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CONTROL AGREEMENT WITH A SECURITIES INTERMEDIARY To: Wells Fargo Brokerage Services, LLC. (the “Securities Intermediary”)           Attention:    Dan Kraft --------------------------------------------------------------------------------       Re: Fargo Electronics, Inc. (the “Pledgor”)           Address: 6533 Flying Cloud Drive     Eden Prairie, MN  55344               Taxpayer ID Number: 41-1959505       The Securities Intermediary’s Account No. ______(the “Account”) Investment Property pledged: ý All Investment Property in Account, or o Investment Property in the account listed on Attachment A to this Agreement (If the entire Account is pledged, “Investment Property” ý will Include o will not include reinvested interest, all dividends, capital gains per existing instructions from pledgor, and all proceeds of the foregoing.)     Dear Sir or Madam:                 A.            This is to advise you that Pledgor has given the Secured Party a security interest in the  Investment Property described above and credited or to be credited to the above referenced Account has been pledged to LaSalle Bank National Association, as Agent for the Lender Parties (the “Secured Party”), pursuant to the terms of a collateral pledge agreement securing certain obligations of the Pledgor to the Secured Party.                 B.            The Pledgor acknowledges and agrees that in the event of any inconsistency between this Control Agreement With a Securities Intermediary (this “Agreement”) and the terms of any other agreement regarding the Account, this Agreement shall govern.  Without limiting the foregoing, the Pledgor shall have no right to purchase any financial assets on margin or to make any withdrawals from the Account (whether by telephone request, check, credit card or otherwise) except with the prior written consent of the Secured Party or as set forth in subparagraph F.4(b) below.  Pledgor has advised the Secured Party that there currently is not in effect any pledge by the Pledgor of the Investment Property to any party other than the Secured Party.                 C.            Accordingly, the Secured Party and the Pledgor agree to the following terms relating to the control of the Investment Property and jointly request that the Securities Intermediary agrees: (1) to register this pledge on its books and control the Investment Property on behalf of and at the direction of the Secured Party; (2) to permit no person or entity, including the Pledgor, except as set forth in subparagraph F.4(b) below, to withdraw, redeem, sell, exchange, substitute or otherwise dispose of the Investment Property, or any proceeds thereof, until the Secured Party has released its pledge in writing; (3) not to register on its books any other pledge to the Investment Property until the Secured Party has released its pledge in writing; and (4) to either redeem and deliver the proceeds of the Investment Property to the Secured Party or transfer the Investment Property to the Secured Party upon demand and without further notice or consent from the Pledgor.  By signing the acknowledgment below, the Securities Intermediary agrees to such requests of the Secured Party and the Pledgor.                 D.            This Control Agreement with a Securities Intermediary (the “Agreement”) establishes the Secured Party as a registered pledgee in control of the Investment Property, with all rights and privileges granted to a registered pledgee or purchaser under Article 8 and 9 of the Uniform Commercial Code in the State of Minnesota. The Securities Intermediary agrees to subordinate any security interest it may have in the Investment Property to the Secured Party’s security interest in such property, the Securities Intermediary also understands that the Secured Party may from time to time partially release Investment Property or any proceeds of the Investment Property pursuant to the terms of the collateral pledge agreement, and that any such partial release shall not result in a release of the remainder of the Investment Property pledged to and controlled by the Secured Party pursuant to this Agreement.                 E.             The Securities Intermediary’s records show that Pledgor is the sole owner of the Investment Property and that Securities Intermediary has not been served with any notices of levy or received notice of any security interest in or other claim to the Investment Property or any portion of the Investment Property, other than this Agreement. The Securities Intermediary is not presently obligated to accept transfer and redemption notices from any person.                 F.             The Securities Intermediary agrees: (1) that it holds the Investment Property on behalf of the Secured Party;     (2) that it will comply with all of the Secured Party’s entitlement orders relating to the Account without any further consent of the Pledgor, including all notices from the Secured Party to trade or redeem any Investment Property, or to transfer or pay any Investment Property to the Secured Party or anyone that the Secured Party designates;     (3) that by entering into this Agreement, the Pledgor, the Secured Party and the Securities Intermediary are giving the Secured Party control over the Investment Property and are perfecting the Secured Party’s security interest in the Investment Property by control;     (4) without the prior written consent of the Secured Party, the Securities Intermediary will not: (a) enter into any agreements by which Securities Intermediary agrees to comply with transfer or redemption orders of any person other than the Secured Party with respect to the Investment Property, or any portion of the Investment Property; or (b) allow any withdrawals of any Investment Property from the Account and will not deliver, transfer or pay any portion or all of the Investment Property to the Pledgor or any other person; provided, that until Securities Intermediary receives notice from the Secured Party that Pledgor’s withdrawal rights under this proviso clause are canceled, the Secured Party consents to the withdrawal of Investment Property from the Account; and     (5) to send duplicate copies of any and all statements of the Account and confirmations of transactions involving Investment Property to the Secured Party at its address set forth below.                   G.            The Account and this Agreement shall be governed by the internal laws of the state of Minnesota.  Securities Intermediary is a “securities intermediary” with respect to the Account and the Account is a “securities account” within the meaning of Article 8 of the Uniform Commercial Code as adopted in Minnesota, Minn. Stat. Ch. 336, Article 8 (“Minnesota Article 8”).  Notwithstanding the terms of any other agreement, Minnesota is Securities Intermediary’s jurisdiction for purposes of Minnesota Article 8.  Securities Intermediary expressly agrees that each and every item of property held in the Account is and will be treated as a “financial asset” within the meaning of Minnesota Article 8.                 H.            Nothing in this Agreement can be waived, changed or cancelled, except by a writing signed by the Secured Party.  Nothing in this Agreement will be affected by any act or omission by anyone.  This Agreement overrides all other present and future agreements to the contrary.                 I.              The Securities Intermediary will make all reports relating to the Collateral to federal, state and local tax authorities under the name and tax identification number of the Pledgor.                 J.             Please confirm your consent and agreement to the terms of this Agreement by executing this Agreement as soon as possible and returning it to the Secured Party at the address and to the attention of the individual indicated below. SECURED PARTY LASALLE BANK NATIONAL ASSOCIATION, as Agent for the Lender Parties By:    /s/ Ann Pifer --------------------------------------------------------------------------------     Its:    First Vice President --------------------------------------------------------------------------------     Dated:    June 25, 2001 --------------------------------------------------------------------------------     Secured Party’s Address:       601 Second Avenue South   Suite 4100   Minneapolis, MN  55402   Attention:  Ms. Ann Pifer     PLEDGOR Pledgor hereby directs and authorizes the Securities Intermediary to execute this Agreement for Pledgor. FARGO ELECTRONICS, INC.       By:     /s/ Jeffrey D. Upin --------------------------------------------------------------------------------     Its:     VP Admin & General Counsel --------------------------------------------------------------------------------     Dated:     6/29/01 -------------------------------------------------------------------------------- SECURITIES INTERMEDIARY                 The undersigned agrees to all provisions of this Agreement, this 3rd day of July, 2001.   Wells Fargo Brokerage Services, LLC           By:    /s/  Dan Kraft --------------------------------------------------------------------------------         Its:      Vice President --------------------------------------------------------------------------------  

AMENDMENT NO. 6 TO LOAN FUNDING AND SERVICING AGREEMENT (VFCC Transaction with ACS Funding Trust I)              THIS AMENDMENT NO. 6 TO LOAN FUNDING AND SERVICING AGREEMENT, dated as of March 29, 2001 (this “ Amendment”), is entered into by and among ACS FUNDING TRUST I (“Borrower”), as Borrower, AMERICAN CAPITAL STRATEGIES, LTD. (“Servicer”), as Servicer, certain INVESTORS, VARIABLE FUNDING CAPITAL CORPORATION (“VFCC”), as a Lender, FIRST UNION SECURITIES, INC. (successor-in-interest to First Union Capital Markets Corp.), as Deal Agent, FIRST UNION NATIONAL BANK (“First Union”), as a Lender and as Liquidity Agent, Wells Fargo Bank Minnesota, National Association (successor-in-interest to Norwest Bank Minnesota, National Association, as Collateral Custodian and the Backup Servicer, and as acknowledged and agreed to by FIRST UNION NATIONAL BANK (“Hedge Counterparty”), as Hedge Counterparty.  Capitalized terms used and not otherwise defined herein are used as defined in the Agreement (as defined below).              WHEREAS, the parties hereto entered into that certain Loan Funding and Servicing Agreement, dated as of March 31, 1999 as amended by that Amendment No. 1, dated as of June 30, 1999, Amendment No. 2, dated as of September 24, 1999, Amendment No. 3, dated as of December 14, 1999, Amendment No. 4, dated as of June 16, 2000, and Amendment No. 5, dated as of December 20, 2000 (as amended, the “Agreement”);              WHEREAS, the parties hereto desire to amend the Agreement in certain respects as provided herein;              NOW THEREFORE, in consideration of the premises and the other mutual covenants contained herein, the parties hereto agree as follows:              SECTION 1.   Amendments. (a) The definition of “Availability” in Section 1.1 of the Agreement is hereby amended and restated in its entirety as follows:       “Availability:  On any day, the excess of (I) the amount by which (a) the lesser of (i) the product of (A) the Borrowing Base and (B) 75% and (ii) the Facility Amount exceeds (b) an amount necessary to cure any Overcollateralization Shortfall and any Required Equity Shortfall over (II) the Advances Outstanding on such day; provided, however, during the Amortization Period, the Availability shall be zero.”.     (b) The definition of “Agent’s Account” in Section 1.1 of the Agreement is hereby amended and restated in its entirety as follows:       “Agent’s Account:           A special account (account number 2000002391825) in the name of the Deal Agent or, so long as VFCC is the sole Purchaser hereunder, in the name of VFCC, maintained at First Union National Bank.”.     (c) The definition of “Commitment Termination Date” in Section 1.1 of the Agreement is hereby amended and restated in its entirety as follows:       “Commitment Termination Date:     March 30, 2002 or such later date to which the Commitment Termination Date may be extended (if extended) in the sole discretion of VFCC and each Investor in accordance with the terms of Section 2.2(b).”.     (d) The definition of “Minimum Overcollateralization Percentage” in Section 1.1 of the Agreement is hereby amended and restated in its entirety as follows:       “Minimum Overcollateralization Percentage:                133 1/3%”.                SECTION 2.  Agreement in Full Force and Effect as Amended.              Except as specifically amended hereby, the Agreement shall remain in full force and effect.  All references to the Agreement shall be deemed to mean the Agreement as modified hereby.  This Amendment shall not constitute a novation of the Agreement, but shall constitute an amendment thereof.  The parties hereto agree to be bound by the terms and conditions of the Agreement, as amended by this Agreement, as though such terms and conditions were set forth herein.              SECTION 3.  Representations.              Each of the Borrower and Servicer represent and warrant as of the date of this Amendment as follows:              (i)        it is duly incorporated or organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization;              (ii)       the execution, delivery and performance by it of this Amendment are within its powers, have been duly authorized, and do not contravene (A) its charter, by-laws, or other organizational documents, or (B) any Applicable Law;              (iii)      no consent, license, permit, approval or authorization of, or registration, filing or declaration with any governmental authority, is required in connection with the execution, delivery, performance, validity or enforceability of this Amendment by or against it;              (iv)       this Amendment has been duly executed and delivered by it;              (v)        this Amendment constitutes its legal, valid and binding obligation 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 or by general principles of equity;              (vi)       it is not in default under the Agreement; and              (vii)     there is no Termination Event, Unmatured Termination Event, or Servicer Termination Event.              SECTION 4.   Conditions Precedent.              The effectiveness of this Amendment is subject to the due execution of this Amendment  by each of the parties hereto.              SECTION 5.   Miscellaneous.              (a)        This Amendment may be executed in any number of counterparts, and by the different parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument but all of which together shall constitute one and the same agreement.              (b)        The descriptive headings of the various sections of this Amendment are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.              (c)        This Amendment may not be amended or otherwise modified except as provided in the Agreement.              (d)        First Union certifies by execution hereof that it is an Investor with Commitments in excess of 66-2/3% of the Facility Amount, and therefore is a Required Investor pursuant to the Agreement.              (e)        The failure or unenforceability of any provision hereof shall not affect the other provisions of this Amendment.              (f)        Whenever the context and construction so require, all words used in the singular number herein shall be deemed to have been used in the plural, and vice versa, and the masculine gender shall include the feminine and neuter and the neuter shall include the masculine and feminine.              (g)        This Amendment represents the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements between the parties.  There are no unwritten oral agreements between the parties.              (h)        THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS.   [Remainder of Page Intentionally Left Blank]              IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. THE BORROWER: ACS FUNDING TRUST I       By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: --------------------------------------------------------------------------------           ACS Funding Trust I   c/o American Capital Strategies, Ltd.   3 Bethesda Metro Center, Suite 860 Bethesda, Maryland  20814   Attention:  President   Facsimile No.:  (301) 654-6714   Confirmation No.:  (301) 951-6122      THE SERVICER: AMERICAN CAPITAL STRATEGIES, LTD.       By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: --------------------------------------------------------------------------------       American Capital Strategies, Ltd.   3 Bethesda Metro Center, Suite 860   Bethesda, Maryland  20814   Attention:  President   Facsimile No.:  (301) 654-6714 Confirmation No.:  (301 951-6122   [SIGNATURES CONTINUED ON FOLLOWING PAGE]   THE INVESTORS: FIRST UNION NATIONAL BANK       By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: --------------------------------------------------------------------------------       Commitment:  $225,000,000.00       First Union National Bank   One First Union Center, Mail Code: NC0610   301 South College Street   Charlotte, North Carolina 28288   Attention:  Capital Markets Credit Administration   Facsimile No.:  (704) 374-3254   Confirmation No:  (704) 374-4001      LENDER: VARIABLE FUNDING CAPITAL   CORPORATION       By First Union Securities, Inc.   (successor-in-interest to First Union   Capital Markets Corp.), as attorney-in-fact       By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: --------------------------------------------------------------------------------       Variable Funding Capital Corporation   c/o First Union Securities, Inc.   One First Union Center, Mail Code: NC0610   301 South College Street   Charlotte, North Carolina 28288   Attention:  Conduit Administration   Facsimile No.:  (704) 383-6036   Confirmation No.:  (704) 383-9343                             With a copy to:         Lord Securities Corp.   2 Wall Street, 19th Floor   Attention:  Vice President   Facsimile No.:  (212) 346-9012   Confirmation No.:  (212) 346-9008   [SIGNATURES CONTINUED ON FOLLOWING PAGE]   THE BACKUP SERVICER: WELLS FARGO BANK MINNESOTA,   NATIONAL ASSOCIATION (successor-in-   interest to Norwest Bank Minnesota)       By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: --------------------------------------------------------------------------------       Wells Fargo Bank Minnesota, National Association   Sixth Street and Marquette Avenue   Minneapolis, MN  55479-0070   Attention:  Corporate Trust Services                                Asset-Backed Administration   Facsimile No.:  (612) 667-3464   Confirmation No.:  (612) 667-8058   THE COLLATERAL CUSTODIAN: WELLS FARGO BANK MINNESOTA,   NATIONAL ASSOCIATION (successor-in-   interest to Norwest Bank Minnesota)       By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: --------------------------------------------------------------------------------       Wells Fargo Bank Minnesota, National Association   Sixth Street and Marquette Avenue   Minneapolis, MN  55479-0070   Attention:  Corporate Trust Services                Asset-Backed Administration     Facsimile No.:  (612) 667-3464   Confirmation No.:  (612) 667-8058     [SIGNATURES CONTINUED ON THE FOLLOWING PAGE]   THE DEAL AGENT: FIRST UNION SECURITIES, INC.   (successor-in-interest to First Union   Capital Markets Corp.)       By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: --------------------------------------------------------------------------------       First Union Securities, Inc.   One First Union Center, Mail Code: NC0610   301 South College Street   Charlotte, North Carolina 28288   Attention:  Conduit Administration   Facsimile No.:  (704) 383-6036   Telephone No.:  (704) 383-9343         LENDER AND LIQUIDITY AGENT       FIRST UNION NATIONAL BANK       By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: --------------------------------------------------------------------------------       First Union National Bank   One First Union Center, Mail Code: NC0610   301 South College Street   Charlotte, North Carolina 28288   Attention:  Capital Markets Credit Administration   Facsimile No.:  (704) 374-3254   Telephone No.:  (704) 374-4001       Lender Commitment: $10,000,000   Acknowledged and Agreed to this 29th day of March, 2001. FIRST UNION NATIONAL BANK, as the Hedge Counterparty   By: -------------------------------------------------------------------------------- Name: -------------------------------------------------------------------------------- Title: -------------------------------------------------------------------------------- First Union National Bank One First Union Center, Mail Code: NC0610 Charlotte, North Carolina  28288 Attention:  Capital Markets Credit Administration Facsimile:  (704) 374-3254 Telephone:  (704) 374-4001

Exhibit 10.32 CONSENT TO SETTLEMENT OF CLAIM The undersigned creditor of EpicEdge, Inc. (“Creditor”), for good and valuable consideration, does hereby absolutely and conditioned solely as described below agree to compromise, settle or otherwise resolve Creditor’s claim(s), debts, demands, actions, contracts, obligations, liabilities, damages of any type or nature, in existence as of February 1, 2001, and whether now known or not known, statutory, common law or otherwise against EpicEdge, Inc., along with all other creditors of EpicEdge, Inc. who similarly agree to compromise, settle or otherwise resolve their respective claims debts, demands, actions, contracts, obligations, liabilities, damages of any type or nature, in existence as of February 1, 2001, and whether now known or not known, statutory, common law or otherwise, including and without limitation Creditor’s claim, choosing one of the following Options:                                        OPTION “A” Creditors with claims of $5,000 or less, or who are willing to reduce their claims to $5,000 will be paid in full upon receipt of sufficient consents of creditors.                                        OPTION “B” Creditors with claims greater than $5,000 and who do not reduce their claims will be paid a total of 60% of their claims over a thirty month period; the initial payment will equal 18% of their approved claim upon receipt of sufficient consents of creditors, followed by quarterly payments of 4% of each creditor’s allowed claim beginning 180 days after the initial payment, with a final quarterly payment of 6%.  PLUS, If the Company can make payments totaling 30% of the allowed consenting creditor claims on or before December 31, 2001, such payment will satisfy the full amount of the amount due; If the Company can make payments totaling 50% of the allowed consenting creditor claims on or before December 31, 2002, such payment will satisfy the full amount of the amount due; This Consent to Settlement of Claim is conditioned upon at least 95% of the dollar amount of the claims of unsecured creditors of EpicEdge, Inc., or some lesser percentage as EpicEdge, Inc. may so elect at its sole discretion, executing a similar Consent to Settlement of Claims and returning said Consent to Settlement of Claims on or before March 31, 2001 or such date thereafter as the Company elects.  In the event a sufficient number of Consents are not received, this Consent shall not be binding on the Creditor. Creditor further represents that it has adequate information concerning the financial condition of EpicEdge, Inc. to make an informed decision regarding the settlement of its claim against EpicEdge, Inc. and that it has independently and without reliance on Development Specialists, Inc., and based on such information as the Creditor deemed appropriate, made its own analysis and decision to execute this Consent to Settlement of Claim; that it has not and will not assign its claim without the express written consent of EpicEdge, Inc.; that the signatory below has the authority to execute this Consent and perform thereunder.  Creditor hereby acknowledges, agrees and represents that Creditor has no claims arising from and act or omission by EpicEdge, Inc. or Development Specialists, Inc. with respect to this Consent.  To the extent that the Creditor now has, or in the future possesses any claim against Development Specialists, Inc. with regard to or relative to the Consent to Settlement of Claim, whether known or unknown, fixed or contingent, the same is irrevocably released in its entirety. This Consent to Settlement of Claim supercedes all prior discussions and agreements, oral or written, between the Creditor, EpicEdge, Inc, and Development Specialists, Inc. with respect to the matters contained herein and constitutes the sole and entire agreement between the parties.  The terms of this Consent shall be binding upon, and inure to the benefit of the parties and their respective successors and assigns.  All representations and warranties made herein shall survive the execution and delivery of this Consent to Settlement of Claims. This Consent to Settlement of Claims shall be governed by the laws of the State of Texas.  Any action arising under or related to this Consent may be brought in any State or Federal Court located in the State of Texas.  Creditor hereby consents to and confers personal jurisdiction over Creditor by such court or courts and agrees that service of process may be upon Creditor at the address set forth below, and in any action hereunder Creditors waives the right to demand trial by jury. IN WITNESS WHEREOF, the undersigned Creditor has duly consented to this Consent to Settlement of Claims by its authorized representative this        day of                            , 2001. Amount claimed by creditor:  $____________________________________________.                                                                                       (fill in amount) BY: WITNESS:     -------------------------------------------------------------------------------- CREDITOR -------------------------------------------------------------------------------- SIGNATURE OF WITNESS     -------------------------------------------------------------------------------- AUTHORIZED SIGNATURE -------------------------------------------------------------------------------- PRINT NAME/TITLE     -------------------------------------------------------------------------------- PRINT NAME/TITLE -------------------------------------------------------------------------------- TELEPHONE NO.     -------------------------------------------------------------------------------- TELEPHONE NO.     Return form to: DEVELOPMENT SPECIALISTS, INC.   333 SOUTH GRAND AVENUE, SUITE 2010   LOS ANGELES, CALIFORNIA 90071   FAX NUMBER: 213-617-2718  

EXHIBIT 10.5   September 19, 2001   William Murray 1120 N. Elmwood Avenue Oak Park, IL  60302   Re:          Retention Plan   Dear Bill:                   As you may be aware the BP 13D filing indicates that multiple options for the divestiture of BP’s holdings in Vysis will be reviewed. Such options may include a merger or sale of the business.  Therefore, in order to help encourage your continued focused attention on the on-going success of Vysis, Inc (“Vysis”) and its affiliates (“the Company”) and to encourage you to remain employed by the Company during a potential period of transition which may result in a change in control of Vysis, the Board of Directors of Vysis has authorized the establishment of a Retention Plan which will include payment to you of a “Retention Bonus”.  This Retention Bonus will be payable in the event a Change in Control (as defined below) occurs and if certain other minimal terms and conditions are met.  The following describes your Retention Bonus Plan and the terms and conditions relating to the Retention Bonus payment:                   1.             If you satisfy the terms and conditions described below, the Company will pay you a Retention Bonus in an amount equal to 6 (six) months of your annual base salary (not including any bonus or incentive payments or other types of compensation whatsoever) in effect immediately prior to the closing date of a Change in Control, as defined in the Vysis, Inc. Severance Program adopted by Vysis, Inc. on August 17, 2001 (the “Transaction Closing Date”).                   2.             In order to receive payment of the Retention Bonus, you must remain employed by the Company for ninety (90) days after the Transaction Closing Date (the “Payment Date”); provided, however, that if your employment is terminated (i) by the Company for reasons other than Cause or (ii) by death or disability, after the Transaction Closing Date but before the Payment Date, you will nonetheless receive payment of the Retention Bonus.  For this purpose, the term “Cause” shall mean any of the following:  (A) you have engaged in willful conduct involving misappropriation, dishonesty, or serious moral turpitude which is demonstrably and materially injurious to the Company or (B) you are convicted of a felony.                   3.             The Retention Bonus shall be paid to you on the Payment Date, provided that you remain employed on that date.  If your employment is terminated by the Company before the Payment Date for reasons of death or disability or for reasons other than Cause, the Retention Bonus shall be paid to you on the day your employment is terminated.                   4.             The Retention Bonus will be subject to such deductions as may be required to be made pursuant to law, government regulations or order or by agreement with you.                 5.             If you find it necessary to bring any legal action 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, and if you are the prevailing party in such action, Vysis shall reimburse you for your reasonable attorneys' fees and any other costs that you incur in connection with such action.  Any payments pursuant to this paragraph 5 shall be in addition to any other relief to which you may be entitled as a result of such action.                   6.             The parties hereto agree to maintain the existence of this Agreement and the terms thereof confidential and shall not disclose them to any third parties (other than Vysis management officials and administrative personnel necessary to effectuate the terms of this Agreement and/or counsel for the parties, their respective tax advisors and accountants and Employee’s immediate family), except as required by law.                   7.             The Company’s obligations under this Agreement shall be governed by the laws of the State of Illinois.  If a Change of Control has not occurred by August 17, 2002, this Agreement shall automatically terminate as of such date.                   If you have any questions regarding the foregoing, please contact Bill Murray.     Sincerely,           /s/ John L. Bishop       John L. Bishop President and CEO   JLB/ld       Agreed: /s/ William Murray     Employee Name:  William Murray   Date:  September 20, 2001    

OCEAN ENERGY, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN (AS AMENDED AND RESTATED) -------------------------------------------------------------------------------- OCEAN ENERGY, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN         WHEREAS, OCEAN ENERGY, INC. (the "Company"), desiring to aid certain of its executives in making provision for their retirement for the purpose of assisting the Company to recruit and retain key management personnel, maintains the OCEAN ENERGY, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN (the "Plan"); and         WHEREAS, the Company desires to amend the Plan in certain respects;         NOW, THEREFORE, the Plan is hereby amended and restated as follows, effective as of July 1, 2001: I. DEFINITIONS AND CONSTRUCTION         1.01 Definitions Where the following words and phrases appear in the Plan, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary. (1) Accrued Benefit: The benefit of a Member determined under the Plan. (2) Actuarial Equivalent: Equality in value of the aggregate amounts expected to be received under different forms of payment based upon (a) if prior to a Change in Control (as defined in the Company’s 2001 Long-Term Incentive Plan or its successor), mortality and interest rate assumptions adopted by the actuary for the Plan and (b) if on and following a Change in Control, (i) the Applicable Mortality Table (as defined in section 417(e)(3)(A)(ii)(I) of the Code), and (ii) the annual rate of interest on 30-year Treasury securities for the calendar month that is three months prior to the calendar year in which the Member’s Annuity Starting Date occurs. (3) Annuity Starting Date: The first day of the first period with respect to which an amount is received as a benefit pursuant to the Plan. (4) Applicable Percentage: The percentage determined by the Committee and set forth in a Member's Membership Agreement which is used to compute his Accrued Benefit. (5) Average Monthly Compensation: The result obtained by dividing the total Compensation paid to a Member during a considered period by the number of months during the considered period. The considered period shall be the Member’s last five consecutive calendar years of employment with the Company and its subsidiaries (including any predecessors); provided, that if a Member has less than five consecutive calendar years of employment, his considered period shall be all of his completed calendar years of employment. (6) Code: The Internal Revenue Code of 1986, as amended. (7) Committee: The Compensation Committee of the Directors. (8) Company: Ocean Energy, Inc., a Delaware corporation. (9) Compensation: Except as otherwise provided in a Member’s Membership Agreement, the total of all amounts paid by the Company to or for the benefit of a Member for services rendered or labor performed while a Member, including (i) elective contributions made on a Member’s behalf by the Company that are not includable in income under sections 125, 129 or 402(g) of the Code and (ii) elective deferrals of compensation, including incentive bonuses, under a nonqualified deferred compensation program, but excluding non-cash remuneration, income incurred as a result of the exercise of stock options or stock appreciation rights, and fringe benefits or perquisites (whether paid in cash or in kind) and, except as expressly included herein, Company contributions to any other deferred compensation program. (10) Directors: The Board of Directors of the Company. (11) Eligible Surviving Spouse: A surviving spouse to whom a deceased Member was married on his Annuity Starting Date or, if earlier, his date of death. (12) Member: Any employee of the Company or any subsidiary of the Company who has been designated by the Committee to be a Member of the Plan and who has executed a Membership Agreement. (13) Membership Agreement: The agreement executed by and between an employee of the Company or any subsidiary evidencing his status as a Member of the Plan and setting forth the terms and conditions of such membership. A Member’s Membership Agreement may change any provision of the Plan as it pertains to such Member and such provision as so changed shall be applicable and binding with respect to such Member and the Company as if set forth in the text of the Plan. (14) Normal Retirement Date: The date upon which a Member attains sixty-five years of age. (15) Pension: With respect to a Member entitled to receive benefits under the Plan, a series of monthly payments for the life of the Member. (16) Plan: The Ocean Energy, Inc. Executive Supplemental Retirement Plan, as amended from time to time. (17) Plan Year: Any twelve consecutive month period commencing upon January 1 of each year. (18) Trust: The trust, if any, established under the Trust Agreement. (19) Trust Agreement: The agreement, if any, entered into between the Company and the Trustee pursuant Article II. (20) Trust Fund: The funds and properties, if any, held pursuant to the provisions of the Trust Agreement, together with all income, profit, and increments thereto." (21) Vested Interest: The percentage of a Member's Accrued Benefit which, pursuant to the Plan and his Membership Agreement, is nonforfeitable.         1.02 Number and Gender. Wherever appropriate herein, words used in the singular shall be considered to include the plural and the plural to include the singular. The masculine gender, where appearing in this Plan, shall be deemed to include the feminine gender. II. PURPOSE AND NATURE OF THE PLAN         The purpose of the Plan is to provide supplemental retirement benefits for those employees who are designated by the Committee as Members and who complete the required period of employment with the Company and its subsidiaries. The Plan is intended to provide a method for attracting and retaining key employees of the Company and its subsidiaries and to encourage such individuals to remain with the Company and its subsidiaries and devote their best efforts to its affairs. The Plan shall constitute an unfunded, unsecured obligation of the Company to make retirement benefit payments in accordance with the provisions of the Plan. The establishment of the Plan shall not be deemed to create a trust. No Member shall have any security or other interest in any assets of the Company.         The Committee, in its sole discretion, may establish the Trust and direct the Company to enter into the Trust Agreement. In such event, the Company shall remain the owner of all assets in the Trust Fund and the assets shall be subject to the claims of the Company’s creditors if the Company ever becomes insolvent. For purposes hereof, the Company shall be considered “insolvent” if (a) the Company is unable to pay its debts as they become due, or (b) the Company is subject to a pending proceeding as a debtor under the United Sates Bankruptcy Code (or any successor federal statute). The chief executive officer of the Company and its board of directors shall have the duty to inform the Trustee in writing if the Company becomes insolvent. When so informed, the Trustee shall suspend payments to the Members and hold the assets for the benefit of the Company’s general creditors. If the Trustee receives a written allegation that the Company is insolvent, the Trustee shall suspend payments to the Members and hold the Trust Fund for the benefit of the Company’s general creditors, and shall determine whether the Company is insolvent. If the Trustee determines that the Company is not insolvent, the Trustee shall resume payments to the Members. No Member or beneficiary shall have any preferred claim to, or any beneficial ownership interest in, any assets of the Trust Fund. III. PARTICIPATION         3.01 Selection of Participants. The Committee shall select those individuals who will participate in the Plan. Members of the Plan shall be selected from among those key employees of the Company or any subsidiary of the Company who, in the opinion of the Committee, are in a position to make the most significant contributions to the long-term profitability of the Company. The term “employee” shall mean any person (including any officer) employed by the Company or a subsidiary on a full-time salaried basis and shall include directors who are also employees of the Company or of a subsidiary. For purposes of the Plan, the term “subsidiary” shall mean any entity a majority of the outstanding voting stock or voting power of which is beneficially owned directly or indirectly by the Company. No member of the Committee while serving as such shall be eligible to be a Member of the Plan.         3.02 Notice. The Committee shall give written notice to each employee who has been selected to be a Member of the Plan. Each Member of the Plan shall execute a Membership Agreement setting forth the terms and conditions of his membership. IV. BENEFITS         4.01 No Benefits Unless Herein Set Forth. Except as set forth in this Article, a Member shall acquire no right to any benefit under the Plan. The elimination of the Social Security Benefit offset hereunder shall not apply to any Member who terminated prior to July 1, 2001.         4.02 Retirement.         (a) A Member whose employment with the Company and its subsidiaries is terminated, for a reason other than death, on or after his Normal Retirement Date shall be entitled to receive, as of such date, a Pension commencing on the first day of the month coinciding with or next following the Member’s Annuity Starting Date, each monthly payment of such Pension being equal to his Applicable Percentage of his Average Monthly Compensation.         (b) With respect to any Member who is to receive his benefit pursuant to Paragraph (a) above, such Member’s Annuity Starting Date shall be his Normal Retirement Date or, if later, the first day of the first month coincident with or immediately following his termination of employment with the Company and its subsidiaries.         4.03 Severance Benefit.         (a) For purposes of this Section, a Member’s Vested Interest shall be determined by such Member’s full years of Vesting Service in accordance with the vesting schedule established by the Committee with respect to such Member at the time he is designated as a Member of the Plan. A Member’s vesting schedule shall be set forth in his Membership Agreement. A Member shall be credited with one year of Vesting Service for each calendar year during which he is employed by the Company or a subsidiary on a full-time basis or during which he is entitled to severance benefits pursuant to a contract or the Company’s regular severance policy.         (b) Paragraph (a) above notwithstanding, a Member shall have a 100% Vested Interest upon termination of his employment by reason of total and permanent disability.         (c) Each Member whose employment is terminated prior to his Normal Retirement Date for any reason other than death or total and permanent disability shall be entitled to receive a Pension commencing on the first day of the month coinciding with or next following such Member’s Normal Retirement Date, each monthly payment of such Pension being equal to the product of such Member’s Vested Interest, as of the date his employment was terminated, and his Applicable Percentage of his Average Monthly Compensation.         (d) With respect to any Member who is to receive his benefit pursuant to Paragraph (c) above, such Member’s Annuity Starting Date shall be his Normal Retirement Date.         4.04 Death Benefits.         (a) A married Member with an Eligible Surviving Spouse shall have a survivor annuity paid to his Eligible Surviving Spouse in the event such Member dies while employed by the Company or a subsidiary. The survivor annuity provided by this Paragraph (a) shall consist of monthly payments in the same amount such deceased Member would have received had he terminated his employment with the Company and its subsidiaries on the day prior to his death assuming, for such purposes, that he had a 100% Vested Interest as of such date without regard to his actual Vested Interest as of such date. Payment of the survivor annuity provided by this Paragraph (a) shall begin as of the first day of the month coinciding with or next following the Member’s date of death and shall end as of the date of the Eligible Surviving Spouse’s death.         (b) A married Member with an Eligible Surviving Spouse shall have a survivor annuity paid to his Eligible Surviving Spouse in the event such Member dies after termination of employment with the Company and its subsidiaries and prior to his Annuity Starting Date. The survivor annuity provided by this Paragraph (b) shall consist of monthly payments in the same amount such deceased Member would have been entitled to receive commencing as of his Annuity Starting Date. Payment of the survivor annuity provided by this Paragraph (b) shall begin as of the first day of the month coinciding with or next following the Member’s date of death and shall end as of the date of the Eligible Surviving Spouse’s death.         (c) Any married Member with an Eligible Surviving Spouse who dies after his Annuity Starting Date shall have paid to such Eligible Surviving Spouse a survivor annuity consisting of monthly payments in an amount equal to the monthly amount the Member was receiving prior to his death. Such survivor annuity shall commence as of the first day of the month coinciding with or next following the Member’s date of death and shall end as of the date of the Eligible Surviving Spouse’s death.         4.05 Disability Benefits.         (a) A Member whose employment with the Company and its subsidiaries is terminated by reason of total and permanent disability shall be entitled to receive a Pension commencing on the first day of the month coinciding with or next following the date of such Member’s termination of employment, each monthly payment of such Pension being equal to the following amount:           (1) his Applicable Percentage of his Average Monthly Compensation; minus           (2) 100% of the monthly disability benefits received by him pursuant to the Ocean Energy, Inc. Long Term Disability Income Plan.   For purposes of computing item (2) above, the Member shall supply the Committee with such information as it may reasonably request. If a Member fails to supply the Committee with such information, the Company shall have no obligation to pay any benefits under the Plan to such Member. For purposes of this Paragraph (a) and section 4.03(b), a Member shall be deemed to be totally and permanently disabled if such Member has been determined to be eligible for benefits under the Ocean Energy, Inc. Long Term Disability Income Plan.         (b) With respect to any Member who is to receive his benefit pursuant to Paragraph (a) above, such Member’s Annuity Starting Date shall be the first day of the first month coincident with or immediately following the date the Committee determines that he is totally and permanently disabled.         4.06. Involuntary Cashouts. The Committee, in its sole discretion, may at any time pay a terminated Member (or a Member’s Eligible Surviving Spouse) the Actuarial Equivalent of the Member’s Accrued Benefit in a single lump sum payment and upon such payment no further benefits shall be due such person pursuant to the Plan. V. FORFEITURES         5.01 Discharge for Cause. Notwithstanding anything in the Plan to the contrary, if a Member’s employment is terminated by the Company or one of its subsidiaries because he has engaged in misconduct to the material detriment of the Company and its subsidiaries taken as a whole or because he has been convicted of a felony, he shall not be entitled to receive any benefit under the Plan and his Accrued Benefit shall be forfeited.         5.02 Competition with the Company. Except as otherwise provided in a Member’s Membership Agreement, if a Member engages in competitive activities against the Company and its subsidiaries to the material detriment of the Company and its subsidiaries taken as a whole following his termination of employment, he shall forfeit all right and entitlement to any amount of Accrued Benefit under the Plan (regardless of whether payment of same has commenced) at the time he engages in such competitive activities[; provided, however, the foregoing forfeiture provision shall not be applicable if the Member’s employment is terminated (i) by the Company or a subsidiary other than pursuant to Section 5.01, (ii) by the Member and in connection with such termination the Company is obligated to provide compensation and benefits to the Member pursuant to a written employment agreement between the Member and the Company or (iii) because the Member’s job is eliminated or substantially reduced in scope following the Change in Control.] VI. ADMINISTRATION OF THE PLAN         6.01 Administration. The Committee shall be charged with the general administration of the Plan. The Committee shall be the “plan administrator” and shall be the “named fiduciary” with respect to the general administration of the Plan.         6.02 Committee Actions. All Committee actions shall be controlled by a vote of a majority of its members; however, the signature of any Committee member on any document shall be sufficient evidence for any person that such document is in accordance with the terms of this Plan.         6.03 General Duties. The Committee shall have the exclusive duty and authority to interpret the provisions of the Plan, to decide any disputes which may arise regarding the rights of Members and to direct the general administration of the Plan. Any disputes arising under the Plan shall be resolved by the Committee, and its decision shall be binding on all concerned parties. In the event that an individual’s claim for a benefit is denied or modified, the Committee shall provide such individual with a written statement setting forth the specific reasons for such denial or modification in a manner calculated to be understood by the individual. Any such written statement shall reference the pertinent provisions of the Plan upon which the denial or modification is based and shall explain the Plan’s claim review procedure. Such individual may, within sixty days of receipt of such written statement, make written request to the Committee for review of its initial decision. Within sixty days following such request for review, the Committee shall, after affording such individual a reasonable opportunity for a full and fair hearing, render its final decision in writing to such individual.         6.04 Committee Records. The Committee shall maintain records of all relevant data pertaining to the Plan and minutes of all Committee meetings. Any Member may inspect any records pertaining to him during business hours.         6.05 Expenses. All administrative expenses of the Committee shall be paid by the Company and its subsidiaries in such proportions as may be agreed upon by them from time to time.         6.06 Information. The Company shall supply full and timely information relating to Members and such other pertinent facts as the Committee may require.         6.07 Administrative Powers. The Committee shall enforce the terms of the Plan and shall have powers necessary to accomplish that purpose including, but not by way of limitation, the following powers:           (a) to determine all questions relating to eligibility;           (b) to determine all questions involving the timing and/or amount of benefits payable to or on behalf of Members;           (c) to hire legal counsel;           (d) to interpret Plan provisions and facts that are claimed to be the basis for benefit entitlement and to make and publish rules for the administration of the Plan; and           (e) to delegate administrative duties to others which are not inconsistent with the terms of the Plan. VII. AMENDMENT AND TERMINATION         7.01 Right to Amend Reserved. The Company reserves the right to amend the Plan at any time. In addition, the Chief Executive Officer of the Company may make such amendments as to not materially increase the Company’s obligations under the Plan. However, no amendment shall adversely affect any Member’s rights with respect to an Accrued Benefit under the Plan, whether or not vested or in pay status, including, without limitation, such rights provided by Section VIII. The Company or the Chief Executive Officer, as the case may be, shall promptly forward a copy of any such amendment to the Committee.         7.02 Termination of Plan. The Company may terminate the Plan at any time; provided, however, each Member shall be automatically 100% vested in his Accrued Benefit under the Plan upon such termination.         7.03 Automatic Termination of the Plan. The Plan shall terminate if the Company is legally dissolved, declared bankrupt or makes a general assignment for the benefit of its creditors, provided that Members shall have rights as general unsecured creditors of the Company upon occurrence of any such event. VIII. CHANGE IN CONTROL         8.01 Funding of Trust. Upon a Change in Control, as defined in the Company’s 2001 Long-Term Incentive Plan, or any successor thereto, the Company shall, at the end of each month thereafter, make such contributions to the Trust as are necessary, if any, for the then value of the assets of the Trust to equal the Actuarial Equivalent of the then Accrued Benefits under the Plan. Any failure to so fund the Trust shall cause all Accrued Benefits to be 100% vested upon such failure. In addition, the Members shall be furnished written evidence by the Company of such funding as soon as reasonably practical following each month. If such funding requirement is not met, a Member may request in writing to the Company that such funding contribution be made and if the Company fails to make such contributions prior to the end of the month following the month of such request, the Member shall be immediately paid the Actuarial Equivalent of his Accrued Benefit in a single, lump sum payment. IX. MISCELLANEOUS         9.01 Alienability. A Member shall not have any power or right to transfer, assign, anticipate, mortgage, commute or otherwise encumber in advance any of the benefits payable hereunder, nor shall said benefits be subject to seizure for payment of any debts or judgments of any of them, or be transferable by operation of law in the event of bankruptcy, insolvency or otherwise.         9.02 Participation in Other Plans. Nothing contained in the Plan shall be construed to alter, abridge or in any manner affect the rights and privileges of a Member to participate in any pension, profit sharing, bonus or similar plan that the Company may now or hereafter have.         9.03 Reorganization. The Company shall not merge or consolidate with any other corporation, or reorganize, unless and until such succeeding or continuing corporation agrees to assume and discharge the obligations of the Company under the Plan.         9.04 Not a Contract of Employment. The Plan shall not be deemed to constitute a contract of employment nor shall any provision herein restrict the right of the Company to discharge a Member or restrict the right of a Member to terminate his employment.         9.05 Benefits Constitute Unsecured Liability. Benefits under the Plan constitute an unfunded, unsecured liability of the Company to make payments in accordance with the provisions hereof, and neither a Member nor any person claiming under his shall have any security or other interest in any specific assets of the Company by virtue of the Plan.         9.06 Governing Law. The Plan shall be construed, administered and governed in all respects by the laws of the State of Texas, without regard to conflicts of laws principles.         9.07 Counterparts. The Plan may be executed or conformed in any number of counterparts, each of which will be deemed an original.         IN WITNESS WHEREOF, the Company has executed this Plan amendment and restatement, effective for all purposes as of [July 1,] 2001.   Ocean Energy, Inc.   By:   __________________________        Name: _____________________        Title: _______________________

OXFORD HEALTH PLANS, INC. FIRST AMENDMENT TO CREDIT AGREEMENT           This FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of July 6, 2001 and entered into by and among Oxford Health Plans, Inc., a Delaware corporation (“Company”), Oxford Benefit Management, Inc., as a Credit Support Party (the “Credit Support Party”), the financial institutions listed on the signature pages hereof (“Lenders”), Credit Suisse First Boston, as Administrative Agent for Lenders (“Administrative Agent”), Deutsche Banc.Alex.Brown Inc., formerly known as Deutsche Bank Securities Inc., as Syndication Agent (the “Syndication Agent”) and Credit Lyonnais New York Branch, as Documentation Agent (the “Documentation Agent”), and is made with reference to that certain Credit Agreement dated as of December 22, 2000 (the "Credit Agreement”), by and among Company, Lenders, Agent, Syndication Agent and Documentation Agent. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement. RECITAL           WHEREAS, Company and Lenders desire to amend the Credit Agreement to permit Company increased ability to repurchase shares of its common stock, to make certain capital contributions to Regulated Subsidiaries, to allow Company and its Subsidiaries to incur additional Indebtedness, to amend certain definitions and to make certain other related changes, all as more specifically set forth herein;           NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: Section 1. AMENDMENTS TO THE CREDIT AGREEMENT           1.1 Amendments to Subsection 1.1: Defined Terms           A. Subsection 1.1 of the Credit Agreement is hereby amended by deleting the phrase “minus the sum of the aggregate Term Loan Exposure and the aggregate Revolving Loan Exposure for all Lenders on such date.” from the definition of “Available Cash” and by substituting therefor the following:           “minus the sum of (i) $75,000,000 plus (ii) the Total Utilization of Revolving Loan Commitments on such date.”           B. Subsection 1.1 of the Credit Agreement is hereby further amended by adding at the end of the definition of “Capital Contributions” the following:           “and provided that amounts contributed by Company to a Regulated Subsidiary which would otherwise be restricted assets of Company under the terms of   --------------------------------------------------------------------------------           Company’s tax-sharing agreement with the Regulated Subsidiaries shall not be deemed a Capital Contribution.”           C. Subsection 1.1 of the Credit Agreement is hereby further amended by deleting clause (c) from the definition of “Company Cash Flow” and by substituting therefor the following:           "(c) contributions to capital or loans to a Regulated Subsidiary (other than amounts paid in respect of intercompany accounts receivable and accounts payable incurred in the ordinary course of business, and other than amounts contributed by Company to a Regulated Subsidiary which would otherwise be a restricted asset of Company under the terms of Company’s tax-sharing agreement with the Regulated Subsidiaries)”           D. Subsection 1.1 of the Credit Agreement is hereby further amended by deleting the definition of “Company Excess Cash Flow” therefrom. After giving effect to the deletion of this defined term, all references within the Credit Agreement to “Company Excess Cash Flow” shall no longer have any force and effect.           E. Subsection 1.1 of the Credit Agreement is hereby amended to add an additional definition “Extended Maturity Indebtedness” to read as follows:           “Extended Maturity Indebtedness” means one or more issuances of Indebtedness of Company and its Subsidiaries in an initial aggregate principal amount not exceeding $300,000,000 (x) having a final stated maturity no earlier than the six month anniversary of the final stated maturity of the Term Loans and percentage amortization no greater than the amortization of the Term Loans (i.e., Extended Maturity Indebtedness must have an averaged weighted life to maturity longer than the Term Loans), (y) which may be included within this Agreement as increased Commitments hereunder and as a separate Class pursuant to an appropriate agreement of joinder (making appropriate modifications to this Agreement which could be approved by the action of Requisite Lenders) executed by Company, Administrative Agent and the lenders committing to provide such additional Indebtedness, and (z) if made pursuant to increased Commitments under this Agreement, which may be equally and ratably secured with the obligations under the Collateral Documents and receive the equal and ratable benefit of the Subsidiary Guaranty”           1.2 Amendments to Section 2: Amounts and Terms of Commitments and Loans           A. Subsection 2.4B(iii) of the Credit Agreement is hereby amended by deleting clause (c) therefrom and by inserting in lieu thereof the following:           "(c) Prepayments and Reductions Due to Issuance of Indebtedness. No later than the first Business Day following receipt by Company or any of its Subsidiaries of the Cash proceeds (any such proceeds, net of reasonable and customary underwriting discounts and commissions, financial advisory or placement fees and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses, being “Net Debt Securities Proceeds") from the issuance of any debt Securities of Company or any of its Subsidiaries after the Closing Date (other than Extended Maturity Indebtedness permitted by subsection 7.1(x)), Company shall 2 --------------------------------------------------------------------------------           prepay the Loans and/or permanently reduce the Revolving Loan Commitments in an aggregate amount equal to 100% of such Net Debt Securities Proceeds; provided that, if Net Debt Securities Proceeds otherwise required to be used to prepay the Loans by this clause (c) at any time do not equal or exceed $5,000,000, Company may defer prepayment and/or reduction of the Revolving Loan Commitments until aggregate Net Debt Securities Proceeds equal at least $5,000,000, such deferral to be evidenced by an Officers’ Certificate setting forth the calculation of the Net Debt Securities Proceeds.”           B. Subsection 2.4B(iii) of the Credit Agreement is hereby amended by deleting 2.4B(iii)(d) therefrom.           C. Subsection 2.4B(i) of the Credit Agreement is hereby amended by adding the following sentence at the end thereof to read as follows:           “Notwithstanding anything in the foregoing provisions of this subsection 2.4B(i), if Company incurs additional Extended Maturity Indebtedness as increased Commitments under this Agreement, Company shall make a proportionate voluntary prepayment of the Extended Maturity Indebtedness concurrently with each voluntary prepayment of the Term Loans.”           D. Subsection 2.4B(iv)(b) of the Credit Agreement is hereby amended to add a final sentence thereto to read as follows:           “Notwithstanding anything in the foregoing provisions of this subsection 2.4B(iv) to the contrary, the amount of any mandatory prepayment otherwise to be made on the Term Loans shall be reduced by an amount sufficient to permit a proportionate mandatory prepayment of Extended Maturity Indebtedness and Company shall make a mandatory prepayment in such amount on such Indebtedness; provided, however, that such proportionate mandatory prepayment of Extended Maturity Indebtedness need only be made if such Extended Maturity Indebtedness is incurred as increased Commitments hereunder.”           1.3 Amendments to Section 7: Negative Covenants           A. Subsection 7.1 of the Credit Agreement is hereby amended by adding the following Subsection 7.1(x):           "(x) Company may become and remain liable with respect to Extended Maturity Indebtedness.”           B. Subsection 7.2C is hereby amended to add an introductory clause to read as follows:           “Except for a provision substantially identical to this subsection 7.2C in an agreement evidencing Extended Maturity Indebtedness, neither....” The remainder of such subsection is unchanged.           C. Subsection 7.3(ii) of the Credit Agreement is hereby amended by deleting clause (a) therefrom and by inserting in lieu thereof the following: 3 --------------------------------------------------------------------------------           "(a) make Capital Contributions and own any resulting additional equity Investments in any Regulated Subsidiary and make capital contributions to the Regulated Subsidiaries of amounts which would otherwise be restricted assets of Company under the terms of Company’s tax-sharing agreement with the Regulated Subsidiaries”           D. Subsection 7.3(vii) of the Credit Agreement is hereby amended by deleting the phrase “(other than intercompany accounts receivable and accounts payable incurred in the ordinary course of business)” and by inserting in lieu thereof the following:           "(other than intercompany accounts receivable and accounts payable incurred in the ordinary course of business and other than amounts contributed by Company to a Regulated Subsidiary which would otherwise be a restricted asset of Company under the terms of Company’s tax-sharing agreement with the Regulated Subsidiaries)”           E. Subsection 7.4 of the Credit Agreement is hereby amended by deleting clause (i) therefrom and by substituting in lieu thereof the following:           "(i) Subsidiaries of the Company may become and remain liable with respect to Contingent Obligations in respect of the Subsidiary Guaranty or and such Subsidiaries party to the Subsidiary Guaranty may become and remain liable with respect to Contingent Obligations in respect of Extended Maturity Indebtedness.”           F. Subsection 7.5 of the Credit Agreement is hereby amended by deleting the phrase “(other than intercompany accounts receivable and accounts payable incurred in the ordinary course of business)” and by inserting in lieu thereof the following:           "(other than intercompany accounts receivable and accounts payable incurred in the ordinary course of business and other than amounts contributed by Company to a Regulated Subsidiary which would otherwise be a restricted asset of Company under the terms of Company’s tax-sharing agreement with the Regulated Subsidiaries)”           G. Subsection 7.6C of the Credit Agreement is hereby amended by adding at the end thereof the following:           “and aggregate repurchases of Company common stock permitted by subsection 7.5.” Section 2. CONFORMING MODIFICATIONS OF COLLATERAL DOCUMENTS AND SUBSIDIARY GUARANTY                    AND AGREEMENT OF JOINDER           By their execution and delivery of this Amendment, Lenders approve, consent and agree that (y) Company, Administrative Agent and the lenders providing the Extended Maturity Indebtedness may execute and deliver an appropriate agreement of joinder wherein such Lenders become a separate “Class” of “Lenders” with “Commitments” hereunder and such agreement of joinder may make any other appropriate modifications of this Agreement to effect the addition of Extended Maturity Indebtedness as increased Commitments hereunder, all without any further approval, consent or agreement of Lenders hereunder; provided any such modification shall have otherwise but for this Section 2 required only the consent of Requisite Lenders, and (z) if such            4 -------------------------------------------------------------------------------- Extended Maturity Indebtedness is incurred as increased Commitments hereunder, the Collateral Documents and the Subsidiary Guaranty may be appropriately modified pursuant to documentation acceptable to the Administrative Agent to provide for equal and ratable security and equal and ratable guaranty benefits, respectively, for the Extended Maturity Indebtedness. Section 3. CONDITIONS TO EFFECTIVENESS           Sections 1 and 2 of this Amendment shall become effective only upon the satisfaction of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the “Amendment Effective Date”):           A. On or before the Amendment Effective Date, Company shall deliver to Lenders (or to Administrative Agent for Lenders) the following, each, unless otherwise noted, dated the Amendment Effective Date:   1.   Signature and incumbency certificates of its officers executing this Amendment;     2.   Copies of this Amendment executed by Company and the Credit Support Party.           B. Company shall pay to each Lender executing this Amendment on or before July 6, 2001, by the close of business, New York time, on July 9, 2001, a consent fee equal to 0.125% multiplied by the sum of (a) such Lender’s Term Loan Exposure plus (b) such Lender’s Revolving Loan Commitment.           C. On or before the Amendment Effective Date, all corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found acceptable by Administrative Agent, acting on behalf of Lenders, and its counsel shall be satisfactory in form and substance to Administrative Agent and such counsel, and Administrative Agent and such counsel shall have received all such counterpart originals or certified copies of such documents as Administrative Agent may reasonably request.           D. Requisite Lenders and Administrative Agent shall have executed and delivered copies of this Amendment to Administrative Agent. Section 4. REPRESENTATIONS AND WARRANTIES           In order to induce Lenders to enter into this Amendment and to amend the Credit Agreement and the other Loan Documents in the manner provided herein, Company and the Credit Support Party represent and warrant to each Lender that the following statements are true, correct and complete:           A. Corporate Power and Authority. Each of Company and the Credit Support Party has all requisite corporate power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement and the other Loan Documents as amended by this Amendment (the “Amended Agreements”). 5 --------------------------------------------------------------------------------           B. Authorization of Agreements. The execution and delivery of this Amendment and the performance of the Amended Agreements have been duly authorized by all necessary corporate action on the part of Company and the Credit Support Party.           C. No Conflict. The execution and delivery by Company and the Credit Support Party of this Amendment and the performance by Company and the Credit Support Party of the Amended Agreements does not and will not (i) violate any provision of any law or any governmental rule or regulation applicable to Company or any of its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Company or any of its Subsidiaries or any order, judgment or decree of any court or other agency of government binding on Company or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Company or any of its Subsidiaries, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of Company or any of its Subsidiaries or (iv) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of Company or any of its Subsidiaries.           D. Governmental Consents. The execution and delivery by Company and the Credit Support Party of this Amendment and the performance by Company and the Credit Support Party of the Amended Agreements does not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body.           E. Binding Obligation. This Amendment and the Amended Agreements have been duly executed and delivered by Company and the Credit Support Party and are the legally valid and binding obligations of Company and the Credit Support Party, enforceable against Company and the Credit Support Party in accordance with their 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 relating to enforceability.           F. Incorporation of Representations and Warranties From Credit Agreement. The representations and warranties contained in Section 5 of the Credit Agreement are and will be true, correct and complete in all material respects on and as of the 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, correct and complete 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 Potential Event of Default. Section 5. ACKNOWLEDGEMENT AND CONSENT           Company is a party to the certain Collateral Documents, pursuant to which Company has created Liens in favor of Agent on certain Collateral to secure the Obligations. The Credit Support Party is party to the Subsidiary Guaranty and certain Collateral Documents specified in the Credit Agreement, in each case as amended through the Amendment Effective Date, pursuant to which the Credit Support Party has (i) guarantied the Obligations pursuant to the Subsidiary Guaranty and (ii) granted a security interest in and pledged certain Collateral to Agent to secure the            6 -------------------------------------------------------------------------------- obligations of such Subsidiary under such Subsidiary Guaranty pursuant to such Collateral Documents. Company and the Credit Support Party are collectively referred to herein as the “Credit Support Parties and the Guaranties and Collateral Documents referred to above 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 the other Loan Documents and this Amendment and consents to the Credit Agreement as amended by the First Amendment and to the amendment of the Credit Agreement and the other Loan Documents 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 guaranty or secure, as the case may be, to the fullest extent possible the payment and performance of all “Obligations,” “Guarantied Obligations” and “Secured Obligations,” as the case may be (in each case as such terms are defined in the applicable Credit Support Document), including without limitation the payment and performance of all such “Obligations,” “Guarantied Obligations” or “Secured Obligations,” as the case may be, in respect of the Obligations of Company and the Credit Support Parties now or hereafter existing under or in respect of the Amended Agreements and the Notes defined therein.           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 represents and warrants that all representations and warranties contained in the Amended Agreements and the Credit Support Documents to which it is a party or otherwise bound are true, correct and complete in all material respects on and as of the 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, correct and complete in all material respects on and as of such earlier date.           Each Credit Support Party (other than Company) 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 Loan 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 Loan Document shall be deemed to require the consent of such Credit Support Party to any future amendments to the Credit Agreement. Section 6. MISCELLANEOUS           A. Reference to and Effect on the Credit Agreement and the Other Loan Documents.        (i) On and after the Amendment Effective Date, each reference in the Credit Agreement or the other Loan Documents amended hereby to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement or such other Loan Document shall mean and be a reference to the Amended Agreements. 7 --------------------------------------------------------------------------------        (ii) Except as specifically amended by this Amendment, the Credit Agreement and the other Loan 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, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of Agent or any Lender under, the Credit Agreement or any of the other Loan 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.           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 page intentionally left blank] 8 --------------------------------------------------------------------------------           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.           OXFORD HEALTH PLANS, INC           By:     --------------------------------------------------------------------------------     Name:     Title:               OXFORD BENEFIT MANAGEMENT, INC., as a Credit Support Party           By:     --------------------------------------------------------------------------------     Name:     Title: S-1 --------------------------------------------------------------------------------           CREDIT SUISSE FIRST BOSTON, individually and as Administrative Agent           By:     --------------------------------------------------------------------------------     Name:     Title: S-2 --------------------------------------------------------------------------------           --------------------------------------------------------------------------------           By:     --------------------------------------------------------------------------------     Name:     Title: S-3

QuickLinks -- Click here to rapidly navigate through this document November 15, 2001 DART 2000-1 DISTRIBUTION SUMMARY Collection Account Wire/Deposit to: --------------------------------------------------------------------------------   In consideration of: --------------------------------------------------------------------------------   In the amount of: --------------------------------------------------------------------------------   1.   Premier Auto Finance, Inc.   Reimburse Previous Advances   45,360.30           Excess Coverage   0.00   2.   Bank of New York   Indenture Trustee Fee   0.00   3.   Chase   Owner Trustee Fee   0.00   4.   Premier Auto Finance, Inc.   Servicing Fees   322,612.76           Late Fees   (19,417.73 )             --------------------------------------------------------------------------------           Total Servicing Fees   303,195.03   5.   Note Distribution Account   Note Interest   2,209,755.60   6.   Certificate Distribution Account   Certificate Interest   87,068.70   7.   Note Distribution Account   Principal Payable   23,434,743.81   8.   Certificate Distribution Account   Principal Payable   0.00   9.   Reserve Fund   Funding   0.00               --------------------------------------------------------------------------------   TOTAL AMOUNT WIRED/DEPOSITED:   26,080,123.44               --------------------------------------------------------------------------------   Reserve Account Wire/Deposit to: --------------------------------------------------------------------------------   In consideration of: --------------------------------------------------------------------------------   In the amount of: -------------------------------------------------------------------------------- 1.   Collection Account   Collection Shortfall   193,861.51             -------------------------------------------------------------------------------- TOTAL AMOUNT WIRED/DEPOSITED:   193,861.51             -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Randall S. Royer VP—Assistant Treasurer         -------------------------------------------------------------------------------- Matthew P. Romano SVP—Finance   November 15, 2001 9:47 AM Page 3 of 10 -------------------------------------------------------------------------------- Dealer Auto Receivables Owner Trust 2000-1 190,000,000.00   6.69% Dealer Auto Receivables Asset-Backed Notes, Class A-1 274,000,000.00   7.01% Dealer Auto Receivables Asset-Backed Notes, Class A-2 168,000,000.00   7.07% Dealer Auto Receivables Asset-Backed Notes, Class A-3 83,251,000.00   7.12% Dealer Auto Receivables Asset-Backed Notes, Class A-4 24,470,000.00   7.46% Dealer Auto Receivables Asset-Backed Notes, Class B 13,175,591.56   7.93% Dealer Auto Receivables Asset- Backed Certificates Monthly Report For the November 15, 2001 Distribution Date A   Calculation of Available Amounts             1   Available Principal (as defined in Article I of the Sale and Servicing Agreement)   $ 22,009,357.68                   --------------------------------------------------------------------------------       2   Available Interest (as defined in Article I of the Sale and Servicing Agreement)   $ 3,896,321.98                   --------------------------------------------------------------------------------       3   Available Amounts (l. plus 2.)   $ 25,905,679.66                   --------------------------------------------------------------------------------   B   Calculation of Principal Distributable Amount (as defined in Article I of the Sale and Servicing Agreement)   $ 23,434,743.81                   --------------------------------------------------------------------------------   C   Calculation of Note Monthly Principal Distributable Amount   $ 23,434,743.81                   --------------------------------------------------------------------------------       1   Note Percentage for such Distribution Date                 (a)   for each Distribution Date to but excluding the Distribution Date on which the principal amount of the Class B Notes is reduced to zero     100.00 %                 --------------------------------------------------------------------------------           (b)   after the principal amount of the Class B Notes have been reduced to zero     0.00 %                 --------------------------------------------------------------------------------       2   Principal Distributable Amount (from B)   $ 23,434,743.81                   --------------------------------------------------------------------------------       3   Note Monthly Principal Distributable Amount for                 (a)   Class A-1 Notes   $ 0.00                   --------------------------------------------------------------------------------           (b)   Class A-2 Notes   $ 23,434,743.81                   --------------------------------------------------------------------------------           (c)   Class A-3 Notes   $ 0.00                   --------------------------------------------------------------------------------           (d)   Class A-4 Notes   $ 0.00                   --------------------------------------------------------------------------------           (e)   Class B Notes   $ 0.00                   --------------------------------------------------------------------------------           (f)   Note Principal Carryover Shortfall   $ 0.00                   --------------------------------------------------------------------------------   D   Calculation of Note Monthly Interest Distributable Amount             1   Class A-1 Interest Rate     6.69 %                 --------------------------------------------------------------------------------       2   Class A-2 Interest Rate     7.01 %                 --------------------------------------------------------------------------------       3   Class A-3 Interest Rate     7.07 %                 --------------------------------------------------------------------------------   Page 4 of 10 --------------------------------------------------------------------------------     4   Class A-4 Interest Rate     7.12 %                 --------------------------------------------------------------------------------       5   Class B Interest Rate     7.46 %                 --------------------------------------------------------------------------------       6   Class A-1 Note Interest Distributable Amount   $ 0.00                   --------------------------------------------------------------------------------       7   Class A-2 Note Interest Distributable Amount   $ 573,877.84                   --------------------------------------------------------------------------------       8   Class A-3 Note Interest Distributable Amount   $ 989,800.00                   --------------------------------------------------------------------------------       9   Class A-4 Note Interest Distributable Amount   $ 493,955.93                   --------------------------------------------------------------------------------       10   Class B Note Interest Distributable Amount   $ 152,121.83                   --------------------------------------------------------------------------------       11   Aggregate Interest Carryover Shortfall for each Class for such Distribution Date   $ 0.00                   --------------------------------------------------------------------------------       12   Note Monthly Interest Distributable Amount (the sum of items D.6, D.7, D.8, D.9, D.10 and D.11)   $ 2,209,755.60                   --------------------------------------------------------------------------------   E   Calculation of Note Distributable Amount (sum of C.3 plus D.12.)   $ 25,644,499.41                   --------------------------------------------------------------------------------   F   Calculation of Certificate Principal Distributable Amount             1   Certificate Balance   $ 13,175,591.56                   --------------------------------------------------------------------------------       2   Principal Distributable Amount   $ 0.00                   --------------------------------------------------------------------------------       3   Certificate Percentage for each respective Distribution Date             3   (a)   for each Distribution Date to but excluding the Distribution Date on which the Principal Amount of the Class B Notes is reduced to zero     0.00 %                 --------------------------------------------------------------------------------       3   (b)   on the Distribution Date on which the Principal Amount of the Class B Notes is reduced to zero                         --------------------------------------------------------------------------------       3   (c)   thereafter     100.00 %                 --------------------------------------------------------------------------------       4   (a)   Principal Distributable Amount multiplied by the Certificate Percentage for such Distribution Date   $ 0.00                   --------------------------------------------------------------------------------       4   (b)   Certificate Principal Carryover Shortfall for such Distribution Date   $ 0.00                   --------------------------------------------------------------------------------       5   Certificate Principal Distributable Amount (the sum of 4.(a) and 4.(b))   $ 0.00                   --------------------------------------------------------------------------------   G   Calculation of Certificate Interest Distributable Amount             1   Certificate Pass-Through Rate     7.93 %                 --------------------------------------------------------------------------------       2   (a)   Certificate Monthly Interest Distributable Amount   $ 87,068.70                   --------------------------------------------------------------------------------       2   (b)   Certificate Interest Carryover Shortfall for such Distribution Date   $ 0.00                   --------------------------------------------------------------------------------       3   Certificate Interest Distributable Amount (sum of 2.(a) and 2.(b))   $ 87,068.70                   --------------------------------------------------------------------------------   H   Calculation of Certificate Distributable Amount (sum of F.5 and G.3)   $ 87,068.70                   --------------------------------------------------------------------------------   Page 5 of 10 -------------------------------------------------------------------------------- I   Fees             1   The Monthly Servicing Fee for such Distribution Date (1/12 of the product of 1% and the Aggregate Principal Balance of the Contracts as of the beginning of the preceding Distribution Date)     322,612.76                   --------------------------------------------------------------------------------       2   Late Payment Penalty Fees for such Distribution Date   $ (19,417.73 )                 --------------------------------------------------------------------------------       3   Extension Fees for such Distribution Date   $ 0.00                   --------------------------------------------------------------------------------       4   Indenture Trustee Fee for such Distribution Date   $ 0.00                   --------------------------------------------------------------------------------       5   Owner Trustee Fee for such Distribution Date   $ 0.00                   --------------------------------------------------------------------------------   J   Calculation of the Available Amounts for such Distribution Date             1   The amount of funds deposited into the Collection Account pursuant to Section 5.05(b) of the Sale and Servicing Agreement with respect to the related Due Period   $ 25,886,261.93                   --------------------------------------------------------------------------------           a   All amounts received by the Indenture Trustee or the Servicer with respect to principal and interest on the Contracts, as well as Late Payment Penalty Fees and Extensions Fees for related Due Period   $ 24,711,510.66                   --------------------------------------------------------------------------------           b   All Net Liquidation Proceeds   $ 1,153,647.41                   --------------------------------------------------------------------------------           c   The aggregate of the Repurchase Prices for Contracts required to be repurchased by the Depositor as described in Section 7.05 of the Sale and Servicing Agreement   $ 0.00                   --------------------------------------------------------------------------------           d   All Advances made by Servicer pursuant to Section 7.02 of the Sale and Servicing Agreement   $ 0.00                   --------------------------------------------------------------------------------           e   All amounts paid by the Seller in connection with an optional repurchase of the Contracts described in Section 7.07 of the Sale and Servicing Agreement   $ 0.00                   --------------------------------------------------------------------------------           f   All amounts received in respect of interest, dividends, gains, income and earnings on investments of funds in the Trust Accounts as contemplated in Section 5.05(b) of the Sale and Servicing Agreement   $ 21,103.86                   --------------------------------------------------------------------------------           g   Total amount of funds deposited into the Collection Account pursuant to Section 5.05(b) (the sum of a. through g.)   $ 25,886,261.93                   --------------------------------------------------------------------------------       2   The amount of funds permitted to be withdrawn from the Collection Account pursuant to clauses (i) through (iv) of Section 7.03(a) of the Sale and Servicing Agreement with respect to related Due Period   $ 348,555.33                   --------------------------------------------------------------------------------           a   Amounts to be paid to the Servicer as the Reimbursement Amount in accordance with Section 7.02 of the Sale and Servicing Agreement   $ 45,360.30                   --------------------------------------------------------------------------------           b   Amounts to be paid to the Servicer in respect to the Servicing Fee for the related Due Period     303,195.03                   --------------------------------------------------------------------------------   Page 6 of 10 --------------------------------------------------------------------------------         c   Amounts to be paid to the Indenture Trustee in respect of the Indenture Trustee Fee for the related Due Period   $ 0.00                   --------------------------------------------------------------------------------           d   Amounts to be paid to the Owner Trustee in respect of Owner Trustee Fee for related Due Period   $ 0.00                   --------------------------------------------------------------------------------           e   Total amount of funds permitted to be withdrawn from the Collection Account pursuant to clauses (i) through (iv) Section 7.03(a) of the Sale and Servicing Agreement with respect to the related Due Period (sum of a. through d.)   $ 348,555.33                   --------------------------------------------------------------------------------       3   The Available Amounts (not including amounts from Reserve Fund Account) for such Distribution Date available to pay Note Distributable Amounts and Certificate Distributable Amounts (1(g) minus 2(e))   $ 25,537,706.60                   --------------------------------------------------------------------------------   K   The shortfall of Available Amounts for such Distribution Date to pay either the Note Distributable Amount or the Certificate Distributable Amount (the Available Amounts for such Distribution Date minus the sum of the Note Distributable Amount as set forth in E. and the Certificate Distributable Amount as set forth in H.)   $ 193,861.51                   --------------------------------------------------------------------------------   L   The amount to be withdrawn from the Reserve Fund on such Distribution Date to cover the Note Interest Distributable Amount   $ 0.00                   --------------------------------------------------------------------------------   M   The amount to be withdrawn from the Reserve Fund on such Distribution Date to cover the Certificate Interest Distributable Amount   $ 0.00                   --------------------------------------------------------------------------------   N   The amount to be withdrawn from the Reserve Fund on such Distribution Date to cover the Note Principal Distributable Amount   $ 193,861.51                   --------------------------------------------------------------------------------   O   The amount to be withdrawn from the Reserve Fund on such Distribution Date to cover the Certificate Principal Distributable Amount   $ 0.00                   --------------------------------------------------------------------------------   P   Interest Earnings on the Reserve Fund.   $ 32,121.28                   --------------------------------------------------------------------------------   Q   The amount on deposit in the Reserve Fund after giving effect to deposits and withdrawals therefrom on such Distribution Date     23,265,226.62                   --------------------------------------------------------------------------------   R   The Specified Reserve Fund Amount for such Distribution Date will be an amount equal to the lesser of (i) the aggregate unpaid principal balance of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the Class B Notes and the Certificate Balance as of such Distribution Date, and (ii) the greater of:             (a)   4.25% of the aggregate unpaid principal balance of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the Class B Notes and the Certificate Balance on such Distribution Date, except that if a Reserve Fund Trigger Event shall have occurred and be continuing on such Distribution Date, then the percentage of the aggregate unpaid principal balance of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the Class B Notes and the Certificate Balance referred to in this clause (a), shall be equal to 6.50%; and             (b)   1.00% of the Aggregate Principal Balance as of the Cutoff Date.     23,640,536.75                   --------------------------------------------------------------------------------   Page 7 of 10 -------------------------------------------------------------------------------- S   The Pool Factor             Factor immediately Before such Distribution Date --------------------------------------------------------------------------------   Factor immediately After such Distribution Date -------------------------------------------------------------------------------- Class A-1 Note   1   0.0000000   7   0.0000000         --------------------------------------------------------------------------------       -------------------------------------------------------------------------------- Class A-2 Note   2   0.3585355   8   0.2730072         --------------------------------------------------------------------------------       -------------------------------------------------------------------------------- Class A-3 Note   3   1.0000000   9   1.0000000         --------------------------------------------------------------------------------       -------------------------------------------------------------------------------- Class A-4 Note   4   1.0000000   10   1.0000000         --------------------------------------------------------------------------------       -------------------------------------------------------------------------------- Class B Note   5   1.0000000   11   1.0000000         --------------------------------------------------------------------------------       -------------------------------------------------------------------------------- Certificate   6   1.0000000   12   1.0000000         --------------------------------------------------------------------------------       -------------------------------------------------------------------------------- T   Delinquent Contracts             1   31-60 Days   1,364   $ 13,324,830.69                       --------------------------------------------------------------------------------   --------------------------------------------------------------------------------       2   61-90 Days   278   $ 2,830,199.52                       --------------------------------------------------------------------------------   --------------------------------------------------------------------------------       3   91 or More Days   137   $ 1,373,519.85                       --------------------------------------------------------------------------------   --------------------------------------------------------------------------------               Total Delinquent Receivables   1,779   $ 17,528,550.06               61+ Days Delinquencies as Percentage of Receivables         1.16 %             Delinquency Ratio for Second Preceding Collection Period         1.30 %             Delinquency Ratio for Preceding Collection Period         1.35 %             Delinquency Ratio for Current Collection Period         1.16 %             Average Delinquency Ratio   (Reserve Fund Trigger Event >= 2.0%)     1.27 % U   Defaulted Contracts             1   Total Defaulted Contracts for the Due Period   265     2,481,597.21                           --------------------------------------------------------------------------------       2   Identity (attach)                 3   Liquidation proceeds for the Due Period       $ 1,227,703.03                           --------------------------------------------------------------------------------       4   Liquidation expenses for the Due Period       $ 74,055.62                           --------------------------------------------------------------------------------       5   Net Liquidation Proceeds for the Due Period       $ 1,153,647.41                           --------------------------------------------------------------------------------       6   Net Liquidation Losses for the Due Period       $ 1,327,949.80                           --------------------------------------------------------------------------------               Pool Balance at Beginning of Collection Period       $ 387,135,309.21               Net Loss Ratio for Current Collection Period         4.12 %             Net Loss Ratio for Second Preceding Collection Period         3.70 %             Net Loss Ratio for Preceding Collection Period         4.14 %             Net Loss Ratio for Current Collection Period         4.12 %             Average Net Loss Ratio   (Reserve Fund Trigger Event >= 2.5%)     3.99 % Page 8 of 10 -------------------------------------------------------------------------------- V   Advances             1   Unreimbursed Advances prior to such Distribution Date       $ 249,446.16                           --------------------------------------------------------------------------------       2   Amount paid to Servicer on such Distribution Date to reimburse Servicer for such unreimbursed Advances       $ 150,887.65                           --------------------------------------------------------------------------------       3   Amount of Delinquent Interest for the related Due Period       $ 105,527.35                           --------------------------------------------------------------------------------       4   Amount of new Advances on such Distribution Date (if such amount is less than the amount of Delinquent Interest, attach the certificate required by Section 7.02 of the Sale and Servicing Agreement)       $ (45,360.30 )                         --------------------------------------------------------------------------------       5   Total of unreimbursed Advances after new Advances on such Distribution Date       $ 204,085.86                           --------------------------------------------------------------------------------   W   Repurchased Contracts             1   Number of Contracts to be repurchased pursuant to Section 7.07 of the Sale and Servicing Agreement         0                           --------------------------------------------------------------------------------       2   Principal Amount of such Contracts       $ 0.00                           --------------------------------------------------------------------------------       3   Related Repurchase Price of such Contracts       $ 0.00                           --------------------------------------------------------------------------------   X   Contracts             1   Number of Contracts as of beginning of Due Period         41,912                           --------------------------------------------------------------------------------       2   Principal Balance of Contracts as of beginning of Due Period         387,135,309.21                           --------------------------------------------------------------------------------       3   The weighted average Contract Rate of the Contracts as of the beginning of the Due Period         11.63 %                         --------------------------------------------------------------------------------       4   The weighted average remaining term to maturity of the Contracts as of the beginning of the Due Period         35.73                           --------------------------------------------------------------------------------       5   Number of Contracts as of end of Due Period         40,269                           --------------------------------------------------------------------------------       6   Principal Balance of Contracts as of end of Due Period         363,700,565.40                           --------------------------------------------------------------------------------       7   The weighted average Contract Rate of the Contracts as of the end of the Due Period         11.64 %                         --------------------------------------------------------------------------------       8   The weighted average remaining term to maturity of the Contracts as of the end of the Due Period         34.98                           --------------------------------------------------------------------------------   Page 9 of 10 -------------------------------------------------------------------------------- Net Loss Addendum Section "U" of Servicer Certificate For the Period Ending 10/31/01 Servicing Report Dated 11/15/01   Reported 8K --------------------------------------------------------------------------------   Actual* Loss -------------------------------------------------------------------------------- Net Loss Ratio for Current Month   4.12%   3.69% Net Loss Ratio for Previous Month   4.14%   3.01% Net Loss Ratio for 2nd Previous Month   3.70%   2.51% Net Loss Ratio Three Month Average   3.99%   3.07%     The difference between the Reported 8K and Actual Loss column is driven by the difference in the definition of a Defaulted Contract between the DART 2000-1 Servicing Agreement and the servicer's normal procedures as described in the Prospectus. Generally the servicer charges-off a contract: 1)when the servicer deems the contract uncollectible; 2)if the financed vehicle is not repossessed, during the month when 5% or more of an installment due under the contract becomes more than 120 days past due; 3)if the financed vehicle is repossessed, when all sale proceeds, insurance claims and refunds of financed insurance policies and extended warranties have been received; or 4)when an obligor files for bankruptcy and the servicer determines that its loss is known. The definition of a Defaulted Contract in the DART 2000-1 Sale And Servicing Agreement states: "Defaulted Contract" means a Contract with respect to which there has occurred one or more of the following: (i) all or part of a scheduled payment under the Contract is 120 days or more than 120 days past due and the Servicer has not repossessed the related Financed Vehicle, (ii) the Servicer, has in accordance with its customary servicing procedures, determined that eventual payment in full is unlikely and has either repossessed and liquidated the related Financed Vehicle or repossessed and held the related Financed Vehicle in its repossessed inventory for 90 days, whichever occurs first; provided, however, in no event shall the period of time referred to in clauses (i) or (ii) extend for a combined period of longer than 120 days, or (iii) the relevant Obligor has suffered an Insolvency Event.     Two differences between the two standards account for the change in the Net Loss Ratio reported in the revised Servicer Certificate from the Net Loss Ratio calculated in accordance with the servicer's customary servicing procedures: 1)Under the DART 2000-1 Servicing Agreement the servicer must recognize the entire amount of a bankrupt account as a loss when the obligor files for bankruptcy rather than when the seller determines the actual amount of loss. Although prior experience does not necessarily predict future performance, in the servicer's experience, a majority of the accounts that file bankruptcy are collected. 2)Under the DART 2000-1 Servicing Agreement repossessions in inventory are considered to be a loss if the contract is 120 days delinquent. Traditionally the Servicer would not consider repossessions in inventory to be a loss until the car has been sold and all liquidation proceeds have been recovered and the loss is known. -------------------------------------------------------------------------------- *Losses as determined according to the Servicer's customary servicing procedures. Page 10 of 10 -------------------------------------------------------------------------------- QuickLinks November 15, 2001 DART 2000-1 DISTRIBUTION SUMMARY Collection Account Reserve Account Dealer Auto Receivables Owner Trust 2000-1 Monthly Report For the November 15, 2001 Distribution Date

EXHIBIT 10.20 EXECUTIVE MANAGEMENT INCENTIVE PLAN (Effective January 1, 2000) SECTION 1. Purpose.           The purpose of the Executive Management Incentive Plan (the "Plan") is to advance the interest of Coca-Cola Enterprises Inc. (the "Company") by providing senior officers of the Company with incentive to assist the Company in meeting and exceeding its business goals. SECTION 2. Administration.           The Plan shall be administered by a Compensation Committee (the "Committee") appointed by the Board of Directors of the Company (the "Board") from among its members and shall be comprised of not fewer than two members who shall be "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), and the regulations thereunder.           The Committee may, subject to the provisions of the Plan, establish such rules and regulations or take such action as it deems necessary or advisable for the proper administration of the Plan. Each interpretation made or action taken pursuant to the Plan shall be final and conclusive for all purposes and binding upon all persons, including, but not limited to, the Company, the Committee, the Board, the affected Participants (as defined in Section 3), and their respective successors in interest.           In addition to such other rights of indemnification as they have as directors or as members of the Committee, the members of the Committee shall be indemnified by the Company against reasonable expenses (including, but not limited to, attorneys' fees) incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal, to which they or any of them may be a party by reason of any action taken or failure to act in connection with the Plan, and against all amounts paid by them in settlement thereof (provided such settlement is approved to the extent required by and in the manner provided by the Certificate of Incorporation or Bylaws of the Company relating to indemnification of directors) or paid by them in satisfaction of a judgment in any such action, suit, or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee member or members did not act in good faith and in a manner he, she or they reasonably believed to be in or not opposed to the best interest of the Company. SECTION 3. Eligibility.           Cash awards ("Awards") may be made under this Plan to persons who are senior officers of the Company and its Subsidiaries ("Participants").           "Subsidiary" shall mean any corporation or other business organization in which the Company owns, directly or indirectly, 20% or more of the voting stock or capital during any Performance Period. SECTION 4. Performance Goal Criteria.           For each calendar year (a "Performance Period") designated by the Committee as a Performance Period for which an Award will be made, the Committee shall establish specific targets for the Company's actual operating income for the Performance Period, as compared to its budgeted operating income ("Budgeted OI") for the Performance Period. Awards under the Plan shall be paid solely on account of the attainment of these targets, which shall be preestablished in accordance with Section 162(m) of the Internal Revenue Code and regulations thereunder. For the purposes of the Plan, operating income is determined in the same manner as set forth in the Company's audited financial statements for the Performance Period, normalized for acquisitions, divestitures and other significant financial events. SECTION 5. Calculation of Awards.           The Committee shall establish Award levels, described as percentages by which a Participant's annual base salary shall be multiplied, to determine the amount of an Award payable upon the attainment of specified targets described in Section 4. No Award under the Plan shall exceed 115% percent of a Participant's annual base salary. An Award paid to a Participant shall be calculated using the annual base salary in effect on December 31 of the year for which the Award is made. Notwithstanding the preceding sentence, the annual base salary used to calculate an Award paid to a Participant (under this Section 5 or Section 6) may not exceed such Participant's annual base salary in effect on January 1 of any Performance Period for which the Award is made, increased by 10%. SECTION 6. Prorated Awards.           (i) A person hired or promoted into a position identified in Section 3 ("Eligible Position") during a Performance Period shall receive a prorated Award for the period of time the person was employed in an Eligible Position, using the Participant's base salary in effect on December 31 of the Performance Period for which the Award is made.           (ii) A Participant who is transferred from one Eligible Position to another Eligible Position during a Performance Period shall receive an Award that is prorated for the period of time the Participant was employed within each Eligible Position, using the Participant's annual base salary in effect on December 31 of the Performance Period for which the Award is made.           (iii) A Participant who is not employed in an Eligible Position on the last day of the Performance Period due to the Participant's transfer to a position with the Company or a Subsidiary that is not an Eligible Position shall receive an Award that is prorated for the period of time the Participant was employed in an Eligible Position, using the Participant's annual salary on the last day that the Participant is employed in that Eligible Position.           (iv) A Participant whose employment with the Company or any Subsidiary terminates prior to the last day of the Performance Period shall not receive any Award under the Plan unless the reason for such termination was the Participant's death, disability, or retirement. In the event a Participant terminates on account of such circumstances, the Participant shall receive a prorated Award determined as if the Participant transferred to a position within the Company that is ineligible for participation in the Plan as of the date of such termination.           (v) For purposes of this Section 6:                 (a) "Retirement" means a Participant's voluntary termination of employment on a date which is on or after the earliest date on which such Participant would be eligible for an immediately payable benefit pursuant to the terms of the defined benefit pension plan sponsored by the Company or a Subsidiary in which the Participant participates. If the Participant does not participate in such a plan, the date shall be determined as if the Participant participated in the Company's defined benefit plan covering the majority of its non-bargaining employees in the United States.                 (b) "Disability" shall be determined according to the definition of "total and permanent disability," in effect at the time of the determination, in the defined benefit plan sponsored by the Company or a Subsidiary in which the Participant participates. If the Participant does not participate in such a plan or such plan does not define "disability," "disability" shall mean the Participant's inability, by reason of a medically determinable physical or mental impairment, to engage in any substantial gainful activity, which condition, in the opinion of a physician approved of by the Committee, is expected to have a duration of not less than one year.                 (c) "Prorated" means the determination of the amount of an Award for partial participation in a particular Eligible Position, which amount is determined according to the nearest whole number of months in which a Participant was employed in the relevant Eligible Position(s) during the Performance Period for which the Award is made.                 (d) For purposes of this Section 6, a Participant's employment with the Company or any Subsidiary will be deemed not to be a termination of employment if the Participant's reason for termination is due to immediate employment with any other Subsidiary or any Related Company; however, in such event, the Participant shall receive a prorated Award as if the Participant transferred to a position that is not eligible for participation under the Plan. The term "Related Company" shall include The Coca-Cola Company or any corporation or business entity in which The Coca-Cola Company owns, directly or indirectly, 20% or more of the voting stock or capital if (i) such company is a party to an active reciprocity agreement with the Company and (ii) the Company has assented to the Participant's subsequent employment. SECTION 7. Discretion of the Compensation Committee.            All Awards shall be made solely on the basis of the performance goals set forth by the Committee pursuant to Section 4 and only in accordance with the standards set forth in Section 5. The Committee shall have no authority to increase the amount of an Award payable to a Participant that would otherwise be due upon the attainment of the performance goal. The Committee shall, however, have the authority to reduce or eliminate any Award under the Plan. SECTION 8. Committee Certification.           Prior to payment of an Award, the Committee shall certify in writing that the performance targets in Section 4 have, in fact, been satisfied.      SECTION 9. Amendments, Modification and Termination of the Plan.           The Board or the Committee may terminate the Plan in whole or in part, may suspend the Plan in whole or in part from time to time, and may amend the Plan from time to time to correct any defect or supply any omission or reconcile any inconsistency in the Plan or in the Awards made thereunder that does not constitute the modification of a material term of the Plan. Any such action may be taken without the approval of the share owners unless the Committee determines that the approval of share owners would not be necessary to retain the benefits of Section 162(m) of the Internal Revenue Code. SECTION 10. Governing Law.           The Plan and all determinations made and actions taken pursuant thereto shall be governed by the laws of the State of Georgia and construed in accordance therewith.

Exhibit 10.22(c) Supplemental Agreement No. 3 to Purchase Agreement No. 2060 between The Boeing Company and Continental Airlines, Inc.   Relating to Boeing Model 767-400ER Aircraft   THIS SUPPLEMENTAL AGREEMENT, entered into as of October 31, 2000, by and between THE BOEING COMPANY, a Delaware corporation with its principal office in Seattle, Washington, (Boeing) and Continental Airlines, Inc., a Delaware corporation with its principal office in Houston, Texas (Customer); WHEREAS, the parties hereto entered into Purchase Agreement No. 2060 dated October 10, 1997, (the Purchase Agreement) relating to Boeing Model 767-400ER aircraft, (Aircraft); and WHEREAS, Boeing and Customer have mutually agreed to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]; and WHEREAS, Boeing and Customer have mutually agreed to correct an error in the engine price; and WHEREAS, Boeing and Customer have mutually agreed to revise the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]; and WHEREAS, Boeing and Customer have mutually agreed to add a previously missing option to the list of optional features; and WHEREAS, Boeing and Customer have mutually agreed to amend the Purchase Agreement to incorporate the effect of these and certain other changes; NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties agree to amend the Purchase Agreement as follows: 1. Table of Contents: Remove and replace, in its entirety, the "Table of Contents", with the "Table of Contents" attached hereto, to reflect the changes made by this Supplemental Agreement No. 3. 2. Tables: Remove and replace, in its entirety, "Table 1, Aircraft Delivery, Description, Price and Advance Payments" with the revised "Table 1, Aircraft Delivery, Description, Price and Advance Payments", attached hereto, to reflect the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] and the engine price correction. 3. Exhibits: Remove and replace, in its entirety, Exhibit A with the revised Exhibit A (attached hereto) to reflect an additional optional feature. 4. Letter Agreements: Remove and replace, in its entirety, Letter Agreement 6-1162-GOC-084 [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] with the revised Letter Agreement 6-1162-GOC-084R1, attached hereto, to reflect a revision to the engine model CF6-80C2B8F.   The Purchase Agreement will be deemed to be supplemented to the extent herein provided as of the date hereof and as so supplemented will continue in full force and effect.   EXECUTED IN DUPLICATE as of the day and year first written above.     THE BOEING COMPANY Continental Airlines, Inc.       By: /s/ J. A. McGarvey  By: /s/ Gerald Laderman   Its: Attorney-In-Fact   Its: Senior Vice President - Finance TABLE OF CONTENTS   ARTICLES Revised By: 1. Quantity, Model and Description 2. Delivery Schedule 3. Price 4. Payment 5. Miscellaneous   TABLE 1. Aircraft Information Table SA No. 3   EXHIBIT A. Aircraft Configuration SA No. 3 B. Aircraft Delivery Requirements and Responsibilities   SUPPLEMENTAL EXHIBITS BFE1. BFE Variables CS1. Customer Support Variables EE1. Engine Escalation/Engine Warranty and Patent Indemnity [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]   TABLE OF CONTENTS   LETTER AGREEMENTS Revised By: 2060-1 not used 2060-2 Demonstration Flights 2060-3 Spares Initial Provisioning 2060-4 Flight Crew Training Spares 2060-5 Escalation Sharing 6-1162-JMG-165 Installation of Cabin Systems Equipment SA No. 2     TABLE OF CONTENTS   CONFIDENTIAL LETTER AGREEMENTS Revised By: 6-1161-GOC-084R1 [CONFIDENTIAL MATERIAL SA No. 3 OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] 6-1162-GOC-085 [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] 6-1162-GOC-086 Special Matters           SUPPLEMENTAL AGREEMENTS Dated as of: Supplemental Agreement No. 1 December 18, 1997 Supplemental Agreement No. 2 June 8, 1999 Supplemental Agreement No. 3 October 31, 2000   Table 1 to Purchase Agreement No. 2060 Aircraft Delivery, Description, Price and Advance Payments   [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] AIRCRAFT CONFIGURATION between THE BOEING COMPANY and Continental Airlines, Inc.   Exhibit A to Purchase Agreement Number 2060 AIRCRAFT CONFIGURATION Dated  October 31, 2000 relating to BOEING MODEL 767-400ER AIRCRAFT   The Detail Specification is Boeing Detail Specification D019T001-CAL-64E1 dated as of even date herewith. Such Detail Specification will be comprised of Boeing Configuration Specification D019T003, revision A, dated March 13, 1997 as amended to incorporate the Options listed below, including the effects on Manufacturer's Empty Weight (MEW) and Operating Empty Weight (OEW). Such Options are set forth in Boeing Document D019TCR1-CAL-64E1. As soon as practicable, Boeing will furnish to Buyer copies of the Detail Specification, which copies will reflect such Options. The Aircraft Basic Price reflects and includes all effects of such Options, except such Aircraft Basic Price does not include the price effects of any Buyer Furnished Equipment or Seller Purchased Equipment. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]   October 31, 2000 6-1162-GOC-084R1     Continental Airlines, Inc. 1600 Smith Houston, TX 77002     Subject: [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]   Reference: Purchase Agreement No. 2060 (the Purchase Agreement) between The Boeing Company (Boeing) and Continental Airlines, Inc. (Customer) relating to Model 767-400ER aircraft (the Aircraft)   Ladies and Gentlemen: This Letter Agreement amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement. This Letter Agreement supersedes and replaces in its entirety Letter Agreement 6-1162-GOC-084 dated October 10, 1997. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Boeing and Customer understand that certain information contained in this Letter Agreement, including any attachments hereto, are considered by both parties to be confidential. Boeing and Customer agree that each party will treat this Letter Agreement and the information contained herein as confidential and will not, without the other party's prior written consent, disclose this Letter Agreement or any information contained herein to any other person or entity except as may be required by applicable law or governmental regulations.     Very truly yours, THE BOEING COMPANY   By     /s/ J. A. McGarvey       Its           Attorney-In-Fact              ACCEPTED AND AGREED TO this Date: October  31, 2000 Continental Airlines, Inc.   By   /s/ Gerald Laderman             Its Senior Vice President - Finance  Attachment to Letter Agreement No. 6-1162-GOC-084R1 CF6-80C2B8F Engines Page 1   [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Exhibit 10.2 PROXICOM, INC. AMENDED AND RESTATED 1996 STOCK OPTION PLAN       Proxicom, Inc., a Delaware corporation (the “Company”), sets forth herein the terms of the 1996 Stock Option Plan (the “Plan”) as follows: 1. Purpose       Under the Plan, Awards may be granted to Eligible Employees and Eligible Nonemployees to purchase shares of the Company’s capital stock. The Plan is designed to enable the Company to attract, retain and motivate its Employees, consultants and others by providing for or increasing the proprietary interests of such persons in the Company. 2. Definitions       For purposes of interpreting the Plan and related documents (including Agreements), the following definitions shall apply:       2.1. “Affiliate” means the Company and any company or other trade or business that is controlled by or under common control with the Company, determined in accordance with the principles of Section 414(b) and 414(c) of the Code and the regulations thereunder, or is an affiliate of the Company within the meaning of Rule 405 of Regulation C under the Securities Act.       2.2. “Agreement” means the Stock Option Agreement under which the Grantee accepts the Award terms and conditions and receives an Award pursuant to the Plan.       2.3. “Annual Incentive Award” means a conditional right granted to a Grantee under Section 30 hereof to receive a cash payment, Common Stock or other Award after the end of a specified fiscal year (or such other period as determined by the Committee).       2.4. “Award” means individually, collectively or in tandem, an incentive award granted under the Plan, whether in the form of Options, SARs, Restricted Stock Awards, or performance shares, or such other form and subject to such terms as the Committee may determine.       2.5. “Award Price” means the purchase price for each share of Common Stock subject to an Award.       2.6. “Board” means the Board of Directors of the Company.       2.7. “Code” means the Internal Revenue Code of 1986, as amended. Any section thereof referenced in the Plan or an Agreement shall include the rules and regulations thereunder, and any successor provisions thereto.       2.8. “Committee” means the Compensation Committee of the Board, which must consist of no fewer than two members of the Board who satisfy the definition under Rule 16b-3 of the Exchange Act for “nonemployee director”.       2.9. “Common Stock” means common stock, par value $.01, issued by the Company.       2.10. “Company” means Proxicom, Inc., a Delaware corporation, any Affiliates and any other entity as determined by the Committee. -7- --------------------------------------------------------------------------------       2.11 “Covered Employee” means a Grantee who is a Covered Employee within the meaning of Section 162(m)(3) of the Code.       2.12. “Effective Date” means August 26, 1996, the date of adoption of the Plan by the Board.       2.13. “Eligible Employee” means any Employee of the Company who the Committee selects to receive an Award.       2.14. “Eligible Nonemployee” means any former Employee, consultant or advisor to the Company who the Committee selects to receive an Award.       2.15. “Employee” means, for the purposes of the Plan, an individual who is an employee of the Company.       2.16. “Employer” means the Company.       2.17. “Exchange Act” means the Securities Exchange Act of 1934, as now in effect or as hereafter amended. Any section thereof referenced in the Plan or an Agreement shall include the rules and regulations thereunder, and any successor provisions thereto.       2.18. “Fair Market Value” means the value of each share of Common Stock subject to the Plan determined as follows: (a) if on the Grant Date or other determination date the shares of Common Stock are listed on an established national or regional stock exchange, are admitted to quotation on the National Association of Securities Dealers Automated Quotation System, or are publicly traded on an established securities market, the Fair Market Value of the shares of Common Stock shall be the closing price of the shares of Common Stock on such exchange or in such market (the highest such closing price if there is more than one such exchange or market) on the trading day immediately preceding the Grant Date or such other determination date (or if there is no such reported closing price, the Fair Market Value shall be the mean between the highest bid and lowest asked prices or between the high and low sale prices on such trading day); or (b) if no sale of the shares of Common Stock is reported for such trading day, on the next preceding day on which any sale shall have been reported. If the shares of Common Stock are not listed on such an exchange, quoted on such System or traded on such a market, Fair Market Value shall be determined by the Board or Committee in good faith.       2.19. “Grant Date” means for a particular Award (i) the date as of which the Committee approves the Award or (ii) any other date specified by the Committee, if any.       2.20. “Grantee” means an individual to whom one or more Awards have been granted.       2.21. “Incentive Stock Option” or “ISO” means an incentive stock option within the meaning of section 422 of the Code. Any Option that is not specifically designated as an Incentive Stock Option shall under no circumstances be considered an Incentive Stock Option.       2.22. “Nonqualified Stock Option” means any Option that does not qualify under section 422 of the Code.       2.23. “Option” means an option granted by the Company to purchase Common Stock pursuant to the provisions of the Plan, including ISOs, Nonqualified Stock Options and Reload Options.       2.24. “Option Period” means the period during which Options may be exercised as defined in section 13. -8- --------------------------------------------------------------------------------       2.25. “Option Term” means the period defined under section 13 herein.       2.26. “Performance Award” means a conditional right granted to a Grantee under Section 30 hereof to receive cash payments, Common Stock or other Awards during a designated time period of up to 10 years.       2.27. “Plan” means the Proxicom, Inc. 1996 Stock Option Plan, as amended.       2.28. “Publicly Traded” means that time when the shares of Common Stock are listed on an established national or regional stock exchange, are admitted to quotation on the National Association of Securities Dealers Automated Quotation System, or are publicly traded on an established securities market.       2.29. “Reload Option” means the right to receive a further Option for a number of shares of Common Stock surrendered by the Grantee upon exercise of the original Option.       2.30. “Restricted Period” means the period of time from the date of grant of Restricted Stock until the lapse of restrictions attached thereto under the terms of the Agreement granting such Restricted Stock, pursuant to the provisions of the Plan or by action of the Committee.       2.31. “Restricted Stock” shall mean an Award granted by the Committee entitling the Grantee to acquire, at no cost or for a purchase price determined by the Committee at the time of grant, shares of Common Stock which are subject to restrictions in accordance with the provisions hereof.       2.32. “Securities Act” means the Securities Act of 1933, as now in effect or as hereafter amended. Any section thereof referenced in the Plan or an Agreement shall include the rules and regulations thereunder, and any successor provisions thereto.       2.33. “Stock Appreciation Right” or “SAR” means a grant entitling the Grantee to receive an amount in cash or shares of Common Stock or a combination thereof having a value equal to (or if the Committee shall so determine at the time of a grant, less than) the excess of the Fair Market Value of a share of Common Stock on the date of exercise over the Fair Market Value of a share of Common Stock on the date of grant (or over the Award Price, if the SAR was granted in tandem with an Option), multiplied by the number of shares with respect to which the SAR shall have been exercised, with the Committee having sole discretion to determine the form or forms of payment at the time of grant of the SAR.       2.34. ‘’Stock Awards” means any Award which is in the form of Restricted Stock and any outright grants of Common Stock approved by the Committee pursuant to the Plan.       2.35. “Stockholder” means a holder of record of at least one share of the voting stock of the Company.       2.36. “Termination of Employment” means that event when a person is no longer employed by the Company or any Affiliate as an employee, advisor, consultant or otherwise. The Committee may in its discretion determine (a) whether any leave of absence constitutes a termination of employment for purposes of the Plan; (b) the impact, if any, of any such leave of absence on awards theretofore made under the Plan; and (c) when a change in a nonemployee’s association with the Company constitutes a termination of employment for purposes of the Plan. Such determinations of the Committee shall be final, binding and conclusive. 3. Administration 3.1 Administration of the Plan -9- --------------------------------------------------------------------------------       Prior to the time that the securities of the Company become Publicly Traded, the Plan shall be administered by the Board (unless and until the Board appoints the Committee and the members thereof to administer the Plan), in which case the term “Committee” when used herein with respect to the administration of the Plan shall be deemed to mean the Board. After the securities of the Company become Publicly Traded, the Plan shall be administered by the Committee. 3.2 Scope of Authority       The Committee shall have the full power and authority to take all actions and to make all determinations required or provided for under the Plan, any Award granted or Agreement entered into hereunder, and all such other actions and determinations not inconsistent with the specific terms and provisions of the Plan deemed by the Committee to be necessary or appropriate to the administration of the Plan, any Award or Agreement entered into hereunder. Actions of the Committee shall be taken by the vote of a majority of its members; provided, however, that the Plan shall be administered so that Awards granted under the Plan will qualify for the benefits provided by Rule 16b-3 (or any successor rule) under the Exchange Act and section 162(m) of the Code, and the regulations thereunder to the extent the Committee intends such grant to quality under section 162(m). The interpretation and construction by the Committee of any provision of the Plan or of any Award granted or Agreement entered into hereunder shall be final and conclusive. 3.3 No Liability       No member of the Board or of the Committee shall be liable for any action or determination made, or any failure to take or make an action or determination, in good faith with respect to the Plan or any Option granted or Agreement entered into hereunder. 4. Awards; Common Stock 4.1 Awards       Awards granted under the Plan may be Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Stock Appreciation Rights, and performance shares, all as more fully set forth herein. No Incentive Stock Option may be granted to a person who is not an employee of the Company on the date of grant. Unless otherwise specified in a particular grant, Awards granted under the Plan are intended to qualify as performance-based compensation for the purposes of section 162(m) of the Code. Notwithstanding the foregoing, Awards granted under the Plan may also be Deferred Stock Awards as more fully described in Section 29. 4.2 Common Stock       The stock that may be issued pursuant to Awards granted under the Plan shall be Common Stock, which shares may be treasury shares or authorized but unissued shares. The number of shares of Common Stock that may be issued pursuant to Awards granted under the Plan shall not exceed in the aggregate 36,500,000 shares of Common Stock, which number of shares is subject to adjustment and increase. If any Award expires, terminates or is terminated for any reason prior to exercise in full, the shares of Common Stock that were subject to the unexercised portion of such Award shall be available for future Awards granted under the Plan. When the exercise price for an Award under this Plan is paid with previously outstanding shares or with shares as to which the Award is being exercised, as permitted in section 13, only the number of shares of stock issued net of the shares of stock tendered shall be deemed delivered for purposes of determining the maximum number of shares of Stock available for delivery under the Plan. Shares of stock delivered under the Plan in settlement, assumption or substitution of outstanding awards (or obligations to grant future awards) under the plans or arrangements of another entity shall not reduce the maximum number of shares -10- -------------------------------------------------------------------------------- of stock available for delivery under the Plan, to the extent that such settlement, assumption or substitution as a result of the Company or an Affiliate acquiring another entity (or an interest in another entity). 4.3 Individual Limits       During any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, the maximum number of shares of Common Stock subject to Options that can be awarded in any one calendar year under the Plan to any person eligible for an Award under Section 5 hereof is two million (2,000,000). The maximum number of shares that can be awarded under the Plan, other than pursuant to an Option, to any person eligible for an Award is two million (2,000,000) per calendar year. The maximum amount that may be earned as an Annual Incentive Award or other cash Award in any fiscal year by any one Grantee shall be $1,000,000 and the maximum amount that may be earned as a Performance Award or other cash Award in respect of a performance period by any one Grantee shall be $3,000,000. 5. Eligibility       Awards may be granted under the Plan to all current and former officers and executive, administrative, technical or professional employees of the Company; to current and former consultants of the Company; and to any other individual whose participation in the Plan is determined to be in the best interests of the Company by the Committee. An individual may hold more than one Award, subject to such restrictions as are provided herein. 6. Effective Date and Plan Term 6.1 Effective Date       The Plan is effective as of August 26, 1996, the date of adoption by the Board, subject to Stockholders’ approval of the Plan within one year of such Effective Date by a majority of the votes cast at a duly held meeting of the Stockholders of the Company at which a quorum representing a majority of all outstanding Common Stock is present, either in person or by proxy, and voting on the matter, or by written consent in accordance with applicable state law and the Certificate of Incorporation and By-Laws of the Company and in a manner that satisfies the requirements of section 162(m) of the Code; provided, however, that upon approval of the Plan by the Stockholders of the Company, all Awards granted under the Plan on or after the Effective Date shall be fully effective as if the Stockholders of the Company had approved the Plan on the Effective Date. If the Stockholders fail to approve the Plan within one year of such Effective Date, any Awards granted hereunder shall be null, void and of no effect. 6.2 Term       The Plan shall terminate on the date ten (10) years after the Effective Date. 7. Grant of Awards 7.1 Awards       The Committee shall determine the type or types of Awards to be made to each Grantee. Awards may be granted singly, in combination or in tandem subject to restrictions set forth herein. Without limiting the foregoing, the Committee may at any time amend the terms of outstanding Awards or issue new Awards in exchange for the surrender and cancellation of outstanding Awards. The date on which the Committee approves the Award shall be considered the date on which such Award is granted, unless the Committee approves a separate grant date. The terms and conditions of the -11- -------------------------------------------------------------------------------- Awards granted under this section shall be determined from time to time by the Committee, as set forth in the Agreement, and the conditions herein. 7.2 Nonqualified Options       The Award Price for each share of Common Stock issuable pursuant a Nonqualified Stock Option shall be set by the Committee, but may not be less than par value. 7.3 Incentive Stock Options       The Award Price for each share of Common Stock issuable pursuant to an Incentive Stock Option may not be less than the Fair Market Value on the Grant Date. 7.4 Incentive Stock Options — Special Rules       Options granted in the form of ISOs shall be subject to the following provisions:       (a) Grant. No Incentive Option shall be granted pursuant to this plan more than ten (10) years after the Effective Date.   (b) Annual Limit. An Option shall constitute an ISO only to the extent that the aggregate Fair Market Value (determined at the time the Option is granted) of the Common Stock with respect to which ISOs are exercisable for the first time by any Grantee during any calendar year under the Plan and all other plans of the Grantee’s employer Company and its parent and Affiliates does not exceed $100,000. This limitation shall be applied by taking Options into account in the order in which such Options were granted.   (c) 10% Stockholder. If any Grantee to whom an ISO is to be granted pursuant to the provisions of the Plan is, on the date of grant, an individual described in section 422(b)(6) of the Code, then the following special provisions shall be applicable to the Option granted to such individual:   (i) the Award Price of shares subject to such ISO shall not be less than 110% of the Fair Market Value of Common Stock on the date of grant; and   (ii) the Option shall not have a term in excess of five (5) years from the date of grant. 7.5 Changes in Law       The Committee may establish rules with respect to, and may grant to Eligible Employees and Eligible Nonemployees, Options to comply with any amendment to the Code made after the Effective Date. 7.6 Reload Options       Without in any way limiting the authority of the Committee to make Awards hereunder, the Committee shall have the authority to grant Reload Options. Any such Reload Option shall be subject to such other terms and conditions as the Committee may determine. Notwithstanding the above, (i) the Committee shall have the right, in its sole discretion, to withdraw a Reload Option to the extent that the grant thereof will result in any adverse accounting consequences to the Company and (ii) no additional Reload Options shall be granted upon the exercise of a Reload Option. 8. Agreements -12- --------------------------------------------------------------------------------       All Awards granted pursuant to the Plan shall be evidenced by written Agreements in such form or forms as the Committee shall from time to time determine. Agreements covering Awards need not contain similar provisions; provided, however, that all such Agreements shall comply with the terms of the Plan and all applicable laws and regulations. By accepting an Award pursuant to the Plan, a Grantee thereby agrees that the Award shall be subject to all of the terms and provisions of the Plan and the applicable Agreement. 9. Stock Appreciation Rights       The Committee shall have the authority to grant SARs to Eligible Employees and Eligible Nonemployees either alone or in connection with an Option. SARs granted in connection with an Option shall be granted either at the time of grant of the Option or by amendment to the Option. SARs granted in connection with an Option shall be subject to the same terms and conditions as the related Option and shall be exercisable only at such times and to such extent as the related Option is exercisable. An SAR granted in connection with an Option may be exercised only when the Fair Market Value of the Common Stock of the Company exceeds the Award Price of the related Option. An SAR granted in connection with an Option shall entitle the Grantee to surrender to the Company unexercised the related Option, or any portion thereof and to receive from the Company cash and/or shares of Common Stock equal to that number of shares of Common Stock having an aggregate value equal to the excess of (i) the Fair Market Value of one share of Common Stock on the day of the surrender of such Option over (ii) the Award Price per share of Common Stock multiplied by (iii) the number of shares of Common Stock that may be exercised under the Option, or surrendered; provided, however, that no fractional shares shall be issued. An SAR granted singly shall entitle the Grantee to receive the excess of (i) the Fair Market Value of a share of Common Stock on the date of exercise over (ii) the Fair Market Value of a share of Common Stock on the date of grant of the SAR, multiplied by (iii) the number of SARs exercised. Payment of any fractional shares of Common Stock shall be made in cash. 10. Restricted Stock       The Committee may in its sole discretion grant Restricted Stock to Eligible Employees and Eligible Nonemployees, subject to the following provisions. At the time a grant of Restricted Stock is made, the Committee shall establish a period of time (the “Restricted Period”) applicable to such Restricted Stock. Each grant of Restricted Stock may be subject to a different Restricted Period. The Committee may, in its sole discretion, at the time a grant of Restricted Stock is made, prescribe restrictions in addition to or other than the expiration of the Restricted Period, including the satisfaction of corporate or individual performance objectives, which may be applicable to all or any portion of the Restricted Stock. Such performance objectives shall be established in writing by the Committee prior to the ninetieth day of the year in which the grant is made and while the outcome is substantially uncertain. Performance objectives shall be based on the following business criteria: Common Stock price, market share, sales, earnings per share, return on equity, or costs.       Performance objectives may include positive results, maintaining the status quo or limiting economic losses. The Committee also may, in its sole discretion, shorten or terminate the Restricted Period or waive any other restrictions applicable to all or a portion of the Restricted Stock. Restricted Stock may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the Restricted Period or prior to the satisfaction of any other restrictions prescribed by the Committee with respect to such Restricted Stock. 10.1 Restrictions       A Common Stock certificate representing the number of shares of Restricted Stock granted shall be held in custody by the Company for the Grantee’s account. The Grantee shall have all rights and privileges of a Stockholder as to such Restricted Stock, including the right to receive dividends and -13- -------------------------------------------------------------------------------- the right to vote such shares, except that subject to the provisions below, the following restrictions shall apply: (i) The Grantee shall not be entitled to delivery of the certificate until the expiration of the Restricted Period; (ii) none of the shares of Restricted Stock may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the Restricted Period; (iii) the Grantee shall, if requested by the Company, execute and deliver to the Company, a Common Stock power endorsed in blank. If a Grantee ceases to be an Employee of the Company prior to the expiration of the Restricted Period applicable to such shares, shares of Restricted Stock still subject to restrictions shall be forfeited unless otherwise determined by the Committee, and all rights of the Grantee to such shares shall terminate without further obligation on the part of the Company. 10.2 Delivery of Restricted Shares       At the end of the Restricted Period, a Common Stock certificate for the number of shares of Restricted Stock with respect to which the restrictions have lapsed shall be delivered (less any amount in satisfaction of any withholding obligation), free of all such restrictions, except applicable securities laws, to the Grantee. The Company shall not be required to deliver any fractional shares of Common Stock but shall pay, in lieu thereof, the Fair Market Value (as of the date the restrictions lapse) of such fractional share to the Grantee. Notwithstanding the foregoing, the Committee may authorize the delivery of the Restricted Stock to a Grantee during the Restricted Period, in which event any Common Stock certificates in respect of any shares of Restricted Stock thus delivered to a Grantee during the Restricted Period applicable to such shares shall bear an appropriate legend referring to the terms and conditions, including the restrictions, applicable thereto. 11. Performance Shares       The Committee may in its sole discretion grant performance share awards to such individuals and under such terms and conditions as the Committee shall determine, subject to the provisions of the Plan. Such an award shall entitle a Grantee to acquire shares of Common Stock of the Company, or to be paid the value thereof in cash, as the Committee shall determine, if specified performance goals are met. Performance shares may be awarded independently of or in connection with any other Award under the Plan. The Grantee of a performance share award will have the rights of a shareholder only as to shares for which a certificate has been issued pursuant to the award and not with respect to any other shares subject to the award. Except as otherwise may be provided by the Committee at any time prior to termination of employment, the rights of a Grantee of a performance share award shall automatically terminate upon the Grantee’s Termination of Employment for any reason. 12. Award Price       The purchase price of each share of Common Stock subject to an Award shall be fixed by the Committee and stated in each Agreement. 13. Term, Vesting and Exercise of Awards 13.1 Term       Each Award granted under the Plan shall terminate and all rights to purchase Common Stock thereunder shall cease upon the expiration of ten (10) years from the Grant Date, as otherwise provided herein, or on such date prior thereto as may be fixed by the Committee and stated in the Agreement relating to such Award; provided, however, that in the event the Grantee would otherwise be ineligible to receive an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d) of the Code (relating to Common Stock ownership of more than 10 percent), an Option granted to such Grantee which is intended to be an Incentive Stock Option shall in no event be exercisable after the expiration of five years from the Grant Date (collectively, the “Option Term”). -14- -------------------------------------------------------------------------------- 13.2 Vesting       Effective January 26, 2000, unless otherwise expressly provided in an Agreement and approved by the Committee the initial grant of Options hereunder to Employees shall become vested and exercisable at the following schedule if the Grantee is an Employee on the relevant anniversary date and has not experienced a Termination of Employment prior to such anniversary date: one fourth ( 1/4) of the total number of shares optioned shall become vested and exercisable on the first anniversary of the Grant Date; an additional one sixteenth ( 1/16) of the total shares optioned shall become vested and exercisable at the end of each three month period thereafter until 100% of the total number of shares optioned are vested and exercisable on and after the fourth anniversary of the Grant Date.       Unless otherwise expressly provided in an Agreement and approved by the Committee, subsequent grants of Options hereunder to Employees shall become vested and exercisable at the schedule indicated below if the Grantee is an Employee on the relevant vesting date and has not experienced a Termination of Employment prior to such vesting date:       (a) if the Grantee has been employed by the Company for at least one year at the end of the first three month period following the Grant Date, one sixteenth ( 1/16) of the total number of shares optioned shall become vested and exercisable at the end of the first three month period, and an additional one sixteenth ( 1/16) of the shares optioned shall become vested and exercisable at the end of each three month period thereafter until 100% of the total number of shares optioned are vested and exercisable on and after the fourth anniversary of the Grant Date; or   (b) if the Grantee has not been employed by the Company for at least one year at the end of the first three month period following the Grant Date, at the end of the next three month period following the Grant Date that occurs after the Grantee has been employed by the Company for at least one year, the portion of the total number of shares optioned that is equal to the product of one sixteenth ( 1/16) and the number of whole three month periods that have elapsed since the Grant Date shall become vested and exercisable. An additional one sixteenth ( 1/16) of the total shares optioned shall become vested and exercisable at the end of each three month period thereafter until 100% of the total number of shares optioned are vested and exercisable on and after the fourth anniversary of the Grant Date.       All Awards that do not vest are forfeited. 13.3 Exercise by Grantee       Only the Grantee receiving an Award (or, in the event of the Grantee’s legal incapacity or incompetency, the Grantee’s guardian or legal representative, and in the case of the Grantee’s death, the Grantee’s estate) may exercise the Award. 13.4 Limitations on Exercise and Sale; Forfeiture       The Committee, subject to the terms and conditions of the Plan, may in its sole discretion provide in an Agreement that an Option may not be exercised in whole or in part for any period or periods of time during which such Option is outstanding as the Committee shall determine (and as set forth in the Agreement relating to such Option). Any such limitation on the exercise of an Option contained in any Agreement may be rescinded, modified or waived by the Committee, in its sole discretion, at any time and from time to time after the date of grant of such Option. The Committee may also include such other terms and conditions as it deems effect the purpose of the Plan and are in the best interest of the Company. -15- -------------------------------------------------------------------------------- 13.5 Method of Exercise       (a) Payment. An Award that is exercisable hereunder may be exercised by delivery to the Company on any business day, at its principal office addressed to the attention of the Committee (or such other person identified in an Agreement), of written notice of exercise, which notice shall specify the number of shares for which the Award is being exercised, and shall be accompanied by payment in full of the Award Price of the shares of Common Stock for which the Award is being exercised. Payment of the Award Price for the shares of Common Stock purchased pursuant to the exercise of an Award shall be made, as determined by the Committee and set forth in the Agreement pertaining to an Award, (i) in cash or by certified check payable to the order of the Company; (ii) to the extent the Company is not prohibited from purchasing or acquiring shares of Common Stock, through the tender to the Company of shares of Common Stock, which shares shall be valued, for purposes of determining the extent to which the Award Price has been paid thereby, at their Fair Market Value on the date of exercise; or (iii) by a combination of the methods described in sections 13.5(a)(i) and (ii) hereof, or such other method permitted by the Committee; provided, however, that the Committee may in its discretion at any time impose such limitations or prohibitions on the use of shares of Common Stock to exercise Awards as it deems appropriate. If and while payment with Common Stock is permitted for the exercise of an Award granted under this Plan in accordance with the foregoing provision, the instrument evidencing the Award may also provide that, in lieu of using previously outstanding shares therefore, the Grantee may pay the Award Price by directing the Company to retain so many of the underlying shares as have a market value on the date of exercise equal to the Award Price, and any such exercise will cause the surrender and cancellation of the Award to the extent of the shares so retained by the Company. As soon as practical after receipt of the foregoing written notice of exercise, full payment of the Award Price, and full payment of all amounts due to satisfy any applicable tax withholding requirements (which the Grantee shall be required to pay in cash, rather than by application of shares of Common Stock otherwise deliverable upon exercise of the Award), the Company shall deliver to the Grantee, in the Grantee’s name, a certificate evidencing the number of shares of Common Stock purchased upon exercise of the Award. An attempt to exercise any Award granted hereunder other than as set forth above shall be invalid and of no force and effect.       An Agreement may provide that on and after the date shares of Common Stock are publicly traded on an established securities market, payment in full of the Award Price need not accompany the written notice of exercise provided the notice directs that the Common Stock certificate or certificates for the shares for which the Award is exercised be delivered to a licensed broker acceptable to the Company as the agent for the individual exercising the Award and, at the time such Common Stock certificate or certificates are delivered, the broker tenders to the Company cash (or cash equivalents acceptable to the Company) equal to the Award Price.       (b) Rights. Except as provided in section 10.1, an individual holding or exercising an Award shall have none of the rights of a Stockholder until the shares of Common Stock covered thereby are fully paid and issued to such individual and, except as provided in section 21 hereof, no adjustment shall be made for dividends or other rights for which the record date is prior to the date of such issuance. 13.6 Financial Assistance       The Company is vested with authority under this Plan to assist any Employee to whom an Award is granted hereunder in the payment of the Award Price payable on exercise of the Award, by lending part or all of the amount of such Award Price to such Employee on such terms and at such rates of interest and upon such security (or no security) as shall have been authorized by or under authority of the Committee. The Company is under no obligation to provide such assistance, however. 14. Transferability of Awards; Company’s Right of First Purchase -16- -------------------------------------------------------------------------------- 14.1 Transferability       Unless otherwise expressly provided in an Agreement, no Award granted under the Plan may be sold, transferred, pledged, assigned, hypothecated or otherwise alienated, other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order, as defined under the Code or the Employee Retirement Income Security Act, as amended, or the rules thereunder. The designation of a beneficiary with respect to an Award shall not constitute a transfer for purposes of this section. 14.2 Right of First Purchase       While and so long as the securities of the Company have not been Publicly Traded for at least ninety (90) days, any Common Stock issued on exercise of any Award granted under this Plan shall be subject to the Company’s right of first purchase. By virtue of that right, (a) such Common Stock may not be transferred during the Grantee’s lifetime to any person other than the Grantee’s spouse, brothers/sisters, parents or other ancestors, and children and other direct descendants of that individual or of his or her spouse (“Immediate Family”); a partnership whose members are the Grantee and/or members of the Grantee’s Immediate Family; or a trust for the benefit of the Grantee and/or members of the Grantee’s Immediate Family, unless such transfer occurs within fifteen (15) days following the expiration of thirty (30) days after the Company has been given a written notice which correctly identified the prospective transferee or transferees and which offered the Company an opportunity to purchase the Common Stock at its Fair Market Value in cash, and such offer was not accepted within thirty (30) days after the Company’s receipt of that notice; and (b) upon the Grantee’s death, the Company shall have the right to purchase all or some of such Common Stock at its Fair Market Value within nine (9) months after the date of death. This right of first purchase shall continue to apply to any such Common Stock after the transfer during the Grantee’s lifetime of that Common Stock to a member of the Grantee’s Immediate Family or to a family partnership or trust as aforesaid, and after any transfer of that Stock with respect to which the Company expressly waived its right of first purchase without also waiving it as to any subsequent transfers thereof, but it shall not apply after a transfer of that Common Stock with respect to which the Company was offered but did not exercise or waive its right of first purchase or more than nine months after the Grantee’s death. The Company may assign all or any portion of its right of first purchase to any one or more of its Stockholders, or to a pension, retirement or savings plan for Employees of the Company, who may then exercise the right so assigned. Stock certificates evidencing Common Stock subject to this right of first purchase shall be appropriately legended to reflect that right. 15. Termination of Employment       In the case of Termination of Employment, unless otherwise provided in an Agreement and other than upon death or Disability (as hereafter defined), Awards otherwise exercisable on the date of the Termination of Employment will remain exercisable for a period of three (3) months. If, on the date of the Termination of Employment, the Grantee is not entitled to exercise the Grantee’s entire Award, the Common Stock covered by the unexercisable portion of the Award shall revert to the Plan. If, after Termination of Employment, the Grantee does not exercise the Award within the time prescribed, the Award shall terminate and the Common Stock covered by such Award shall revert to the Plan. For purposes of the Plan, a Termination of Employment with the Company or an Affiliate shall not be deemed to occur if the Grantee is immediately thereafter employed with the Company or any Affiliate. 16. Rights in the Event of Death or Disability 16.1 Death -17- --------------------------------------------------------------------------------       If a Grantee dies while employed by the Company or an Affiliate, the executors, administrators, legatees or distributees of such Grantee’s estate shall have the right (subject to the general limitations on exercise set forth in section 13 hereof), at any time within one (1) year (unless otherwise provided in an Agreement) after the date of such Grantee’s death and prior to the end of the Award Term, to exercise any Award held by such Grantee at the date of such Grantee’s death, to the extent such Award was otherwise exercisable immediately prior to such Grantee’s death. 16.2 Disability       If a Grantee experiences a Termination of Employment with the Company or an Affiliate by reason of a “permanent and total disability” within the meaning of Section 22(e)(3) of the Code (“Disability”) of such Grantee, then such Grantee shall have the right (subject to the general limitations on exercise set forth in section 13 hereof), at any time within one (1) year (unless otherwise provided in an Agreement) after such Termination of Employment and prior to the expiration of the Award Term, to exercise, in whole or in part, any Award held by such Grantee at the date of such Termination of Employment, to the extent such Award was exercisable immediately prior to such Termination of Employment. 17. Use of Proceeds       The proceeds received by the Company from the sale of Common Stock pursuant to Awards granted under the Plan shall constitute general funds of the Company. 18. Securities Laws       The Company shall not be required to sell or issue any Award or shares of Common Stock under any Award if the sale or issuance of such Award or shares would constitute a violation of any provisions of any law or regulation of any governmental authority, including, without limitation, any federal or state securities laws or regulations. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of any shares subject to the Award upon any securities exchange or under any state or federal law, or the consent of any government regulatory body, is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares, the Award may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of the Award. Specifically in connection with the Securities Act, upon exercise of any Award, unless a registration statement under the Securities Act is in effect with respect to the shares of Common Stock covered by such Award, the Company shall not be required to sell or issue such shares unless the Company has received evidence satisfactory to the Company that the Grantee may acquire such shares pursuant to an exemption from registration under the Securities Act. Any determination in this connection by the Company shall be final and conclusive. The Company may, but shall in no event be obligated, to register any securities covered hereby pursuant to the Securities Act. The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Award or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority. As to any jurisdiction that expressly imposes the requirement that an Award shall not be exercisable unless and until the shares of Common Stock covered by such Award are registered or are subject to an available exemption from registration, the exercise of such Award (under circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption. 19. Exchange Act: Rule 16b-3 19.1 General -18- --------------------------------------------------------------------------------       The Plan is intended to comply with Rule 16b-3 (and any successor thereto) (“Rule 16b-3”) under the Exchange Act. Any provision or action inconsistent with Rule 16b-3 shall, to the extent permitted by law and determined to be advisable by the Committee, be inoperative and void. 19.2 Restriction on Transfer of Common Stock       Unless otherwise permitted under an exemption under Rule 16b-3, no officer or other “insider” of the Company subject to section 16 of the Exchange Act shall be permitted to sell Common Stock (which such “insider” had received upon exercise of an Award) during the six months immediately following the grant of such Award. 20. Amendment and Termination       The Board may, at any time and from time to time, amend, suspend or terminate the Plan or an Agreement governing any Award that has not vested. Except as permitted under this Plan, no amendment, suspension or termination of the Plan or an Agreement shall, without the consent of the Grantee, alter or impair rights or obligations under any vested Award. 21. Effect of Changes in Capitalization 21.1 Changes in Common Stock       If the shares of Common Stock are changed into or exchanged for a different number or kind of shares or securities of the Company, whether through reorganization, recapitalization, reclassification, stock dividend or other distribution, split, reverse split, combination of interest, exchange of interests, change in corporate structure or the like, an appropriate and proportionate adjustment shall be made in the number and kind of shares of Common Stock subject to the Plan and in the number, kind and per share exercise price of shares of Common stock subject to unexercised Awards, or portions thereof granted prior to any such change. In the event of any such adjustment in an outstanding Award, the Grantee thereafter shall have the right to purchase the number of shares of Common Stock under such Award at the per share price, as so adjusted, which the Grantee could purchase at the total purchase price applicable to the Award immediately prior to such adjustment. 21.2 Reorganization with Company Surviving       Subject to section 20, if the Company shall be the surviving entity in any reorganization, merger, consolidation or the like of the Company with one or more other entities, any Award theretofore granted pursuant to the Plan shall apply to the securities resulting immediately following such reorganization, merger, consolidation or the like, with a corresponding proportionate adjustment of the number of shares and Award Price per share so that the aggregate number of shares and Award Price thereafter shall be the same as the aggregate share number and Award Price immediately prior to such reorganization, merger, consolidation or the like. 21.3 Other Reorganizations; Sale of Assets or Common Stock       Unless otherwise provided in an Agreement, upon the dissolution or liquidation of the Company, or upon a merger, consolidation or reorganization of the Company with one or more other entities in which the Company is not the surviving entity, or upon a sale of substantially all of the assets of the Company to another entity, or upon any transaction (including, without limitation, a merger or reorganization in which the Company is the surviving entity) approved by the Board that results in any person or entity (other than persons who are holders of Common Stock of the Company at the time the Plan is approved by the Stockholders and other than an Affiliate) owning fifty (50) percent or more of the combined voting power of all classes of Common Stock of the Company, the Plan and -19- -------------------------------------------------------------------------------- all Awards outstanding hereunder shall terminate on the date of such transaction, except to the extent provision is made in connection with such transaction for the continuation of the Plan and/or the assumption of the Awards theretofore granted, or for the substitution for such Awards of new awards covering the Common Stock of a successor entity, or a parent or Affiliate thereof, with appropriate adjustments as to the number and kinds of shares and exercise prices, in which event the Plan and Awards theretofore granted shall continue in the manner and under the terms so provided. In the event of any such termination of the Plan, each Grantee shall have the right (subject to the general limitations on exercise set forth in section 13 hereof and except as otherwise specifically provided in the Agreement relating to such Award), immediately prior to the occurrence of such termination and during such period occurring prior to such termination as the Committee in its sole discretion shall designate, to exercise such Award in whole or in part, to the extent such Award was otherwise exercisable at the time such termination occurs. The Committee shall send written notice of an event that will result in such a termination to all Grantees not later than the time at which the Company gives notice thereof to its stockholders. Notwithstanding anything herein to the contrary, the Committee in its discretion may provide for the acceleration of the vesting of any Award in the case of a merger, a significant sale of the common stock or assets of the Company (as determined by the Committee). 21.4 Adjustments       Adjustments under this Section 21 relating to Common Stock or securities of the Company shall be made by the Committee, whose determination in that respect shall be final and conclusive. No fractional shares of Common Stock or units of other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share or unit. 21.5 No Limitations on Company       The grant of an Award pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, consolidate, dissolve or liquidate, or to sell or transfer all or any part of its business or assets. 22. Withholding       The Company or an Affiliate may be obligated to withhold federal and local income taxes and Social Security taxes to the extent that an Grantee realizes income in connection with the exercise of an Award. The Company or a Affiliate may withhold amounts needed to cover such taxes from payments otherwise due and owing to an Grantee, and upon demand the Grantee will promptly pay to the Company or a Affiliate having such obligation any additional amounts as may be necessary to satisfy such withholding tax obligation. Such payment shall be made in cash or cash equivalents. The Company may also withhold shares or amounts payable to a Grantee pursuant to court order. 23. Disclaimer of Rights       The existence of this Plan does not, and no provision in the Plan or in any Award granted or Agreement entered into pursuant to the Plan shall be construed to, create an employment contract; confer upon any individual the right to receive an Award; permit a Grantee to remain in the employ of the Company or alter a Grantee’s status as an at-will employee; or allow the Grantee to interfere in any way with the right and authority of the Company either to increase or decrease the compensation of any individual at any time, or to terminate any employment or other relationship between any individual and the Company. The obligation of the Company to pay any benefits pursuant to the Plan shall be interpreted as a contractual obligation to pay only those amounts described herein, in the manner and under the conditions prescribed herein. The Plan shall in no -20- -------------------------------------------------------------------------------- way be interpreted to require the Company to transfer any amounts to a third party trustee or otherwise hold any amounts in trust or escrow for payment to any Grantee or beneficiary under the terms of the Plan. 24. Nonexclusivity       Neither the adoption of the Plan nor the submission of the Plan to the Stockholders of the Company for approval shall be construed as creating any limitations upon the right and authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual or individuals) as the Board in its discretion determines desirable, including, without limitation, the granting of Common Stock options otherwise than under the Plan. 25. Governing Law       This Plan and all Agreements shall be executed and performed under, and all Awards to be granted hereunder shall be provided under and governed by, the laws of the Commonwealth of Virginia (but not including the choice of law rules thereof). Any disputes concerning the Plan or an Agreement shall be brought before the federal or state courts of the Commonwealth of Virginia. 26. Binding Effect       Subject to all restrictions provided in this Plan and all applicable laws, this Plan and all Agreements hereunder shall be binding on and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns. 27. Dismissal for Cause       Notwithstanding any other provision in this Plan or an Agreement, in the event that a Grantee’s employment is terminated by reason of a Dismissal for Cause, the Award shall expire on the day immediately preceding the date of the Termination of Employment. “Dismissal for Cause” means Termination of Employment for: (a) theft or embezzlement of property of the Company; (b) fraud or other wrongdoing against the Company; (c) a conviction of a crime of moral turpitude; (d) receipt of consideration or acceptance of benefits from, or the participation in business activities with, persons doing business with the Company in violation of the business ethics of the Company; (e) malicious destruction of property of the Company; (f) improper disclosure of confidential information of the Company; (g) actively engaging in or working for a business in competition with the Company while employed by the Company; or (h) such other reason that has a material adverse effect on the Company. The Committee shall have the sole discretion to determine whether a Termination of Employment has occurred by reason of Dismissal for Cause. 28. Miscellaneous Requirements 28.1 Other Award Provisions       Awards granted under the Plan shall contain such other terms and provisions that are not inconsistent with this Plan as the Committee may authorize in its discretion, providing for (a) special vesting schedules governing the exercisability of an Award; (b) provisions for acceleration of such vesting schedules in certain events; (c) arrangements whereby the Company may fulfill any tax obligations for Employees in connection with an Award; (d) provisions imposing restrictions upon the transferability of stock acquired on exercise of such Award, whether required by this Plan or applicable securities laws or imposed for other reasons; and (e) provisions regarding the termination or survival of any such Award upon the Grantee’s death, retirement or other termination of employment and the extent, if any, to which any such Award may be exercised after such event. Any -21- -------------------------------------------------------------------------------- dispute concerning an Award must be brought in the federal or state courts of Virginia. In interpreting any inconsistencies, gaps or discrepancies between or among any documents, the Plan shall control over an Agreement (unless there is an express specific exception in an Agreement to the Plan), and an Agreement shall control over any letter or other notice or document describing a grant of an Award. 28.2 Consents       If the Committee shall at any time determine that any Consent (as hereafter defined) is necessary or desirable as a condition of, or in connection with, the granting of any Award under the Plan, the issuance or purchase of shares or other rights thereunder, or the taking of any other action thereunder (“Plan Action”), then such Plan Action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Committee. “Consent” with respect to any Plan Action means (a) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation; (b) any and all written agreements and representations by the Grantee with respect to the disposition of shares of Common Stock, or with respect to any other matter, which the Committee shall deem necessary or desirable to comply with the terms of any such listing, registration, or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made; and (c) any and all other consents, clearances and approvals in respect of a Plan Action. 28.3 Notice       Any notice required to be given to the Company hereunder shall be in writing and shall be addressed to Corporate Secretary, Proxicom, Inc. 11600 Sunrise Valley Drive, Reston, Virginia 20191, or at such other address the Company may hereafter designate to the Grantee. Any notice to be given to the Grantee hereunder shall be addressed to the Grantee at the address set forth beneath his/her signature hereto, or as such other address as the Grantee may hereafter designate to the Company by notice as provided herein. A notice shall be deemed to have been duly given when personally delivered or mailed by registered mail or certified mail to the party entitled to receive it. 28.4 Notice of Section 83(b) Election and Disqualifying Disposition       If any Grantee shall, in connection with the acquisition of Common Stock make the election permitted under section 83(b) of the Code (i.e., an election to include in gross income in the year of transfer the amounts specified in section 83(b)), such Grantee shall notify the Company within ten (10) days of filing the notice of election with the Internal Revenue Service. Further, Grantee must notify the Company of any disposition of any Common Stock issued pursuant to the exercise of such Award under the circumstances described in section 421(b) of the Code (relating to certain disqualifying dispositions) within 10 days of such disposition. 29. Deferred Stock Awards 29.1 Nature of Deferred Stock Awards.       The Committee shall have the authority to grant Deferred Stock Awards to employees of ad hoc Interactive, Inc., a subsidiary of the Company, or to such Eligible Employees or Eligible Nonemployees as it deems appropriate. A Deferred Stock Award is an Award of phantom Common Stock units to a Grantee, subject to restrictions and conditions as the Board may determine at the time of grant. Conditions may be based on continuing employment (or other business relationship) and/or achievement of pre-established performance goals and objectives. The grant of a Deferred Stock Award is contingent on the Grantee executing the Deferred Stock Award Agreement. The terms and conditions of each such agreement shall be determined by the Board, and such terms and -22- -------------------------------------------------------------------------------- conditions may differ among individual Awards and Grantees. At the end of the deferral period, the Deferred Stock Award, to the extent vested, shall be paid to the Grantee in the form of shares of Common Stock. 29.2 Rights as a Stockholder.       During the deferral period, a Grantee shall have no rights as a Stockholder; provided, however, that the Grantee may be credited with Dividend Equivalent Rights with respect to the phantom Common Stock units underlying the Grantee’s Deferred Stock Award, subject to such terms and conditions as the Board may determine. For the purpose of this Section 29.2, Dividend Equivalent Right means a right, granted to a Grantee hereof, to receive cash, Common Stock, other Awards or other property equal in value to dividends paid with respect to a specified number of shares of Common Stock, or other periodic payments. 29.3 Restrictions.       A Deferred Stock Award may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of during the deferral period. 30. Performance and Annual Incentive Awards 30.1 Performance Awards Granted to Designated Covered Employees       If and to the extent that the Committee determines that a Performance Award to be granted to a Grantee who is designated by the Committee as likely to be a Covered Employee should qualify as “performance-based compensation” for purposes of Code Section 162(m), the grant, exercise and/or settlement of such Performance Award shall be contingent upon achievement of preestablished performance objectives relating to the business criteria set forth in Section 10 and other terms set forth in this Section 30.1.       (i) Performance Objectives Generally. The performance objectives for such Performance Awards shall consist of one or more business criteria set forth in Section 10 and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Section 30.1. Performance objectives shall be objective and shall otherwise meet the requirements of Code Section 162(m) and regulations thereunder including the requirement that the level or levels of performance targeted by the Committee result in the achievement of performance objectives being “substantially uncertain.” The Committee may determine that such Performance Awards shall be granted, exercised and/or settled upon achievement of any one performance objective or that two or more of the performance objectives must be achieved as a condition to grant, exercise and/or settlement of such Performance Awards. Performance objectives may differ for Performance Awards granted to any one Grantee or to different Grantees.   (ii) Performance Period; Timing For Establishing Performance Objectives. Achievement of performance objectives in respect of such Performance Awards shall be measured over a performance period of up to ten years, as specified by the Committee. Performance objectives shall be established not later than 90 days after the beginning of any performance period applicable to such Performance Awards, or at such other date as may be required or permitted for “performance-based compensation” under Code Section 162(m).   (iii) Performance Award Pool. The Committee may establish a Performance Award pool, which shall be an unfunded pool, for purposes of measuring Company performance in connection with Performance Awards. The amount of such Performance Award pool shall be based upon the achievement of a performance objective or goals based on one or more of the business -23- --------------------------------------------------------------------------------       criteria set forth in Section 10 hereof during the given performance period, as specified by the Committee in accordance with Section 30.1(ii) hereof. The Committee may specify the amount of the Performance Award pool as a percentage of any of such business criteria, a percentage thereof in excess of a threshold amount, or as another amount which need not bear a strictly mathematical relationship to such business criteria.   (iv) Settlement of Performance Awards; Other Terms. Settlement of such Performance Awards shall be in cash, Common Stock, other Awards or other property, in the discretion of the Committee. The Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in connection with such Performance Awards. The Committee shall specify the circumstances in which such Performance Awards shall be paid or forfeited in the event of termination of employment by the Grantee prior to the end of a performance period or settlement of Performance Awards. 30.2 Annual Incentive Awards Granted to Designated Covered Employees.       If and to the extent that the Committee determines that an Annual Incentive Award to be granted to a Grantee who is designated by the Committee as likely to be a Covered Employee should qualify as “performance-based compensation” for purposes of Code Section 162(m), the grant, exercise and/or settlement of such Annual Incentive Award shall be contingent upon achievement of preestablished performance objectives based on the business criteria set forth in Section 10 and other terms set forth in this Section 30.1.       (i) Annual Incentive Award Pool. The Committee may establish an Annual Incentive Award pool, which shall be an unfunded pool, for purposes of measuring Company performance in connection with Annual Incentive Awards. The amount of such Annual Incentive Award pool shall be based upon the achievement of a performance objective or goals based on one or more of the business criteria set forth in Section 10 hereof during the given performance period, as specified by the Committee in accordance with Section 30.2(ii) hereof. The Committee may specify the amount of the Annual Incentive Award pool as a percentage of any such business criteria, a percentage thereof in excess of a threshold amount, or as another amount which need not bear a strictly mathematical relationship to such business criteria.   (ii) Potential Annual Incentive Awards. Not later than the end of the 90th day of each fiscal year, or at such other date as may be required or permitted in the case of Awards intended to be “performance-based compensation” under Code Section 162(m), the Committee shall determine the eligible persons who will potentially receive Annual Incentive Awards, and the amounts potentially payable thereunder, for that fiscal year, either out of an Annual Incentive Award pool established by such date under Section 30.2(i) hereof or as individual Annual Incentive Awards. In the case of individual Annual Incentive Awards intended to qualify under Code Section 162(m), the amount potentially payable shall be based upon the achievement of a performance objective or goals based on one or more of the business criteria set forth in Section 10 hereof in the given performance year, as specified by the Committee; in other cases, such amount shall be based on such criteria as shall be established by the Committee. In all cases, the maximum Annual Incentive Award of any Grantee shall be subject to the limitation set forth in Section 4.3 hereof.   (iii) Payout of Annual Incentive Awards. After the end of each fiscal year, the Committee shall determine the amount, if any, of (A) the Annual Incentive Award pool, and the maximum amount of potential Annual Incentive Award payable to each Grantee in the Annual Incentive Award pool, or (B) the amount of potential Annual Incentive Award otherwise payable to each Grantee. The Committee may, in its discretion, determine that the amount payable to any Grantee as an Annual Incentive Award shall be reduced from the amount of his or her potential Annual Incentive Award, including a determination to make no Award -24- --------------------------------------------------------------------------------       whatsoever. The Committee shall specify the circumstances in which an Annual Incentive Award shall be paid or forfeited in the event of termination of employment by the Grantee prior to the end of a fiscal year or settlement of such Annual Incentive Award. 30.3 Written Determinations.       All determinations by the Committee as to the establishment of performance objectives, the amount of any Performance Award pool or potential individual Performance Awards and as to the achievement of performance objectives relating to Performance Awards under Section 30.1, and the amount of any Annual Incentive Award pool or potential individual Annual Incentive Awards and the amount of final Annual Incentive Awards under Section 30.2, shall be made in writing in the case of any Award intended to qualify under Code Section 162(m). To the extent required to comply with Code Section 162(m), the Committee may delegate any responsibility relating to such Performance Awards or Annual Incentive Awards. 30.4 Status of Section 30.1. and Section 30.2 Awards Under Code Section 162(m)       It is the intent of the Company that Performance Awards and Annual Incentive Awards under Section 30.1 and Section 30.2 hereof granted to persons who are designated by the Committee as likely to be Covered Employees within the meaning of Code Section 162(m) and regulations thereunder shall, if so designated by the Committee, constitute “qualified performance-based compensation” within the meaning of Code Section 162(m) and regulations thereunder. Accordingly, the terms of Section 30.1 and Section 30.2, including the definitions of Covered Employee and other terms used therein, shall be interpreted in a manner consistent with Code Section 162(m) and regulations thereunder. The foregoing notwithstanding, because the Committee cannot determine with certainty whether a given Grantee will be a Covered Employee with respect to a fiscal year that has not yet been completed, the term Covered Employee as used herein shall mean only a person designated by the Committee, at the time of grant of Performance Awards or an Annual Incentive Award, as likely to be a Covered Employee with respect to that fiscal year. If any provision of the Plan or any agreement relating to such Performance Awards or Annual Incentive Awards does not comply or is inconsistent with the requirements of Code Section 162(m) or regulations thereunder, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements. -25-

Exhibit 10.37(h)     AMENDMENT No. 8 TO PURCHASE OF AGREEMENT DCT-054/98   This Amendment No.8 ("Amendment 8") dated as of November 7, 2000 is between EMBRAER - Empresa Brasileira de Aeronáutica S.A. ("EMBRAER") and Continental Express, Inc. ("BUYER"), and relates to Purchase Agreement No. DCT-054/98 dated December 23, 1998, as amended from time to time (the "Purchase Agreement") for the purchase of up to fifty (50) newly manufactured EMB-135 aircraft (the "Aircraft").   All terms defined in the Purchase Agreement shall have the same meaning when used herein, and in case of any conflict between this Amendment 8 and the Purchase Agreement, this Amendment shall control.   This Amendment 8 sets forth the further agreement between EMBRAER and BUYER relative to certain changes requested by BUYER in the Aircraft configuration described in Exhibit "1" of Amendment 5 to the Purchase Agreement   NOW, THEREFORE, in consideration of the foregoing, EMBRAER and BUYER do hereby agree as follows:   Each of the newly manufactured LR AIRCRAFT from the FIFETEEN (15th) through the FIFTIETH (50th), shall include the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]. For the affected AIRCRAFT referred to in paragraph 1 above, considering the changes in configuration and in the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]. As a consequence of the AIRCRAFT configuration changes as specified above, the Parties agree that notwithstanding the provisions of the Purchase Agreement, the BASIC PRICE for each of the LR AIRCRAFT from the FIFETEENTH (15th) through the EIGHTEENTH (18th) shall be [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] 4. All other terms and conditions of the Purchase Agreement, which are not specifically amended by this Amendment 8, shall remain in full force and effect without any change.           IN WITNESS WHEREOF, EMBRAER and BUYER, by their duly authorized officers, have entered into and executed this Amendment No. 8 to the Purchase Agreement to be effective as of the date first written above.   EMBRAER - Empresa Brasileira CONTINENTAL EXPRESS, INC. de Aeronautica S.A.       By : /s/ Antonio L. P. Manso By : /s/ Frederick S. Cromer Name : Antonio L. P. Manso Name : Frederick S. Cromer Title : Executive Vice President and CFO Title : VP & CFO     By : /s/ Flavio Rimoli Name : Flavio Rimoli Title : Director of Contracts Date: Nov. 07, 2000 Date: 11/01/00 Place : S. J. Campos - SP, Brazil Place : Houston, Texas   Witness: /s/ Jose Luis D. Molina Witness /s/ Amy K. Sedano Name : Jose Luis D. Molina Name : Amy K. Sedano      

Exhibit 10.26 INTRABIOTICS PHARMACEUTICALS, INC. SENIOR EXECUTIVE SEVERANCE BENEFIT PLAN Section 1.         INTRODUCTION.                            This IntraBiotics Pharmaceuticals, Inc. Senior Executive Severance Benefit Plan (the “Plan”) was established effective July 1, 2001.  The purpose of the Plan is to provide for the payment of severance benefits to certain eligible employees of IntraBiotics Pharmaceuticals, Inc. (the “Company”) whose employment with the Company is terminated pursuant to a Covered Termination (as defined below).  This Plan shall supersede any severance benefit plan (other than the Executive Severance Benefit Plan, the Director Severance Benefit Plan and the Employee Severance Benefit Plan), policy or practice previously maintained by the Company.  This Plan document also is the Summary Plan Description for the Plan. Section 2.         DEFINITIONS.                            For purposes of the Plan, the following terms are defined as follows:                            (a)         “Base Salary” means the Eligible Employee’s annual base salary as in effect during the last regularly scheduled payroll period immediately preceding the effective date of the Covered Termination.                            (b)         “Board” means the Board of Directors of the Company.                            (c)         “Company” means IntraBiotics Pharmaceuticals, Inc.                            (d)         “Constructive Termination” means that the Eligible Employee voluntarily terminates employment with the Company after:                                         (i)         the assignment to the Eligible Employee of any duties or responsibilities that results in a significant diminution in the Eligible Employee’s function as in effect on the Effective Date;                                         (ii)        a change in the Eligible Employee’s title or reporting relationships as in effect on the Effective Date;                                         (iii)       a reduction by the Company in the Eligible Employee’s Base Salary by five percent (5%) or more; provided, however, that a reduction by the Company of the Eligible Employee’s Base Salary by up to ten percent (10%) shall not constitute a Constructive Termination for purposes of this Plan if it is made in connection with an across-the-board reduction by the Company of all Eligible Employees’ annual base salaries by a percentage at least equal to the percentage by which the Eligible Employee’s Base Salary is reduced;                                           (iv)        a relocation of the Eligible Employee’s business office to a location that requires the Eligible Employee to commute more than thirty-five (35) miles each way, except for required travel by the Eligible Employee on the Company’s business to an extent substantially consistent with the Eligible Employee’s business travel obligations prior to the Effective Date; provided, however, that no relocation of the Eligible Employee’s business office shall constitute a Constructive Termination for purposes of this Plan if the Eligible Employee provides services to the Company from a remote location (e.g., through telecommuting) at the time of the relocation;                                         (v)         a material breach by the Company of any provision of this Plan; or                                         (vi)        any failure by the Company to obtain the assumption of this Plan by any successor or assign of the Company.                            (e)         “Continuation Period” means the period for which an Eligible Employee is entitled to receive the salary continuation benefits described in Section 4(a).  The maximum Continuation Period for Eligible Employees, with the exception of the Chief Executive Officer, shall be fifteen (15) months.  The maximum Continuation Period for the Chief Executive Officer shall be twenty (20) months.                            (f)         “Covered Termination” means an Involuntary Termination Without Cause or a Constructive Termination, notice of either of which is given on or after the Effective Date.                            (g)        “Effective Date” means July 1, 2001, the effective date of the Plan.                            (h)        “Eligible Employee” means any full-time, regular hire employee of the Company who is an Officer of the Company and whose employment with the Company terminates due to a Covered Termination.                            (i)         “Involuntary Termination Without Cause” means the Eligible Employee’s dismissal or discharge for reasons other than Cause.  For this purpose, “Cause” means that, in the reasonable determination of the Company, the Eligible Employee has                                         (i)         been indicted for or convicted of or pleaded guilty or no contest to any felony or any crime involving dishonesty that is likely to inflict or has inflicted demonstrable and material injury on the business of the Company;                                         (ii)        participated in any fraud against the Company;                                         (iii)       willfully and materially breached a Company policy;                                         (iv)        intentionally damaged any property of the Company thereby causing demonstrable and material injury to the business of the Company;                                         (v)         willfully and materially breached the Eligible Employee’s Proprietary Information and Inventions Agreement with the Company; or                                           (vi)        engaged in conduct that, in the reasonable determination of the Company, demonstrates gross unfitness to serve.                            Notwithstanding the foregoing, Cause shall not exist based on conduct described in clause (iii) or (vi) above unless the conduct described in such clause has not been cured within fifteen (15) days following the Eligible Employee’s receipt of written notice from the Company specifying the particulars of the conduct constituting Cause.                            (j)         “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.                            (k)        “Year of Service” means any twelve (12) consecutive months of service with the Company. Section 3.         ELIGIBILITY FOR BENEFITS.                            (a)         General Rules.  Subject to the requirements set forth in this Section, the Company shall provide the severance benefits described in Section 4 of the Plan to Eligible Employees.                                         (i)         In order to be eligible to receive benefits under the Plan, an Eligible Employee whose employment is terminated pursuant to a Covered Termination that is an Involuntary Termination Without Cause must continue to provide services to the Company, at the Company’s request, through such date as determined by the Company; provided, however, that such date shall not be more than ninety (90) days from the date the Eligible Employee is notified by the Company, in writing, of his or her Involuntary Termination Without Cause.                                         (ii)        In order to be eligible to receive benefits under the Plan, an Eligible Employee also must execute a general waiver and release in substantially the form attached hereto as Exhibit A, Exhibit B or Exhibit C, as appropriate, and such release must become effective in accordance with its terms. The Company, in its sole discretion, may modify the form of the required release to comply with applicable state law and shall determine the form of the required release.                            (b)         Exceptions to Benefit Entitlement.  An employee who otherwise is an Eligible Employee shall not receive benefits under the Plan in any of the following circumstances, as determined by the Company in its sole discretion:                                         (i)         The employee has executed an individually negotiated employment contract or agreement with the Company relating to severance benefits that is in effect on his or her termination date, in which case such employee’s severance benefit, if any, shall be governed by the terms of such individually negotiated employment contract or agreement and shall be governed by this Plan only to the extent that the reduction pursuant to Section 5(a) below does not entirely eliminate benefits under this Plan.                                           (ii)        The Company involuntarily terminates the employee’s employment with the Company, and such termination does not constitute a Covered Termination.  Involuntary terminations include, but are not limited to, a termination for Cause, as such term is defined in Section 2(i).                                         (iii)       The employee voluntarily terminates employment with the Company, and such termination does not constitute a Constructive Termination.  Voluntary terminations include, but are not limited to, resignation, retirement or failure to return from a leave of absence on the scheduled date.                                         (iv)        The employee voluntarily terminates employment with the Company in order to accept employment with another entity that is wholly or partly owned (directly or indirectly) by the Company or an affiliate of the Company.                                         (v)         The employee is offered employment, with the same title and reporting responsibilities and no diminution in duties and responsibilities, with the Company, an affiliate of the Company, or a successor to the Company.                                         (vi)        The employee is rehired by the Company or an affiliate of the Company prior to the date benefits under the Plan are scheduled to commence. Section 4.         AMOUNT OF BENEFIT.                            (a)         Salary Continuation.  Each Eligible Employee, with the exception of the Chief Executive Officer, shall continue to receive Base Salary for a Continuation Period of nine (9) months plus one (1) month of additional salary continuation for each complete Year of Service performed by the Eligible Employee in excess of two (2) Years of Service up to a maximum of fifteen (15) months.  The Chief Executive Officer shall continue to receive Base Salary for a Continuation Period of twelve (12) months plus one (1) month of additional salary continuation for each complete Year of Service performed by the Chief Executive Officer in excess of two (2) Years of Service up to a maximum of twenty (20) months..  Such amounts shall be paid in regular installments on the normal payroll dates of the Company and shall be subject to all required tax withholding.                            (b)         Continued Insurance Benefits.  Provided that the Eligible Employee elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall pay the portion of premiums of each Eligible Employee’s group medical, dental and vision coverage, including coverage for the Eligible Employee’s eligible dependents, that the Company paid prior to the Covered Termination for the Continuation Period described in Section 4(a) or, if shorter, for the duration of the COBRA continuation period.  Such premium payments shall continue for the duration of the Continuation Period; provided, however, that no such premium payments shall be made following the effective date of the Eligible Employee’s coverage by a medical, dental or vision insurance plan of a subsequent employer.  Each Eligible Employee shall be required to notify the Company immediately if the Eligible Employee becomes covered by a medical, dental or vision insurance plan of a subsequent employer.                                         No provision of this Plan will affect the continuation coverage rules under COBRA, except that the Company’s payment of any applicable insurance premiums during the Continuation Period will be credited as payment by the Eligible Employee for purposes of the Eligible Employee’s payments required under COBRA.  Therefore, the period during which an Eligible Employee may elect to continue the Company’s group medical coverage at his or her own expense under COBRA, the length of time during which COBRA coverage will be made available to the Eligible Employee, and all other rights and obligations of the Eligible Employee under COBRA (except the obligation to pay insurance premiums that the Company pays during the Continuation Period) will be applied in the same manner that such rules would apply in the absence of this Plan.  At the conclusion of the Continuation Period, the Eligible Employee shall be responsible for the entire payment of premiums required under COBRA for the duration of the COBRA continuation period.  For purposes of this Section 4(b), applicable premiums that will be paid by the Company during the Continuation Period shall not include any amounts payable by the Eligible Employee under a Section 125 health care reimbursement plan, which amounts, if any, are the sole responsibility of the Eligible Employee. Section 5.         LIMITATIONS ON BENEFITS.                            (a)         Certain Reductions and Offsets. Notwithstanding any other provision of the Plan to the contrary, any benefits payable to an Eligible Employee under this Plan shall be reduced by any severance benefits payable by the Company to such individual under any other policy, plan, program or arrangement, including, without limitation, a contract between the Eligible Employee and any entity, covering such individual.  Furthermore, to the extent that any federal, state or local laws, including, without limitation, so-called “plant closing” laws, require the Company to give advance notice or make a payment of any kind to an Eligible Employee because of that Eligible Employee’s involuntary termination due to a layoff, reduction in force, plant or facility closing, sale of business, change of control, or any other similar event or reason, the benefits payable under this Plan shall either be reduced or eliminated.  The benefits provided under this Plan are intended to satisfy any and all statutory obligations that may arise out of an Eligible Employee’s involuntary termination of employment for the foregoing reasons, and the Plan Administrator shall so construe and implement the terms of the Plan.                            (b)         Mitigation.  Except as otherwise specifically provided herein, Eligible Employees shall not be required to mitigate damages or the amount of any payment provided under this Plan by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Plan be reduced by any compensation earned by any Eligible Employee as a result of employment by another employer or any retirement benefits received by such Eligible Employee after the Covered Termination.                            (c)         Termination of Benefits.  Benefits under this Plan shall terminate immediately if the Eligible Employee, at any time, violates any proprietary information or confidentiality obligation to the Company.                            (d)         Non-Duplication of Benefits.  No Eligible Employee is eligible to receive benefits under this Plan more than one time.                              (e)         Indebtedness of Eligible Employees.  If a terminating employee is indebted to the Company or an affiliate of the Company at his or her termination date, the Company reserves the right to offset any severance payments under the Plan by the amount of such indebtedness.                            (f)         Parachute Payments.  If any payment or benefit the Eligible Employee would receive in connection with a Change in ownership or effective control of the Company from the Company or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal to the Reduced Amount.  The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Eligible Employee’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order unless the Eligible Employee elects in writing a different order (provided, however, that such election shall be subject to Company approval if made on or after the date on which the event that triggers the Payment occurs):  reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits.  In the event that acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of the Eligible Employee’s stock awards unless the Eligible Employee elects in writing a different order for cancellation.                            The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in ownership or effective control of the Company shall perform the foregoing calculations.  If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in ownership or effective control of the Company, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder.  The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.                                         The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and the Eligible Employee within fifteen (15) calendar days after the date on which the Eligible Employee’s right to a Payment is triggered (if requested at that time by the Company or the Eligible Employee) or such other time as requested by the Company or the Eligible Employee.  If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it shall furnish the Company and the Eligible Employee with an opinion reasonably acceptable to Executive that no Excise Tax will be imposed with respect to such Payment.  Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and the Eligible Employee.   Section 6.         RIGHT TO INTERPRET PLAN; AMENDMENT AND TERMINATION.                            (a)         Exclusive Discretion.  The Plan Administrator shall have the exclusive discretion and authority to establish rules, forms, and procedures for the administration of the Plan and to construe and interpret the Plan and to decide any and all questions of fact, interpretation, definition, computation or administration arising in connection with the operation of the Plan, including, but not limited to, the eligibility to participate in the Plan and amount of benefits paid under the Plan.  The rules, interpretations, computations and other actions of the Plan Administrator shall be binding and conclusive on all persons.                            (b)         Amendment or Termination.  The Company reserves the right to amend or terminate this Plan or the benefits provided hereunder at any time; provided, however, that no such amendment or termination shall affect the right to any unpaid benefit of any Eligible Employee whose termination date has occurred prior to amendment or termination of the Plan.  Any action amending or terminating the Plan shall be in writing and executed by the chairman of the Compensation Committee of the Board of Directors of the Company. Section 7.         TERMINATION OF CERTAIN EMPLOYEE BENEFITS.                            All non-health benefits (such as life insurance, disability and 401(k) plan coverage) shall terminate as of the employee’s termination date (except to the extent that a conversion privilege may be available thereunder). Section 8.         NO IMPLIED EMPLOYMENT CONTRACT.                            The Plan shall not be deemed (i) to give any employee or other person any right to be retained in the employ of the Company or (ii) to interfere with the right of the Company to discharge any employee or other person at any time and for any reason, which right is hereby reserved. Section 9.         LEGAL CONSTRUCTION.                            This Plan is intended to be governed by and shall be construed in accordance with the Employee Retirement Income Security Act of 1974 (“ERISA”) and, to the extent not preempted by ERISA, the laws of the State of California. Section 10.      CLAIMS, INQUIRIES AND APPEALS.                            (a)         Applications for Benefits and Inquiries.  Any application for benefits, inquiries about the Plan or inquiries about present or future rights under the Plan must be submitted to the Plan Administrator in writing.  The Plan Administrator is: IntraBiotics Pharmaceuticals, Inc. 2021 Stierlin Court Mountain View, CA  94043                              (b)         Denial of Claims.  In the event that any application for benefits is denied in whole or in part, the Plan Administrator must notify the applicant, in writing, of the denial of the application, and of the applicant’s right to review the denial.  The written notice of denial will be set forth in a manner designed to be understood by the employee and will include specific reasons for the denial, specific references to the Plan provision upon which the denial is based, a description of any information or material that the Plan Administrator needs to complete the review and an explanation of the Plan’s review procedure.                            This written notice will be given to the employee within ninety (90) days after the Plan Administrator receives the application, unless special circumstances require an extension of time, in which case, the Plan Administrator has up to an additional ninety (90) days for processing the application.  If an extension of time for processing is required, written notice of the extension will be furnished to the applicant before the end of the initial ninety (90) day period.                            This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the application.  If written notice of denial of the application for benefits is not furnished within the specified time, the application shall be deemed to be denied.  The applicant will then be permitted to appeal the denial in accordance with the Review Procedure described below.                            (c)         Request for a Review.  Any person (or that person’s authorized representative) for whom an application for benefits is denied (or deemed denied), in whole or in part, may appeal the denial by submitting a request for a review to the Plan Administrator within sixty (60) days after the application is denied (or deemed denied).  The Plan Administrator will give the applicant (or his or her representative) an opportunity to review pertinent documents in preparing a request for a review.  A request for a review shall be in writing and shall be addressed to: IntraBiotics Pharmaceuticals, Inc. 2021 Stierlin Court Mountain View, CA  94043 A request for review must set forth all of the grounds on which it is based, all facts in support of the request and any other matters that the applicant feels are pertinent.  The Plan Administrator may require the applicant to submit additional facts, documents or other material as it may find necessary or appropriate in making its review.                              (d)         Decision on Review.  The Plan Administrator will act on each request for review within sixty (60) days after receipt of the request, unless special circumstances require an extension of time (not to exceed an additional sixty (60) days), for processing the request for a review.  If an extension for review is required, written notice of the extension will be furnished to the applicant within the initial sixty (60) day period.  The Plan Administrator will give prompt, written notice of its decision to the applicant.  In the event that the Plan Administrator confirms the denial of the application for benefits in whole or in part, the notice will outline, in a manner calculated to be understood by the applicant, the specific Plan provisions upon which the decision is based.  If written notice of the Plan Administrator’s decision is not given to the applicant within the time prescribed in this Subsection (d), the application will be deemed denied on review.                            (e)         Rules and Procedures.  The Plan Administrator will establish rules and procedures, consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its responsibilities in reviewing benefit claims.  The Plan Administrator may require an applicant who wishes to submit additional information in connection with an appeal from the denial (or deemed denial) of benefits to do so at the applicant’s own expense.                            (f)         Exhaustion of Remedies.  No legal action for benefits under the Plan may be brought until the claimant (i) has submitted a written application for benefits in accordance with the procedures described by Section 10(a) above, (ii) has been notified by the Plan Administrator that the application is denied (or the application is deemed denied due to the Plan Administrator’s failure to act on it within the established time period), (iii) has filed a written request for a review of the application in accordance with the appeal procedure described in Section 10(c) above and (iv) has been notified in writing that the Plan Administrator has denied the appeal (or the appeal is deemed to be denied due to the Plan Administrator’s failure to take any action on the claim within the time prescribed by Section 10(d) above). Section 11.      BASIS OF PAYMENTS TO AND FROM PLAN.                            All benefits under the Plan shall be paid by the Company.  The Plan shall be unfunded, and benefits hereunder shall be paid only from the general assets of the Company. Section 12.      OTHER PLAN INFORMATION.                            (a)         Employer and Plan Identification Numbers.  The Employer Identification Number assigned to the Company (which is the “Plan Sponsor” as that term is used in ERISA) by the Internal Revenue Service is 94-3200380.  The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the instructions of the Internal Revenue Service is 513.                            (b)         Ending Date for Plan’s Fiscal Year.  The date of the end of the fiscal year for the purpose of maintaining the Plan’s records is December 31.                            (c)         Agent for the Service of Legal Process.  The agent for the service of legal process with respect to the Plan is IntraBiotics Pharmaceuticals, Inc., 2021 Stierlin Court, Mountain View, CA  94043.                              (d)         Plan Sponsor and Administrator.  The “Plan Sponsor” and the “Plan Administrator” of the Plan is IntraBiotics Pharmaceuticals, Inc., 2021 Stierlin Court, Mountain View, California 94043.  The Plan Sponsor’s and Plan Administrator’s telephone number is (650) 526–6800.  The Plan Administrator is the named fiduciary charged with the responsibility for administering the Plan. Section 13.      STATEMENT OF ERISA RIGHTS.                            Participants in this Plan (which is a welfare benefit plan sponsored by IntraBiotics Pharmaceuticals, Inc.) are entitled to certain rights and protections under ERISA.  If you are an Eligible Employee, you are considered a participant in the Plan and, under ERISA, you are entitled to:                            (a)         Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as work sites, all Plan documents and copies of all documents filed by the Plan with the U.S. Department of Labor, such as detailed annual reports;                            (b)         Obtain copies of all Plan documents and Plan information upon written request to the Plan Administrator.  The Administrator may make a reasonable charge for the copies; and                            (c)         Receive a summary of the Plan’s annual financial report, in the case of a plan that is required to file an annual financial report with the Department of Labor.  (Generally, all pension plans and welfare plans with one hundred (100) or more participants must file these annual reports.)                            In addition to creating rights for Plan participants, ERISA imposes duties upon the people responsible for the operation of the employee benefit plan.  The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries.                            No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under ERISA.  If your claim for a Plan benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial.  You have the right to have the Plan review and reconsider your claim.                              Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request materials from the Plan and do not receive them within thirty (30) days, you may file suit in a federal court.  In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.  If you have a claim for benefits that is denied or ignored, in whole or in part, you may file suit in a state or federal court.  If it should happen that the Plan fiduciaries misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court.  The court will decide who should pay court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.                            If you have any questions about the Plan, you should contact the Plan Administrator.  If you have any questions about this statement or about your rights under ERISA, you should contact the nearest office of the Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Pension and Welfare Benefits Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. Section 14.      EXECUTION.                            To record the adoption of the Plan as set forth herein, effective as of July 1, 2001, IntraBiotics Pharmaceuticals, Inc. has caused its duly authorized officer to execute the same this 31 day of May 2001.   INTRABIOTICS PHARMACEUTICALS, INC.   By:  /s/ JANE SHAW   --------------------------------------------------------------------------------   Title: Chairman, Compensation Committee   --------------------------------------------------------------------------------  

QuickLinks -- Click here to rapidly navigate through this document EXHIBIT 10.32 AMENDMENT, dated as of March 19, 2001 (this "Amendment"), among Euramax International Inc., a Delaware corporation ("Euramax U.S."), the other Loan Parties party to the Credit Agreement referred to below, each of the Majority Lenders (as defined in the Credit Agreement referred to below) party hereto and the Swing Loan Lender referred to below and BNP Paribas (formerly Banque Paribas), as agent (in such capacity, the "Agent") for the Lenders, the Swing Loan Lender and the Issuer, to the Amended and Restated Credit Agreement, dated as of July 16, 1997, as amended (said Agreement, as so amended and as the same may be further amended, supplemented or otherwise modified from time to time, being the "Credit Agreement", and the terms defined therein being used herein as therein defined unless otherwise defined herein), among Euramax U.S., the other Loan Parties party thereto, the financial institutions party thereto as lenders (the "Lenders"), the Swing Loan Lender referred to therein, the Issuer referred to therein and the Agent. W I T N E S S E T H: WHEREAS, the Loan Parties have requested that certain definitions and financial covenants in the Credit Agreement be amended and that the Credit Agreement be amended to allow the Loan Parties to engage in certain commodity options transactions; and WHEREAS, the Loan Parties, the Majority Lenders party hereto and BNP Paribas, as Swing Loan Lender and Agent, are willing to agree to such amendments, subject to the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows: The Credit Agreement is hereby amended as follows: (a)Amendments to Section 1.1 of the Credit Agreement. (i) Section 1.1 of the Credit Agreement is amended by deleting the definitions of "Applicable Base Rate Margin", "Applicable Eurocurrency Margin", "EBITDA", "Level I Rate Period", "Level II Rate Period", "Level III Rate Period", "Level IV Rate Period" and "Level V Rate Period" therein and substituting in lieu thereof the following in their proper alphabetical order:     "Applicable Base Rate Margin" means:     (a) in the case of all Loans other than the U.S. Dollar Term B Loans, the U.S. Dollar Term C Loans and the U.S. Dollar Term D Loans, (i) 1.50% at all times during each Level I Rate Period, (ii) 1.25% at all times during each Level II Rate Period, (iii) 1.00% at all times during each Level III Rate Period, (iv) 0.75% at all times during each Level IV Rate Period, (v) 0.50% at all times during each Level V Rate Period and (vi) 0.25% at all times during each Level VI Rate Period;     (b) in the case of the U.S. Dollar Term B Loans and the U.S. Dollar Term C Loans, (i) 2.00% at all times during each Level I Rate Period, (ii) 1.75% at all times during each Level II Rate Period, (iii) 1.50% at all times during each Level III Rate Period, (iv) 1.25% at all times during each Level IV Rate Period and (v) 1.00% at all times during each Level V Rate Period and each Level VI Rate Period; and     (c) in the case of the U.S. Dollar Term D Loans, (i) 2.25% at all times during each Level I Rate Period, (ii) 2.00% at all times during each Level II Rate Period, (iii) 1.75% at all times during each Level III Rate Period, (iv) 1.50% at all times during each Level IV Rate Period and (v) 1.25% at all times during each Level V Rate Period and Level VI Rate Period. 1 --------------------------------------------------------------------------------     "Applicable Eurocurrency Margin" means:     (a) in the case of all Loans other than the U.S. Dollar Term B Loans, the U.S. Dollar Term C Loans and the U.S. Dollar Term D Loans, (i) 2.50% at all times during each Level I Rate Period, (ii) 2.25% at all times during each Level II Rate Period, (iii) 2.00% at all times during each Level III Rate Period, (iv) 1.75% at all times during each Level IV Rate Period, (v) 1.50% at all times during each Level V Rate Period and (vi) 1.25% at all times during each Level VI Rate Period;     (b) in the case of the U.S. Dollar Term B Loans and the U.S. Dollar Term C Loans, (i) 3.00% at all times during each Level I Rate Period, (ii) 2.75% at all times during each Level II Rate Period, (iii) 2.50% at all times during each Level III Rate Period, (iv) 2.25% at all times during each Level IV Rate Period and (v) 2.00% at all times during each Level V Rate Period and each Level VI Rate Period; and     (c) in the case of the U.S. Dollar Term D Loans, (i) 3.25% at all times during each Level I Rate Period, (ii) 3.00% at all times during each Level II Rate Period, (iii) 2.75% at all times during each Level III Rate Period, (iv) 2.50% at all times during each Level IV Rate Period, (v) 2.25% at all times during each Level V Rate Period and Level VI Rate Period.     "EBITDA" means, for any Person for any period, the Net Income (Loss) of such Person, including the pro forma Net Income (Loss) of any other Person acquired by such Person or a Subsidiary of such Person; for such period taken as a single accounting period, plus, without duplication, (a) the sum of the following amounts of such Person and its Subsidiaries (including the sum of the following amounts on a pro forma basis of any Person acquired by such Person or a Subsidiary of such Person) for such period determined on a consolidated basis in conformity with GAAP to the extent included in the determination of such Net Income (Loss): (i) depreciation expense, (ii) amortization expense, (iii) Net Interest Expense, (iv) income tax expense, (v) extraordinary losses (and other losses on Asset Sales not otherwise included in extraordinary losses determined on a consolidated basis in conformity with GAAP) and (vi) other non-recurring costs, including, without limitation, incurred in connection with the restructuring steps set forth in the December 1999 Amendment less (b) the sum of the following amounts of such Person and its Subsidiaries determined on a consolidated basis in conformity with GAAP to the extent included in the determination of such Net Income (Loss): (i) extraordinary gains (and other gains on Asset Sales not otherwise included in extraordinary gains determined on a consolidated basis in conformity with GAAP) and (ii) the Net Income (Loss) of any other Person that is accounted for by the equity method of accounting except to the extent of the amount of dividends or distributions paid to such Person.     "Level I Rate Period" means, with respect to any Loan, each period (a) commencing on the last day of any Fiscal Quarter (i) as at the end of which the Ratio of Total Debt to EBITDA for the four Fiscal Quarters ended on such day exceeds 5.25 to 1.00, as reflected in a Ratio Notice with respect to such four Fiscal Quarters, or (ii) with respect to which four Fiscal Quarters period no Ratio Notice shall have been timely delivered, and (b) ending on the last day of the next succeeding Fiscal Quarter.     "Level II Rate Period" means, with respect to any Loan, each period commencing on the last day of any Fiscal Quarter as at the end of which the Ratio of Total Debt to EBITDA for the four Fiscal Quarters ending on such day does not exceed 5.25 to 1.00 but is in excess of 5.00 to 1.00, as reflected in a Ratio Notice with respect to such Fiscal Quarters, and ending on the last day of next succeeding Fiscal Quarter.     "Level III Rate Period" means, with respect to any Loan, each period commencing on the last day of a Fiscal Quarter as at the end of which the Ratio of Total Debt to EBITDA for the four Fiscal Quarters ended on such day does not exceed 5.00 to 1.00 but is in excess of 4.50 to 1.00, as reflected in a Ratio Notice with respect to such four Fiscal Quarters, and ending on the last day of the next succeeding Fiscal Quarter. 2 --------------------------------------------------------------------------------     "Level IV Rate Period" means, with respect to any Loan, each period commencing on the last day of a Fiscal Quarter as at the end of which the Ratio of Total Debt to EBITDA for the four Fiscal Quarters ended on such day does not exceed 4.50 to 1.00 but is in excess of 4.00 to 1.00, as reflected in a Ratio Notice with respect to such four Fiscal Quarters, and ending on the last day of the next succeeding Fiscal Quarter.     "Level V Rate Period" means, with respect to any Loan, each period commencing on the last day of a Fiscal Quarter as at the end of which the Ratio of Total Debt to EBITDA for the four Fiscal Quarters ended on such day does not exceed 4.00 to 1.00 but is in excess of 3.50 to 1.00, as reflected in a Ratio Notice with respect to such four Fiscal Quarters, and ending on the last day of the next succeeding Fiscal Quarter. (ii) Section 1.1 of the Credit Agreement is further amended by inserting the following new definition in its proper alphabetical order:     "Level VI Rate Period" means, with respect to any Loan, each period commencing on the last day of a Fiscal Quarter as at the end of which the ratio of Total Debt to EBITDA for the four Fiscal Quarters ended on such day is equal to or less than 3.50 to 1.00, as reflected in a Ratio Notice with respect to such four Fiscal Quarters, and ending on the last day of the next succeeding Fiscal Quarter".     (b) Amendment to Section 5.1 of the Credit Agreement. Section 5.1 of the Credit Agreement is amended by deleting each of the maximum leverage ratios for the Fiscal Quarters ending in 2001 therein and substituting in lieu thereof the following: "For the Fiscal Quarter Ending On --------------------------------------------------------------------------------   Maximum Ratio --------------------------------------------------------------------------------   March 31, 2001   5.75 to 1.00   June 30, 2001   6.00 to 1.00   September 30, 2001   5.25 to 1.00   December 31, 2001   4.75 to 1.00 ".     (c) Amendment to Section 5.4 of the Credit Agreement. Section 5.4 of the Credit Agreement is amended by deleting each of the minimum interest coverage ratios for the Fiscal Quarters ending on March 31, 2001 and June 30, 2001 therein and substituting in lieu thereof the following: "For the Fiscal Quarter Ending On --------------------------------------------------------------------------------   Minimum Interest Coverage Ratio --------------------------------------------------------------------------------   March 31, 2001   1.75 to 1.00   June 30, 2001   1.75 to 1.00 ".     (d) Amendment to Section 5.5 of the Credit Agreement. Section 5.5 of the Credit Agreement is amended by deleting each of the minimum EBITDA amounts for the Fiscal Quarters ending in 2001 therein and substituting in lieu thereof the following: "For the Fiscal Quarter Ending On --------------------------------------------------------------------------------   Maximum Amount --------------------------------------------------------------------------------   March 31, 2001   45,000,000   June 30, 2001   42,500,000   September 30, 2001   47,500,000   December 31, 2001   48,500,000 ". 3 --------------------------------------------------------------------------------     (e) Amendment to Section 7.11 of the Credit Agreement. Section 7.11 of the Credit Agreement is amended by deleting clause (b) thereof and substituting in lieu thereof the following: "(b) engage in any speculative transaction or in any transactions involving commodity options or future contracts, except for (i) Currency Contracts and interest rate protection agreements permitted by Section 7.6(e) and (ii) non-speculative commodity options transactions in order to hedge against fluctuations in revenues and costs in the ordinary course of business".     SECTION 2.  Effectiveness.  This Amendment shall become effective as of the April 2000 Amendment Effective Date upon (a) the Agent having executed a counterpart hereof and having received counterparts hereof executed by the Majority Lenders, the Swing Loan Lender and each Loan Party and (b) the Agent having received an amendment fee for the account of each Lender executing this Amendment in the amount equal to 0.25% of the sum of such Lender's aggregate extensions of credit and its unutilized Commitments as of the first date upon which each of the conditions set forth in this Section 2 are satisfied.     SECTION 3.  Representations and Warranties.  Each of the Loan Parties represents and warrants as to itself and each of its Subsidiaries as follows: (a)The execution, delivery and performance of this Amendment has been duly authorized by all necessary corporate action, and this Amendment and the Loan Documents as amended hereby, and the transactions contemplated hereby and thereby, do not and will not (i) require any consent or approval of the stockholders of any Loan Party or any of its Subsidiaries or any third party, other than any consents or approvals that have already been obtained and which remain in full force and effect, (ii) violate any Requirement of Law, (iii) result in a breach of or constitute a default under any Contractual Obligation to which any Loan Party or any of its Subsidiaries is a party or by which any of them or their respective properties may be bound or affected, or (iv) result in, or require, the creation or imposition of any Lien of any nature upon or with respect to any of the properties now owned or hereafter acquired by any Loan Party or any of its Subsidiaries (other than pursuant to the Loan Documents). (b)All authorizations, consents, approvals of, licenses of, or filings or registrations with, any court or Governmental Authority, required in connection with the execution, delivery and performance by any Loan Party of this Amendment and the performance by each Loan Party of the Loan Documents as amended hereby, and the consummation by each Loan Party of the transactions contemplated hereby and thereby, have been obtained, given, filed or taken and are in full force and effect. (c)This Amendment has been duly executed and delivered by each Loan Party, and each of this Amendment and each Loan Document as amended hereby constitutes the legal, valid and binding obligation of each Loan Party thereto, enforceable against such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or law). (d)There exists no judgment, order, injunction or other restraint prohibiting or imposing materially adverse conditions upon the execution, delivery and performance of this Amendment or the Loan Documents as amended hereby or upon the consummation of the transactions contemplated hereby or thereby. (e)None of the transactions contemplated by this Amendment or the Loan Documents as amended hereby will have or could have a Material Adverse Effect, and the execution, delivery and performance of this Amendment will not and could not adversely affect the Liens of any Collateral Document. 4 -------------------------------------------------------------------------------- (f)No provision of any Related Document or any other Contractual Obligation of any Loan Party would prohibit, restrict or impose any conditions on this Amendment or the Loan Documents as amended hereby, and no consent under any Related Document or other Contractual Obligation is required for the execution, delivery or performance of this Amendment, or the Loan Documents as amended hereby, or for the consummation of any of the transactions contemplated hereby, including the transactions contemplated by the amendments set forth herein except as specifically contemplated hereby. (g)Each of the representations and warranties contained in each Loan Document are true and correct on and as of the date hereof, and no Default or Event of Default has occurred or is continuing or would result from the consummation of any transaction contemplated hereby.     SECTION 4.  Costs and Expenses.  The Loan Parties jointly and severally agree to pay (a) all costs and expenses of the Agent in connection with the preparation, execution and delivery of this Amendment, including the reasonable fees and out-of-pocket expenses of counsel for the Agent with respect thereto and (b) all costs and expenses otherwise required to be paid under Section 10.4 of the Credit Agreement.     SECTION 5.  Miscellaneous.   (a)Upon the effectiveness of this Amendment each reference in any Loan Document to "this Agreement", "hereunder", "herein", or words of like import, and each reference in any other Loan Document to such Loan Document, shall mean and be a reference to such Loan Document as amended or waived hereby. (b)Except as specifically amended or waived hereby, each Loan Document shall remain in full force and effect and is hereby ratified and confirmed. (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 the Lenders, the Issuer, the Swing Loan Lender or the Agent under any Loan Document, nor constitute a waiver of any provision of any Loan Document. (d)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 to be an original and all of which taken together shall constitute but one and the same instrument. (e)THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (f)EACH LOAN PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AMENDMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE ISSUER, ANY LENDER OR ANY LOAN PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THIS AMENDMENT. [REMAINDER OF PAGE LEFT INTENTIONALLY 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 above written.     EURAMAX INTERNATIONAL INC.     By: --------------------------------------------------------------------------------     Title:     EURAMAX INTERNATIONAL HOLDINGS LIMITED     By: --------------------------------------------------------------------------------     Title:     EURAMAX INTERNATIONAL LIMITED     By: --------------------------------------------------------------------------------     Title:     EURAMAX EUROPEAN HOLDINGS LIMITED     By: --------------------------------------------------------------------------------     Title:     EURAMAX CONTINENTAL LIMITED     By: --------------------------------------------------------------------------------     Title:     EURAMAX EUROPEAN HOLDINGS, B.V.     By: --------------------------------------------------------------------------------     Title: 6 --------------------------------------------------------------------------------     EURAMAX EUROPE LIMITED     By: --------------------------------------------------------------------------------     Title:     EURAMAX NETHERLANDS B.V.     By: --------------------------------------------------------------------------------     Title:     EURAMAX HOLDINGS LIMITED     By: --------------------------------------------------------------------------------     Title:     EURAMAX EUROPE B.V.     By: --------------------------------------------------------------------------------     Title:     ELLBEE LIMITED     By: --------------------------------------------------------------------------------     Title:     EURAMAX COATED PRODUCTS LIMITED     By: --------------------------------------------------------------------------------     Title: 7 --------------------------------------------------------------------------------     AMERIMAX HOLDINGS, INC. AMERIMAX FABRICATED PRODUCTS, INC. AMERIMAX BUILDING PRODUCTS, INC. AMERIMAX COATED PRODUCTS, INC. AMERIMAX RICHMOND COMPANY AMERIMAX HOME PRODUCTS, INC. AMERIMAX LAMINATED PRODUCTS, INC.     By: --------------------------------------------------------------------------------     Title:     FABRAL HOLDINGS, INC.   (formerly, Gentek Holdings, Inc.) FABRAL, INC.   (formerly, Gentek Building Products, Inc.)     By: --------------------------------------------------------------------------------     Title:     BNP PARIBAS (formerly, Banque Paribas), as Agent, as a Lender, as the Issuer and as Swing Loan     By: --------------------------------------------------------------------------------     Title:     By: --------------------------------------------------------------------------------     Title:     FLEET NATIONAL BANK (formerly, BANKBOSTON, N.A.), as a Lender     By: --------------------------------------------------------------------------------     Title:     SUNTRUST BANK, ATLANTA, as a Lender     By: --------------------------------------------------------------------------------     Title: 8 --------------------------------------------------------------------------------     BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC., as a Lender     By: --------------------------------------------------------------------------------     Title:     By: --------------------------------------------------------------------------------     Title:     LASALLE BANK NATIONAL ASSOCIATION, as a Lender     By: --------------------------------------------------------------------------------     Title:     WACHOVIA BANK, N.A., as a Lender     By: --------------------------------------------------------------------------------     Title:     BANK ONE, NA, as a Lender     By: --------------------------------------------------------------------------------     Title:     PPM AMERICA, INC., as attorney in fact, on behalf of Jackson National Life Insurance Company, as a Lender     By: --------------------------------------------------------------------------------     Title: 9 --------------------------------------------------------------------------------     DE NATIONALE INVESTERINGS BANK N.V., as a Lender     By: --------------------------------------------------------------------------------     Title:     By: --------------------------------------------------------------------------------     Title:     FLEET NATIONAL BANK, as a Lender     By: --------------------------------------------------------------------------------     Title: 10 -------------------------------------------------------------------------------- QuickLinks EXHIBIT 10.32

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT   THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement") is made as of December 20, 2000, by and among bigchalk.com, inc., a Delaware corporation (the "Company"), holders of Series A Preferred Stock and/or Series A-2 Preferred listed on Schedule A hereto (collectively the "Series A Investors" and individually a "Series A Investor"), the purchasers of Series B Preferred Stock listed on Schedule A hereto (collectively the "Series B Investors" and individually a "Series B Investor", and together with the Series A Investors, collectively the "Investors" and individually an "Investor"), holders of the Company's outstanding Common Stock, $.01 par value per share (the "Common Stock"), who appear on Schedule A hereto (collectively the "Founders", unless otherwise indicated on Schedule A), and any subsequent stockholder of the Company who becomes a party to this Agreement pursuant to the terms and conditions hereof (collectively, the "Additional Stockholders," and with the Series A Investors, the Series B Investors, the Founders and the other holders of Common Stock, listed on Schedule A, sometimes hereinafter collectively referred to herein as the "Stockholders" or individually as a "Stockholder"). For the purposes of this Agreement, the term "Series A Preferred Stock" includes Series A Preferred Stock and Series A-2 Preferred Stock of the Company. "Preferred Stock" shall mean Series A Preferred Stock and Series B Preferred Stock. WHEREAS, in connection with the sale and issuance of its Series A Preferred Stock, the Company entered into that certain Stockholders Agreement dated January 10, 2000 (the "Original Agreement") with the purchasers of such Series A Preferred Stock under the Series A Stock Purchase Agreement (the "Series A Stock Purchase Agreement") and the Founders. WHEREAS, the Company and the undersigned Series A Investors and Founders, representing sufficient voting interests to modify the Original Agreement, desire to amend and restate the Original Agreement and to accept the rights created pursuant hereto in lieu of the rights under the Original Agreement. WHEREAS, the Company and the Series B Investors are entering into a Series B Preferred Stock Purchase Agreement (the "Series B Stock Purchase Agreement") of even date herewith whereby the Company will sell, and the Series B Investors will purchase, Series B Preferred Stock of the Company (the "Series B Financing"). WHEREAS, the closing of the Series B Financing is conditioned upon the execution and delivery of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree, and the Company, the Founders and the Series A Investors hereby amend and restate the Original Agreement in its entirety, as follows: ELECTION OF DIRECTORS Election of Directors . At each annual meeting of the stockholders of the Company, or at each special meeting of the stockholders of the Company involving the election of directors of the Company, and at any other time at which stockholders of the Company will have the right to or will vote for or render consent in writing regarding the election of directors of the Company, then and in each event, the Stockholders hereby covenant and agree to vote all shares of voting capital stock of the Company presently owned or hereafter acquired by them (whether owned of record or over which any person exercises voting control) in favor of the following actions: a. to fix and maintain the number of directors initially at thirteen which number may not be further changed except by an amendment to this Agreement approved by the consent of the holders of fifty-one percent (51%) or more of the Preferred Stock; and b. to cause and maintain the election to the Board of Directors of the Company: i. so long as at least one-third of the number of shares of Series A Preferred Stock set forth on Schedule A are outstanding, three representatives designated by the Series A Investors, one of whom shall be a representative of TBG Information Investors LLC (the "TBG Director"), who shall initially be Oakleigh Thorne, one of whom shall be a representative of Core Learning Group LLC (the "Core Learning Director"), who shall initially be William Oberndorf, and the other of whom shall be a representative of the Series A Investors as a class (the "Series A Investor Director" and, with the TBG Director and the Core Learning Director, the "Series A Investor Directors"), who shall initially be George Jenkins; ii. so long as Bell & Howell Company controls one-third of the number of shares of Common Stock held by Bell & Howell Company and its subsidiaries, as listed on Schedule A, three nominees designated by Bell & Howell Company, subject to Section 1.2 below (the "Bell & Howell Common Directors"); iii. so long as Infonautics, Inc. controls one-third of the number of shares of Common Stock held by Infonautics, Inc., listed on Schedule A, two nominees designated by Infonautics, Inc., who shall initially be Lloyd Morrisett and David Van Riper Morris; iv. two nominees represented by the Company's management, who shall initially be John J. Lynch, Jr. and Susan Harman; and v. so long as at least one-third of the number of shares of Series B Preferred Stock set forth on Schedule A are outstanding, three representatives designated by the Series B Investors, one of whom shall be a representative of Bell & Howell Company (the "Bell & Howell Series B Director"), provided, that Bell & Howell Company holds at least thirty percent (30%) of the number of shares of Series B Preferred Stock set forth on Schedule A opposite Bell & Howell Company's name, and the other directors shall be representatives of the Series B investors as a class (the "Series B Investor Directors"). The Series A Investor Director shall be nominated by holders of a majority of the outstanding Series A Preferred Stock owned by the Series A Investors. The Series B Investor Directors shall be nominated by holders of a majority of the outstanding Series B Preferred Stock owned by the Series B Investors other than Bell & Howell Company (as long as Bell & Howell Company is entitled to nominate the Bell & Howell Series B Director). Removal of Bell & Howell Directors . Notwithstanding the foregoing, if Bell & Howell Company has entered into, or is actively preparing to enter into, significant competition with the Company, then (i) Bell & Howell shall thereafter have no rights to designate representatives to the Board of Directors of the Company; (ii) the Bell & Howell Common Directors and Bell & Howell Series B Directors shall immediately resign as directors; (iii) the Company shall use its reasonable efforts to amend its Certificate of Incorporation, Bylaws and this Agreement to reduce the number of directors by three (3) to eliminate the vacancies resulting from the resignation of the Bell & Howell Common Directors; and (iv) the Board seat designated as the Bell & Howell Series B Director thereafter shall therefore be nominated by a majority of the outstanding Series B Preferred Stock owned by the Series B Investors. Removal of Directors; Vacancy . Subject to Section 1.2 above, none of the parties hereto, except in the case of a director designated or nominated by any such party by right in accordance with Section 1.1(b), shall vote any voting capital stock held by it to remove a director, except for bad faith or willful misconduct. Any vacancy in the Board of Directors may only be filled by the party (or class of securities) which, pursuant to Section 1.1, has the right to designate a director to fill such directorship. Each of the parties hereto shall vote or cause to be voted all shares of voting capital stock owned by them or over which they have voting control (i) to remove from the Board of Directors any director designated by any party pursuant hereto at the request of such party, and (ii) to fill any vacancy in the membership of the Board of Directors with a designee pursuant to the terms of this Agreement. Notice . The Company shall provide to each party entitled to designate directors hereunder prior written notice of any intended mailing of notice to stockholders for a meeting at which directors are to be elected, and any party entitled to designate directors pursuant hereto shall notify the Company in writing, prior to such mailing, of the person designated by it or them as its or their nominee for election as director. If any party entitled to designate directors hereunder fails to give notice to the Company as provided above, it shall be deemed that the designee of such party then serving as director shall be its designee for reelection. Committees . The Board of Directors shall establish an Audit and a Compensation Committee of the Board of Directors, each of which (i) shall consist of three "Non-Employee Directors" (as that term is defined in Rule 16b-3 of the Exchange Act of 1934, as amended), and (ii) shall include at least one of the Series A Investor Directors or the Series B Investor Directors who shall be different for each of the Audit and Compensation Committee. Any other committee of the Board shall have at least one of the Series A Investor Directors or the Series B Investor Directors as a member. Observer Rights . As long as any Series A Investor owns not less than ten percent (10%) of the shares of Series A Preferred Stock issued pursuant to the Series A Stock Purchase Agreement (or an equivalent amount of Common Stock issued upon conversion thereof) and such Series A Investor is not otherwise represented on the Board by one of the Series A Investor Directors or Series B Investor Directors directly affiliated with them and as long as any Series B Investor owns not less than ten percent (10%) of the shares of Series B Preferred Stock issued pursuant to the Series B Stock Purchase Agreement (or an equivalent amount of Common Stock issued upon conversion thereof) and such Series B Investor is not otherwise represented on the Board by one of the Series B Investor Directors or Series A Investor Directors directly affiliated with them, the Company shall invite a representative of each such Investor to attend all meetings of its Board of Directors in a nonvoting-observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents and other materials it provides to its directors; provided, however, that such representative shall agree to hold such in confidence; and, provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting will adversely affect the attorney-client privilege between the Company and its counsel. Approval of Indebtedness . So long as at least one-third of the number of shares of Series A Preferred Stock and Series B Preferred Stock set forth on Schedule A are outstanding, the Company will not incur indebtedness in excess of $2,500,000, in one or a series of related transactions, without the prior approval of a majority of the directors nominated by the holders of Preferred Stock. Termination of Rights . The rights and obligations of the Company and the Stockholders set forth in this Article I shall terminate upon the earlier of (i) the consummation of a sale of two-thirds or more of the Series A Preferred Stock and Series B Preferred Stock held by the Stockholders immediately after all closings of the Series B Financing and (ii) the closing of an underwritten public offering of shares of Common Stock of the Company at a public offering price of at least $11.50 per share (as adjusted for any stock split, stock dividend or recapitalization after the date of the first issuance of the Series A Preferred Stock) and gross proceeds to the Company in excess of $40,000,000 (a " Qualified IPO "). Additionally, with respect to each party which has the right to designate or nominate a director pursuant to Section 1.1(b) above, such right shall terminate if such party holds less than 100,000 shares of Common Stock of the Company (assuming the conversion of all Series A Preferred Stock and Series B Preferred Stock, if applicable, and as adjusted for stock split, dividend, combination or like forms of recapitalization). Any vacancy in the Board of Directors resulting from the termination of such right shall be filled by a director elected by all holders of voting capital stock of the Company in a single class. RIGHTS OF FIRST REFUSAL AND CO-SALE Proposed Transfer of Shares . The Stockholders shall not transfer either in a single transaction or in a series of transactions any shares of capital stock of the Company (the " Shares ") or any right or interest therein then owned by him or it except by a transfer that meets the requirements of this Article II and of this Agreement generally. In the event that a Stockholder (a " Transferring Stockholder ") proposes to transfer any portion of the Shares (each, a " Shares Transfer "), whether voluntarily or involuntarily, other than a Permitted Transfer (as defined below), then at least sixty (60) days prior to any proposed Shares Transfer, such Transferring Stockholder shall give written notice (the " TS Notice ") to the Company and the Investors of his or its intention to effect the Shares Transfer. The TS Notice shall set forth (i) its bona fide intention to offer such shares, (ii) the class, series and number of Shares to be sold by the Transferring Stockholder (the " Sale Shares "), (iii) the date or proposed date of the Shares Transfer and the name and address of the proposed transferee, and (iv) the principal terms of the Shares Transfer, including the cash or other property or consideration to be received upon such Shares Transfer. The term " Permitted Transfer " shall mean (i) a Shares Transfer made pursuant to the rights and obligations set forth in Article X of the Master Transaction Agreement, dated as of July 8, 1999, as amended on September 28 and December 15, 1999, by and among certain of the Founders, Bell & Howell Company and Infonautics Corporation (the " MTA "), (ii) a Shares Transfer from a Stockholder to one or more of its " Affiliates " or " Subsidiaries " as those terms are defined in Rule 405 (" Rule 405 ") of the Securities Act of 1933, as amended, (iii) a Shares Transfer to a spouse (other than pursuant to any divorce or separation proceedings or settlement), parents, children (natural or adopted), stepchildren or grandchildren or a trust for any of their benefit in the case of a Transferring Stockholder that is an individual, or (iv) a pro rata distribution of the Shares to such Stockholde's partners, members or stockholders based on such partners, members or stockholders' ownership interests in the Stockholder in the case of a Transferring Stockholder that is a partnership, limited liability company or corporation, as the case may be (each recipient pursuant to any of (i), (ii), (iii) or (iv) being a " Permitted Transferee "); provided, however, that prior to such Shares Transfer, such Permitted Transferee shall agree in writing to be bound by the obligations imposed upon Stockholders under this Agreement as if such transferee were originally a signatory to this Agreement. Right of First Refusal . Exercise by the Company . At any time within fifteen (15) days after receipt of the Notice, the Company may elect by giving written notice to the Transferring Stockholder to purchase all or a portion of the Sale Shares at the purchase price set forth in the TS Notice. Exercise by the Investors and Founders . If the Company does not choose to purchase all of the Sale Shares within fifteen (15) days after receipt of the TS Notice, each of the Investors and Founders may elect, by giving written notice to the Transferring Stockholder within forty-five (45) days after receipt of the TS Notice, to purchase all or a portion of the Sale Shares not purchased by the Company at the purchase price set forth in the TS Notice. If the total number of shares the Investors and Founders offer to purchase exceeds the number of the available Sale Shares, each Investor and Founder shall be entitled to purchase such Investor's or Founder's pro rata share of the Sale Shares, based on the proportion that the number of shares of Common Stock issued and held, or issuable upon conversion of the Preferred Stock then held by such Investor or Founder, bears to the total number of shares of Common Stock issued and held, or issuable upon conversion of the Preferred Stock then held by the participating Investors and Founders. If any Investor or Founder does not exercise its right of first refusal, each of the Investors and Founders which did exercise their right of first refusal shall have the right, exercisable within fifteen (15) days following the date which is forty-five (45) days after receipt of the TS Notice, to elect to purchase any or all of such unpurchased Sale Shares. The Sale Shares that would otherwise have been allocated to the non-exercising Investor or Founder shall be allocated to each Investor or Founder which so exercises its right within such fifteen (15) day period on a pro rata basis. Purchase Price . The purchase price (" Purchase Price ") for the Sale Shares purchased by the Company and the Investors and Founders shall be the price set forth in the TS Notice (the " Offered Price "). If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the board of directors of the Company in good faith. Payment . If the Company or the Investors and Founders elect to purchase the Sale Shares, payment of the Purchase Price shall be made, at the option of the Company or the Investors and Founders, as the case may be, in cash, by cancellation of all or a portion of any outstanding indebtedness of the Transferring Stockholder to the applicable purchaser, or by any combination thereof, by the date which is ninety (90) days after receipt of the TS Notice. Transferring Stockholder's Right to Transfer . If all of the Sale Shares proposed in the TS Notice to be transferred are not purchased by the Company and the Investors and Founders as provided in this Article II, the Transferring Stockholder may sell or otherwise transfer the Sale Shares not purchased by the Company and the Investors and Founders to the proposed transferee at no less than ninety percent (90%) of the Offered Price or at a higher price, provided that such sale or other transfer (i) complies with the provisions of this Article II, including without limitation the co-sale rights in Section 2.3 below, (ii) is consummated within ninety (90) days after receipt of the TS Notice, (iii) is in accordance with all the terms of this Agreement and all other agreements between the Transferring Stockholder and the Company and (iv) is effected in accordance with any applicable securities laws. If the Sale Shares are not transferred to the proposed transferee within such period, a new TS Notice shall be given to the Company and the Investors and Founders, who shall again be offered a right of first refusal pursuant to this Agreement, before any Sale Shares held by the Transferring Stockholder may be sold or otherwise transferred. Right to Participate in Transfer . To the extent the Company and the Investors and Founders decline to exercise their right of first refusal (set forth in Section 2.2 hereof), the Transferring Stockholder shall send a written notice (the " Second Notice ") to all Investors as to their rights under this Section 2.3 within sixty (60) days of sending the TS Notice pursuant to Section 2.2. Upon receipt of the Second Notice, each Investor shall have the right (by written notice to the Transferring Stockholder and the Company to be sent within twenty (20) days after the Investor receives the Second Notice) to require the Transferring Stockholder to cause to be purchased from such Investor the number of shares of Common Stock issued or issuable upon conversion of shares of Series A Preferred Stock or Series B Preferred Stock, as applicable, then held by such Investor that equals (x) the number of Sale Shares that the Transferring Stockholder proposes to transfer, multiplied by (y) the percentage determined by dividing (i) the number of shares of Common Stock issued and held, or issuable upon conversion of the Preferred Stock then held, by the Investor by (ii) the number of shares of Common Stock issued and held, or issuable upon conversion of the Preferred Stock then held, by all of the Investors plus the number of shares of Common Stock issued and held, or issuable upon conversion of the Preferred Stock then held, by the Transferring Stockholder. Any such purchase shall take place concurrently with the closing of the applicable Shares Transfer and in any event within ninety (90) days after receipt of the TS Notice. The foregoing restriction shall not apply to a transfer or series of transfers by an employee or employees of the Company which transfer or series of transfers results in the transfer of less than five percent (5%) of the Shares outstanding on a fully diluted basis (including, for purpose of such calculation, all Shares issuable upon exercise of outstanding options as being issued for any such employee and for outstanding Shares generally). Terms of Purchase . The purchase from the Investors pursuant to Section 2.3 shall be on the same terms and conditions, including per Share price and date of Shares Transfer, as are received by the Transferring Stockholder and stated in the Second Notice provided to the Investors; provided, however, that, in all events, the Sale Shares (and any shares sold by Investors in accordance with this Section 2.3 above) shall continue to be subject to the terms of this Agreement and any such transferee shall agree in writing to be bound by the obligations imposed upon Stockholders under this Agreement as if such transferee were originally a signatory to this Agreement. Transfers Void . Any attempted Shares Transfer by the Stockholders in violation of the terms of this Article II shall be ineffective to vest in any transferee any interest held by the Transferring Stockholder in the Shares. Without limiting the foregoing, any purported Shares Transfer in violation hereof shall be ineffective as against the Investors and the Investors shall have a continuing right and option (but not an obligation), until the restrictions contained in this Article II terminate, to purchase the Shares purported to be transferred by the Transferring Stockholders for a price and on terms the same as those at which the purported Shares Transfer was effected. Termination of Restrictions . The restrictions in this Article II shall terminate upon the consummation of a Qualified IPO. RIGHT OF FIRST OFFER Right of First Offer. Subject to the terms and conditions specified in this Article III, the Company hereby grants to each Investor and each Founder a right of first offer with respect to future sales by the Company of its Shares or securities convertible into or exercisable for any Shares (collectively, "Offered Securities"). For purposes of this Section, "Investor" includes transferees of any Investor and any general partners, members and/or affiliates of an Investor and "Founder" includes transferees of any Founder. An Investor shall be entitled to apportion the right of first offer hereby granted it among itself and its partners and affiliates in such proportions as it deems appropriate. Each time the Company proposes to offer any Offered Securities, the Company shall first make an offering of such Offered Securities to each Investor and Founder in accordance with the following provisions: a. The Company shall deliver written notice (the "Offer Notice") to the Investors and Founders stating (i) its bona fide intention to offer such Offered Securities, (ii) the class, series and number of Offered Securities to be offered, and (iii) the price and terms upon which it proposes to offer such Offered Securities. b. Within thirty (30) days after receipt of the Offer Notice, each Investor and Founder may elect to purchase, at the price and on the terms specified in the Offer Notice, up to that portion of such Offered Securities which equals the proportion that the number of shares of Common Stock issued and held, or issuable upon conversion of the Series A Preferred Stock and the Series B Preferred Stock then held, by such Investor or Founder, as the case may be, bears to the total number of shares of Common Stock of the Company (assuming full conversion and exercise of all convertible or exercisable securities) then held by all the Company's Stockholders. The Company shall promptly give written notice to each Investor and Founder which purchases all the Offered Securities available to it (each, a "Fully-Exercising Investor or Founder") of any other Investor's or Founder's, as the case may be, failure to do likewise. During the twenty (20) day period commencing after receipt of such information, each Fully-Exercising Investor or Founder shall be entitled to obtain that portion of the Offered Securities not subscribed for by the Investors or Founders equal to the proportion the number of shares of Common Stock issued and held, or issuable upon conversion of Series A Preferred Stock or Series B Preferred Stock then held, by such Fully-Exercising Investor or Founder bears to the total number of shares of Common Stock issued and held, or issuable upon conversion of the Series A Preferred Stock or Series B Preferred Stock then held, by all Fully-Exercising Investors or Founders who wish to purchase some of the unsubscribed shares. c. If all Offered Securities are not purchased as provided in subsection (b), the Company may, during the forty-five (45) day period following the expiration of the period provided in subsection (b) hereof, offer the remaining unsubscribed portion of such Offered Securities to any person or persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Notice. If the Company does not enter into an agreement for the sale of the Offered Securities within such period, or if such agreement is not consummated within forty-five (45) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such Offered Securities shall not be offered unless first reoffered to the Investors and Founders in accordance herewith. d. The right of first offer in this Article III shall not be applicable to (i) the issuance by the Company of options to employees, directors or unaffiliated consultants (or to the exercise of such options) pursuant to option plans adopted by the Board of Directors in amounts calculated as follows: (A) options to purchase up to 3,000,000 shares of Common Stock reserved for issuance (subject to appropriate adjustments in the event of any stock dividend, stock split, combination or similar recapitalization affecting such shares), (B) options to purchase such number of shares of Common Stock that equals up to twenty percent (20%) of the Series A Preferred Stock and the Series B Preferred Stock (calculated on an as-converted basis), and (C) options to purchase such number of shares of Common Stock that equals up to twenty percent (20%) of any shares of future equity issued by the Company (calculated on an as-converted basis); (ii) the issuance of securities pursuant to the conversion or exercise of convertible or exercisable securities; (iii) the issuance of securities in connection with a bona fide business acquisition of or by the Company, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise; (iv) the issuance of securities pursuant to equipment lease financing arrangements with equipment lessors which have been approved by the Board, including a majority of the Investor Directors; (v) the issuance of securities pursuant to a Qualified IPO; or (vi) issuances of shares of Series B Preferred Stock pursuant to the Series B Stock Purchase Agreement, including shares issued to any Additional Investors (as defined in the Series B Stock Purchase Agreement). Termination of Rights. The rights and obligations of the Company and Stockholders set forth in this Article III shall terminate upon the Closing of a Qualified IPO. 3.3 For purposes of this Article III, the term "Investor" shall be deemed to include the HomeworkCentral Holders (as defined in the First Amendment to Stockholders Agreement executed in connection with the Company's acquisition of Ho meworkCentral.com, Inc. on April 1, 2000), and for purposes of the HomeworkCentral Holders, the number of shares of Common Stock held by such persons shall include all shares issuable upon conversion or exercise of convertible or exercisable securities held by such persons and such persons' family members (and any trusts for the benefit thereof). MANAGEMENT AND CONTROL General. The business and affairs of the Company shall be managed, controlled and operated in accordance with its certificate of incorporation and bylaws, as the same may be amended from time to time, except that neither the certificate of incorporation nor the bylaws shall be amended in any manner that would conflict with, or be inconsistent with, the provisions of this Agreement. Limitation on Certain Actions by the Company. a. The Company shall not take any of the actions listed in Section 4.2 (a)(i), (ii), (iii), (iv) and (ix) below without the written consent or affirmative vote of the holders of at least seventy percent (70%) of the then outstanding shares of Series B Preferred Stock and shall not take any of the actions listed in Section 4.2 (a)(v), (vi), (vii), (viii) and (x) below without the written consent or affirmative vote of the holders of at least fifty-one percent (51%) of the then outstanding shares of Preferred Stock, voting as a single class: i. any amendment or change of the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of, the Series B Preferred Stock; ii. any action that authorizes, creates or issues shares of any class or series of stock having preferences superior to the Series B Preferred Stock; iii. any action that reclassifies any outstanding shares into shares having preferences or priority as to dividends or assets senior to preferences of the Series B Preferred Stock; iv. any amendment of the Company's Certificate of Incorporation that adversely affects the rights of the Series B Preferred Stock; v. any transaction which is described in Section 2(c) of Article FOURTH of the Certificate of Incorporation of the Company unless holders of Preferred Stock receive at least $4.545 per share (subject to appropriate adjustments in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares); vi. the sale of all or substantially all of the Company's assets unless holders of Series A Preferred Stock receive at least $4.545 per share (subject to appropriate adjustments in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares); vii. the liquidation or dissolution of the Company; viii. the declaration or payment of a dividend on the Common Stock (other than a dividend payable solely in shares of Common Stock); ix. taking any other actions adversely affecting the Series B Preferred Stock vis-à-vis the right of holders of any other securities of the Corporation, provided that issuances of pari passu securities shall not be deemed to be adverse affect the Series B Preferred Stock; or x. the repurchase of any shares of Common Stock except from employees upon termination of employment pursuant to the terms and conditions of employment agreements approved by the Board. b. The Company shall not take any of the actions listed in Section 4.2 (b)(i), (ii), (iii), (iv) and (v) below without the written consent or affirmative vote of the holders of at least seventy percent (70%) of the then outstanding shares of Series A Preferred Stock: i. any amendment or change of the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of, the Series A Preferred Stock; ii. any action that authorizes, creates or issues shares of any class or series of stock having preferences superior to the Series A Preferred Stock; iii. any action that reclassifies any outstanding shares into shares having preferences or priority as to dividends or assets senior to preferences of the Series A Preferred Stock; iv. any amendment of the Company's Certificate of Incorporation that adversely affects the rights of the Series A Preferred Stock; or v. taking any other actions adversely affecting the Series A Preferred Stock vis-à-vis the right of holders of any other securities of the Corporation, provided that issuances of pari passu securities shall not be deemed to be adverse affect the Series A Preferred Stock. REGISTRATION RIGHTS Definitions. As used in this Article V, the following terms shall have the following meanings: a. "Commission" shall mean the Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act. b. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute and the rules and regulations thereunder, all as the same shall be in effect at the time. c. "Holder" shall mean any holder of outstanding Registrable Securities or anyone who holds outstanding Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with this Agreement. d. "Initiating Holders" shall mean any Holder or Holders of at least twenty-five percent (25%) of the Registrable Securities then outstanding. e. "Register," "registered" and "registration" shall 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, and compliance with applicable state securities laws of such states in which Holders notify the Company of their intention to offer Registrable Securities. f. "Registrable Securities" shall mean all of the following to the extent the same have not been sold to the public (i) any and all shares of Common Stock of the Company, issued or issuable, upon conversion of shares of the Company's Series A Preferred Stock, Series B Preferred Stock and up to an aggregate of 7,600,000 shares (subject to appropriate adjustments in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares) of Common Stock owned by Founders; or (ii) stock issued in respect of stock referred to in (i) above in any reorganization; or (iii) stock issued in respect of the stock referred to in (i) or (ii) as a result of a stock split, stock dividend, recapitalization or combination. Notwithstanding the foregoing, Registrable Securities shall not include otherwise Registrable Securities (i) sold by a person in a transaction in which his rights under this Agreement are not properly assigned; (ii) (A) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, or (B) 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, if any, are removed upon the consummation of such sale; or (iii) if they are held by a Holder who can sell all Registrable Securities held by such holder in any three-month period without registration pursuant to Rule 144. g. "Rule 144" shall mean Rule 144 under the Securities Act or any successor or similar rule as may be enacted by the Commission from time to time, but shall not include Rule 144A. h. "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations thereunder, all as the same shall be in effect at the time. Demand Registration. a. If the Company shall receive, at any time after the earlier of December 31, 2002 or one hundred eighty (180) days following the effective date of a Qualified IPO, from Initiating Holders a written request that the Company effect any registration with respect to all or at least twenty-five percent (25%) of the issued and outstanding Registrable Securities held by Holders, the Company shall: i. promptly give written notice of the proposed registration to all other Holders; and ii. as soon as practicable use its best efforts to register (including, without limitation, the execution of an undertaking to file post-effective amendments and any other governmental requirements) all Registrable Securities which the Initiating Holders request to be registered; provided, that the Company shall not be obligated to file a registration statement pursuant to this Section 5.2: A. in any particular state in which the Company would be required to execute a general consent to service of process in effecting such registration; B. within one hundred eighty (180) days following the effective date of any registered offering of the Company's securities to the general public in which the Holders of Registrable Securities shall have been able effectively to register all Registrable Securities as to which registration shall have been requested; C. in any registration having an aggregate offering price (before deduction of underwriting discounts and expenses of sale) of less than $5,000,000; D. after the Company has effected two such registrations by the Investors and two such Registrations by the Founders pursuant to this Section 5.2 and such registrations have been declared or ordered effective, except as provided in Section 5.3; or E. during the period starting with the date sixty (60) days prior to the Company's good faith estimate of the date of filing of, and ending on a date one hundred eighty (180) days after the effective date of, a registration subject to Section 5.3 hereof; provided that the Company is actively employing in good faith its best efforts to cause such registration statement to become effective; and provided further that the Company may not rely on this Section 5.2(a)(ii)(E) more than once during the term of this Agreement to not register Registrable Securities pursuant to a request made by Initiating Holders pursuant to this Section 5.2. Subject to the foregoing clauses (A) through (E), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practical, but in any event within sixty (60) days after receipt of the request or requests of the Initiating Holders and shall use reasonable best efforts to have such registration statement promptly declared effective by the Commission whether or not all Registrable Securities requested to be registered can be included; provided, however, that if the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good-faith judgment of the Board of Directors it would be seriously detrimental to the Company and its Stockholders for such registration statement to be filed within such sixty (60) day period and it is therefore essential to defer the filing of such registration statement, the Company shall have an additional period of not more than 60 days after the expiration of the initial sixty (60) day period within which to file such registration statement; provided, that during such time the Company may not file a registration statement for securities to be issued and sold for its own account except as contemplated by Section 5.2(a)(ii)(E) above. b. If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request. In such event, if so requested in writing by the Company, the Initiating Holders shall negotiate with an underwriter selected by the Company with regard to the underwriting of such requested registration; provided, however, that if a majority in interest of the Initiating Holders have not agreed with such underwriter as to the terms and conditions of such underwriting within twenty (20) days following commencement of such negotiations, a majority in interest of the Initiating Holders may select an underwriter of their choice. The right of any Holder to registration pursuant to Section 5.2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. The Company shall (together with all Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Section 5, if the managing underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, the Company shall so advise all Holders, and the number of shares of Registrable Securities that may be included in the registration and underwriting may be reduced up to an amount that is not less than twenty-five percent (25%) of all the securities included in such registration and the Registrable Securities to be included shall be allocated among all Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders; provided, however, that securities to be included in such registration statement as a result of piggyback registration rights not contained in this Article V as well as any securities to be offered by the Company, its officers and employees shall be excluded from the registration statement prior to the exclusion of any Registrable Securities held by the Holders and further provided that no Registrable Securities held by Holders other than the Founders shall be reduced if any Registrable Securities held by the Founders are included in the registration. If any Holder disapproves of the terms of the underwriting, he may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Initiating Holders. If, by the withdrawal of such Registrable Securities, a greater number of Registrable Securities held by other Holders may be included in such registration (up to the limit imposed by the underwriters) the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities in the same proportion used in determining the limitation as set forth above. Any Registrable Securities which are excluded from the underwriting by reason of the underwriter's marketing limitation or withdrawn from such underwriting shall be withdrawn from such registration. Piggyback Registration. a. If at any time or from time to time, the Company shall determine to register any of its securities, for its own account or the account of any of its Stockholders, other than a registration relating solely to employee benefit plans, or a registration relating solely to a transaction pursuant to Rule 145 under the Securities Act, a transaction relating solely to the sale of debt or convertible debt instruments or a registration on any form (other than Form S-1, S-2 or S-3, or their successor forms) which does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities, the Company will: i. give to each Holder written notice thereof as soon as practicable prior to filing the registration statement; and ii. include in such registration and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within fifteen (15) days after receipt of such written notice from the Company, by any Holder or Holders, except as set forth in subsection (b) below. b. If the registration 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 subsection 5.3. In such event, the right of any Holder to registration pursuant to Section 5.3 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 5.3, if the managing underwriter advises the Holders who are participating in such underwriting in writing that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the number of Registrable Securities to be included in the registration and underwriting to an amount that is not less than twenty-five percent (25%) of all the securities included in such registration, or may exclude Registrable Securities entirely from such registration if the registration is the first registered offering for the sale of the Company's equity securities to the general public (provided that no shares held by officers and directors of the Company, other than Registrable Securities that may be owned by officers and directors, are included in the registration and underwriting and further provided that no Registrable Securities held by Holders other than the Founders shall be reduced if any Registrable Securities held by the Founders are included in the registration). The Company shall so advise all Holders, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated first among all Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement and next to holders of piggyback registration rights not contained in this Article V. If any Holder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the managing underwriter. If, by the withdrawal of such Registrable Securities, a greater number of Registrable Securities held by other Holders may be included in such registration (up to the limit imposed by the underwriters), the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. Form S-3. The Company shall use its reasonable best efforts to qualify for registration on Form S-3 or its successor form. After the Company has qualified for the use of Form S-3, Initiating Holders shall have the right at any time to request that the Company effect any registration on Form S-3 (such requests shall be in writing and shall state the number of shares of Registrable Securities to be disposed of and the intended method of disposition of shares by such Holders), subject only to the following: a. The Company shall not be required to file a registration statement pursuant to this Section 5.4 within one hundred eighty (180) days of the effective date of any registration referred to in Sections 5.2 and 5.3 above. b. The Company shall not be required to file a registration statement pursuant to this Section 5.4 unless the Holder or Holders requesting registration propose to dispose of shares of Registrable Securities having an aggregate disposition price (before deduction of underwriting discounts and expenses of sale) of at least $1,000,000. c. The Company shall not be required to file more than two registration statements pursuant to this Section 5.4 within any twelve-month period. The Company shall give written notice to all Holders of Registrable Securities of the receipt of a request for registration pursuant to this Section 5.4 and shall provide a reasonable opportunity for other Holders to participate in the registration; provided, that if the registration is for an underwritten offering, the following terms shall apply to all participants in such offering: The right of any Holder to registration pursuant to Section 5.4 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other Holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 5.4, if the managing underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, the Company shall so advise all Holders, and the number of shares of Registrable Securities that may be included in the registration and underwriting may be reduced up to an amount that is not less than twenty-five percent (25%) of all the securities included in such registration and the Registrable Securities to be included shall be allocated among all Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders; provided, however, that securities to be included in such registration statement as a result of piggyback registration rights not contained in this Article V as well as any securities to be offered by the Company, its officers and employees shall be excluded from the registration statement prior to the exclusion of any Registrable Securities held by the Holders and further provided that no Registrable Securities held by Holders other than the Founders shall be reduced if any Registrable Securities held by the Founders are included in the registration. If any Holder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the underwriter. If, by the withdrawal of such Registrable Securities, a greater number of Registrable Securities held by other Holders may be included in such registration (up to the limit imposed by the underwriters), the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities in the same proportion used in determining the limitation as set forth above. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. Subject to the foregoing, the Company will use its best efforts to effect promptly the registration of all shares of Registrable Securities on Form S-3 to the extent requested by the Holder or Holders thereof for purposes of disposition. Expenses of Registration. In addition to the fees and expenses contemplated by Section 5.6 hereof, all expenses incurred in connection with registrations pursuant to Sections 5.2, 5.3 and 5.4 hereof, including without limitation all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and expenses of any special audits of the Company's financial statements incidental to or required by such registration, shall be borne by the Company, except that the Company shall not be required to pay underwriters' fees, discounts or commissions relating to Registrable Securities or fees of a separate legal counsel of a Holder. Registration Procedures. In the case of each registration effected by the Company pursuant to this Agreement, the Company will keep each Holder participating therein advised in writing as to the initiation of each registration and as to the completion thereof. At its expense the Company will: a. keep such registration pursuant to Sections 5.2, 5.3 and 5.4 continuously effective for periods of one hundred twenty (120) days, or, in each case, such reasonable period necessary to permit the Holder or Holders to complete the distribution described in the registration statement relating thereto, whichever first occurs; b. promptly prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act, and to keep such registration statement effective for that period of time specified in Subsection 5.6(a) above; c. furnish such number of prospectuses and other documents incident thereto as a Holder from time to time may reasonably request; d. use reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, at the earliest possible moment; e. subject to Subsection 5.2(a)(ii)(A), register or qualify such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as any Holder or underwriter reasonably requires, and keep such registration or qualification effective during the period set forth in Subsection 5.6(a) above; f. cause all Registrable Securities covered by such registrations to be listed on each securities exchange, including NASDAQ, on which similar securities issued by the Company are then listed or, if no such listing exists, use reasonable best efforts to list all Registrable Securities on one of the New York Stock Exchanges, the American Stock Exchange or NASDAQ; and g. cause its accountants to issue to the underwriter, if any, or the Holders, if there is no underwriter, comfort letters and updates thereof, in customary form and covering matters of the type customarily covered in such letters with respect to underwritten offerings; h. enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably, request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a stock split or a combination of shares); i. make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by any such seller or underwriter, such financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors, employees and independent accountants to supply such information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement; and j. if the offering is underwritten, at the request of any Holder of Registrable Securities to furnish on the date that Registrable Securities are delivered to the underwriters for sale pursuant to such registration: (i) an opinion dated such date of counsel representing the Company for the purposes of such registration, addressed to the underwriters and to such Holder, stating that such registration statement has become effective under the Securities Act and that (A) to the best knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act, (B) the registration statement, the related prospectus and each amendment or supplement thereof comply as to form in all material respects with the requirements of the Securities Act (except that such counsel need not express any opinion as to financial statements or other financial data contained therein) and (C) to such other effects as reasonably may be requested by counsel for the underwriters or by such Holder or its counsel and (ii) a letter dated such date from the independent public accountants retained by the Company, addressed to the underwriters and to such seller, stating that they are independent public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements of the Company included in the registration statement or the prospectus, or any amendment or supplement thereof, comply as to form in all material respects with the applicable accounting requirements of the Securities Act, and such letter shall additionally cover such other financial matters (including information as to the period ending no more than five (5) business days prior to the date of such letter) with respect to such registration as such underwriters reasonably may request; k. notify each Holder, at any time a prospectus covered by such registration statement is required to be delivered under the Securities Act, of the happening of any event of which it has knowledge 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 in the light of the circumstances then existing; and l. take such other actions as shall be reasonably requested by any Holder. Indemnification. a. In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to Sections 5.2, 5.3 or 5.4, the Company will indemnify, defend and hold harmless each Holder of such Registrable Securities thereunder, each underwriter of such Registrable Securities thereunder and each other person, if any, who controls such Holder or underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Holder, underwriter or controlling person 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, 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, or any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities law applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, and will indemnify each such Holder, each of its officers, directors and partners, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any reasonable legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by an instrument duly executed by such Holder or underwriter specifically for use therein; provided, further, that the Company shall not be liable if any such omission or statement of material fact is corrected in a later prospectus that was provided to the Investors in a timely manner by the Company and the Investors did not deliver such updated prospectus. b. Each Holder will, if Registrable Securities held by or issuable to such Holder are included in the securities as to which such registration is being effected, indemnify and hold harmless the Company, each of its directors and officers, each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company and each underwriter within the meaning of the Securities Act, and each other such Holder, each of its officers, directors and partners and each person controlling such Holder, against all claims, losses, expenses, 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, such directors, officers, partners, persons or underwriters for any reasonable legal or any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action, 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 an instrument duly executed by such Holder specifically for use therein; provided, however, the total amount for which any Holder, its officers, directors and partners, and any person controlling such Holder, shall be liable under this Section 5.7 shall not in any event exceed the aggregate proceeds received by such Holder from the sale of Registrable Securities sold by such Holder in such registration. c. Each party entitled to indemnification under this Section 5.7 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claims 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, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in actual detriment to the Indemnifying Party. 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 of such claim or litigation. d. Notwithstanding the foregoing, to the extent that the provisions on indemnification contained in the underwriting agreements entered into among the selling Holders, the Company and the underwriters in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall be controlling as to the Registrable Securities included in the public offering; provided, however, that if, as a result of this Subsection 5.7(d), any Holder, its officers, directors, and partners and any person controlling such Holder is held liable for an amount which exceeds the aggregate proceeds received by such Holder from the sale of Registrable Securities included in a registration, as provided in Subsection 5.7(b) above, pursuant to such underwriting agreement (the "Excess Liability"), the Company shall reimburse any such Holder for such Excess Liability. e. If the indemnification provided for in this Section 5.7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations. The relevant fault of the indemnifying party and 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 or alleged omission to state a material fact relates 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. Notwithstanding the foregoing, the amount any Holder shall be obligated to contribute pursuant to this Subsection 5.7(e) shall be limited to an amount equal to the proceeds to such Holder of the Restricted Securities sold pursuant to the registration statement which gives rise to such obligation to contribute (less the aggregate amount of any damages which the Holder has otherwise been required to pay in respect of such loss, claim, damage, liability or action or any substantially similar loss, claim, damage, liability or action arising from the sale of such Restricted Securities). f. Survival of Indemnity. The indemnification provided by this Section 5.7 shall be a continuing right to indemnification and shall survive the registration and sale of any securities by any Person entitled to indemnification hereunder and the expiration or termination of this Agreement. Lockup Agreement. In consideration for the Company agreeing to its obligations under this Agreement, each Holder agrees in connection with any registration of the Company's securities (whether or not such Holder is participating in such registration) upon the request of the Company and the underwriters managing any underwritten offering of the Company's securities, not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days in the case of the Company's initial public offering and ninety (90) days in any other public offering) from the effective date of such registration as the Company and the underwriters may specify, so long as all Holders or stockholders holding more than one percent (1%) of the outstanding common stock and all officers and directors of the Company are, and continue to be, bound by a comparable obligation; provided, however, that nothing herein shall prevent any Holder that is a partnership or corporation from making a distribution of Registrable Securities to the partners or Stockholders thereof that is otherwise in compliance with applicable securities laws, so long as such distributees agree to be so bound. Rule 144. With a view to making available to Holders of Registrable Securities the benefits of certain rules and regulations of the Commission which may permit the sale of the Registrable Securities to the public without registration, the Company agrees at all times after ninety (90) days after the effective date of the first registration filed by the Company for an offering of its securities to the general public to: a. make and keep public information available, as those terms are understood and defined in Rule 144; and b. use its reasonable best efforts to 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. Transfer of Registration Rights. The rights to cause the Company to register Registrable Securities of a Holder and other rights under this Section 5 may be assigned by a Holder to any partner or Stockholder of such Holder, to any other Holder, or to a transferee or assignee who receives at least 50,000 shares of Registrable Securities (as adjusted for any stock split, stock dividend or recapitalization after the date of the first issuance of the Series A Preferred Stock); provided, that the Company is given written notice by the Holder at the time of or within a reasonable time after said transfer, stating the name and address of said transferee or assignee and identifying the securities with respect to which such registration rights are being assigned. Limitations on Subsequent Registration Rights. From and after the date these registration rights are granted, the Company shall not, without the prior written consent of the Investors with at least fifty-one percent (51%) of the outstanding shares of Registrable Securities held by all Investors, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Sections 5.2, 5.3 and 5.4 hereof other than rights subordinate to the rights of any Holder hereunder; provided, further, that granting registration rights to holders in connection with a Rule 145 transaction shall not require the approval of the Investors. Termination of Rights. The rights and obligations of the Company and the Stockholders set forth in this Article V shall terminate on December 31, 2006 (except for the provisions in regard to indemnification which shall continue and shall survive the termination hereof). Notwithstanding anything contained herein to the contrary, any Holder who may sell all such Holder's shares of Registrable Securities in any three-month period without registration pursuant to Rule 144 shall not be entitled to the registration rights set forth in Sections 5.2, 5.3 and 5.4 above. MISCELLANEOUS Information Rights. For so long as the Company is not subject to the periodic reporting requirements of Section 12 of the Securities Exchange Act of 1934, as amended, the Investors shall have the right to receive the information stated in this Section 6.1 from the Company. Periodic Financial and Other Information . So long as an Investor is the holder of not less than (i)100,000 shares of Series A Preferred Stock, (ii) 100,000 shares of Series B Preferred Stock, or (iii) 200,000 shares of Series A Preferred Stock and/or Series B Preferred Stock in the aggregate: i. within ninety (90) days after the end of each fiscal year of the Company, the Company will provide such Investor with financial statements of the Company for such fiscal year, consisting of an income statement, balance sheet and statement of changes in financial position, and prepared in accordance with generally accepted accounting principles consistently applied ("GAAP") which may be audited by such Investor's internal auditors at such times and from time to time as such Investor deems appropriate; the Company shall provide such Investor with full access to its premise, officers, employees, books and records as shall be requested by such Investor in order to exercise such audit right; ii. within forty-five (45) days after the end of each quarterly accounting period of each fiscal year of the Company, the Company will provide such Investor with an unaudited income statement, balance sheet and statement of changes in financial position with comparisons to budget and the immediately preceding fiscal year for such quarter and for the year to date, prepared in accordance with GAAP; iii. within thirty (30) days after the end of each fiscal month, commencing with the first fiscal month ending after the date hereof or ending in the thirty (30) day period before the date hereof, the Company will provide such Investor with internal monthly financial and operating statements for such month, plus a statement setting forth a comparison by reasonable categories to the applicable budget and comparable figures for the prior year; and iv. within thirty (30) days after the end of each fiscal year, the Company will provide such Investor with an annual budget for the next succeeding fiscal year, with the first such annual budget to be provided January 30, 2001; provided, however, that the Company need not provide any such budgets to any Investor which has entered into, or is actively preparing to enter into, significant competition with the Company. Additional Information . So long as an Investor is the holder of not less than (i)100,000 shares of Series A Preferred Stock, (ii) 100,000 shares of Series B Preferred Stock, or (iii) 200,000 shares of Series A Preferred Stock and/or Series B Preferred Stock in the aggregate, the Company will permit such Investor or any representative of such Investor to visit and inspect the Company's premises and properties, including its books and records of account, from time to time, and to discuss the Company's business, finances and accounts with the Company's officers at reasonable times during the Company's regular business hours, upon reasonable advance written notice to the Company and in a manner that will not unreasonably interfere with the normal business operations of the Company; and Books and Records . The Company will keep books and records of account in which full, accurate and correct entries in all material respects will be made of all dealings and transactions in relation to the business and affairs of the Company in accordance with GAAP. (d) For purposes of this Section 6.1, a HomeworkCentral Holder (as defined in the First Amendment to Stockholders Agreement executed in connection with the Company's acquisition of HomeworkCentral.com, Inc. on April 1, 2000) shall be deemed to be an "Investor" who is a "holder of not less than 100,000 shares of Series A Preferred Stock" so long as such HomeworkCentral Holder owns, individually or together with such HomeworkCentral Holder's family members, in excess of 100,000 shares of Common Stock of the Company, including all shares issuable upon conversion or exercise of convertible or exercisable securities held by such persons (and any trusts for the benefit thereof). Transfer of Stock. Except as otherwise expressly provided by this Agreement, each Stockholder agrees not to transfer any of his shares of capital stock of the Company unless the transferee agrees in writing to be bound by the terms and conditions of this Agreement and executes a counterpart of this Agreement, and unless such Stockholder has complied with applicable law and all provisions of this Agreement in connection with such transfer. Duration of Agreement. Except for those provisions that, by their terms, terminate sooner, the rights and obligations of the Company and each Stockholder under this Agreement shall terminate as to such Stockholder on the earliest to occur of the following: (a) the transfer in accordance with this Agreement of all Shares held by such Stockholder or (b) upon the written consent of the Company and the holders of at least a majority of the shares of capital stock then subject to this Agreement, based upon voting power and calculated on an "as if converted" basis, together with the consent of Investors and Founders holding at least sixty percent (60%) of the outstanding Shares held by the Investors and the Founders outstanding on the date hereof. Legend. In addition to any legends which the Company determines to be reasonably necessary at the time of issuance to comply with restrictions or requirements imposed by Federal or state securities laws or by General Corporation Law of the State of Delaware, each certificate representing shares of Series A Preferred Stock, Series B Preferred Stock and Common Stock shall bear the following legend, until such time as the shares of Series A Preferred Stock, Series B Preferred Stock and Common Stock represented thereby are no longer subject to the provisions hereof: "THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT WHICH INCLUDES, AMONG OTHER THINGS, TRANSFER RESTRICTIONS AND A VOTING AGREEMENT. COPIES OF THE STOCKHOLDERS AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY'S SECRETARY." Severability; Governing Law. If any provisions of this Agreement shall be determined to be illegal or unenforceable by any court of law, the remaining provisions shall be severable and enforceable in accordance with their terms. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware. Injunctive Relief. It is acknowledged that it will be impossible to measure the damages that would be suffered by the nonbreaching party if any party fails to comply with the provisions of this Agreement and that in the event of any such failure, the nonbreaching parties will not have an adequate remedy at law. The non-breaching parties shall, therefore, be entitled to obtain specific performance of the breaching party's obligations hereunder and to obtain immediate injunctive relief. The breaching party shall not urge, as a defense to any proceeding for such specific performance or injunctive relief, that the nonbreaching parties have an adequate remedy at law. If any action at law or in equity 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 such party may be entitled. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assignees, legal representatives and heirs. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. The administrator, executor or legal representative of any deceased or incapacitated Stockholder shall have the right to execute and deliver all documents and perform all acts necessary to exercise and perform the rights and obligations of such Stockholder under the terms of this Agreement. Additional Stockholders. Prior to being issued Shares, all future stockholders of the Company during the term of this Agreement shall agree to be Additional Stockholders and to be bound by the terms and provisions of this Agreement, including, without limitation, those who obtain Shares through the exercise of the options described in Section 3.1(d). The Company shall add Additional Stockholders by joinder whereby the Additional Stockholders shall sign a counterpart to this Agreement and the Schedule A hereto shall be amended to reflect the Shares issued to the Additional Stockholder. The joinder of an Additional Stockholder as contemplated by the preceding sentence shall not constitute an amendment to this Agreement requiring the consent of the existing Stockholders except as may otherwise required by this Agreement in connection with the issuance of such Shares. Promptly following the addition of an Additional Stockholder, the Company shall distribute to all Stockholders copies of this Agreement executed by the Additional Stockholder with a revised Schedule A. Modification or Amendment. Neither this Agreement nor any provisions hereof can be modified, amended, changed, discharged or terminated except by an instrument in writing, signed by the Company and the holders of at least a majority of the shares of capital stock then subject to this Agreement, based upon voting power and calculated on an "as if converted" basis, together with the consent of Investors and Founders holding at least sixty percent (60%) of the outstanding Shares held by the Investors and the Founders outstanding on the date hereof. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument. Notices. All notices to be given or otherwise made to any party to this Agreement shall be deemed to be sufficient if contained in a written instrument, delivered by hand in person, or by express overnight courier service, or by electronic facsimile transmission (with a copy sent by first-class mail, postage prepaid), or by registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth on Schedule A to the Series B Stock Purchase Agreement or at such other address as may heretofore or hereafter been designated in writing by the addressee to the addressor. All such notices shall, when mailed or transmitted, be effective when received or when attempted delivery is refused. No Other Agreements. Each Stockholder represents that he has not granted and is not a party to any proxy, voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement, and no holder of Shares shall grant any proxy or become party to any voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement. Certificate of Incorporation and Bylaws. The certificate of incorporation and bylaws of the Company may be amended in any manner permitted thereunder, except that neither the certificate nor the bylaws shall be amended in any manner that would conflict with, or be inconsistent with, the provisions of this Agreement. Significant Competition. Each of the Stockholders covenants that, in the event such Stockholder actively prepares to enter into significant competition with the Company, such Stockholder shall provide immediate notice to the Company in writing. Each of the Stockholders covenants that it will promptly respond to any inquiries by the Company regarding (i) whether such Stockholder has entered into, or is actively preparing to enter into, significant competition with the Company and (ii) the extent of any such competition Stock Splits, etc. All references in this Agreement to share numbers and thresholds based on share numbers are subject to proportional adjustments for stock splits, stock combinations, stock dividends or other like forms of recapitalization. IN WITNESS WHEREOF, the Company, the Investors and the Founders have executed this agreement in counterparts as of the date first above specified. "Company" BIGCHALK.COM, INC.  By: /s/ John J. Lynch, Jr. Name: John J. Lynch, Jr. Title: President & CEO   "Stockholders" TBG INFORMATION INVESTORS LLC  By: /s/ Jack W. Blumenstein Name: Jack W. Blumenstein Title: President   CORE LEARNING GROUP LLC  By: /s/ William E. Oberndorf Name: William E. Oberndorf Title: Chairman   CORE LEARNING GROUP BC, LLC  By: /s/ William E. Oberndorf Name: William E. Oberndorf Title: Chairman   APA EXCELSIOR V, L.P. By: APA Excelsior Partners L.P., its General Partner By: Patricof & Co. Managers, Inc. its General Partner  By: /s/ George M. Jenkins Name: George M. Jenkins Title:   PATRICOF PRIVATE INVESTMENT CLUB II, L.P. By: APA Excelsior Partners L.P., its General Partner By: Patricof & Co. Managers, Inc. its General Partner  By: /s/ George M. Jenkins Name: George M. Jenkins Title:   SOFTBANK VENTURES, INC.  By: /s/ Keisoko Chuman Name: Keisoko Chuman Title: President & CEO   BELL & HOWELL INFORMATION AND LEARNING COMPANY  By: /s/ Nils Johanson Name: Nils Johanson Title: Vice President   INFONAUTICS, INC.  By: /s/ David Van Riper Morris Name: David Van Riper Morris Title: President & CEO   IGSB LSP I, LLC  By: /s/ Timothy K. Bliss Name: Timothy K. Bliss Title: Manager       "Additional Stockholders" Stockholder: By: /s/ Frank A. Bonsal, Jr. Name: Frank A. Bonsal, Jr. Title:   Stockholder: By: Name: Title:   Stockholder: By: Name: Title:   Stockholder: By: Name: Title:   Stockholder: By: Name: Title:   .: SCHEDULE A FORMATION ISSUANCES Founders Number of Shares of Common Stock BELL & HOWELL INFORMATION AND LEARNING COMPANY 10,366,667 INFONAUTICS, INC. 4,633,333 Gerald Frankel   Anne Toder   Toder Trust   Peter C. Van Roden   [Executive Officers](1)   [Directors](1)   (1) For purposes of Article III (Right of First Offer) of this agreement, this party shall not be deemed to be a "Founder" and shall not be deemed to be a party to said Article III. SERIES A PREFERRED STOCK Investors Number of Shares of Series A Preferred Stock TBG INFORMATION INVESTORS LLC 3,010,000 CORE LEARNING GROUP LLC 2,510,000 CORE LEARNING GROUP BC, LLC 500,000 APA EXCELSIOR V, L.P. 1,486,941 PATRICOF PRIVATE INVESTMENT CLUB II, L.P. 18,060 FRANK A. BONSAL, JR. 35,715 WS INVESTMENT COMPANY 99B 14,286 ALAN K. AUSTIN 14,286 THE SAN DOMENICO TRUST 3,286 TIMOTHY J. SPARKS 7,143 DANIEL K. YUEN 285 SERIES A PREFERRED TOTAL 7,600,002     SERIES B PREFERRED STOCK Investors Number of Shares of Series B Preferred Stock                         ADDITIONAL ISSUANCES NAME Number and Class of Shares                        

Exhibit 10.08 FIFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF ZAMBA CORPORATION              Zamba Corporation, a corporation organized and existing under the laws of the State of Delaware hereby certifies as follows:              FIRST:    The name of this corporation (hereinafter the “Corporation”) is ZAMBA CORPORATION.  The name was changed to Zamba Corporation from Racotek, Inc. on October 5, 1998.  The corporation was originally incorporated under the name RaCoTek, Inc. and the date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware is August 15, 1990.  The current articles of incorporation, the Fourth Amended and Restated Certificate of Incorporation, are dated December 30, 1998.              SECOND:    The text of the Fourth Amended and Restated Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to become the Fifth Amended and Restated Certificate of Incorporation and to read as follows: ARTICLE 1              The name of this Corporation is Zamba Corporation. ARTICLE 2              The address of the registered office of the Corporation in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801, and the name of the registered agent of the Corporation in the State of Delaware at such address is:  The Corporation Trust Company. ARTICLE 3              The purposes and powers of the Corporation shall be to conduct any lawful act or activity, for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE 4              Section 1.         Classes of Stock              This Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock”, both of which shall have a par value of $0.01 per share.  The total number of shares which the Corporation is authorized to issue is 125,000,000, of which 120,000,000 shares shall be Common Stock and 5,000,000 shares shall be Preferred Stock.              Section 2.         Designation of Series of Preferred Stock              The Board of Directors is authorized to provide for the issuance of the shares of Preferred Stock in one or more series, and, by filing a certificate of designation pursuant to the General Corporation Law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof, and to increase or decrease the number of shares of any such series (but not above the total number of shares of Preferred Stock authorized when combined with other series of Preferred Stock nor below the number of shares of such series then outstanding).  In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status that they had prior the adoption of the resolution originally fixing the number of shares of such series.              Except as may be expressly provided in any Certificate of Designation designating any series of Preferred Stock pursuant to the foregoing provisions of this Article 4, any new series of Preferred Stock may be designated, fixed and determined as provided herein by the Board of Directors without approval of the holders of Common Stock or the holders of Preferred Stock, or any series thereof, and any such new series may have powers, preferences and rights, including, without limitation, voting rights, dividend rights, liquidation rights, redemption rights and conversion rights, senior to, junior to or pari passu with the rights of the Common Stock, the Preferred Stock, or any future class or series of Preferred Stock or Common Stock. ARTICLE 5              A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for (i) liability based on a breach of the duty of loyalty to the Corporation or its stockholders; (ii) liability for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; (iii) liability based on the payment of an improper dividend or an improper repurchase of the Corporation’s stock under Section 174 of the General Corporation Law of the State of Delaware; or (iv) liability for any transaction for which the director derived an improper personal benefit.  If the General Corporation Law of the State of Delaware is hereafter amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended General Corporation Law of the State of Delaware.  Any repeal or modification of this Article by the stockholders of the Corporation shall be prospective only and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. ARTICLE 6              The power to adopt, amend, or repeal the Bylaws of this Corporation is hereby conferred upon the Board of Directors to the full extent permitted by law, subject, however, to the power of the stockholders of this Corporation to adopt, amend, or repeal Bylaws. ARTICLE 7              Election of directors need not be by written ballot unless the Bylaws of this Corporation shall so provide.              THIRD:    This Fifth Amendment and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware, with notice to nonconsenting stockholders having been given in accordance with Section 228(d) of the General Corporation Law of the State of Delaware.              IN WITNESS WHEREOF, Zamba Corporation has caused this Fifth Amended and Restated Certificate of Incorporation to be signed by its Chief Executive Officer and attested to by its Secretary in Minneapolis, Minnesota this 3rd day of August, 2001.     ZAMBA CORPORATION           By: /s/ Doug Holden     Doug Holden, Chief Executive Officer ATTEST:           /s/ Ian Nemerov   Ian Nemerov, Secretary      

  EXHIBIT 10.73 STOCK PURCHASE AGREEMENT      This Stock Purchase Agreement is entered into as of July 1, 2001, (the “Effective Date”) by MetriGenix, Inc., a Delaware corporation (the “Company”), and [name] (the “Stockholder”). SECTION 1. Acquisition Of Shares.      (a)       Sale and Purchase. On the terms and conditions set forth in this Agreement and pursuant to the provisions of the Company’s Amended and Restated Omnibus Stock Plan adopted as of June 14, 2001 (the “Plan”), the Company agrees to sell to Stockholder, and the Stockholder agrees to purchase from the Company, [Number of Shares (figure amount)] shares of Stock. The sale and purchase shall occur at the offices of the Company on the date set forth above or at such other place and time as the parties may agree.      (b)       Consideration. The Stockholder agrees to pay $0.30 for each Purchased Share, for a total of [amount (figure amount)]. The Purchase Price is agreed to be at least 100% of the Fair Market Value of each Purchased Share. Payment in an amount equal to the Purchase Price of all Purchased Shares shall be made on the transfer date in cash.      (c)       Stock Restriction Agreement. In consideration of the Company’s willingness to sell Shares to Stockholder, Stockholder agrees to be bound by the transfer restrictions, Right of Repurchase, Right of First Refusal, Rights of Second Refusal, Rights of Co-Sale, Market Stand-off, Drag Along Rights and other terms and conditions herein.      (d)       Defined Terms. Capitalized terms not otherwise defined herein are defined in Section 13 of this Agreement. SECTION 2. Restrictions Against Transfer, Right Of Repurchase and Put Right.      (a)      Restrictions Against Transfer. All Purchased Shares initially shall be Restricted Shares and shall be subject to a right of repurchase by the Company. The Stockholder shall not transfer, assign, encumber or otherwise dispose of any Restricted Shares, nor any of the Purchased Shares which have been held for less than one year from the Effective Date, except as provided in the following sentence. The Stockholder may transfer Restricted Shares, and/or any Purchased Shares which have been held for less than one year from the Effective Date, (i) by beneficiary designation, will or intestate succession or (ii) to the Purchaser’s spouse, children or grandchildren or to a trust established by the Stockholder for the benefit of the Stockholder or the Stockholder’s spouse, children or grandchildren, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement, including without limitation this Section 2.   --------------------------------------------------------------------------------        (b)       Condition Precedent to Exercise. The Right of Repurchase shall be exercisable with respect to Restricted Shares only during the 90-day period next following the date when the Stockholder’s Service terminates for any reason, with or without cause, including (without limitation) death or disability.      (c)       Lapse of Repurchase Right. The Right of Repurchase shall lapse with respect to one-fourth (1/4th) of the Restricted Shares on the Effective Date. The Right of Repurchase shall lapse with respect to an additional one-forty eighth (1/48th) of the remaining Restricted Shares when the Stockholder completes each month of continuous Service thereafter. The Right of Repurchase shall lapse and all of the remaining Restricted Shares shall become vested on the earlier of the following events: (i) the Company is subject to a Change in Control; (ii) the Company successfully consummates an initial public offering of its Stock pursuant to an effective registration statement under the Securities Act covering a primary sale of Stock of the Company at a public offering price of at least eight dollars ($8.00) per Share with gross proceeds of thirty million dollars ($30,000,000) or more or (iii) the Stockholder’s Service is terminated at any time during the three (3) month period preceding or the thirteen (13) month period following the consummation of a Change in Control of the Company’s Parent due to an Involuntary Termination Without Cause or a Constructive Termination. Any and all Purchased Shares with respect to which the Right of Repurchase shall have lapsed shall be fully vested in Stockholder and shall not be Restricted Stock.      (d)       Repurchase Cost. If the Company exercises the Right of Repurchase, it shall pay the Stockholder an amount equal to the Purchase Price per Share under Subsection 1(b) above for each of the Restricted Shares being repurchased.      (e)       Exercise of Repurchase Right. The Right of Repurchase shall be exercisable only by written notice delivered to the Stockholder prior to the expiration of the 90-day period specified in Subsection (b) above. The notice shall set forth the date on which the repurchase is to be effected which shall not be more than thirty (30) days after the date of the notice. The certificate(s) representing the Restricted Shares to be repurchased shall, prior to the close of business on the date specified for the repurchase, be delivered to the Company properly endorsed for transfer. The Company shall, concurrently with the receipt of such certificate(s), pay to the Stockholder the Purchase Price determined according to Subsection (d) above. Payment shall be made in cash or cash equivalents. The Right of Repurchase shall terminate with respect to any Restricted Shares for which it has not been timely exercised pursuant to this Subsection (e).      (f)       Additional Shares or Substituted Securities. In the event of the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities or other property (including money paid other than as an ordinary cash dividend) which by reason -2- --------------------------------------------------------------------------------   of such transaction are distributed with respect to any Restricted Shares or into which such Restricted Shares thereby become convertible shall immediately be subject to the Right of Repurchase. Appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class of the Restricted Shares. After each such transaction, appropriate adjustments shall also be made to the price per share to be paid upon the exercise of the Right of Repurchase in order to reflect any change in the Company’s outstanding securities effected without receipt of consideration therefor; provided, however, that the aggregate purchase price payable for the Restricted Shares shall remain the same.      (g)       Termination of Rights as Stockholder. If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Restricted Shares to be repurchased in accordance with this Section 2, then after such time the person from whom such Restricted Shares are to be repurchased shall no longer have any rights as a holder of such Restricted Shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such Restricted Shares shall be deemed to have been repurchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement.      (h)       Escrow. Upon issuance, the certificates for Restricted Shares shall be deposited in escrow with the Company to be held in accordance with the provisions of this Agreement. Any new, substituted or additional securities or other property described in Subsection (f) above shall immediately be delivered to the Company to be held in escrow, but only to the extent the Purchased Shares are at the time Restricted Shares. All regular cash dividends on Restricted Shares (or other securities at the time held in escrow) shall be paid directly to the Stockholder and shall not be held in escrow. Restricted Shares, together with any other assets or securities held in escrow hereunder, shall be (i) surrendered to the Company for repurchase and cancellation upon the Company’s exercise of its Right of Repurchase or (ii) released to the Stockholder upon the Stockholder’s request to the extent the Purchased Shares are no longer Restricted Shares (but not more frequently than once every six months). In any event, all Purchased Shares that have vested (and any other vested assets and securities attributable thereto) shall be released as soon as administratively practicable following the expiration of 90 days after the earlier of (i) the Stockholder’s cessation of Service or (ii) the lapse of the Right of Repurchase as to all Purchased Shares. Notwithstanding this Section 2(h), in the event Stockholder elects to pledge all or part of the Restricted Shares as contemplated in Section 3(h) below, the certificates for the Restricted Shares so pledged shall be held pursuant to the terms and conditions of a Stock Pledge Agreement to be entered into between Parent and the Stockholder.      (i)       Put Right. During any period in which the Company’s Right of Repurchase is exercisable, the Stockholder or his or her Transferee shall have a corresponding right to require the Company to purchase all, but not less than all, of the -3- --------------------------------------------------------------------------------   Restricted Shares, which Put Right shall be exercisable only by written notice delivered to the Company prior to the expiration of such period. The notice shall set forth the date on which the repurchase is to be effected which shall not be more than thirty (30) days after the date of the notice. The certificate(s) representing the Restricted Shares to be repurchased shall, prior to the close of business on the date specified for the repurchase, be delivered to the Company properly endorsed for transfer. The Company shall, concurrently with the receipt of such certificate(s), pay to the Stockholder an amount equal to the Purchase Price per Share under Subsection 1(b) above for each of the Restricted Shares being repurchased. Payment shall be made in cash or cash equivalents. The Put Right shall terminate with respect to any Restricted Shares for which it has not been timely exercised pursuant to this Subsection (i). SECTION 3. Right Of First Refusal.      (a)       Right of First Refusal. In the event that the Stockholder proposes to sell, pledge or otherwise transfer to a third party any Purchased Shares (which are not then Restricted Shares and have been held for at least one year), or any interest in such Purchased Shares, the Company, in the first instance, and each of the Investors and Parent (collectively, the “Investor Stockholders”), in the second instance, shall have the rights of refusal with respect to all or part of such Purchased Shares as herein set forth. If the Stockholder desires to transfer such Purchased Shares (which are no longer subject to the restrictions against transfer in Subsection 2(a)), the Stockholder shall give a written Transfer Notice to the Company describing fully the proposed transfer, including the number of such Purchased Shares proposed to be transferred, the proposed transfer price and the terms of payment, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed sale or transfer will not violate any applicable federal or state securities laws (the “Initial Transfer Notice”). The Initial Transfer Notice shall be signed both by the Stockholder and by the proposed Transferee and must constitute a binding commitment of both parties to the transfer of the Purchased Shares. For a period of thirty (30) calendar days following the Initial Transfer Notice, the Company shall have the right to purchase all or part of the Purchased Shares on the terms of the proposal described in the Initial Transfer Notice (with an equivalent amount of cash being substituted for proposed payment in any form other than cash) by delivery of a notice of exercise of the Right of First Refusal within such 30-day period. The Company shall effect the purchase of any of the Purchased Shares pursuant to the exercise of the Right of First Refusal, including payment of any portion of the purchase price required to be paid upon closing and execution of any documents evidencing any deferred obligation to pay any portion of the purchase price, not more than thirty (30) calendar days after delivery of the notice of exercise, and at such time the Stockholder shall deliver to the Company the certificate(s) representing the Purchased Shares to be purchased by the Company, each certificate to be properly endorsed for transfer. The Company’s rights under this Subsection (a) shall be freely assignable, in whole or in part.      (b)       Investor Stockholders’ Right of Second Refusal. In the event that the Company does not elect to purchase all of the Purchased Shares pursuant to its Right of -4- --------------------------------------------------------------------------------   First Refusal under Section 3(a) above within the period set forth therein, the Stockholder shall promptly (and in any event not later than forty-five (45) calendar days after the Initial Transfer Notice) give a written Transfer Notice (the “Second Transfer Notice”) to each of the Investor Stockholders. The Second Transfer Notice shall set forth the number of Purchased Shares not purchased by the Company and shall otherwise reflect the information required in an Initial Transfer Notice pursuant to Section 3(a). Each Investor Stockholder shall then have the right, exercisable upon written notice to the Stockholder (a “Participation Notice”) within fifteen (15) calendar days after the receipt of the Second Transfer Notice, to purchase its pro rata share (determined based on each such Investor Stockholder’s then percentage ownership in the Company (as determined on an as-if-converted basis) unless the Investor Stockholders agree upon a different percentage within such 15-day period) of the Purchased Shares subject to the Second Transfer Notice on the same terms and conditions set forth therein. The Investor Stockholders who so exercise their rights of second refusal (each such Investor Stockholder a “Participating Investor” and collectively, the “Participating Investors”) shall effect the purchase of the Purchased Shares, including payment of any portion of the purchase price required to be paid upon closing and execution of any documents evidencing any deferred obligation to pay any portion of the purchase price, not more than fifteen (15) calendar days after delivery of the Participation Notice, and at such time the Stockholder shall deliver to the Participating Investors the certificate(s) representing the Purchased Shares to be purchased by such Participating Investors, each certificate to be properly endorsed for transfer.      (c)       Right of Co-Sale.                (i)       In the event the Company and the Investor Stockholders fail to exercise their respective rights to purchase all of the Purchased Shares subject to Section 3(a) and (b) hereof, following the exercise or expiration of the rights of purchase set forth therein, the Stockholder shall deliver to each Investor Stockholder written notice (a “Co-Sale Notice”) that each Investor Stockholder shall have the right, exercisable upon written notice (a “Co-Sale Participation Notice”) to Stockholder within fifteen (15) calendar days after receipt of the Co-Sale Notice, to participate in such transfer on the same terms and conditions as proposed with respect to the Purchased Shares of such Stockholder. Such Co-Sale Participation Notice shall indicate the number of shares of capital stock of the Company owned by such Investor Stockholder (the “Investor Stock”) that such Investor Stockholder wishes to sell under his or its right to participate. To the extent one or more of the Investor Stockholders exercise such right of participation in accordance with the terms and conditions set forth below, the number of shares of Purchased Shares that such Stockholder may sell in the transaction shall be correspondingly reduced.                (ii)       Each Investor Stockholder may sell all or any part of that number of its shares of capital stock of the Company equal to the product obtained by multiplying (i) the aggregate number of shares of Stock covered by the Co-Sale Notice by (ii) a fraction the numerator of which is the number of shares of Stock owned by such Investor Stockholder at the time of the proposed transfer (as determined on an as-if-converted -5- --------------------------------------------------------------------------------   basis) and the denominator of which is the total number of shares of Stock of the Company owned by the Stockholder and the Investor Stockholders at the time of the transfer, without regard to the transfer (as determined on an as-if-converted basis).                (iii)       Each Investor Stockholder who elects to participate in the transfer pursuant to this Section 3(c) (a “Co-Sale Participant”) shall effect its participation in the transfer by promptly delivering to the Stockholder one or more certificates, properly endorsed for transfer, which represent the type and number of shares of capital stock of the Company which such Co-Sale Participant elects to sell provided, however, that if a Co-Sale Participant owns Preferred Stock of the Company and the prospective transferee objects to the delivery of Preferred Stock, such Co-Sale Participant shall convert such Preferred Stock into Stock and deliver Stock. The Company agrees to make any such conversion concurrent with the actual transfer of such shares.                (iv)       The stock certificate or certificates that represent the shares which such Co-Sale Participant elects to sell to the prospective Transferee pursuant to Section 3(c) shall be transferred by the Stockholder to such Transferee in consummation of the sale of the Stock pursuant to the terms and conditions specified in the Co-Sale Notice, and the Transferee shall concurrently therewith pay to such Co-Sale Participant that portion of the sale proceeds to which such Co-Sale Participant is entitled by reason of its participation in such sale. To the extent that any prospective Transferee prohibits such assignment or otherwise refuses to purchase shares from a Co-Sale Participant exercising its rights of co-sale hereunder, the Stockholder shall not sell to such prospective Transferee any Purchased Shares unless and until, simultaneously with such sale, such Stockholder shall purchase such shares from such Co-Sale Participant on the same terms and conditions specified in the Co-Sale Notice.                (v)       If Stockholder has delivered Co-Sale Notices and otherwise has complied with the provisions of this Section 3, the Stockholder may, not later than sixty (60) calendar days following delivery to the Investor Stockholders of the Co-Sale Notices, enter into an agreement providing for the closing of the transfer of that portion of the Purchased Shares covered by the Co-Sale Notice and not displaced by participation in the transfer of the Investor Stockholders as permitted by this Section 3 within thirty (30) calendar days of such agreement, at the same price per share and on other terms and conditions not more materially favorable to the Stockholder than those described in the Co-Sale Notices. Any proposed transfer at a different price per share or on other terms and conditions materially more favorable than those described in the Co-Sale Notices, as well as any subsequent proposed transfer of any of the Purchased Shares of the Stockholder, shall again be subject to the Right of First Refusal, Rights of Second Refusal and Rights of Co-Sale and shall require compliance by the Stockholder with the procedures described in this Section 3. Any Purchased Shares not actually sold or transferred to a proposed Transferee by the Stockholder within such 30-day period at the price and on the terms set forth in the Co-Sale Notices shall remain subject to all of the provisions of this Agreement. Any Purchased Shares which are sold or transferred to such proposed Transferee by the Stockholder within such 30-day period shall also remain subject to all of the provisions of this Agreement. Completion of such sale and transfer -6- --------------------------------------------------------------------------------   of the shares on the books and records of the Company will be subject to the Transferee of such shares executing with the Company a stock restriction agreement containing the aforementioned provisions.      (d)       Additional Shares or Substituted Securities. In the event of the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities or other property (including money paid other than as an ordinary cash dividend) which are by reason of such transaction distributed with respect to any Purchased Shares subject to this Section 3 or into which such Purchased Shares thereby become convertible shall immediately be subject to this Section 3. Appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class of Purchased Shares subject to this Section 3.      (e)       Termination and Exception. Any other provision of this Section 3 notwithstanding, the Right of First Refusal, Rights of Second Refusal and Rights of Co-Sale shall terminate upon the successful consummation of an underwritten initial public offering by the Company of its Stock pursuant to an effective registration statement under the Securities Act of 1933, as amended and shall not apply to a transfer in connection with a Change in Control.      (f)       Permitted Transfers. This Section 3 shall not apply to a transfer by beneficiary designation, will or intestate succession or (ii) a transfer to the Stockholder’s spouse, children or grandchildren or to a trust established by the Stockholder for the benefit of the Stockholder or the Stockholder’s spouse, children or grandchildren, provided in either case that the Transferee agrees in writing on a form prescribed by the Company to be bound by all the provisions of this Agreement, including without limitation this Section 3.      (g)       Termination of Rights as Stockholder. If the Company and/or the Investor Stockholders make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Purchased Shares to be purchased in accordance with this Section 3, then after such time the person from whom such Purchased Shares are to be purchased shall no longer have any rights as a holder of such Purchased Shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such Purchased Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement.      (h)       Pledge of Purchased Shares to Secure Loan. Notwithstanding anything to the contrary in Section 2 and this Section 3, the Company, the Investors and the Parent hereby agree that Stockholder may pledge all or part of the Purchased Shares to secure a loan from Parent to Stockholder to enable Stockholder to acquire the Purchased Shares -7- --------------------------------------------------------------------------------   hereunder and in connection therewith, each of the Company, the Investors and Parent waives its rights of refusal and any co-sale rights under this Section 3 with respect to such pledge of Purchased Shares. SECTION 4. Other Restrictions On Transfer.      (a)       Purchaser Representations. In connection with the issuance and acquisition of Shares under this Agreement, the Stockholder hereby represents and warrants to the Company as follows:              (i)      The Stockholder is acquiring and will hold the Purchased Shares for investment for his or her account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.              (ii)      The Stockholder understands that the Purchased Shares have not been registered under the Securities Act by reason of a specific exemption therefrom and that the Purchased Shares must be held indefinitely, unless they are subsequently registered under the Securities Act or the Stockholder obtains an opinion of counsel, in form and substance satisfactory to the Company and its counsel, that such registration is not required. The Stockholder further acknowledges and understands that the Company is under no obligation to register the Purchased Shares.              (iii)      The Stockholder is aware of the adoption of Rule 144 by the Securities and Exchange Commission under the Securities Act, which permits limited public resales of securities acquired in a non-public offering, subject to the satisfaction of certain conditions, including (without limitation) the availability of certain current public information about the issuer, the resale occurring only after the holding period required by Rule 144 has been satisfied, the sale occurring through an unsolicited “broker’s transaction,” and the amount of securities being sold during any three-month period not exceeding specified limitations. The Stockholder acknowledges and understands that the conditions for resale set forth in Rule 144 have not been satisfied and that the Company has no plans to satisfy these conditions in the foreseeable future.              (iv)      The Stockholder will not sell, transfer or otherwise dispose of the Purchased Shares in violation of the Securities Act, the Securities Exchange Act of 1934, or the rules promulgated thereunder, including Rule 144 under the Securities Act. The Stockholder agrees that he or she will not dispose of the Purchased Shares unless and until he or she has complied with all requirements of this Agreement applicable to the disposition of Purchased Shares and he or she has provided the Company with written assurances, in substance and form satisfactory to the Company, that (A) the proposed disposition does not require registration of the Purchased Shares under the Securities Act or all appropriate -8- --------------------------------------------------------------------------------     action necessary for compliance with the registration requirements of the Securities Act or with any exemption from registration available under the Securities Act (including Rule 144) has been taken and (B) the proposed disposition will not result in the contravention of any transfer restrictions applicable to the Purchased Shares under applicable state law.              (v)      The Stockholder has been furnished with, and has had access to, such information as he or she considers necessary or appropriate for deciding whether to invest in the Purchased Shares, and the Stockholder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issuance of the Purchased Shares.              (vi)      The Stockholder is aware that his or her investment in the Company is a speculative investment that has limited liquidity and is subject to the risk of complete loss. The Stockholder is able, without impairing his or her financial condition, to hold the Purchased Shares for an indefinite period and to suffer a complete loss of his or her investment in the Purchased Shares.      (b)       Securities Law Restrictions. Regardless of whether the offering and sale of Shares under this Agreement have been registered under the Securities Act or have been registered or qualified under the securities laws of any state, the Company at its discretion may impose restrictions upon the sale, pledge or other transfer of the Purchased Shares (including the placement of appropriate legends on stock certificates or the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities laws of any state or any other law.      (c)       Market Stand-Off. In connection with the first underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, the Stockholder shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Purchased Shares without the prior written consent of the Company or its underwriters. The Market Stand-Off shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriters. In no event, however, shall such period exceed 180 days. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the -9- --------------------------------------------------------------------------------   Purchased Shares until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Subsection 4(c).      (d)       Rights of the Company. The Company shall not be required to (i) transfer on its books any Purchased Shares that have been sold or transferred in contravention of this Agreement or (ii) treat as the owner of Purchased Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom Purchased Shares have been transferred in contravention of this Agreement. SECTION 5. Drag Along Rights.      (a)       Generally. If at any time the holder(s) of a majority of the shares of Stock of the Company desire to sell, exchange, convey, or otherwise transfer, in one or a series of related transactions to an independent third party, all of the outstanding shares of Stock of the Company (“Selling Holder(s)”), then the Selling Holder(s) may require the Stockholder to sell, exchange, convey, or otherwise transfer, and the Stockholder agrees to sell, exchange, convey, or otherwise transfer all of the shares of Stock at the same price per share of Stock (as set forth below) and on the same terms and conditions, as received by the Selling Holder(s) from the independent third party for the same class of shares.      (b)       Conditions to Obligation. The Stockholder’s obligation to sell, exchange, convey or otherwise transfer the Stock under the provisions of this Section 5 is subject to the requirements that (i) the Selling Holder(s) shall give notice to the Stockholder of such sale, exchange, conveyance, or transfer at least thirty (30) days prior to the proposed date of such event, specifying the price and terms upon which shares of Stock are to be sold, exchanged, conveyed, or transferred, and the proposed date of such event, and (ii) upon the consummation of said sale, exchange, conveyance, or transfer, the Stockholder will receive the same form and amount of consideration per share of Stock as received by the Selling Holder(s) for the same class of shares, or, if the Selling Holder(s) are given an option as to the form and amount of consideration to be received, the Stockholder will be given the same option. SECTION 6. Successors And Assigns.      Except as otherwise expressly provided to the contrary, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and inure to the benefit of, and be binding upon, the Stockholder and the Stockholder’s legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person has become a party to this Agreement or has agreed in writing to join herein and to be bound by the terms, conditions and restrictions hereof. -10- --------------------------------------------------------------------------------   SECTION 7. No Retention Rights.      Nothing in this Agreement shall confer upon the Stockholder any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Stockholder), which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause. SECTION 8. Tax Election.      The acquisition of the Purchased Shares may result in adverse tax consequences that may be avoided or mitigated by filing an election under Code Section 83(b). Such election may be filed only within 30 days after the date of purchase. The form for making the Code Section 83(b) election is attached to this Agreement as an Exhibit. The Stockholder should consult with his or her tax advisor to determine the tax consequences of acquiring the Purchased Shares and the advantages and disadvantages of filing the Code Section 83(b) election. The Stockholder acknowledges that it is his or her sole responsibility, and not the Company’s, to file a timely election under Code Section 83(b), even if the Stockholder requests the Company or its representatives to make this filing on his or her behalf. SECTION 9. Legends.      Legends. All certificates evidencing Purchased Shares shall bear the following legends:   “THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT (i) GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES AND CERTAIN REPURCHASE RIGHTS UPON TERMINATION OF SERVICE WITH THE COMPANY, (ii) GRANTS TO CERTAIN INVESTORS RIGHTS OF FIRST REFUSAL AND CO-SALE RIGHTS UPON AN ATTEMPTED TRANSFER OF THE SHARES, AND (iii) IMPOSES ON THE HOLDER CERTAIN SO-CALLED MARKET STAND OFF AND DRAG ALONG REQUIREMENTS. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”   “THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN -11- --------------------------------------------------------------------------------     EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.” If required by the authorities of any state in connection with the issuance of the Purchased Shares, the legend or legends required by such state authorities shall also be endorsed on all such certificates. SECTION 10.      Notice.      Any notice required by the terms of this Agreement shall be given in writing and shall be deemed effective (a) upon personal delivery; (b) three (3) business days after having been sent by registered or certified mail, return receipt requested, with postage and fees prepaid; or (c) one (1) business day after having been sent by Federal Express or other similar overnight courier, with receipt therefor. Notice shall be addressed to the Company at its principal executive office and to the Stockholder at the address that he or she most recently provided to the Company. SECTION 11.      Entire Agreement.      This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof. It supersedes any other agreements, representations or understandings (whether oral or written and whether express or implied) relating to the subject matter hereof. SECTION 12.      Choice Of Law.      This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State. SECTION 13.      Definitions.      (a)       “Agreement” shall mean this Stock Purchase Agreement.      (b)       “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time.      (c)       “Change in Control” shall mean:                        (i)       The consummation of a merger or consolidation of the Company or its Parent with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, -12- --------------------------------------------------------------------------------     consolidation or other reorganization is owned by persons who were not stockholders of the Company or its Parent, as the case may be, immediately prior to such merger, consolidation or other reorganization;                  (ii)       The sale, transfer or other disposition of all or substantially all of the Company’s or its Parent’s assets to an unrelated entity; or                  (iii)       The sale, transfer or other disposition of eighty percent (80%) or more of the capital stock of the Company or its Parent in one transaction or a series of related transactions. A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s or its Parent’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s or its Parent’s securities immediately before such transaction.      (d)       “Code” shall mean the Internal Revenue Code of 1986, as amended.      (e)       “Constructive Termination” shall have the meaning ascribed thereto in the Gene Logic Inc. Executive Severance Plan, as in effect on the date of this Agreement.      (f)       “Consultant” shall mean an individual who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.      (g)       “Drag Along Rights” shall mean the obligation of the Stockholder to transfer the Purchase Shares pursuant to Section 5 in the event a majority of the holders of Stock wish to transfer all of the shares of Stock to an independent third party.      (h)       “Employee” shall mean any individual who is a common-law employee of the Company, or an entity which is a Parent or a Subsidiary on the date of this Agreement.      (i)       “Fair Market Value” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons.      (j)       “Investors” shall mean those persons and entities set forth on Schedule 1 to that certain Stock Purchase and Contribution Agreement, dated as of July 1, 2001, among the Company, Gene Logic and such persons and entities.      (k)      “Involuntary Termination Without Cause” shall have the meaning ascribed thereto in the Gene Logic Inc. Executive Severance Plan, as in effect on the date of this Agreement. -13- --------------------------------------------------------------------------------        (l)       “Market Stand-Off” shall mean the restriction against transfer of the shares by the Stockholder pursuant to Subsection 4(c) for the 180 day period following an initial public offering of equity securities by the Company.      (m)       “Outside Director” shall mean a member of the Board of Directors who is not an Employee.      (n)       “Parent” shall mean Gene Logic, Inc.      (o)       “Purchase Price” shall mean the amount for which one Share may be purchased pursuant to this Agreement, as specified in Section 1(b).      (p)       “Purchased Shares” shall mean the Shares purchased by the Stockholder pursuant to this Agreement.      (q)       “Put Right” shall mean the Stockholder’s Put Right in Section 3.      (r)       “Restricted Share” shall mean a Purchased Share that is subject to the Right of Repurchase in Section 2.      (s)       “Right of First Refusal” shall mean the Company’s right of first refusal described in Section 3.      (t)       “Right of Repurchase” shall mean the Company’s right of repurchase described in Section 2.      (u)       “Rights of Co-Sale” shall mean the rights of the Parent and Investors under Section 3 to participate in a transfer of the Purchased Shares under Section 3.      (v)       “Rights of Second Refusal” shall mean the Parent’s and Investors’ rights of second refusal in Section 3.      (w)       “Securities Act” shall mean the Securities Act of 1933, as amended.      (x)       “Service” shall mean service as an Employee, Outside Director or Consultant.       (y)      “Share” or “Shares” shall mean one or more shares of Stock.      (z)       “Stock” shall mean the Common Stock of the Company, with a par value of $0.01 per Share.      (aa)       “Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more -14- --------------------------------------------------------------------------------   of the total combined voting power of all classes of stock in one of the other corporations in such chain.      (bb)       “Transferee” shall mean any person to whom the Stockholder has directly or indirectly transferred any Purchased Shares.      (cc)       “Transfer Notice” shall mean the notice of a proposed transfer of Purchased Shares described in Section 3.      WITNESS, the signatures below this 31st day of August, 2001, effective as of the first date set forth above.       PURCHASER:   METRIGENIX, INC     _____________________________ [name]   By:__________________________       Title:_________________________ -15- --------------------------------------------------------------------------------   FULL-RECOURSE PROMISSORY NOTE       $[amount]   August 31, 2001     Gaithersburg, Maryland      FOR VALUE RECEIVED, the undersigned Borrower promises to pay to Gene Logic Inc. (the “Company”) at its principal offices at 708 Quince Orchard Boulevard, Gaithersburg, Maryland 20878, the principal sum of [amount (figure amount)], together with interest from the date of this Note on the unpaid principal balance, upon the terms and conditions specified below.      1.     Term. The principal balance of this Note, together with interest accrued and unpaid to date, shall be due and payable at the close of business on August 31, 2008.      2.     Rate of Interest. Interest shall accrue under the Note on any unpaid principal balance at the Long Term Applicable Federal Rate under Section 1274(d) of the Internal Revenue Code of 1986, as amended, on the date of issuance, compounded semiannually.      3.     Prepayment. Prepayment of principal and interest may be made at any time without penalty.      4.     Events of Acceleration. The entire unpaid principal sum and unpaid interest under this Note shall become immediately due and payable upon:           (a)      The date when the Borrower ceases to be employed by either Gene Logic, Inc. or MetriGenix, Inc. for any reason;           (b)      The failure of the Borrower to pay when due the principal balance and accrued interest on this Note and the continuation of such default for more than 10 days;           (c)      The insolvency of the Borrower, the commission of an act of bankruptcy by the Borrower, the execution by the Borrower of a general assignment for the benefit of creditors, or the filing by or against the Borrower of a petition in bankruptcy or a petition for relief under the provisions of the federal bankruptcy act or another state or federal law for the relief of debtors and the continuation of such petition without dismissal for a period of 90 days or more;           (d)      The occurrence of an event of default under the Stock Pledge Agreement securing this Note or any obligation secured thereby;   --------------------------------------------------------------------------------             (e)      Any sale, transfer or other disposition of any shares of Common Stock of MetriGenix, Inc. (“MG”) owned by Borrower (including shares of Common Stock owned as of the date hereof and any acquired hereafter);           (f)      One hundred eighty (180) days following the closing of an initial public offering of the Common Stock of MG requiring registration under the Securities Act of 1933, as amended; or           (g)      The occurrence of a Change in Control of MG (as defined in that certain Stock Purchase Agreement, dated as of even date herewith, between MG and the Borrower).      5.     Security. Payment of this Note shall be secured by a Stock Pledge Agreement to be executed and delivered by the Borrower and covering shares of the Common Stock of MG owned by Borrower. The Borrower, however, shall remain personally liable for payment of this Note, and assets of the Borrower, in addition to the collateral under the Stock Pledge Agreement, may be applied to the satisfaction of the Borrower’s obligations hereunder.      6.     Collection. If action is instituted to collect this Note, the Borrower shall pay all reasonable costs and expenses (including reasonable attorneys’ fees) incurred in connection with such action.      7.     Waiver. No previous waiver and no failure or delay by the Company or the Borrower in acting with respect to the terms of this Note or the Stock Pledge Agreement shall constitute a waiver of any breach, default or failure of condition under this Note, the Stock Pledge Agreement or the obligations secured thereby. A waiver of any term of this Note, the Stock Pledge Agreement or of any of the obligations secured thereby must be made in writing and signed by a duly authorized officer of the Company and shall be limited to the express terms of such waiver.      The Borrower hereby expressly waives presentment and demand for payment at such time as any payments are due under this Note.      8.      Notice. Any and all notices, requests, demands or other communications hereunder shall be deemed to have been duly given if in writing and if transmitted by (i) hand delivery, in which event effective notice shall be deemed to have been given as of the date of delivery, (ii) Federal Express, Express Mail or other nationally recognized overnight courier, in which event effective notice shall be deemed to have been given on the next business day after being sent, or (iii) by registered or certified mail, postage prepaid, return receipt requested, in which event effective notice shall be deemed to have been given three (3) business days after being sent. Notice shall be addressed to the Company at its principal office and to Borrower at the address set forth on the signature page of this Note or to such other address as a party may furnish to the other by notice in accordance with this Section 8. -2- --------------------------------------------------------------------------------        9.     Conflicting Agreements. In the event of any inconsistencies between the terms of this Note and the terms of any other document related to the loan evidenced by the Note, the terms of this Note shall prevail.      10.     Governing Law. This note shall be construed in accordance with the laws of the State of Maryland.   BORROWER:   _____________________________ [name]   Address: ______________________             _________________________ -3- --------------------------------------------------------------------------------   STOCK PLEDGE AGREEMENT      In order to secure payment of the promissory note dated August 31, 2001 (the “Note”) payable to Gene Logic Inc., a Delaware corporation (the “Company”), at its principal offices in the principal amount of [amount, figure amount], which Note [name] (the “Borrower”) delivered in connection with a loan extended to the Borrower by the Company, the Borrower hereby grants the Company a security interest in, and assigns, transfers and pledges to the Company, the following securities and other property:      (a)     The [number of shares (figure amount)] shares of the MetriGenix, Inc. (“MG”) Common Stock (the “Common Stock”) delivered to and deposited with the Company as collateral for the Note; and      (b)     Any and all new, additional or different securities or other property subsequently distributed with respect to the shares identified in Subsection (a) above that are to be delivered to and deposited with the Company pursuant to the requirements of Section 3 of this Agreement;      (c)     Any and all other property and money that is delivered to or comes into the possession of the Company pursuant to the terms and provisions of this Agreement; and      (d)     The proceeds of any sale, exchange or disposition of the property and securities described in Subsection (a), (b) or (c) above. All securities, property and money to be assigned to, transferred to and pledged with the Company shall be herein referred to as the “Collateral” and shall be accompanied by one or more stock power assignments properly endorsed by the Borrower. The Company (or its designee, including without limitation MG) shall hold the Collateral in accordance with the following terms and provisions:      1.      Representations, Warranties and Covenants of Borrower. Borrower hereby warrants and represents, and, to the extent relevant, covenants and agrees, that:               (a)     Borrower has the requisite right, power and authority to enter into, and perform in accordance with, the terms and conditions of this Stock Pledge Agreement, and Borrower has the right, power and authority to grant, assign, transfer and pledge its interest in the Collateral to the Company;               (b)     With the exception of the restrictions upon transfer set forth in that certain Stock Purchase Agreement, dated as of even date herewith, by and between the Company and the Borrower, the Collateral is owned legally and beneficially by Borrower, free and clear of any option, call, contract, commitment, demand, lien, claim, charge, security interest or encumbrance whatsoever;   --------------------------------------------------------------------------------                 (c)     Borrower shall not, sell, assign, transfer or otherwise dispose of, or mortgage, pledge, encumber or otherwise hypothecate, all or any portion of the Collateral;               (d)     This Stock Pledge Agreement shall be construed as absolute, continuing and unlimited with respect to the covenants, conditions and obligations contained herein, without regard to regularity, validity, enforceability or any change, modification or amendment of any liability or obligation of Borrower; and               (e)     Borrower shall take any steps reasonably deemed necessary or advisable by the Company to preserve the security interest of the Company in and to the Collateral.      2.      Rights and Powers. The Company may, without obligation to do so, exercise one or more of the following rights and powers with respect to the Collateral:                (a)     Accept in its discretion, but subject to the applicable limitations of Section 7, other property of the Borrower in exchange for all or part of the Collateral and release Collateral to the Borrower to the extent necessary to effect such exchange, and in such event the money, property or securities received in the exchange shall be held by the Company as substitute security for the Note and all other indebtedness secured hereunder;                (b)     Perform such acts as are necessary to preserve and protect the Collateral and the rights, powers and remedies granted with respect to such Collateral by this Agreement; and                (c)     Transfer record ownership of the Collateral to the Company or its nominee and receive, endorse and give receipt for, or collect by legal proceedings or otherwise, dividends or other distributions made or paid with respect to the Collateral, but only if there exists at the time an outstanding event of default under Section 8 of this Agreement.                Any action by the Company pursuant to the provisions of this Section 2 may be taken without notice to the Borrower. Expenses reasonably incurred in connection with such action shall be payable by the Borrower and form part of the indebtedness secured hereunder, as provided in Section 11.                So long as there exists no event of default under Section 8 of this Agreement, the Borrower may exercise all shareholder voting rights and be entitled to receive any and all regular cash dividends paid on the Collateral. Accordingly, until such time as an event of default occurs under this Agreement, all proxy statements and other shareholder materials pertaining to the Collateral shall be delivered to the Borrower at the address indicated below.                Any cash sums that the Company may receive in the exercise of its rights -2- --------------------------------------------------------------------------------   and powers under this Section 2 shall be applied to the payment of the Note and any other indebtedness secured hereunder, in such order of application as the Company deems appropriate. Any remaining cash shall be paid over to the Borrower.      3.     Duty to Deliver. Any new, additional or different securities that may now or hereafter become distributable with respect to the Collateral by reason of (i) any stock dividend, stock split or reclassification of the capital stock of MG or (ii) any merger, consolidation or other reorganization affecting the capital structure of MG shall, upon receipt by the Borrower, be promptly delivered to and deposited with the Company as part of the Collateral hereunder. Such securities shall be accompanied by one or more properly endorsed stock power assignments.      4.     Care of Collateral. The Company shall exercise reasonable care in the custody and preservation of the Collateral but shall have no obligation to initiate any action with respect to, or otherwise inform the Borrower of, any conversion, call, exchange right, preemptive right, subscription right, purchase offer or other right or privilege relating to or affecting the Collateral. The Company shall not be obligated to take any action with respect to the Collateral requested by the Borrower unless the request is made in writing and the Company determines that the requested action will not unreasonably jeopardize the value of the Collateral as security for the note and other indebtedness secured hereunder.      The Company may at any time release and deliver all or part of the Collateral to the Borrower, and the receipt thereof by the Borrower shall constitute a complete and full acquittance for the Collateral so released and delivered. The Company shall accordingly be discharged from any further liability or responsibility for the Collateral, and the released Collateral shall no longer be subject to the provisions of this Agreement. However, any and all releases of the Collateral shall be effected in compliance with the applicable limitations of Section 7(a) and (c).      5.     Payment of Taxes and Other Charges. The Borrower shall pay, prior to the delinquency date, all taxes, liens, assessments and other charges against the Collateral, and in the event of the Borrower’s failure to do so, the Company may at its election pay any or all of such taxes and charges without contesting the validity or legality thereof. The payments so made shall become part of the indebtedness secured hereunder and, until paid, shall bear interest at the minimum per annum rate, compounded semiannually, required to avoid the imputation of interest income to the Company and compensation income to the Borrower under the federal tax laws.      6.     Transfer of Collateral. In connection with the transfer or assignment of the Note (whether by negotiation, discount or otherwise), the Company may transfer all or any part of the Collateral, and the transferee shall thereupon succeed to all the rights, powers and remedies granted the Company hereunder with respect to the Collateral so transferred. Upon such transfer, the Company shall be fully discharged from all liability and responsibility for the transferred Collateral. -3- --------------------------------------------------------------------------------        7.     Release of Collateral. Provided (i) all indebtedness secured hereunder shall at the time have been paid in full or cancelled and (ii) there does not otherwise exist any event of default under Section 8, the pledged shares of Common Stock, together with any additional Collateral that may hereafter be pledged and deposited hereunder, shall be released from pledge and returned to the Borrower in accordance with the following provisions:              (a)       Upon payment or prepayment of principal under the Note, together with payment of all accrued interest to date, one or more shares of Common Stock held as Collateral hereunder shall (subject to the applicable limitations of Subsection (c) below) be released to the Borrower within three days after such payment or prepayment. The number of shares to be so released shall be equal to the number obtained by multiplying (i) the total number of shares of Common Stock held under this Agreement at the time of the payment or prepayment by (ii) a fraction, the numerator of which shall be the amount of the principal paid or prepaid and the denominator of which shall be the unpaid principal balance of the Note immediately prior to such payment or prepayment. In no event, however, shall any fractional shares be released. In addition, one or more shares of Common Stock held as Collateral hereunder shall (subject to the applicable limitations of Subsection (c) below) be released to a stockbroker designated in writing by the Borrower and acceptable to the Company for the sole purpose of effecting an immediate sale of the released shares, provided that such stockbroker agrees to forward any proceeds (up to the balance of principal and interest due under the Note) directly to the Company to be used to satisfy the Note.              (b)       Any additional Collateral that may hereafter be pledged and deposited with the Company (pursuant to the requirements of Section 3) with respect to the shares of Common Stock pledged hereunder shall be released at the same time the particular shares of Common Stock to which the additional Collateral relates are to be released in accordance with the applicable provisions of Subsection (a) above. Under no circumstances, however, shall any shares of Common Stock or any other Collateral be released if previously applied to the payment of any indebtedness secured hereunder.              (c)       In no event shall any shares of Common Stock be released pursuant to the provisions of Subsections (a) and (b) above if, and to the extent, the fair market value of the Common Stock and all other Collateral that would otherwise remain in pledge hereunder after such release were affected would be less than the unpaid balance of the Note (principal and accrued interest).      8.     Events of Default. The occurrence of one or more of the following events shall constitute an event of default under this agreement:              (a)       The failure of the Borrower to pay the principal and accrued interest when due under the Note;              (b)       The failure of the Borrower to perform an obligation imposed upon -4- --------------------------------------------------------------------------------   the Borrower by reason of this Agreement;              (c)       The breach of any representation, warranty or covenant of the Borrower contained in this Agreement; or              (d)       Any default by Borrower in the performance of any provision under this Stock Pledge Agreement.      Upon the occurrence of any such event of default, the Company may, at its election, declare the Note and all other indebtedness secured hereunder to become immediately due and payable and may exercise any or all of the rights and remedies granted to a secured party under the provisions of the Maryland Uniform Commercial Code (as now or hereafter in effect), including (without limitation) the power to dispose of the Collateral by public or private sale or to accept the Collateral in full payment of the Note and all other indebtedness secured hereunder.      Any proceeds realized from the disposition of the Collateral pursuant to the foregoing power of sale shall be applied first to the payment of reasonable expenses incurred by the Company in connection with the disposition, then to the payment of the Note and finally to any other indebtedness secured hereunder. Any surplus proceeds shall be paid over to the Borrower. However, in the event such proceeds prove insufficient to satisfy all obligations of the Borrower under the Note, then the Borrower shall remain personally liable for the resulting deficiency.      9.     Other Remedies. The rights, powers and remedies granted to the Company and the Borrower pursuant to the provisions of this Agreement shall be in addition to all rights, powers and remedies granted to the Company and the Borrower under any statute or rule of law. Any forbearance, failure or delay by the Company or the Borrower in exercising any right, power or remedy under this Agreement shall not be deemed to be a waiver of such right, power or remedy. Any single or partial exercise of any right, power or remedy under this Agreement shall not preclude the further exercise thereof, and every right, power and remedy of the Company and the Borrower under this Agreement shall continue in full force and effect, unless such right, power or remedy is specifically waived by an instrument executed by the Company or the Borrower, as the case may be.      10.     General Authority. Borrower hereby irrevocably appoints the Company as Borrower’s true and lawful attorney, with full power of substitution, in the name of Borrower, for the sole use and benefit of the Company to the extent permitted by law, to exercise, at any time and from time to time while any default has occurred and is continuing hereunder, all or any of the following powers with respect to all or any of the Collateral:              (a)       To receive, take, endorse, assign and deliver any and all checks, notes, drafts, documents and other negotiable and non-negotiable instruments and chattel paper taken or received by the Company in connection therewith; -5- --------------------------------------------------------------------------------                 (b)       To settle, compromise, compound, prosecute or defend any action or proceeding with respect thereto;              (c)       To sell, transfer, assign or otherwise deal in or with the Collateral or the proceeds or avails thereof as fully and effectually as if the Company was the absolute owner thereof; and              (d)       To discharge any taxes, liens, security interests or other encumbrances at any time placed thereon, provided, that the Company shall give the Borrower not less than five (5) days’ prior written notice of the time and place of any sale or other intended disposition of any of the Collateral. The Company and the Borrower agree that such notice constitutes “reasonable notification” under applicable sections of the Uniform Commercial Code in effect in the State of Maryland.      11.     Costs and Expenses. All reasonable costs and expenses (including reasonable attorneys fees) incurred by the Company in the exercise or enforcement of any right, power or remedy granted it under this Agreement shall become part of the indebtedness secured hereunder and shall constitute a personal liability of the Borrower payable immediately upon demand and bearing interest until paid at the Company’s bank interest rate then being earned by the Company on its deposits.      12.     Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland and shall be binding upon the executors, administrators, heirs and assigns of the Borrower.      13.     Arbitration. Any controversy between the parties hereto involving the construction or application of any terms, covenants or conditions of this Agreement or the Note, or any claims arising out of or relating to this Agreement or the Note, or the breach hereof or thereof, will be submitted to and settled by final and binding arbitration in Baltimore, Maryland, in accordance with the rules of the American Arbitration Association then in effect, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. In the event of any arbitration under this Agreement or the Note, the prevailing party shall be entitled to recover from the losing party reasonable expenses, attorneys’ fees and costs incurred therein or in the enforcement or collection of any judgment or award rendered therein. The “prevailing party” means the party determined by the arbitrator to have most nearly prevailed, even if such party did not prevail in all matters, not necessarily the one in whose favor a judgment is rendered.      14.     Severability. If any provision of this Agreement is held to be invalid under applicable law, then such provision shall be ineffective only to the extent of such invalidity, and neither the remainder of such provision nor any other provisions of this -6- --------------------------------------------------------------------------------   Agreement shall be affected thereby.      15.     Notice. Any and all notices, requests, demands or other communications hereunder shall be deemed to have been duly given if in writing and if transmitted by (i) hand delivery, in which event effective notice shall be deemed to have been given as of the date of delivery, (ii) Federal Express, Express Mail or other nationally recognized overnight courier, in which event effective notice shall be deemed to have been given on the next business day after being sent, or (iii) by registered or certified mail, postage prepaid, return receipt requested, in which event effective notice shall be deemed to have been given three (3) business days after being sent. Notice shall be addressed to the Company at its principal office and to Borrower at the address set forth on the signature page of this Stock Pledge Agreement or to such other address as a party may furnish to the other by notice in accordance with this Section 15.      IN WITNESS WHEREOF, this Agreement has been executed by the Borrower on this 31st day of August, 2001.   BORROWER:   ___________________________ [name]   Address: ____________________             _______________________ Agreed to and Accepted by: Gene Logic Inc. By:___________________________ Printed Name:___________________ Title:__________________________ Dated: August 31, 2001 -7- --------------------------------------------------------------------------------   INDIVIDUAL AMOUNTS                   Named Executive Officer Number of Shares Purchase Price Michael J. Brennan, M.D., Ph.D.     100,000     $ 30,000   Y. Douglas Dolginow, M.D.     20,000     $ 6,000   Eric M. Eastman, Ph.D.     20,000     $ 6,000   Mark D. Gessler     125,000     $ 37,500   David S. Murray     50,000     $ 15,000  

QuickLinks -- Click here to rapidly navigate through this document Exhibit 10.1 APPLICATION SOLUTION LICENSE AGREEMENT     This Software License Agreement (the "Agreement") is entered into between Sollen Technologies, LLC, a Texas Limited Liability Company, ("Sollen") with its principal place of business located at 6009 Beltline Road, Suite 100, Dallas TX 75240, and Monument Mortgage, Inc., a California corporation ("Monument Mortgage") with its principal place of business located at 2527 Camino Ramon, Suite 200, San Ramon, CA 94583. (Sollen and Monument Mortgage are sometimes individually referred to herein as a "Party" and collectively referred to herein as the "Parties").     WHEREAS, Monument Mortgage is a mortgage company; and     WHEREAS, Sollen is in the business of developing software and application solutions designed to increase the efficiency of the mortgage industry; and     WHEREAS, Monument Mortgage wishes to obtain a license to the Application Solution (as defined in this Agreement) developed by Sollen for use in its business. AGREEMENT     NOW, THEREFORE, in consideration of the covenants and agreements set forth herein, and for other good and valuable consideration, Monument Mortgage and Sollen agree as follows:     1.  Term   1.1.Effective Date. This Agreement and the license granted hereunder shall take effect upon the date that the last Party executes this Agreement and shall have a term of one year. This Agreement shall automatically be renewed for consecutive one-year terms, unless either party notifies the other party in writing of its intent not to renew at least 60 days prior to the end of the current term. 1.2.Termination. Each Party shall have the right to terminate, with immediate effect, this Agreement and the license granted herein after the occurrence of any of the following events (an "Event of Default"): (i)In the event the other Party materially breaches any provision of this Agreement that is not cured within 30 days of written notice thereof; or (ii)In the event the other Party (a) terminates or suspends its business, (b) becomes subject to any bankruptcy or insolvency proceeding under Federal or State statute, (c) becomes insolvent or subject to direct control by a trustee, receiver or similar authority, or (d) has wound up or liquidated, voluntarily or otherwise.     2.  Definitions   2.1."Intellectual Property Rights" shall mean all inventions (whether or not prosecutable under patent laws), works of authorship, moral rights, mask works, trademarks, trade names, trade dress, trade secrets, and all other subject matter protectable under patent, copyright, moral right, mask work, trademark, trade secret, or other laws, including without limitation all new or useful art, combinations, discoveries, formulae, manufacturing techniques, technical developments, artwork, software, programming, applets, scripts, and designs. 2.2."Application Solution": The term "Application Solution" shall mean Sollen developed software, databases and technology used to offer Monument Mortgage a solution package with functionality described in Exhibit A. The Application Solution includes Sollen's single lender back-office software "Sollen Suite," access to the Sollen Product and Pricing Engine through a Sollen approved or delivered interface, and interfaces between the Product and Pricing Engine and Monument Mortgage's wholesale web site and the Calyx PTS server. The Application Solution includes Sollen's software, content, databases and features for the operation of the Application Solution. The Application Solution also includes any corrections, bug fixes, 1 -------------------------------------------------------------------------------- enhancements, updates or other modifications, including custom modifications made by Sollen to it, subject to the terms of this Agreement.     3.  License Grant to Application Solution and Parties' Undertakings.   3.1.Grant. Subject to the terms and conditions of this Agreement. Sollen grants Monument Mortgage a personal, non-exclusive, non-transferable US license to use and copy (for back-up purposes only) the Application Solution, subject to the terms and conditions of this Agreement. 3.2.Title. Sollen shall have sole and exclusive ownership of all right, title and interest in and to the Application Solution, all copies thereof, and all derivative works, modifications and enhancements thereto (including ownership of all copyrights and all other Intellectual Property Rights pertaining to the Application Solution), whether made by Sollen or any third party, subject only to the right and license expressly granted to you herein. This Agreement does not provide Monument Mortgage with title or ownership of the Sollen Application Solution, any Intellectual Property Rights or software, but only a right of limited use. In particular, Monument Mortgage agrees it will not use, copy, modify, or distribute the software or any other part of the Application Solution (electronically or otherwise), or any copy, adaptation, transcription or merged portion thereof, except as expressly authorized by Sollen by a written agreement signed by Sollen. Monument Mortgage agrees it will not reverse assemble, reverse compile, or otherwise translate or reverse engineer the software or any other part of the Application Solution. 3.3.Inspection. Monument Mortgage authorizes Sollen to enter its premises in order to inspect the Application Solution and software during regular business hours for the purpose of verifying compliance with the terms of this Agreement. For the same purpose, Monument Mortgage authorizes Sollen to have electronic access at all times to all copies of the Application Solution and any parts thereof. 3.4.Future Enhancements. Sollen shall provide Monument Mortgage, without charge, with the use of future enhancements and the most current release of the Application Solution as long as Monument Mortgage is a customer in good standing. 3.5.Copies.Monument Mortgage may make two copies of the Application Solution software installed at its premises, if any, for back-up purposes only, provided that in making such copies Monument Mortgage shall not delete Sollen's copyright and any other proprietary notices. Any copy of the Application Solution made by Monument Mortgage is the exclusive property of Sollen. Monument Mortgage, at its discretion and expense, may elect to have an on-site server installed to run the Application Solution to mirror or regularly copy the Application Solution for the purpose of redundancy or disaster recovery. In this case, access to this copy shall be restricted by Monument Mortgage to only those employees of Monument Mortgage that have a need to access to maintain the system. 3.6.Suspension of Operations. In the event Sollen suspends or terminates its business or is otherwise unable to maintain the functionality of the Application Solution for Monument Mortgage for five (5) consecutive business days during the Term of this Agreement other than caused by Force Majeure (as defined by Section 14), then Sollen shall sell to Monument Mortgage a stand alone, fully licensed, version of the Application Solution, which includes all of Monument Mortgage's product guidelines and business rules, and operates within Monument Mortgage's data center, independent of support from Sollen ("Independent Application Solution"). Monument Mortgage shall pay to Sollen a sum equal to the total of the Transaction Fees paid by Monument Mortgage to Sollen during the prior three months, as the purchase price for the Independent Application Solution. 3.7.Material Terms and Conditions. Monument Mortgage and Sollen specifically agree that each of the terms and conditions of this Section 3 are material and that failure of Monument Mortgage or Sollen to comply with these terms and conditions shall constitute a material 2 -------------------------------------------------------------------------------- breach and shall be sufficient cause for either Party to terminate this Agreement in accordance with the provisions of Section 12.     4.  Delivery, Installation, Data Integrity, and Acceptance   4.1.Delivery. Both Parties will agree on a schedule for the delivery, testing and acceptance of the wholesale web site interface to be developed by Sollen. Installation of the PTS software will be done by Calyx and at the discretion of Calyx, and the failure of performance by Calyx to install the Calyx software does not excuse performance by the Parties to this Agreement. 4.2.Installation. Sollen has already installed the user interface to the Sollen Suite software at the Monument Mortgage site and has trained Monument Mortgage personnel in the use of the software. In the event of any subsequent installation by Sollen at Monument Mortgage, Monument Mortgage shall provide (i) any necessary hardware and all required peripherals ("Hardware"), and (ii) provide all required third party software ("Third Party Software"). Monument Mortgage at all times is solely responsible for obtaining and maintaining licenses on the Third Party Software. 4.3.Data Integrity. Monument Mortgage shall be solely responsible for the verification and integrity of all of the lender's program guidelines and pricing data entered into the Application Solution by Sollen or Monument Mortgage personnel. 4.4.Acceptance. The Application Solution shall be deemed accepted by Monument Mortgage when the Application Solution has been completely installed, enabled and made ready for use, and Monument Mortgage and Sollen have tested the Application Solution to ensure that the Application Solution complies in all material respects with the specifications set forth in Exhibit A. The Parties shall confirm the successful completion of the testing procedure to their mutual satisfaction, by a writing signed and dated by the Parties ("Acceptance"). 4.5.Performance. Sollen and Monument Mortgage agree that if within thirty days of Acceptance, the Application Solution fails to comply in all material respects with the specifications set forth in Exhibit A, that Monument Mortgage shall notify Sollen in writing of the manner in which the Application Solution is failing to comply with the specifications set out in Exhibit A. Sollen shall have 15 working days following such notification to cause the Application Solution to comply in all material respects with the specifications set forth in Exhibit A. If Sollen fails to achieve timely compliance, such failure shall constitute an Event of Default. Sollen warrants that after Acceptance, the Application Solution shall continue to perform as accepted. 4.6.Support. Sollen agrees to provide support between the hours of 7:00 a.m. and 8:00 p.m., Central Time, Monday through Friday, excluding federal holidays, to assist Monument Mortgage in using the Application Solution and to assist Monument Mortgage in maintaining its access to the Application Solution.     5.  Fees   5.1.General. In consideration for the right to use the Application Solution granted by Sollen, Monument Mortgage shall pay Sollen fees ("Fees") as set forth in this Section 5 and in Exhibit B, attached hereto and made part of this Agreement for all purposes. 5.2.Evaluation. Both Parties agree to meet six months from the Effective Date of this Agreement at a mutually convenient time and place to discuss and evaluate the economic viability of the Fees of this Agreement for both Parties. However, this is not an agreement to amend the current Fee Schedule in any way. Any changes to the schedule of Fees can only be made in writing signed by both Parties. 5.3.Payment of transaction fees. Monument Mortgage shall submit to Sollen within twenty (20) days after each calendar month, a transaction report setting forth at least the following information: (a) the number of loans closed, which were generated through PTS and/or any other interface using the Application Solution; (b) the amount of transaction fees due thereon. An officer of Monument Mortgage shall certify such report as correct. The transaction fees 3 -------------------------------------------------------------------------------- for the previous calendar month are due and payable upon the submission of each transaction report. All payments due hereunder shall be deemed received when funds are credited to Sollen's bank account and shall be payable by check or wire transfer. Failure to make a payment when due shall be considered an Event of Default. 5.4.Taxes. Each party is responsible for the payment of their own taxes, however designated, which are levied or imposed by reason of the transactions contemplated by this Agreement. 5.5.Records. Monument Mortgage shall keep accurate records (together with supporting documentation) of transactions closed using the Application Solution, appropriate to determine the amount of fees due to Sollen. Such records shall be retained for at least three (3) years following the end of the reporting period to which they relate. They shall be available during normal business hours for examination by an accountant selected by Sollen, for the sole purpose of verifying reports and payments hereunder. In conducting examinations pursuant to this paragraph, Sollen's accountant shall have access to all records that Sollen reasonably believes to be relevant to the calculation of transaction fees. Such examination by Sollen's accountant shall be at Sollen's expense, except that if such examination shows an underreporting or underpayment in excess of five percent (5%) for any twelve (12) month period, then Monument Mortgage shall pay the cost of such examination as well as any additional sum that would have been payable to Sollen had Monument Mortgage reported correctly, plus interest on said sum at the rate of one and one half per cent (11/2%) per month or at the rate of the maximum legally allowed interest rate if it is less than one and one half per cent.     6.  No Transfer       Under no circumstances shall Monument Mortgage sell, license, publish, or otherwise transfer to a third party the Application Solution or any copy thereof, in whole or in part without Sollen's prior written consent.     7.  Confidential Information       In the performance of this Agreement, each Party may have access to confidential, proprietary or trade secret information owned or provided by the other Party relating to the Application Solution, software computer programs, object code, source code, marketing plans, business plans, financial information, specifications, flow charts and other data ("Confidential Information"). All Confidential Information supplied by one Party to another pursuant to this Agreement shall remain the exclusive property of the disclosing Party. The receiving Party shall use such confidential information only for the purposes of this Agreement and shall not copy, disclose, convey or transfer any of the Confidential Information or any part thereof to any third party. Each Party will implement adequate procedures with its employees or other persons who have access to the Confidential Information to satisfy their obligations under this Agreement. Neither Party shall have any obligation with respect to Confidential Information which: (i) is or becomes generally known to the public by any means other than a breach of the obligations of a receiving Party; (ii) was previously known to the receiving Party or rightly received by a receiving Party from a third party without any obligation of confidentiality; or (iii) can be shown by contemporaneous written records to have been independently developed by the receiving Party. Monument Mortgage acknowledges that the Application Solution contains proprietary information, including trade secrets, know-how and confidential information, that is the exclusive property of Sollen.     8.  Use and Training       Monument Mortgage shall limit the use of the Application Solution to its employees who have been appropriately trained. Following the installation and acceptance as defined in Section 4.4, upon request of Monument Mortgage, Sollen shall provide, at a mutually convenient time, a training program at Monument Mortgage's site or at a mutually agreed upon site. Monument Mortgage shall pay Sollen for reasonable Training Expenses ("Training Expenses"). The Training Expenses shall 4 -------------------------------------------------------------------------------- include reasonable travel, meals, accommodation and miscellaneous charges and are due and payable upon delivery of an invoice to Monument Mortgage.     9.  Warranty       SOLLEN WARRANTS THAT FOR A PERIOD OF THIRTY (30) DAYS FROM THE DATE OF ACCEPTANCE THE APPLICATION SOLUTION SHALL COMPLY IN ALL MATERIAL RESPECTS WITH THE SPECIFICATIONS SET FORTH IN EXHIBIT A TO THIS AGREEMENT. SOLLEN WARRANTS THAT THEREAFTER, THE APPLICATION SOLUTION SHALL CONTINUE TO PERFORM AS ACCEPTED. SOLLEN DOES NOT EXTEND ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY WITH RESPECT TO THE QUALITY, ACCURACY OR FREEDOM FROM ERROR OF THE OPERATION, USE AND FUNCTION OF THE APPLICATION SOLUTION.     10.  Liability       NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS) RELATED TO THIS AGREEMENT OR RESULTING FROM MONUMENT MORTGAGE'S USE, RESULTS OF USE, OR INABILITY TO USE THE SOLLEN TECHNOLOGIES APPLICATION SOLUTION, ARISING FROM ANY CAUSE OF ACTION WHATSOEVER, INCLUDING CONTRACT, WARRANTY, STRICT LIABILITY, OR NEGLIGENCE, EVEN IF THE PARTY HAS BEEN NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. IN THE EVENT OF TERMINATION OF THIS AGREEMENT FOR WHATEVER REASON, MONUMENT MORTGAGE AGREES THAT THE AGGREGATE LIABILITY OF SOLLEN ARISING FROM OR RELATING TO THIS AGREEMENT SHALL NOT EXCEED THE AMOUNT OF THE INITIAL LICENSE FEE AND DEVELOPMENT FEES EFFECTIVELY PAID BY MONUMENT MORTGAGE UNDER THIS AGREEMENT PRIOR TO ACCEPTANCE.     Monument Mortgage acknowledges that data input (including, without limitation, lender specific guidelines, pricing, rates or any other related information or data), inspection and management is subject to the likelihood of human and machine errors, omissions, delays, and losses, including inadvertent loss of data or damage to media that may give rise to loss or damage. Sollen shall not be liable for any such errors, omissions, delays, or losses, unless such errors, omissions, delays, or losses are caused by the gross negligence or the intentional acts of Sollen.     Monument Mortgage is responsible for adopting reasonable measures to limit the impact of such problems, including backing up data and adopting procedures to ensure the accuracy of input data; examining and confirming results prior to use; and adopting procedures to identify and correct errors and omissions, replace lost or damaged media, and reconstruct data. Monument Mortgage is also solely responsible for complying with all local, state, and federal laws pertaining to the use and disclosure of any data.     11.  Indemnification       Each Party to this Agreement shall indemnify and hold harmless the other Party for any liability, damages, causes of action, or claims arising from or relating to the failure by the other Party to acquire, maintain, or comply with any and all third party licenses for software necessary for operation of the Application Solution.     12.  Notice and Opportunity to Cure   12.1Notice. Upon the occurrence of an Event of Default, a Party shall deliver to the defaulting Party a Notice of Intent to Terminate that identifies in detail the Event of Default. If the Event of Default remains uncured for thirty (30) calendar days, the Party may terminate this Agreement and the license granted herein by delivering to the defaulting Party a Notice of Termination that takes effect immediately. 5 -------------------------------------------------------------------------------- 12.2Procedure Upon Termination. Within fifteen (15) days after termination of the license, Monument Mortgage shall return to Sollen, at Monument Mortgage's expense if terminated by Monument Mortgage or default of Monument Mortgage, the Application Solution and all copies thereof, and deliver to Sollen a certification, in writing signed by an officer of Monument Mortgage, that all copies of any part of the Application Solution have been returned, all copies deleted or destroyed, and its use discontinued.     13.  Assignment       Neither Party may assign this Agreement or any rights or obligations hereunder, whether by operation of law or otherwise, without the prior written consent of the other Party. Notwithstanding the foregoing, either Party shall have the right to assign this Agreement in connection with the merger or acquisition of such Party or the sale of all or substantially all of its assets related to this Agreement without such consent. Subject to the foregoing, this Agreement will bind and inure to the benefit of the Parties, their respective successors and permitted assigns. Any assignment in violation of this Section 13 shall be null and void.     14.  Force Majeure       Neither Party shall be in default or otherwise liable for any delay in or failure of its performance under this Agreement if such delay or failure arises by any reason beyond its reasonable control, including any act of God, any acts of the common enemy, the elements, earthquakes, floods, fires, epidemics, riots, failures or delay in transportation or communications, or any act or failure to act by the other Party or such other Party's employees, agents or contractors; provided, however, that lack of funds shall not be deemed to be a reason beyond a Party's reasonable control. The Parties will promptly inform and consult with each other as to any of the above causes that in their judgment may or could be the cause of a delay in the performance of this Agreement.     15.  Notices       All notices under this Agreement are to be delivered by (i) depositing the notice in the mail, using registered mail, return receipt requested, addressed to the address below or to any other address as the Party may designate by providing notice, (ii) faxing the notice by using the telephone number set forth below or any other telephone number as the Party may designate by providing notice, followed by depositing the notice in the mail as outlined in (i) above, (iii) overnight delivery service addressed to the address below or to any other address as the Party may designate by providing notice, or (iv) hand delivery to the individual designated below or to any other individual as the Party may designate by providing notice. The notice shall be deemed delivered (i) if by registered mail, four (4) days after the notice's deposit in the mail, (ii) if by telecopy, on the date the notice is delivered, (iii) if by overnight delivery service, on the day of delivery, and (iv) if by hand delivery, on the date of hand delivery. SOLLEN: Sollen Technologies, LLC 6009 Beltline Road, Suite 100 Dallas, Texas 75240 Attention: Larry Huff, Executive Vice President Fax No.: (972) 960-7202 MONUMENT MORTGAGE: Monument Mortgage, Inc. 2527 Camino Ramon, Suite 200 San Ramon, CA 94583 Attention: Rob Katz, CTO With a Copy to: Corporate Counsel 6 --------------------------------------------------------------------------------     16.  General Provisions       16.1.   Complete Agreement. The Parties agree that this Agreement with its exhibits is the complete and exclusive statement of the agreement between the Parties, which supersedes and merges all prior proposals, understandings and all other agreements, oral or written, between the Parties relating to the Agreement's subject matter.     16.2.   Amendment. This Agreement may not be modified, altered or amended except by a written instrument duly executed by both Parties.     16.3.   Waiver. The waiver or failure of either Party to exercise in any respect any right provided for in this Agreement shall not be deemed a waiver of any further right under this Agreement.     16.4.   Severability. If any provision of this Agreement is invalid, illegal or unenforceable under any applicable statute or rule of law, it is to that extent to be deemed omitted. The remainder of the Agreement shall be valid and enforceable to the maximum extent possible.     16.5.   Governing Law. The laws of the State of Texas, other than the conflict of law provisions thereof, hereunder shall govern this Agreement and its performance.     16.6.   Forum. Any legal proceedings arising under this Agreement shall be instituted only in the courts of the State of Texas, Dallas County.     16.7.   Independent Parties. Nothing contained in this Agreement shall be construed as creating a joint venture, partnership, agent or employment relationship between Monument Mortgage and Sollen.     16.8.   Headings. The headings in this Agreement are for convenience or reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.     16.9.   Read and Understood. Each Party acknowledges that it has read and understands this Agreement and agrees to be bound by its terms. AGREED:       SOLLEN TECHNOLOGIES, INC.   MONUMENT MORTGAGE, INC. Signature   Signature Name   Name Title   Title Date   Date 7 -------------------------------------------------------------------------------- EXHIBIT A SOLLEN TECHNOLOGIES APPLICATION SOLUTION DESCRIPTION     Monument Mortgage sends Sollen an electronic rate sheet containing interest rate and fee combinations for multiple loan products, with a frequency determined at Monument Mortgage's sole discretion. The file is transferred from Monument to Sollen using an FTP agent provided by Sollen. Although the specific technical requirements for the file format to be used may change, the system will always accept a MS Excel spreadsheet.     The base rates are received by Sollen and applied to the Application Solution. Monument Mortgage agrees to give Sollen advance notice of any change in the rate sheet format, and Monument Mortgage understands and agrees that Sollen needs at least 72 hours to modify the software to adapt to the changed Monument Mortgage rate sheet format.     Sollen is not responsible for the accuracy of the data contained in the rate sheets received from Monument Mortgage. Monument Mortgage is solely responsible for the accuracy of these rates and should have appropriate procedures in place for verification and correction.     Monument Mortgage will provide Sollen with detailed product guidelines that clearly include loan program eligibility and pricing adjustments. The Application Solution has two primary roles: 1.Screen various factors of a loan file against the eligibility rules programmed into the system to determine which loan products are not disqualified based on those rules; and 2.For eligible products, accurately calculate the loan rate and fee combinations by applying the appropriate pricing adjustments, as specified in the product guidelines, based on the various factors of the loan file.     The eligibility and pricing adjustment rules will be programmed by Sollen and/or Monument Mortgage using a guideline editing software tool provided by Sollen. Sollen is not responsible for the accuracy of the eligibility and pricing adjustment rules received from Monument Mortgage. Monument Mortgage is solely responsible for the accuracy of these rules and should have appropriate procedures in place for verification and correction. Sollen is responsible for the accuracy of the Application Solution's execution of determining product eligibility and adjusted pricing based on the rules provided by Monument Mortgage.     Sollen has delivered the user interface of the single lender version of the Sollen Suite software that interacts with the Product and Pricing Engine. The Sollen Suite software will allow Monument Mortgage to manage the program disqualifiers and guidelines, the pricing guidelines and the mortgage insurance guidelines.     Sollen will deliver a set of data structures and procedures interfacing with the Calyx PTS server. Sollen will also deliver a set of data structures interfacing with the Monument Mortgage wholesale website.     Sollen will allow Monument Mortgage access to Sollen's Product and Pricing Engine via the Internet for purposes of operating the transactions for Calyx's PTS initiative. In addition, Sollen will allow Monument Mortgage access to Sollen's Product and Pricing Engine via the Internet for purposes of operating the transactions for Monument Mortgage's wholesale web site initiative. 8 -------------------------------------------------------------------------------- THIRD PARTY SOFTWARE REQUIREMENTS     All Third Party Software, Third Party Software Licenses and hardware installed at Monument Mortgage's site that is necessary for the use of the Sollen Application Solution shall be provided and maintained by Monument Mortgage, including but not limited to: •Microsoft Windows 98 and/or NT 4.0 Server or workstation or other necessary Microsoft operating systems. •Whatever other Microsoft base applications may be required for adequate functionality.     Sollen shall obtain and maintain the required Microsoft SQL Server 7.0 Software, with proper Internet license, ("Licensed Server Software"), as well as a server to run the Licensed Server Software, in the following or substantially equivalent configuration ("Sollen Server"): •Server type: Dell PowerEdge TM 2450 Server; •Processor: Dual 933 Mhz PIII CPU's—256 Kb cache; •RAM memory: 1 Gb RAM; •Hard Disk: 3x 9 Gb, 10 K SCSI Hard drives—single channel Raid 5.     Should the traffic (number of "hits") on the Sollen Server attributed to Monument Mortgage customers constitute 80% or more of the total traffic on the Sollen Server, and should the total traffic represent 80% or more of the total capacity of the Sollen Server during a period of five consecutive business days, then Monument Mortgage shall obtain and maintain an additional copy of the Licensed Server Software ("Monument's Licensed Server Software"). Sollen shall obtain and maintain an additional server, in the same or substantially equivalent configuration as the first Sollen Server to run Monument's Licensed Server Software. 9 -------------------------------------------------------------------------------- EXHIBIT B FEE SCHEDULE Fee --------------------------------------------------------------------------------   Subject --------------------------------------------------------------------------------   Amount --------------------------------------------------------------------------------   Payment terms --------------------------------------------------------------------------------   Due date -------------------------------------------------------------------------------- Initial Fee   Application Solution comprising Sollen Suite, Pricing Engine and interface to Calyx PTS   $30,000   Two installments of $15,000   First installment due upon signature of the Agreement, and the second installment is due within 45 days of signature of Agreement Development Fee   Development of interface to the Monument Mortgage wholesale web site   $5,000   Two installments of $2,500   First installment due upon signature of Agreement, second installment due upon delivery and acceptance within Q1—2001. Transaction Fee   Fee per transaction using the Application Solution   $5 per closed loan   Minimum of $1,500 per month   Last calendar day of each month --------------------------------------------------------------------------------     NOTES: 1.1.Interface Development Fee. This amount covers the cost of delivering a stored procedure interface to Monument Mortgage to access the Sollen pricing engine in substantially the same way PTS does. 1.2.Transaction Fees. These transaction fees are due on the last calendar day of each month on any closed loans generated through PTS and/or any other interface using the Application Solution. Monument Mortgage agrees to pay to Sollen the transaction fee of $5 per closed loan or $1,500 dollars, whichever is greater, on a monthly basis. 1.3.Other Fees. Sollen has waived the initial program and pricing set-up fee it customarily charges for the set-up of every loan program (guidelines and pricing adjustments), as Sollen has already completed and enabled this part for Monument Mortgage. Monument Mortgage shall be solely responsible for editing and maintaining the current database. If Sollen is asked to do so for Monument Mortgage, additional fees will be charged. For Monument Mortgage requested customer work, Sollen shall charge its standard fee of $125 per hour, and for any training provided under this Agreement, Sollen shall charge $75 per hour. 10 -------------------------------------------------------------------------------- QuickLinks APPLICATION SOLUTION LICENSE AGREEMENT AGREEMENT EXHIBIT A EXHIBIT B FEE SCHEDULE

Exhibit 10.5 [Sun Microsystems letterhead] November 7, 1995 Mr. Robert Kohn Borland International Senior Vice President corporate Affairs 100 Borland Way Scotts Valley, CA 95066-3249 Dear Mr. Kohn: This letter will summarize the understanding reached between Sun Microsystems, Inc. (“Sun”) and Borland International, Inc. (“Borland”) concerning the Technology License and Distribution Agreement for Java technology (the “Agreement”) executed by the parties concurrently herewith. Sun hereby agrees that in the event the restrictions specified in Section 2.5 (ii) concerning non-enforcement of copyright on interfaces for Value Added Open Packages is removed by Sun for any of the following Borland competitors: ***** who have signed Java technology license and distribution agreements with Sun, then Sun shall also remove such restrictions on Borland by amendment to the Agreement. Please confirm your agreement with the terms of this Letter by having an authorized representative sign below and return a fully executed original to me at your earliest convenience.   Sincerely,   /s/ Michele Huff   Michele I. Huff Counsel, Java Products Group AGREED TO AND ACCEPTED: BORLAND INTERNATIONAL, INC. BY:   [signature illegible]      --------------------------------------------------------------------------------   TITLE:  VP. Business Development     --------------------------------------------------------------------------------   DATE:  11/7/95     --------------------------------------------------------------------------------   cc: Lee Parch, Esq. *****   Confidential treatment has been requested for the redacted portions. The confidential redacted portions have been filed separately with the Securities and Exchange Commission.

  Exhibit 10.1(a) EXECUTION COPY SECOND AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AGREEMENT              THIS SECOND AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AGREEMENT (this "Amendment"), dated as of the 31st day of March, 2001 (the "Amendment Date"), by and among RURAL CELLULAR CORPORATION, a Minnesota corporation (the "Borrower"); the financial institutions signatory hereto (the "Lenders"); and TORONTO DOMINION (TEXAS), INC., as administrative agent (the "Administrative Agent") for the Lenders; W I T N E S S E T H:              WHEREAS, the Borrower, the Administrative Agent and the Lenders are parties to that certain Third Amended and Restated Loan Agreement, dated as of June 29, 2000, as amended by that certain First Amendment thereto dated as of December 14, 2000 (as heretofore and hereafter amended, modified, supplemented and restated from time to time, the "Loan Agreement"); and              WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders amend and waive certain provisions in the Loan Agreement as more specifically set forth below; and              WHEREAS, the Administrative Agent and the Lenders have agreed to such amendments and waiver on the terms and conditions set forth herein;              NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that all capitalized terms used herein shall have the meanings ascribed to such terms in the Loan Agreement, and further agree as follows:              1.          Amendment to Article 1.  Article 1 of the Loan Agreement, Definitions, is hereby amended by deleting the definition of "Unreinvested Net Proceeds" in its entirety.              2.          Amendments to Article 2.                            (a)         Amendment to Section 2.3 .  Section 2.3(f) of the Loan Agreement, Applicable Margin, is hereby amended by deleting Section 2.3(f) in its entirety and substituting in lieu thereof the following: "(f) Applicable Margin.              (i)          Revolving Loans and Term Loan A Loans.  With respect to any Advance under the Revolving Loan Commitments or the Term Loan A Commitments, the Applicable Margin shall be as set forth in a certificate of the chief financial officer of the Borrower delivered to the Administrative Agent based upon the Total Leverage Ratio for the most recent fiscal quarter end for which financial statements are furnished by the Borrower to the Administrative Agent and each Lender as follows:   Total Leverage Ratio -------------------------------------------------------------------------------- Base Rate Advance Applicable Margin -------------------------------------------------------------------------------- LIBOR Advance Applicable Margin --------------------------------------------------------------------------------  A. Greater than 7.50:1.00 2.250% 3.250%  B. Greater than 7.00:1.00, but less than or equal to 7.50:1.00 2.125% 3.125%  C. Greater than 6.50:1.00, but less than or equal to 7.00:1.00 2.000% 3.000%  D. Greater than 6.00:1.00, but less than or equal to 6.50:1.00 1.500% 2.500%  E. Greater than 5.00:1.00, but less than or equal to 6.00:1.00 1.000% 2.000%  F. Greater than 4.00:1.00, but less than or equal to 5.00:1.00 0.750% 1.750%  G. Less than or equal to 4.00:1.00 0.500% 1.500%              (ii)         Term Loan B Loans.  With respect to any Advance under the Term Loan B Commitments, the Applicable Margin shall be as set forth in a certificate of the chief financial officer of the Borrower delivered to the Administrative Agent based upon the Total Leverage Ratio for the most recent fiscal quarter end for which financial statements are furnished by the Borrower to the Administrative Agent and each Lender as follows:   Total Leverage Ratio -------------------------------------------------------------------------------- Base Rate Advance Applicable Margin -------------------------------------------------------------------------------- LIBOR Advance Applicable Margin --------------------------------------------------------------------------------  A. Greater than 7.00:1.00 2.500% 3.500%  B. Less than or equal to 7.00:1.00 2.250% 3.250%              (iii)        Term Loan C Loans.  With respect to any Advance under the Term Loan C Commitments, the Applicable Margin shall be as set forth in a certificate of the chief financial officer of the Borrower delivered to the Administrative Agent based upon the Total Leverage Ratio for the most recent fiscal quarter end for which financial statements are furnished by the Borrower to the Administrative Agent and each Lender as follows:   Total Leverage Ratio -------------------------------------------------------------------------------- Base Rate Advance Applicable Margin -------------------------------------------------------------------------------- LIBOR Advance Applicable Margin --------------------------------------------------------------------------------  A. Greater than 7.00:1.00 2.750% 3.750%  B. Less than or equal to 7.00:1.00 2.500% 3.500%              (iv)       Incremental Facility Loans.  With respect to any Advance under the Incremental Facility Commitments, the Applicable Margin shall be as set forth in a certificate of the chief financial officer of the Borrower delivered to the Administrative Agent based upon the Total Leverage Ratio for the most recent fiscal quarter end for which financial statements are furnished by the Borrower to the Administrative Agent and each Lender as follows:   Total Leverage Ratio -------------------------------------------------------------------------------- Base Rate Advance Applicable Margin -------------------------------------------------------------------------------- LIBOR Advance Applicable Margin --------------------------------------------------------------------------------  A. Greater than 7.00:1.00 3.000% 4.000%  B. Less than or equal to 7.00:1.00 2.750% 3.750%              (v)        Notwithstanding any provision to the contrary herein, the Applicable Margin on April 23, 2001 shall be at the highest Applicable Margin set forth for the applicable Loans above, with any adjustments to the Applicable Margin to be based upon the receipt by the Administrative Agent of financial statements for the fiscal quarter ending March 31, 2001 and effective as set forth in Section 2.3(f)(vi) below.              (vi)       Subject to the last sentence hereof, with respect to Section 2.3(f)(i), (ii), (iii) and (iv), changes to the Applicable Margin shall be effective as of the second (2nd) Business Day after the day on which the financial statements are delivered to the Administrative Agent and the Lenders pursuant to Section 6.1 or 6.2 hereof, as the case may be.  Upon the occurrence and during the continuance of an Event of Default, the Applicable Margins shall not be subject to downward adjustment and shall automatically revert to the Applicable Margins set forth in, (A) with respect to Section 2.3(f)(i), part A of the table in Section 2.3(f)(i) above, (B) with respect to Section 2.3(f)(ii), part (A) of the table in Section 2.3(f)(ii) above, (C) with respect to Section 2.3(f)(iii), part A of the table in Section 2.3(f)(iii) above and (D) with respect to Section 2.3(iv), part (A) of the table in Section 2.3(f)(iv) above, in each case, until such time as such Event of Default is cured or waived.”                            (b)        Amendment to Section 2.5. Section 2.5(c) of the Loan Agreement, Mandatory Revolving Loan Commitment Reductions, is hereby amended by deleting Section 2.5(c) in its entirety and substituting in lieu thereof the following:                            "(c)       Reductions From Permitted Asset Sales. After the Agreement Date, on the date that any repayment of the Loans under Section 2.7(b)(vi) hereof is made, the Revolving Loan Commitments and, if applicable, the Incremental Facility Commitments shall be automatically and permanently reduced by an amount equal to the repayment of Revolving Loans and, if applicable, the Incremental Facility Loans required under Section 2.7(b)(vi) hereof; provided, however, that if there are no Loans then outstanding, or if the amount of such repayment exceeds the amount of the outstanding Loans, the Revolving Loan Commitments and, if applicable, the Incremental Facility Commitments shall be reduced on a pro rata basis by an aggregate amount equal to the repayment that would have been made had there been Loans outstanding, or the excess of such repayment over the Loans (which reduction shall be in addition to the reduction set forth in the first part of this Section 2.5(c)), as applicable, regardless of any repayment of the Revolving Loans (or, if applicable, the Incremental Facility Loans).  Reductions under this Section 2.5(c) to the Revolving Loan Commitments shall be applied to the reductions set forth in Section 2.5(a) hereof (and, if applicable, to the Incremental Facility Commitments shall be applied to the reductions set forth in the Notice of Incremental Facility Commitments) in inverse order of the reductions set forth therein."                            (c)         Amendment to Section 2.7 .  Section 2.7(b)(vi) of the Loan Agreement, Prepayments and Repayments, is hereby amended by deleting Section 2.7(b)(vi) in its entirety and substituting in lieu thereof the following:                            "(vi)     Asset Sales.  On the date that the Borrower or any of its Subsidiaries receives any Net Proceeds from any disposition or sale of assets by the Borrower or any of its Subsidiaries in accordance with Section 7.4 hereof, the Borrower shall make a repayment of the Loans then outstanding in an amount equal to such Net Proceeds; provided, however, that, prior to the occurrence or continuance of a Default of Event or Default, the Borrower shall not be required to make a repayment hereunder with respect to (A) any disposition of assets, in the ordinary course of business, which are obsolete or which are no longer used or useful in the business of the Borrower or any of its Subsidiaries or (B) the Net Proceeds of any disposition or sale of assets (other than those Net Proceeds resulting from any sale/leaseback transaction or those resulting from the sale of the incumbent local exchange carrier business of Saco River) which do not exceed (1) $5,000,000 for any single transaction (or series of related transactions), and (2) $15,000,000 in the aggregate during the term hereof.  Subject to Section 2.7(b)(xii) hereof, the amount of the Net Proceeds required to be repaid under this Section 2.7(b)(vi) shall be applied to the Term Loans then outstanding (on a pro rata basis for all Term Loans) in inverse order of maturity for each Term Loan, second to the Revolving Loans and then, if applicable, to the Incremental Facility Loans.  Accrued interest on the principal amount of the Loans being prepaid pursuant to this Section 2.7(b)(vi) to the date of such prepayment will be paid by the Borrower concurrently with such principal prepayment."              3.          Amendments to Article 7.                            (a)         Amendment to Section 7.4 .  Section 7.4(a) of the Loan Agreement Liquidation, Merger, or Disposition of Assets, is hereby amended by deleting Section 7.4(a) in its entirety and substituting in lieu thereof the following:                            "Section 7.4     Liquidation, Merger, or Disposition of Assets              (a)         Disposition of Assets.  The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time sell, lease, abandon, or otherwise dispose of any assets (other than assets disposed of in the ordinary course of business) without the prior written consent of the Lenders; provided, however, that (i) the prior written consent of the Lenders shall not be required for (A) the transfer of assets (including, without limitation, cash or cash equivalents) among the Borrower and its Subsidiaries (excluding Wireless Alliance) or for the transfer of assets (including, without limitation, cash or cash equivalents, but excluding the Licenses) between or among Subsidiaries (excluding Wireless Alliance) of the Borrower or (B) dispositions of assets the proceeds of which are applied pursuant to Section 2.5(c) or 2.7(b)(vi) hereof (provided, however, that, with respect to such sales under Section 2.5(c) or 2.7(b)(vi), the Borrower provides to the Administrative Agent and the Lenders on the date of such sale a certificate reflecting compliance with the terms and provisions of Sections 7.8, 7.9, 7.10, 7.11 and 7.12 hereof both before and after giving effect to such sale or transfer) and (ii) on or prior to March 31, 2002, the Borrower or any of its Subsidiaries shall (A) enter into one or more sale/leaseback transactions with respect to a substantial portion of the Borrower's cellular towers, the documentation for which to be approved as to form by the Administrative Agent (such approval not to be unreasonably withheld) and (B) finalize the sale of the incumbent local exchange carrier business of Saco River for an aggregate sales price of not less than its fair market value (as reasonably determined by the Borrower)."                            (b)        Amendment to Section 7.8 .  Section 7.8 of the Loan Agreement, Total Leverage Ratio, is hereby amended by deleting Section 7.8 in its entirety and substituting in lieu thereof the following:              "Section 7.8     Total Leverage Ratio.  (a) As of the end of any calendar quarter, and (b) at the time of any Advance hereunder (after giving effect to such Advance), the Borrower shall not permit its Total Leverage Ratio to exceed the ratios set forth below during the periods indicated: Period -------------------------------------------------------------------------------- Total Leverage Ratio -------------------------------------------------------------------------------- January 1, 2001 through March 31, 2001 8.65:1.00     April 1, 2001 through June 30, 2001 8.00:1.00     July 1, 2001 through March 31, 2002 7.00:1.00     April 1, 2002 through June 30, 2002 6.25:1.00     July 1, 2002 through December 31, 2002 6.00:1.00     January 1, 2003 and thereafter 5.00:1.00”              (c)         Amendment to Section 7.9.  Section 7.9 of the Loan Agreement, Senior Leverage Ratio, is hereby amended by deleting Section 7.9 in its entirety and substituting in lieu thereof the following:              "Section 7.9     Senior Leverage Ratio.  (a) As of the end of any calendar quarter, and (b) at the time of any Advance hereunder (after giving effect to such Advance), the Borrower shall not permit the ratio of (i) the principal amount of the Loans outstanding on such date to (ii) its Annualized Operating Cash Flow (as of the calendar quarter end being tested, or as of the most recently completed calendar quarter for which financial statements are required to have been delivered pursuant to Section 6.1 or 6.2 hereof, as the case may be) to exceed the ratios set forth below during the periods indicated: Period -------------------------------------------------------------------------------- Senior Leverage Ratio --------------------------------------------------------------------------------     January 1, 2001 through March 31, 2001 7.90:1.00     April 1, 2001 through June 30, 2001 7.50:1.00     July 1, 2001 through March 31, 2002 6.50:1.00     April 1, 2002 through June 30, 2002 5.75:1.00     July 1, 2002 through December 31, 2002 5.00:1.00     January 1, 2003 and thereafter 4.50:1.00"                            (d)        Amendment to Section 7.11.  Section 7.11 of the Loan Agreement, Annualized Operating Cash Flow to Interest Expense, is hereby amended by deleting Section 7.11 in its entirety and substituting in lieu thereof the following              Section 7.11     Annualized Operating Cash Flow to Interest Expense.  (a) As of the end of any calendar quarter, and (b) at the time of any Advance hereunder (after giving effect to such Advance), the Borrower shall not permit the ratio of (i) its Annualized Operating Cash Flow (as of the calendar quarter end being tested, or as of the most recently completed calendar quarter for which financial statements are required to have been delivered pursuant to Section 6.1 or 6.2 hereof, as the case may be) to (ii) its Interest Expense for the twelve (12) calendar months immediately preceding the calculation date to be less than the ratios set forth below for the periods indicated: Period -------------------------------------------------------------------------------- Annualized Operating Cash Flow to Interest Expense --------------------------------------------------------------------------------     January 1, 2001 through June 30, 2001 1.25:1.00     July 1, 2001 through December 31, 2001 1.50:1.00     January 1, 2002 through March 31, 2002 1.25:1.00     April 1, 2002 through June 30, 2002 1.50:1.00     July 1, 2002 and thereafter” 2.00:1.00                4.          Waiver to Credit Agreement.  The Required Lenders and the Administrative Agent hereby waive compliance by the Borrower with Section 7.12 of the Loan Agreement, Fixed Charge Coverage Ratio, for the period from March 31, 2001 through June 30, 2001.  This waiver is effective for that period only and the Borrower shall be required to comply with Section 7.12 at all other times.              5.          Amendment Fee.  The Borrower shall pay to the Administrative Agent on behalf of the Lenders executing and delivering this Amendment on or prior to 5 p.m. (EST) Monday, April 23, 2001, an amendment fee in the amount of 0.250% of the sum of (a) the aggregate outstanding Loans (other than the outstanding Revolving Loans and Swing Line Loans) of such Lenders and (b) the Revolving Loan Commitments of such Lenders (such sum, the “Amendment Fee”).  The Administrative Agent shall distribute pro rata to each Lender executing this Amendment a portion of the Amendment Fee based on such Lender’s portion of the outstanding Loans (other than the outstanding Revolving Loans and Swing Line Loans) and such Lender’s Revolving Loan Commitment.  The Amendment Fee shall be fully earned when due and non-refundable when paid.              6.          Amendment to Loan Documents.  All of the Loan Documents are hereby amended to the extent necessary to give full force and effect to the amendment contained in this Amendment.              7.          Representations and Warranties.  The Borrower hereby represents and warrants to and in favor of the Administrative Agent and the Lenders as follows:              (a)         each representation and warranty set forth in Article 4 of the Loan Agreement is hereby restated and affirmed as true and correct in all material respects as of the date hereof, except to the extent previously fulfilled in accordance with the terms of the Loan Agreement or to the extent relating specifically to the Agreement Date (or date prior thereto) or otherwise inapplicable;              (b)        the Borrower has the corporate power and authority (i) to enter into this Amendment and (ii) to do all acts and things as are required or contemplated hereunder to be done, observed and performed by it;              (c)         this Amendment has been duly authorized, validly executed and delivered by one or more Authorized Signatories of the Borrower, and this Amendment and the Loan Agreement constitute the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with its respective terms, subject, as to enforcement of remedies, to the following qualifications:  (i) an order of specific performance and an injunction are discretionary remedies and, in particular, may not be available where damages are considered an adequate remedy at law and (ii) enforcement may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws affecting enforcement of creditors’ rights generally (insofar as any such law relates to the bankruptcy, insolvency or similar event of the Borrower); and              (d)        the execution and delivery of this Amendment and performance by the Borrower under the Loan Agreement does not and will not require the consent or approval of any regulatory authority or governmental authority or agency having jurisdiction over the Borrower which has not already been obtained, nor be in contravention of or in conflict with the Certificate of Incorporation of the Borrower, or any provision of any statute, judgment, order, indenture, instrument, agreement, or undertaking, to which the Borrower is party or by which the Borrower’s assets or properties are bound.              8.          Conditions Precedent to Effectiveness of Amendment.  The effectiveness of this Amendment is subject to:              (a)         receipt by the Administrative Agent of duly executed counterpart signature pages of the Borrower and the Required Lenders to this Amendment;              (b)        all of the representations and warranties of the Borrower under Section 7 hereof being true and correct in all material respects, except to the extent previously fulfilled in accordance with the terms of the Loan Agreement or to the extent relating specifically to the Agreement Date (or date prior thereto) or otherwise inapplicable;              (c)         receipt by the Administrative Agent of the Amendment Fee; and              (d)        receipt of any other documents or instruments that the Administrative Agent, the Lenders signatory hereto or any of them, may reasonably request, certified by an officer of the Borrower if so requested.              9.          No Other Amendment or Waiver.  Except for the amendment set forth above, the text of the Loan Agreement and all other Loan Documents shall remain unchanged and in full force and effect.  No waiver by the Administrative Agent or the Lenders under the Loan Agreement or any other Loan Document is granted or intended except as expressly set forth herein, and the Administrative Agent and the Lenders expressly reserve the right to require strict compliance in all other respects (whether or not in connection with any Requests for Advance).  Except as set forth herein, the amendment agreed to herein shall not constitute a modification of the Loan Agreement or any of the other Loan Documents, or a course of dealing with the Administrative Agent and the Lenders at variance with the Loan Agreement or any of the other Loan Documents, such as to require further notice by the Administrative Agent and the Lenders, or the Required Lenders to require strict compliance with the terms of the Loan Agreement and the other Loan Documents in the future.              10.        Loan Documents.  This document shall be deemed to be a Loan Document for all purposes under the Loan Agreement and the other Loan Documents.              11.        Counterparts.  This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument.              12.        Governing Law.  This Amendment shall be construed in accordance with and governed by the laws of the State of New York.              13.        Severability.  Any provision of this Amendment which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.              IN WITNESS WHEREOF, the parties hereto have executed this Amendment or caused it to be executed by their duly authorized officers, all as of the day and year first above written. BORROWER: RURAL CELLULAR CORPORATION, a Minnesota corporation       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Title:  --------------------------------------------------------------------------------         ADMINISTRATIVE AGENT AND LENDERS: TORONTO DOMINION (TEXAS), INC., as Administrative Agent and as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------               ABN AMRO BANK N.V., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------                   ADDISON CDO, LIMITED (Acct 1279), as a Lender   By: Pacific Investment Management Company LLC, as its Investment Advisor       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           ATHENA CDO, LIMITED (Acct 1277), as a Lender   By: Pacific Investment Management Company LLC, as its Investment Advisor       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           CAPTIVA III FINANCE LTD. (Acct. 275), as a Lender as advised by Pacific Investment Management Company LLC       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           CAPTIVA IV FINANCE LTD. (Acct. 1275), as a Lender as advised by Pacific Investment Management Company LLC       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     JISSEKIKUN FUNDING, LTD., as a Lender   By: Pacific Investment Management Company, LLC, as its Investment Advisor       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           PIMCO HIGH YIELD FUND (ACCOUNT 705), as a Lender By: Pacific Investment Management Company, LLC, as its Investment Advisor, acting through Investors Fiduciary Trust Company in the Nominee Name of IFTCO       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           ALLFIRST BANK, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           AMARA-I FINANCE, LTD., as a Lender   By: INVESCO Senior Secured Management, Inc., as Subadvisor       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           AMARA 2 FINANCE, LTD., as a Lender   By: INVESCO Senior Secured Management, Inc., as Subadvisor       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           AVALON CAPITAL LTD., as a Lender   By: INVESCO Senior Secured Management, Inc., as Portfolio Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           AVALON CAPITAL LTD. 2, as a Lender   By: INVESCO Senior Secured Management, Inc., as Portfolio Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     AMMC CDO II, LIMITED, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           ARCHIMEDES FUNDING II, LTD., as a Lender   By: ING Capital Advisors LLC, as Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           ARCHIMEDES FUNDING III, LTD., as a Lender   By: ING Capital Advisors LLC, as Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           THE ING CAPITAL SENIOR SECURED HIGH INCOME FUND, L.P., as a Lender   By: ING Capital Advisors LLC, as Investment Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           SEQUILS-ING I (HBDGM), LTD., as a Lender   By: ING Capital Advisors LLC, as Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           SWISS LIFE US RAINBOW LIMITED, as a Lender   ING Capital Advisors LLC, as Investment Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           BANK OF AMERICA, N.A., as a Lender and as a Swing Line Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------       BANK OF MONTRÉAL, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     THE BANK OF NOVA SCOTIA, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           BEAR STEARNS INVESTMENT PRODUCTS, INC., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           BLUE SQUARE FUNDING LIMITED SERIES 3, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           BNP PARIBAS, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           CARLYLE HIGH YIELD PARTNERS II, LTD., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           CENTURION CDO II, LTD., as a Lender   By: American Express Asset Management Group, Inc., As Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           CENTURION CDO III, LTD., as a Lender   By: American Express Asset Management Group, Inc.,  As Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     THE CIT GROUP / EQUIPMENT FINANCING, INC., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           CITIZENS BANK OF MASSACHUSETTS, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           CITY NATIONAL BANK, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           COBANK, ACB, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           COLUMBUS LOAN FUNDING LTD., as a Lender   By: Travelers Asset Management International Company LLC       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           THE TRAVELERS INSURANCE COMPANY, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           TRAVELERS CORPORATE LOAN FUND INC., as a Lender   By: Travelers Asset Management International Company LLC       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     CREDIT AGRICOLE INDOSUEZ, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           CYPRESSTREE INVESTMENT PARTNERS I, LTD., as a Lender   By: CypressTree Investment Management Company, Inc. as Portfolio Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           CYPRESSTREE INVESTMENT PARTNERS II, LTD., as a Lender   By: CypressTree Investment Management Company, Inc. as Portfolio Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           CYPRESSTREE SENIOR FLOATING RATE FUND, as a Lender   By: CypressTree Investment Management Company, Inc. as Portfolio Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           NORTH AMERICAN SENIOR FLOATING RATE FUND, as a Lender   By: CypressTree Investment Management Company, Inc. as Portfolio Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           THE DAI-ICHI KANGYO BANK, LTD. – NEW YORK BRANCH, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           DEBT STRATEGIES FUND, INC., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     MASTER SENIOR FLOATING RATE TRUST, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           MERRILL LYNCH SENIOR FLOATING RATE FUND, INC., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           DEXIA CREDIT LOCAL DE FRANCE – NEW YORK AGENCY, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           EATON VANCE CDO III, LTD., as a Lender   By: Eaton Vance Management, as Investment Advisor       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           EATON VANCE INSTITUTIONAL SENIOR LOAN FUND, as a Lender   By: Eaton Vance Management, as Investment Advisor       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           ATON VANCE SENIOR INCOME TRUST, as a Lender   By: Eaton Vance Management, as Investment Advisor       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           GRAYSON & CO, as a Lender   By: Boston Management and Research, as Investment Advisor       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     OXFORD STRATEGIC INCOME FUND, as a Lender   By: Eaton Vance Management, as Investment Advisor       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           SENIOR DEBT PORTFOLIO, as a Lender   By: Boston Management and Research, as Investment Advisor       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           ELF FUNDING TRUST, as a Lender   By: Highland Capital Management, L.P. as Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           EMERALD ORCHARD LIMITED, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           HIGHLAND LEGACY LIMITED, as a Lender   By: Highland Capital Management, L.P. as Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           HIGHLAND LOAN FUNDING V, LTD., as a Lender   By: Highland Capital Management, L.P. as Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           SL LOANS I LIMITED, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           FIRST UNION NATIONAL BANK, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     FIRSTAR BANK, N.A., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           FLEET NATIONAL BANK, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           FRANKLIN FLOATING RATE FUND PLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           GALAXY CLO 1999-1, LTD., as a Lender   By: SAI Investment Adviser, Inc. its Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           GREAT POINT CLO 1999-1 LTD., as a Lender   By: Sankaty Advisors, LLC as Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           SANKATY HIGH YIELD PARTNERS II, L.P., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     HOWARD BANK, N.A., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           IBM CREDIT CORPORATION, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           KEMPER FLOATING RATE FUND, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           KEY CORPORATE CAPITAL, INC., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           KZH CRESCENT LLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           KZH CRESCENT-2 LLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           KZH ING-1 LLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           KZH ING-2 LLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           KZH ING-3 LLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     KZH LANGDALE LLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           KZH PAMCO LLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           KZH RIVERSIDE LLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           KZH SOLEIL LLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           KZH SOLEIL-2 LLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           KZH STERLING LLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           LIBERTY-STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND, as a Lender   By: Stein Roe & Farnham Incorporated, As Advisor       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------         Stein Roe & Farnham Incorporated, as Advisor to the Stein Roe Floating Rate Limited Liability Company     STEIN ROE & FARNHAM INCORPORATED, as a Lender   as agent for Keyport Life Insurance Company       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           FLEET NATIONAL BANK   As Trust Administrator for Long Lane Master Trust IV, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           MERITA BANK PLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           METROPOLITAN LIFE INSURANCE COMPANY, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           ML CLO XV PILGRIM AMERICA (CAYMAN) LTD., as a Lender   By: Pilgrim Investments, Inc. as its investment manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           PILGRIM CLO 1999-1 LTD., as a Lender   By: Pilgrim Investments, Inc. as its investment manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           PILGRIM PRIME RATE TRUST, as a Lender   By: Pilgrim Investments, Inc. as its investment manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           MUIRFIELD TRADING LLC, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           OLYMPIC FUNDING TRUST, SERIES, 1999-1, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           PPM SPYGLASS FUNDING TRUST, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           SRF TRADING, INC., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           NATIONAL CITY BANK, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           OCTAGON INVESTMENT PARTNERS II, LLC, as a Lender   By: Octagon Credit Investors, LLC as sub-investment manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           PNC BANK, NATIONAL ASSOCIATION, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     PUTNAM DIVERSIFIED INCOME TRUST, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           PUTNAM HIGH YIELD TRUST, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           CAPTIVA II FINANCE LTD., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           SEQUILS IV, LTD., as a Lender   By: TCW Advisors, Inc., as its Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           SEQUILS-CUMBERLAND I, LTD., as a Lender   By: Deerfield Capital Management, L.L.C. as its collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           STANFIELD CLO, LTD., as a Lender   By: Stanfield Capital Partners LLC as its Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           STANFIELD / RMF TRANSATLANTIC CDO, LTD., as a Lender   By: Stanfield Capital Partners LLC as its Collateral Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     WINDSOR LOAN FUNDING, LIMITED, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           FLEET NATIONAL BANK, as Successor to Summit Bank, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           SUNTRUST BANK, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           SYNDICATED LOAN FUNDING TRUST, as a Lender   By: Lehman Commercial Paper, Inc., Not in its individual capacity but solely as Asset Manager       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           TRYON CLO LTD. 2000-1, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           UNION BANK OF CALIFORNIA, N.A., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           U.S. BANK NATIONAL ASSOCIATION, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           VAN KAMPEN PRIME RATE INCOME TRUST, as a Lender   By: Van Kampen Investment Advisory Corp.       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           VAN KAMPEN SENIOR FLOATING RATE FUND, as a Lender   By: Van Kampen Investment Advisory Corp.       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------     WEBSTER BANK, as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           WELLS FARGO BANK N.A., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------           CAPTIVA II FINANCE LTD., as a Lender       By: --------------------------------------------------------------------------------           Name:  --------------------------------------------------------------------------------         Its: --------------------------------------------------------------------------------  

  Exhibit 10.44 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (this “Agreement”) is made as of the 15th day of October, 2001, by and between Illinois Superconductor Corporation, a Delaware corporation (the “Company”) whose headquarters is at 451 Kingston Court Mount Prospect, IL 60056 , and Roger Boivin (the “Employee”) whose place of residence is 7601 County Rd. 418, Melissa Texas 75454. BACKGROUND      Employer hereby agrees to employ Employee and Employee hereby agrees to work for Employer for the term and upon all of the conditions set forth herein.      Employee’s title shall be President and Chief Operating Officer reporting to the Chief Executive Officer , and shall perform such duties as may be reasonably required that are consistent with his position.      Employer and Employee deem it to be in their best interest for Employer to hire Employee to perform his assigned duties (Services) on the terms and conditions set forth herein.      NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the parties hereto hereby agree as follows:      1.     Employment Term The Company hereby employs the Employee, and the Employee hereby accepts employment with the Company, in accordance with and subject to the terms and conditions set forth herein. The term of this Agreement shall commence on the date hereof (the “Effective Date”) and, unless earlier terminated in accordance with Paragraph 5, shall end on December 31, 2004, with the term of employment being that period between the Effective Date and December 31, 2004 (that period, as extended pursuant to the following sentence, the “Term”). As of January 1, 2005, and as of each subsequent January 1st, (each an “Automatic Renewal Date”), unless either party shall have given to the other written notice of non-extension at least sixty (60) days prior to such Automatic Renewal Date, the Term shall, unless earlier terminated in accordance with Paragraph 5, extend automatically for a period of one (1) year to the anniversary of the then otherwise scheduled expiration date of this Agreement. If there is a “Change of Control” (as defined in Paragraph 6(e) below), the Term shall, unless earlier terminated in accordance with Paragraph 5, extend automatically to the second anniversary of the date of the Change of Control, provided that the second anniversary of the date of the Change of Control is later than the last day of the Term as determined without regard to the Change of   --------------------------------------------------------------------------------   Control. Certain provisions of this Agreement shall continue in effect after the Term as specifically set forth herein.      2.     Employment              (a)  The Employee shall serve as the Company’s President and Chief Operating Officer and shall have the primary duties of managing the company’s operations. The Employee shall report to the Chief Executive Officer of the Company.              (b)  The Employee shall have such authority and responsibility as may reasonably be assigned by the Chief Executive Officer or the Board of Directors of the Company (the “Board”).              (c)  During the period the Employee is employed by the Company, the Employee shall devote the Employee’s normal full business time and attention to the business and affairs of the Company and use the Employee’s best efforts to perform faithfully the duties and responsibilities of the Employee’s position as described herein.              (d)  With the prior written approval of the Chairman of the Board of Directors and the Chief Executive Officer of the Company, Employee may engage in other activities, not otherwise precluded by this Agreement, which do not interfere with the performance of his duties, as outlined in the Agreement, including, but not limited to, his duty to provide his Services on a full-time basis with Employer.              (e)  Employee will provide the Services in a professional manner that will reflect favorably on Employer and others associated with Employer, and shall use his best efforts to faithfully perform and discharge those duties which may be assigned to him from time to time by Employer in connection with the conduct of Employer’s business which are consistent with Employee’s position as President and Chief Operating Officer.      3.     Compensation              (a)  The Company shall pay the Employee a base salary (the “Base Salary”) of not less than Two Hundred Twenty-Five Thousand Dollars ($225,000) per annum, payable at least monthly, in accordance with the Company’s payroll practices less such deductions as shall be required to be withheld by applicable law and regulations. The Board shall conduct an annual review of the Employee’s Base Salary and Bonus (as defined in Paragraph 3(b)below), but in no event shall the Base Salary be decreased without the consent of the Employee. Any increase in the Base Salary or change in the Bonus shall be in the sole discretion of the Board. -2- --------------------------------------------------------------------------------                (b)  Subject to Paragraph 6(c) hereof, for each calendar year (or portion thereof) completed during the Term, the Employee shall be eligible to receive a bonus (the “Bonus”) of an amount up to 50% of the Base Salary for such year. The amount of the Bonus payable to the Employee for a particular year, if any, shall be based on the accomplishment of corporate and individual performance goals as determined by the Board. For each year beginning after 2001, the corporate and individual performance goals referenced in the preceding sentence shall be established by the Board and communicated to the Employee before the end of the first quarter of the applicable year, and for the period extending from the Effective Date through December 31, 2001, as soon as practicable following the Effective Date. In the event of a disagreement over the attainment of such goals and objectives, the Compensation Committee of the Board shall have final authority to determine the award of the Bonus. The Bonus payable for a particular year, if any, shall be paid no later than March 15th of the following year and may be paid in cash, Company stock or a combination of the two as determined by the Board in its sole discretion.      4.     Benefits.              (a)  The Company agrees to reimburse the Employee for all reasonable and necessary travel, business entertainment and other business expenses incurred by the Employee in connection with the performance of the Employee’s duties under this Agreement. Such reimbursements shall be made by the Company within a reasonable time after submission by the Employee of vouchers evidencing such expenditures in accordance with the Company’s standard policies and procedures.              (b)  The Employee shall be entitled to participate in any and all medical insurance, group health, disability insurance, pension and other similar benefit plans which are made generally available by the Company to its senior executives, which shall not be less favorable than those available to any other group of employees of the Company. The Company, in its sole discretion, may at any time amend or terminate its benefit plans or programs.              (c)  The Employee shall be entitled to receive five (5) weeks of annual paid vacation in accordance with the Company’s vacation policy for its senior executives. The Employee shall be entitled to all paid holidays the Company makes available to its employees.      5. Termination. -3- --------------------------------------------------------------------------------   The Employee’s employment hereunder may be terminated prior to the end of the Term under the following circumstances:              (a)  Death of Employee. The Employee’s employment hereunder shall terminate upon the Employee’s death.              (b)  Total Disability. The Company may terminate the Employee’s employment hereunder at any time after the Employee’s “Total Disability.” “Total Disability” means (i) the Employee becomes entitled to receive disability benefits under the Company’s long-term disability plan, or, in the absence of such a plan, (ii) the Employee’s inability to perform the duties and responsibilities contemplated under this Agreement for a period of more than one hundred eighty (180) consecutive days due to physical or mental incapacity or impairment. Such termination shall become effective five (5) business days after the Company gives notice of such termination to the Employee, or to the Employee’s spouse or legal representative (in case of mental incapacitation).              (c)  Termination by the Company With or Without Cause. The Company may terminate the Employee’s employment hereunder with or without Cause at any time after the Company provides thirty (30) days’ written notice (or a shorter period of time, to be determined in good faith by the Board to be essential to prevent serious damage to the Company) to the Employee to such effect. Following the Company’s termination of the Employee’s employment hereunder without Cause, subject to the terms and conditions of this Agreement, the Employee shall be entitled to compensation and benefit continuation as provided in Paragraph 6(b). For purposes of this Agreement, the term “Cause” shall mean any of the following: (i) willful malfeasance or willful misconduct by the Employee in connection with the Employee’s employment; (ii) the Employee’s gross negligence in performing any of the Employee’s duties under this Agreement; (iii) the Employee’s conviction of, or entry of a plea of guilty to, or entry of a plea of nolo contendere with respect to any crime other than a traffic violation or infraction which is a misdemeanor; (iv) the Employee’s willful and continuing breach of any written policy applicable to all employees adopted by the Company concerning conflicts of interest, political contributions, standards of business conduct or fair employment practices, procedures with respect to compliance with securities laws or any similar matters, or adopted pursuant to the requirements of any government contract or regulation; or (v) any other material breach by the Employee of this Agreement after the Company provides written notification to the Employee of such breach and the Employee fails within five (5) days of receipt of such notification to cure the circumstances which gave rise to such breach.              (d)  Termination by the Employee With or Without Good Reason. The Employee’s employment hereunder may be terminated by the Employee as specified below upon thirty (30) days’ prior notice with or without, Good Reason. For purposes of this -4- --------------------------------------------------------------------------------   Agreement, “Good Reason” means any of the following, without the consent of the Employee: (i) any change in, or diminution of, the Employee’s duties or responsibilities that is inconsistent in any material and adverse respect with the Employee’s duties and responsibilities as contemplated under Section 2 of this Agreement, provided that changes in reporting relationships of other employees to the Employee, including those which occur as a result of strategic business developments such as the sale of a business unit or the outsourcing of a business function, shall not be construed as “adverse” to the Employee for purposes of determining whether Good Reason exists; (ii) any reduction of the Employee’s Base Salary or maximum Bonus level; or (iii) any other material breach by the Company of this Agreement after the Employee provides written notification to the Company of such breach and the Company fails within thirty (30) days of receipt of such notification to cure the circumstances which gave rise to such breach. Notwithstanding the foregoing, no act or omission by the Company shall constitute Good Reason hereunder unless the Employee gives the Company written notice thereof within thirty (30) days after he has actual knowledge of such act or omission, and the Company fails to remedy such act or omission within thirty (30) days after receiving such notice.                      6.     Compensation Following Termination Prior to the End of the Term. In the event that the Employee’s employment hereunder is terminated prior to the end of the Term, the Employee shall be entitled only to the following compensation and benefits upon such termination:                              (a)  Termination by Reason of Death or Total Disability. In the event that the Employee’s employment is terminated prior to the expiration of the Term by reason of the Employee’s death or Total Disability, pursuant to Paragraph 5(a) or 5(b) hereof, respectively, the Employee (or the Employee’s spouse or estate, as the case may be) shall be entitled to the following amounts or benefits:   i.   any accrued but unpaid Base Salary (as determined pursuant to Paragraph 3(a) hereof) for Services rendered to the date of termination in accordance with the Company’s standard payroll practices and any unpaid Bonus previously awarded by the Board in respect of a completed calendar year pursuant to Paragraph 3(b) hereof;     ii.   any incurred but unreimbursed expenses required to be reimbursed pursuant to Paragraph 4(a) hereof; and     iii.   the benefits to which the Employee and/or the Employee’s family may be entitled upon such termination pursuant to the plans, programs and arrangements referred to in Paragraph 4 hereof, as determined and paid in accordance with the terms of such plans, programs and arrangements. -5- --------------------------------------------------------------------------------                                (b)  Termination by the Company without Cause or Termination by the Employee with Good Reason. In the event that the Employee’s employment is terminated by the Company without Cause pursuant to Paragraph 5(c) hereof, or by the Employee with Good Reason pursuant to Paragraph 5(d) hereof, the Employee shall be entitled to the following amounts or benefits:   i.   any accrued but unpaid Base Salary (as determined pursuant to Paragraph 3(a) hereof) for Services rendered to the date of termination in accordance with the Company’s standard payroll practices and any unpaid Bonus previously awarded by the Board pursuant to Paragraph 3(b) hereof;     ii.   any incurred but unreimbursed expenses required to be reimbursed pursuant to Paragraph 4(a) hereof;     iii.   subject to Paragraph 6(e) hereof, continued payment of the Base Salary (as determined under Paragraph 3(a) hereof) in accordance with the Company’s standard payroll practices for one (1) year following the date of such termination; provided that such continued payments shall be offset by any salary, wage, or similar payments paid or payable, directly or indirectly, to the Employee during the year following the date of termination from another employer or recipient of the Employee’s Services (such payments being determined without regard to any individual waivers or other similar arrangements).     iv.   the benefits to which the Employee and/or the Employee’s family may be entitled upon such termination pursuant to the plans, programs and arrangements referred to in Paragraph 4 hereof, as determined and paid in accordance with the terms of such plans, programs and arrangements and;     v.   subject to Paragraph 6(e) hereof, continuation of health and insurance benefits (other than disability insurance benefits) for one (1) year following the date of such termination on the same terms and conditions as in effect immediately prior to the termination; provided that the Company shall not be required to provide benefits otherwise required by this clause (v) after such time as the Employee becomes entitled to receive benefits of the same type from another employer or recipient of the Employee’s Services (such entitlement being determined without regard to any individual waivers or other similar arrangements).                              (c)  Termination by the Company for Cause or Termination by the Employee Without Good Reason. In the event that the Employee’s employment is terminated prior to the expiration of the Term of this Agreement by the Company for Cause pursuant to -6- --------------------------------------------------------------------------------   Paragraph 5(c) hereof or by the Employee without Good Reason pursuant to Paragraph 5(d) hereof, the Employee shall be entitled to the following amounts or benefits:   i.   any accrued but unpaid Base Salary (as determined pursuant to Paragraph 3(a) hereof) for Services rendered to the date of termination in accordance with the Company’s standard payroll practices;     ii.   any incurred but unreimbursed expenses required to be reimbursed pursuant to Paragraph 4(a) hereof; and     iii.   the benefits to which the Employee and/or the Employee’s family may be entitled upon such termination pursuant to the plans, programs and arrangements referred to in Paragraph 4 hereof, as determined and paid in accordance with the terms of such plans, programs and arrangements. Notwithstanding the foregoing, in no event shall any unpaid Bonus previously awarded by the Board pursuant to Paragraph 3(b) hereof be paid following a termination by the Company for Cause pursuant to Paragraph 5(c) hereof or by the Employee without Good Reason pursuant to Paragraph 5(d) hereof.                                   (d)  Termination due to Company’s Notice of Non-Extension. In the event that during the Term the Company provides the Employee with a notice of non-extension as described in Section 1 hereof, upon the termination of the Employee’s employment by the Company pursuant to such notice, the Employee shall be entitled to the following amounts or benefits:   i.   any accrued but unpaid Base Salary (as determined pursuant to Paragraph 3(a) hereof) for Services rendered to the date of termination in accordance with the Company’s standard payroll practices and any unpaid Bonus previously awarded by the Board pursuant to Paragraph 3(b) hereof;     ii.   any incurred but unreimbursed expenses required to be reimbursed pursuant to Paragraph 4(a) hereof;     iii.   continued payment of the Base Salary (as determined under Paragraph 3(a) hereof) in accordance with the Company’s standard payroll practices for six (6) months following the date of such termination; provided that such continued payments shall be offset by any salary, wage, or similar payments paid or payable, directly or indirectly, to the Employee during the six months following the date of termination from another employer or recipient of the Employee’s Services (such -7- --------------------------------------------------------------------------------         payments being determined without regard to any individual waivers or other similar arrangements);     iv.   the benefits to which the Employee and/or the Employee’s family may be entitled upon such termination pursuant to the plans, programs and arrangements referred to in Paragraph 4 hereof, as determined and paid in accordance with the terms of such plans, programs and arrangements; and     v.   continuation of health and insurance benefits (other than disability insurance benefits) for six (6) months following the date of such termination on the same terms and conditions as in effect immediately prior to the termination; provided that the Company shall not be required to provide benefits otherwise required by this clause (v) after such time as the Employee becomes entitled to receive benefits of the same type from another employer or recipient of the Employee’s Services (such entitlement being determined without regard to any individual waivers or other similar arrangements).     (e)   Termination Upon or Following a Change of Control. If there is a “Change of Control” (as defined below) and the Employee’s employment is terminated by the Company without Cause or by the Employee with Good Reason prior to the expiration of the Term of this Agreement and within two (2) years following a Change of Control, the words “two (2) years” shall replace the words “one (1) year” in clauses (iii) and (v) of Paragraph 6(b). For purposes of this Agreement, a Change of Control shall be deemed to have occurred if the stockholders of the Company approve a definitive agreement (A) to merge or consolidate the Company with or into another corporation other than a majority-owned subsidiary of the Company, pursuant to which the Company is not the surviving or resulting entity or the persons who were the members of the Board prior to such approval do not represent a majority of the directors of the surviving, resulting or acquiring entity or the parent thereof, or (B) to sell or otherwise dispose of all or substantially all of the Company’s assets.                              (f)  No Other Benefits or Compensation. Except as may be specifically provided under this Agreement or under the terms of any incentive compensation, employee benefit or fringe benefit plan applicable to the Employee at the time of the termination of the Employee’s employment prior to the end of the Term, the Employee shall have no right to receive any other compensation, or to participate in any other plan, arrangement or benefit, with respect to any future period after such termination. -8- --------------------------------------------------------------------------------                                (g)  Waiver of Personal Liability. To the extent permitted by applicable law, Employee hereby acknowledges and agrees that he shall have recourse only to the Company (and its successors-in-interest) with respect to any claims he may have for compensation or benefits arising in connection with his employment, whether or not under this Agreement or under any other plan, program, or arrangement, including, but not limited to any agreement relating to the grant or exercise of stock options or other equity rights in the Company. Without limiting the generality of the foregoing, to the extent permitted by applicable law, the Employee hereby waives any such claims for compensation, benefits and equity rights against officers, directors, stockholders, affiliates, employees, agents or other representatives in their personal or separate capacities.      7.     Confidentiality, Ownership, and Covenants of Non-Competition and Non-Solicitation.                              (a)  Confidentiality. The Employee recognizes that the Company’s business interests require the fullest practical protection and confidential treatment of all information not generally known within the relevant trade group or by the public, including all documents, writings, memoranda, business plans, illustrations, designs, plans, processes, programs, inventions, computer software, reports, sources of supply, customer lists, supplier lists, trade secrets and all other valuable or unique information and techniques acquired, developed or used by the Company relating to its businesses, operations, employees and customers (hereinafter collectively termed “Protected Information”). The Employee expressly acknowledges and agrees that Protected Information constitutes trade secrets and confidential and proprietary business information of the Company. No Protected Information shall include information which is or becomes part of the public domain through no breach of this Agreement by the Employee. The Employee agrees that Protected Information is essential to the success of the Company’s business, and it is the policy of the Company to maintain as secret and confidential Protected Information which gives the Company a competitive advantage over those who do not know the Protected Information and is expressly and implicitly protected by the Company from unauthorized disclosure. Accordingly, the Employee agrees to keep secret Protected Information and to treat confidentially and not to knowingly permit any other entity to, directly or indirectly, appropriate, divulge, disclose or otherwise disseminate to any other entity nor use in any manner for the Employee, and not to intentionally use or aid others in using any such Protected Information in competition with the Company or its Affiliates except to the extent that disclosure is required by law; provided, however, that the Employee shall provide the Company with notice as far in advance of any required disclosure as is practicable in order for the Company to obtain an order for the assurance that any information required to be disclosed will be treated as Protected Information and the Employee shall use all reasonable efforts to cooperate with the Company in connection therewith and in furtherance thereof. The obligation -9- --------------------------------------------------------------------------------   of non-disclosure of information shall continue to exists for so long as such information remains Protected Information. For purposes of this Agreement, trade secrets are subject to the protection of the Illinois Trade Secret Act. The provisions of this Paragraph 7(a) are not intended to supersede or limit the effect of any prior confidentiality or proprietary rights agreements previously executed by the Employee including the Confidential Information, Proprietary Rights and Non-Competition Agreement between the Company and the Employee, a copy of which is attached hereto as Exhibit B. However, if there is any conflict between the terms and conditions of this Agreement and the Confidential Information, Proprietary Rights and Non-Competition Agreement attached hereto as Exhibit B, then the terms and conditions of this Agreement, as interpreted by the Board, shall govern.                              (b)  Ownership. The Employee hereby assigns to the Company all of the Employee’s right (including patent rights, copyrights, trade secret rights, and all other rights throughout the world), title and interest in and to Inventions, whether or not patentable or registrable under copyright or similar statutes, made or conceived or reduced to practice or learned by the Employee, either alone or jointly with others, during the course of the performance of Services for the Company. The Employee shall also assign to, or as directed by, the Company, all of the Employee’s right, title and interest in and to any and all Inventions, the full title to which is required to be in the United States government by a contract between the Company and the United States government or any of its agencies. For the purpose of this Agreement, the term “Inventions” collectively refers to any and all inventions, trade secrets, improvements, ideas, processes, formulas, source and object codes, data, programs, other works of authorship, know-how, improvements, discoveries, developments, designs, and techniques regarding any of the foregoing. The provisions of this Paragraph 7(b) are not intended to supersede or limit the effect of any prior confidentiality or proprietary rights agreements previously executed by the Employee including the Confidential Information, Proprietary Rights and Non-Competition Agreement between the Company and the Employee, a copy of which is attached hereto as Exhibit B. However, if there is any conflict between the terms and conditions of this Agreement and the Confidential Information, Proprietary Rights and Non-Competition Agreement attached hereto as Exhibit B, then the terms and conditions of this Agreement, as interpreted by the Board, shall govern.                              (c)  Covenants of Non-Competition and Non-Solicitation. The Employee acknowledges that the Employee’s Services pursuant to this Agreement are unique and extraordinary, that the Company will be dependent upon the Employee for the development and growth of its business and related functions, and that the Employee will continue to develop personal relationships with significant customers of the Company and to have control of confidential information concerning, and lists of customers of, the Company. The Employee further acknowledges that the business of the Company is international in scope and cannot be -10- --------------------------------------------------------------------------------   confined to any particular geographic area of the United States. For the foregoing reasons, the Employee covenants and agrees that at no time during the Restriction Period (as defined below) shall the Employee either alone or as a stockholder, partner, consultant, owner, agent, creditor, co-venturer of any other entity or in any other capacity, directly or indirectly, engage in the Business (as defined below); provided that nothing herein shall prohibit the Employee from being an owner of not more than 5% of the outstanding stock of any class of a corporation which is publicly traded, so long as the Employee does not actively participate in the business of such corporation. For the purpose of this Paragraph 7(c), the “Business” means the business of developing, manufacturing and marketing high temperature superconductivity products designed to enhance the quality, capacity, coverage and flexibility of wireless voice and data, communication services and other wireless telecommunications services.      For the reasons acknowledged by the Employee at the beginning of this Paragraph 7(c), the Employee additionally acknowledges, covenants, and agrees that at no time during the Term nor during the period commencing on the date of termination of the Employee’s employment with the Company and ending the day following the first anniversary of the date of termination of the Employee’s employment with the Company for any reason, shall the Employee, directly or indirectly, either alone or as a stockholder, partner, consultant, adviser, owner, agent, creditor, co-venturer of any other entity, or in any other capacity, (i) knowingly sell to or solicit sales of products produced in the Business to any customer or account which was a customer or account of the Company during the Employee’s employment with the Company, or (ii) (other than through general, non targeted advertisements) intentionally solicit, hire, knowingly attempt to solicit or hire, or knowingly participate in any attempt to solicit or hire any person who was an employee of the Company or any of its Affiliates during the Employee’s employment with the Company.      For purposes of this Agreement, the Restriction Period means the Term and the period commencing on the date of termination of the Employee’s employment with the Company and ending the day following the first anniversary of the date of termination of the Employee’s employment with the Company for any reason; provided that the Company may elect to extend the Restriction Period for up to one (1) year beyond the first anniversary of the date of termination of the Employee’s employment with the Company if (A) the Company provides written notice of its intent to so extend the Restriction Period at least six (6) months prior to the date on which the Restriction Period would otherwise expire and (B) the Company pays to the Employee the Base Salary, without offset for salary, wages or similar payments from another employer during such extended period, at the rate such Base Salary was being paid to the Employee at the time of termination, for one (1) year beyond the period for which the Company would otherwise be obligated to continue the Base Salary pursuant to this Agreement in the absence of the extension of the Restriction Period. -11- --------------------------------------------------------------------------------        (d)  Equitable Remedies. The Employee acknowledges, covenants and agrees that, in the event the Employee shall violate any provisions of this Section 8, the Company will have the right to enforce this Agreement by all remedies that may be available at law or in equity.      8.     Assignability; Binding Effect. This Agreement is a personal contract calling for the provision of unique Services by the Employee, and the Employee’s rights and obligations hereunder may not be sold, transferred, assigned or pledged. In the event of any attempted assignment or transfer of rights hereunder by the Employee contrary to the provisions hereof (other than as may be required by law), the Company will have no further liability for payments hereunder. The rights and obligations of the Company hereunder will be binding upon and run in favor of the successors and assigns of the Company and, in connection therewith, and notwithstanding any other provision of this Agreement to the contrary, in the event that there is such a successor or assign, on and after the date of such succession or assignment, “Company” shall thereupon instead refer to such successor or assign, as the case may be. This Agreement does not create, and shall not be interpreted or construed to create, any rights enforceable by any person not a party to this Agreement, except as specifically provided herein.      9.     Entire Agreement. This Agreement represents the entire agreement between the parties concerning the Employee’s employment with the Company and supersedes all prior negotiations, discussions, understandings and agreements, whether written or oral, between the Employee and the Company relating to the subject matter of this Agreement.      10.     Amendment or Modification, Waiver. No provision of this Agreement may be amended or waived unless such amendment or waiver is agreed to in writing signed by the Employee and by a duly authorized officer of the Company other that the Employee. No waiver by any party to this Agreement of any breach by another party of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time.      11.     Notices. All notices, demands or other communications of any kind to be given or delivered under this Agreement shall be in writing and shall be deemed to have been properly given if (a) delivered by hand, (b) delivered by a nationally recognized overnight courier service, (c) sent by registered or certified United States Mail, return receipt requested and first class postage prepaid, or (d) facsimile transmission followed by a confirmation copy delivered by a nationally recognized overnight courier service. Such communications shall be sent to the parties at their respective addresses as follows: -12- --------------------------------------------------------------------------------         If to the Employee   Mr. Roger Boivin     7601 County Road 418     Melissa, TX 75454   If to the Company:   Illinois Superconductor Corporation     451 Kingston Court     Mount Prospect, IL 60056     Attention: Chief Executive Officer   with a copy to:   Barry M. Abelson, Esquire     Pepper Hamilton LLP     3000 Two Logan Square     18th & Arch Streets     Philadelphia, PA 19103-2799     FAX: 215-981-4750 Either party may change such address for delivery to the other party by delivery of a notice in conformity with the provisions of this Section specifying such change. Notice shall be deemed to have been properly given (i) on the date of delivery, if delivery is by hand, (ii) three (3) days after the date of mailing if sent by certified or registered mail, (iii) one (1) day after date of delivery to the overnight courier if sent by overnight courier, or (iv) the next business day after the date of transmission by facsimile.      12. Severability. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable shall not be affected, and each provision of this Agreement shall be validated and shall be enforced to the fullest extent permitted by law. If for any reason any provision of this Agreement containing restrictions is held to cover an area or to be for a length of time that is unreasonable or in any other way is construed to be too broad or to any extent invalid, such provision shall not be determined to be entirely null, void and of no effect; instead, it is the intention and desire of both the Company and the Employee that, to the extent that the provision is or would be valid or enforceable under applicable law, any court of competent jurisdiction shall construe and interpret or reform this Agreement to provide for a restriction having the maximum enforceable area, time period and such other constraints or conditions (although not greater than those currently contained in this Agreement) as shall be valid and enforceable under the applicable law. -13- --------------------------------------------------------------------------------        13.     Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations.      14.     Headings. All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience of reference, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph.      15.     Withholding Taxes. All salary, benefits, reimbursements and any other payments to the Employee under this Agreement shall be subject to all applicable payroll and withholding taxes and deductions required by any law, rule or regulation of any federal, state or local authority.      16.     Applicable Law/ Jurisdiction. The laws of the State of Illinois shall govern the interpretation, validity and performance of the terms of this Agreement, without reference to rules relating to conflicts of law. The parties select and irrevocably submit to the exclusive jurisdiction of a court of competent jurisdiction located in the State of Illinois for any action to enforce, construe or interpret this Agreement. The Employee and the Company each hereby waives any objection to venue in such state on the basis of forum non-conveniens.      IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first above written. ILLINOIS SUPERCONDUCTOR CORPORATION           By:   /s/ George Calhoun -------------------------------------------------------------------------------- GEORGE CALHOUN Chief Executive Officer   /s/ Roger Boivin -------------------------------------------------------------------------------- ROGER BOIVIN -14-

PROMISSORY NOTE $­86,902 May 9, 2001              For value received, Brian Derr ("Executive") promises to pay to the order of Apropos Technology, Inc., an Illinois corporation (the "Company"), at its offices in Oak Brook Terrace, Illinois, or such other place as is designated in writing by the holder hereof, the aggregate principal sum of $86,902 in eight equal quarterly installments of $10,862.75, commencing April 1, 2002, and subsequent payments due on the first business day of each July, October, January and April thereafter.  Subject to the provisions of this Note, including provisions regarding the acceleration of this Note , the remaining principal amount of this Note (together with unpaid interest due thereon) shall become due in full on the earlier of (i) January 2, 2004, or (ii) the thirtieth day following the last day that Executive is employed by a "Company Entity," unless, in the case of (ii), termination of employment is a result of a "Permitted Termination."  The date of maturity, whether as a result of (i) or (ii) above or earlier acceleration is referred to as the "Maturity Date." • "Permitted Termination" shall mean (i) a termination by a Company Entity other than for "Cause," (ii) a termination by the Executive for "Good Reason," or (iii) the death or "Permanent Disability" of the Executive.     • "Company Entity" shall mean the Company, a subsidiary or their successors and assigns.     • "Cause" shall mean the termination of employment of Executive as a result of (i) any act or acts of dishonesty undertaken by Executive and intended to result in substantial gain or personal enrichment of Executive at the expense of the Company, (ii) persistent failure by Executive to perform the duties and obligations of Executive's employment which are not remedied in a reasonable period of time after receipt of written notice from the Company; (iii) the conviction of Executive of a felony; or (iv) Executive's continued breach of any material term of any employment agreement between the Company and the Executive or a breach of the noncompetition, nondisclosure and developments agreement between the Company and Executive.     • "Permanent Disability" shall mean that the Executive, at the time notice of termination is given, has been unable to perform his/her duties to the Company for a period of not less than six (6) consecutive months or for a period of two hundred seventy (270) days in any three hundred sixty-five (365) day period as the result of his incapacity due to physical or mental illness.     • "Good Reason" shall mean termination by Executive of his/her employment as a result of (i) a material reduction in Executive's salary or benefits not agreed to by Executive (except in connection with a decrease to be applied because the Company's performance has decreased or which is also applied to employees or executives generally, and excluding the substitution of compensation and benefits substantially equivalent in value), (ii) a material change in Executive's responsibilities (other than as contemplated by, and consistent with the spirit of, any employment agreement between the Company and Executive) not agreed to by Executive or (iii) a breach by the Company of any employment agreement between the Company and Executive which is not cured within a reasonable time after written notice of breach to the Company.                Subject to the last sentence of this paragraph, interest shall accrue on the outstanding principal amount of this Note, commencing on the date hereof and with respect to each quarter, at a rate per annum equal to (i) the then current yield on commercial paper issued by GE Capital Corp. with maturities of 60-89 days, as published in The Wall Street Journal on the last business day of the immediately preceding calendar quarter, plus (ii) one-half of one percent. Subject to the last sentence of this paragraph, interest shall be compounded quarterly, and shall be payable on the first business day of each calendar quarter, commencing April 1, 2002.  If the Executive remains an employee of a Company Entity through January 2, 2004 (or ceases to be an employee prior to such time as a result of a Permitted Termination), interest after January 2, 2004 shall no longer accrue on the unpaid portion of this Note, unless and until Executive is entitled to receive the benefit of AMT Recoveries (as hereinafter defined), and then interest shall accrue only on the lesser of (i) the amount of AMT Recoveries, and (ii) the unpaid balance of this Note; it being understood that such interest shall begin accruing on the date Executive realizes the benefit from the AMT Recoveries and shall continue until such amount is paid to Company.              The principal amount of this Note (together with all interest accrued and unpaid thereon) may be prepaid on or prior to the Maturity Date.  Amounts not paid as provided herein, including any past due interest, shall bear interest at the rate of two percentage points above the applicable interest rate.                            This promissory note (the "Note") evidences a loan made to Executive solely to fund certain alternative minimum tax ("AMT") obligations of Executive arising on account of Executive's exercise of incentive stock options to purchase Common Shares of the Company.  As an inducement to the Company to make this loan, the Executive represents that (i) to the best of his knowledge, any financial information previously delivered to the Company is true and correct in all material respects, including tax return schedules, (ii) to the best of his knowledge, the worksheet he has delivered to the Company computing his AMT liability is true and correct in all material respects, and (iii) all of the proceeds of the loan evidenced by this Note will be used to discharge such AMT liability.              The Executive further consents and agrees that (i) he promptly shall provide evidence of the AMT payment to the Company, (ii) he promptly shall provide to the Company copies of all future tax returns both before and after the Maturity Date if any amounts remain outstanding hereunder, (iii) he shall use any available credits against taxes arising from the payment of the AMT (the “AMT Credit”) against future tax obligations as soon as the AMT Credits are available for use and promptly notify the Company in writing upon such use, with supporting detail, and (iv) in the event there is a change in the United States tax laws which results in the availability of a refund in connection with Executive’s AMT liability, then the Executive shall use his best efforts to obtain such refund and any related interest as soon as reasonably practicable (collectively, the “AMT Refund”).              The amounts due under this Note are secured by a pledge of Common Shares of the Company and possibly certain other assets (such collateral, as it exists from time to time being "Pledged Collateral"), pursuant to a certain Executive Stock Pledge, Security and Retention Agreements, dated as of the date hereof, by and between the Company and Executive (the "Pledge Agreement").              Except as to the greater of the amount of the AMT Recoveries and five percent of the principal amount of this Note, for which amount Executive shall remain personally liable both before and after the Maturity Date, this Note, and the loan represented by this Note, shall be non-recourse against Executive, with the sole recourse limited to the Pledged Collateral as provided in the Pledge Agreement.  Notwithstanding the foregoing, if Executive's employment with the Company Entity terminates before January 2, 2004, other than as a result of a Permitted Termination, this Note shall be fully recourse and Executive shall be fully personally liable hereunder, notwithstanding any action taken or not taken under the Pledge Agreement.  Executive agrees that to the extent of his personal liability, the Holder of this Note may, but need not, enforce this Note prior to proceeding against the Pledged Collateral.              Notwithstanding anything herein to the contrary, the outstanding principal amount of this Note (together with interest accrued thereon) shall become immediately due and payable whether before or after the Maturity Date: (w) to the extent of the proceeds (whether cash or other property) of the Pledged Collateral resulting directly or indirectly from either of the following events: (i) Executive sells, pledges or otherwise transfers the Pledged Collateral, whether or not in violation of the Pledge Agreement, or(ii) a transaction occurs involving the Company (whether by merger, asset sale, stock sale or otherwise);     (x) to the extent of the amount of the AMT Credit applied by the Executive or his successors against future tax obligations;     (y) to the extent of any AMT Refund received by the Executive (the AMT Credit and the AMT Refund are collectively referred to as the “AMT Recoveries”); and     (z) if there is a breach or default by Executive under this Note or under the Pledge Agreement, which breach or default, if capable of being cured, has not been cured within five (5) days written notice by the Company. The amount of the proceeds in (w) shall be computed net of any out of pocket taxes due as a result of such transaction (i.e., after utilization of the AMT Credit), computed at the maximum applicable combined state and federal marginal rate (the "Associated Tax Liability").              Executive hereby expressly waives any right to a trial by jury in any action or proceeding to enforce or defend any rights (i) under this Note or under any amendment, instrument, document or agreement delivered or which may in the future be delivered in connection herewith, including the Pledge Agreement, or (ii) arising from any lending relationship existing in connection herewith, and agrees that any such action or proceeding will be tried before a court and not before a jury.  Executive agrees that it will not assert any claim against the Company on any theory of liability, for special, indirect, consequential, incidental or punitive damages.              Executive, for himself and for his successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and nonpayment of this Note, and expressly agrees that this Note, or any payment hereunder, may be extended from time to time and that the holder hereof may accept security for this Note, or release security for this Note, all without in any way affecting the liability of Executive hereunder.              This Note shall be governed by the internal laws, not the laws of conflicts, of the State of Illinois.  The parties hereto agree that all claims, disputes or controversies between them arising out of, connected with or related to the matters contemplated by this Note, whether arising at law or equity, in contract, tort, or otherwise, if pursued in court shall be resolved only by state or federal courts located in Cook or DuPage Counties, Illinois.  Each party waives in all disputes any objection that it may have to personal jurisdiction, the venue of the court considering the dispute, or the convenience of the forum.   Brian Derr   --------------------------------------------------------------------------------   Executive  

EMPLOYMENT AGREEMENT      This Employment Agreement (the “Agreement”) is dated as of May 9, 2001 (“Effective Date”), between METRO INFORMATION SERVICES, INC., a Virginia corporation (the “Company”), and Mark W. Scofield (“Executive”). PRELIMINARY STATEMENTS      A. Executive is being employed by the Company as a Vice President.      B. The Company and the Executive desire to enter into this agreement to establish the terms and conditions of Executive’s employment with the Company.      NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is acknowledged by the parties, the parties agree as follows:      1. Employment Period. The Company agrees to employ Executive and Executive accepts such employment for the period on the terms contained in this agreement beginning on the Effective Date and ending on the termination of Executive’s employment pursuant to paragraph 6 (the “Employment Period”).      2. Services. During the Employment Period, Executive will render such services of an executive and administrative character to the Company as it may from time to time direct. During the Employment Period, Executive will devote his best efforts and all of his business time and attention (except for vacation periods and reasonable periods of illness or other incapacity) to the business of the Company, and will not perform any services of any nature for any enterprise other than the Company without the prior consent of the Company’s board of directors (the “Board of Directors”).      3. Base Salary. Beginning on the Effective Date and thereafter during the Employment Period, the Company will pay Executive salary at a per annum rate of Two Hundred Thousand Dollars ($200,000) (the “Base Salary”). The Company may increase or decrease the Base Salary at any time and from time to time. Any increase or decrease in Executive’s Base Salary shall be made in accordance with Executive’s annual compensation plan as approved by the Compensation Committee of the Company’s Board of Directors (“Committee”).      4. Benefits. Executive will be entitled to receive from the Company, in addition to the salary set forth in paragraph 3 above, all benefits provided generally to full time employees of the Company. Any alteration of the benefits that Executive is entitled to receive from the Company shall be made in accordance with Executive’s annual compensation plan as approved by the Committee. --------------------------------------------------------------------------------      5. Additional Compensation. Additional compensation such as bonuses, if any, will be established by the Committee and set forth in the Executive’s compensation plan as approved by the Committee. The Company may increase or decrease the additional compensation at any time and from time to time. Any increase or decrease in Executive’s additional compensation must be approved by the Committee.      6. Termination of Employment.        a. The Employment Period will automatically end on Executive’s voluntary resignation, termination by the Company’s Chief Executive Officer with or without Cause, termination by the Company’s Chief Executive Officer in the event of Executive’s disability (as determined in the Chief Executive Officer’s good faith judgment) or Executive’s death; provided, that Executive’s resignation will be effective not less than one month after Executive has given written notice thereof to the Company’s Chief Executive Officer; provided further, that Executive’s termination with or without Cause will be effective only after the Company’s Chief Executive Officer has determined in his or her good faith judgment that such termination is in the best interests of the Company.        b. In the event of termination for disability or without Cause, Executive will be entitled to be paid his salary by the Company and to receive the benefits set forth in paragraph 4 for a period following such termination of 2 weeks for each full year of service completed at the time of termination or 90 days, whichever is the longer. Such salary will be payable per the Company’s pay cycle in effect at the time of payment. Executive will have no duty to mitigate the Company’s damages by taking other employment after his termination by the Company without Cause and any compensation earned by him in such other employment will not be deducted from any amount payable to him hereunder. In the event of Executive’s disability, however, the amounts payable to him hereunder will be reduced by any amounts received by Executive from disability insurance purchased by the Company for Executive. -2- --------------------------------------------------------------------------------        c. “Disability,” for purposes hereof, means any physical or mental condition which prevents Executive from performing his duties hereunder, for 180 days, whether or not consecutive, in any 12-month period. In the event of disagreement between Company’s Chief Executive Officer and Executive whether “disability” exists, the disagreement will be resolved by arbitration pursuant to paragraph 9 below. Notwithstanding any provision of this Agreement, the Company shall not take any action with respect to Executive’s employment that would violate the Americans with Disabilities Act, 42. U.S.C. §12101 et seq., or any other applicable law.        d. “Cause” for which the Company’s Chief Executive Officer may terminate Executive’s employment means, (i)  the commission of a crime involving the Company or any entity in which it has an interest or (ii) a breach or breaches of Executive’s fiduciary duty to the Company or its shareholders which individually or in the aggregate are materially adverse to the Company’s business or financial condition or prospects. “Materially adverse” as used in clause (ii) above is not limited to the following instances: (x) any substantial breach of Executive’s duties under paragraphs 2, 7, 8 or 9 of this Agreement, and (y) any willful or grossly negligent breach or breaches (whether or not related) of Executive’s fiduciary duties to the Company that, individually or in the aggregate, result in the Company’s suffering damages of $100,000 or more, and will be deemed prima facie “materially adverse” within the meaning of clause (ii).        e. In the event that the Company’s Chief Executive Officer determines, in its good faith judgment, that Executive has committed a crime involving the Company or any entity in which it has an interest, it may suspend Executive without pay pending final determination of the charges, but only after Executive has been charged with such crime by competent law-enforcement authorities by warrant, summons, information, indictment or otherwise. During the period of suspension, the Company will continue to provide Executive with the insurance benefits which it provided pursuant to paragraph 4 above immediately before his suspension. In the event that the criminal charges against Executive are finally determined without a conviction of Executive of the crime charged or any lesser offense included under such crime, the Company will reinstate Executive and resume paying him the salary and providing him with the other benefits to which he is entitled hereunder, with the salary payable retroactively to the date of suspension (with interest at 8% per annum on all amounts not paid during the period of suspension, calculated from the respective dates these amounts would have been payable). -3- --------------------------------------------------------------------------------        f. In the event that the Company’s Chief Executive Officer determines, in his or her good faith judgment, that Executive has committed a breach of fiduciary duty of a type justifying termination with Cause, the Company’s Chief Executive Officer may immediately suspend or terminate Executive. During a suspension Executive will continue to be paid the salary provided in paragraph 3 and receive the benefits provided for in paragraph 4, regardless of any other employment Executive may take. In the event of final determination by a court of competent jurisdiction that Executive has breached his fiduciary duty to the Company or its stockholders within the meaning of paragraph 7(d)(ii) above, Executive will, on demand by the Company’s Chief Executive Officer, reimburse the Company for all salary and benefits received by him from the Company from the date of suspension, together with interest thereon at 8% per annum from the respective dates of payment.      7. Confidential Information. Executive acknowledges that all computer systems, programs, reports, designs, drawings, memoranda, discoveries, inventions, state of the art technology, data, notes, records, files, proposals, plans, lists, documents and any other information containing or referring to confidential or proprietary information or concerning the business or affairs of the Company or any of its clients (the “Proprietary Information”), whether prepared or developed or both by Executive or others, and all copies thereof are property of the Company or its clients, respectively. The Proprietary Information shall not include any publicly available information. Executive agrees that he will not disclose to any unauthorized person any Proprietary Information nor will he use for his own account any Proprietary Information without the written consent of the Company, which consent may be denied for any reason or no reason. On the termination of Executive’s employment with the Company for any reason (or at any earlier time that such request is made by the Company), Executive will deliver to the Company all Proprietary Information and any copies thereof which Executive may possess or have under his control. Executive agrees not to copyright or attempt to copyright any Proprietary Information or any computer system or any findings or recommendations or other data prepared in connection with the Proprietary Information or Executive’s performance of duties with the Company or both. -4- --------------------------------------------------------------------------------      8. Restrictive Covenant. As a significant inducement to the Company to enter into this Agreement, Executive agrees that:        a. as long as Executive is employed by the Company in any capacity, Executive will not, directly or indirectly, own any interest in, manage, control, participate in, render services for or in any other manner engage in any other activity (all of the foregoing being hereinafter referred to as having or acquiring an “interest”) in any information technology services business “in competition” with the Company, as “in competition” is defined below, without the prior consent of the Board of Directors; and        b. beginning on the termination of Executive’s employment with the Company and ending one year after such termination for any reason (the “Restricted Period”), Executive will not:        i) have or acquire an interest in any enterprise which is “in competition” with the Company, as “in competition” is defined below; or        ii) solicit, request, advise or encourage any customer or supplier of the Company, who was a customer or supplier of the Company at any time the Employee was employed by the Company, to withdraw, curtail or cancel its business with the Company or do any other act which may result in the impairment of the relationship between any customers or suppliers and the Company.        c. An enterprise will be deemed to be “in competition” with the Company if such enterprise is involved, directly or indirectly, with providing information technology services similar to those provided by the Company to any client(s) of the Company with whom the Executive has had contact during the two (2) years preceding the end of the Employment Period.        d. The foregoing restrictions shall not prohibit the Executive from owning up to 5% of the stock of any publicly traded company.        e. If any portion of this Agreement is found to be invalid or unenforceable for any reason, it is the parties intent that this Agreement be enforced to the fullest extent allowed by law. Therefore, if any portion of this Agreement is found to be invalid or unenforceable for any reason, it is the parties intent that any court or other tribunal adjudicating this Agreement shall alter, modify or strike portions of the Agreement so that it will be enforceable to the fullest extent permitted by law. In the event that any provision of this Agreement shall be found invalid or unenforceable, the remainder of that provision and the remainder of this Agreement shall be valid and binding against the parties. -5- --------------------------------------------------------------------------------      9. Staff Relationships. Executive acknowledges that the Company’s employees and its relationships with its employees are valuable assets of the Company. Executive agrees that he will not, at any time during the term of his employment and during the Restricted Period, directly or indirectly, engage in any of the following activities, as an individual, independent contractor, officer, partner, member, employee, agent, consultant, shareholder or investor:        a. solicit, induce or influence, or attempt to induce or influence, any employee of the Company to terminate his or her relationship with the Company;        b. interfere with or disrupt the Company’s relationship with its employees; and/or        c. employ, hire, engage or contract with any person employed by the Company for the purpose of that employee becoming an employee or agent of a business in competition with the Company.      10. Arbitration. Any dispute, controversy or claim arising under or in connection with this Agreement, except for those arising under paragraphs 8 and 9 hereof, shall be settled exclusively by final and binding arbitration, conducted before an arbitrator in Virginia Beach, Virginia in accordance with the Employment Arbitration Rules of the American Arbitration Association then in effect. The arbitrator shall be selected in accordance with the rules for single arbitrator cases of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Employer shall initially pay all administrative fees associated with such arbitration, however, Executive agrees to pay all costs of such arbitration and to abide by the results if the Company prevails in the arbitration and the Company agrees to pay all the costs of the arbitration and to abide by the results if Executive prevails in the arbitration. -6- --------------------------------------------------------------------------------      11. Remedies. Subject to paragraph 10 hereof, the parties will be entitled to enforce their rights under this Agreement specifically, to recover damages by reason of any breach of any provision hereof, and to exercise all other rights existing in their favor. The Company and Executive agree and acknowledge that money damages may not be an adequate remedy for any breach by Executive of the provisions of this Agreement (including paragraphs 8 and 9) and that the Company may in its sole discretion apply to the arbitrator or any court of law or equity of competent jurisdiction (as appropriate) for specific performance and/or injunctive relief to enforce, or prevent any violations of, the provisions of this Agreement.      12. Modification, Amendment, Waiver. No modification, amendment or waiver of any provision of this Agreement will be effective unless set forth in a writing signed by the Company and Executive and approved by the Committee. The Company’s or Executive’s failure at any time to enforce any provision of this Agreement will in no way be construed as a waiver of such provision and will not affect the right of the Company and Executive thereafter to enforce each and every provision of this Agreement in accordance with its terms.      13. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such provision will be ineffective only to the extent of such invalidity, illegality or unenforceability in such jurisdiction, without invalidating the remainder of this Agreement in such jurisdiction or any provision hereof in any other jurisdiction.      14. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience and do not constitute a part of this Agreement.      15. Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by and interpreted in accordance with the internal law, and not the law of conflicts, of the Commonwealth of Virginia. -7- --------------------------------------------------------------------------------      16. Notices. All notices, demands or other communications to be given or delivered under or by reason of any of the provisions of this Agreement will be in writing and will, except as otherwise provided herein, be deemed to have been given when delivered personally or mailed by certified or registered mail, return receipt requested and postage prepaid, to the recipient c/o Metro Information Services, Inc., Reflections II, P.O. Box 8888, Virginia Beach, Virginia 23450, or at such other address as the recipient party has specified by prior written notice to the sending party.      17. Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior understandings or agreements, oral or written, with respect thereto.      IN WITNESS, the undersigned parties have executed this Agreement as of the date first written above. METRO INFORMATION SERVICES, INC. By  /s/ John H. Fain        —————————————————        John H. Fain, Chief Executive Officer EXECUTIVE: /s/ Mark W. Scofield ——————————————————— Mark W. Scofield -8-

Exhibit 10.4 THE ALLSTATE CORPORATION 2001 EQUITY INCENTIVE PLAN OPTION AWARD AGREEMENT [Addressee]     In accordance with the terms of The Allstate Corporation 2001 Equity Incentive Plan (the "Plan"), pursuant to action of the Compensation and Succession Committee of the Board of Directors, The Allstate Corporation hereby grants to you (the "Participant"), subject to the terms and conditions set forth in this Option Award Agreement (including Annex A hereto and all documents incorporated herein by reference) the right and option (the "Option") to purchase from the Company the number of shares of its common stock, par value $.01 per share, set forth below:   Type of Option Granted:   Nonqualified   Number of Shares to which Option       Pertains:   XXXXXX   Date of Grant:   May 15, 2001   Option Exercise Price:   $        , which is the Fair Market Value on the Date of Grant   Vesting:   Four equal installments, each for one-quarter of the total number of said shares, such installments to vest, respectively, on May 15, 2002, May 15, 2003, May 15, 2004 and May 15, 2005 (subject to Sections 2 and 4 of Annex A)   Expiration Date:   Close of business on May 15, 2011   Exercise Period:   Date of Vesting through Expiration Date (subject to Section 2 of Annex A)   Reload Options:   Reload Options are granted on the Option exercise for the number of shares of Stock tendered in payment of the Option Exercise Price THIS OPTION IS SUBJECT TO FORFEITURE AS PROVIDED IN THIS OPTION AWARD AGREEMENT AND THE PLAN. --------------------------------------------------------------------------------     Further terms and conditions of the Award are set forth in Annex A, which is an integral part of this Option Award Agreement.     All terms, provisions and conditions applicable to the Awards set forth in the Plan and not set forth herein are hereby incorporated by reference. To the extent any provision hereof is inconsistent with a provision of the Plan, the provision of the Plan will govern. By accepting this Award, the Participant hereby acknowledges the receipt of a copy of this Option Award Agreement including Annex A and a copy of the Prospectus and agrees to be bound by all the terms and provisions hereof and thereof.   Edward M. Liddy Chairman, President and Chief Executive Officer THE ALLSTATE CORPORATION PARTICIPANT AGREEMENT AND ACCEPTANCE     As consideration for the grant of the Option subject to this Option Award Agreement and the grant of all future Awards, notwithstanding the provisions of Section 2.3 of my Change of Control Employment Agreement ("COC Agreement"), I agree that upon a Change of Control as defined in my COC Agreement all Options or Restricted Stock shall, to the extent not previously exercisable or nonforfeitable, become fully exercisable or non-forfeitable, as applicable, upon the consummation, rather than upon stockholder approval, of a Change of Control as defined in Section 1.23(c) of my COC Agreement. I hereby waive any right that might otherwise exist under such Section 2.3 of my COC Agreement to accelerated vesting or nonforfeitability of this Option and future Awards upon stockholder approval rather than upon consummation of such a Change of Control. -------------------------------------------------------------------------------- Signature of Participant   -------------------------------------------------------------------------------- Date   Attachment: Annex A   -------------------------------------------------------------------------------- ANNEX A TO THE ALLSTATE CORPORATION 2001 EQUITY INCENTIVE PLAN OPTION AWARD AGREEMENT     Further Terms and Conditions of Option.  It is understood and agreed that the Award of the Option evidenced by this Option Award Agreement to which this is annexed is subject to the following additional terms and conditions:     1.  Exercise of Option.  To the extent vested and subject to Section 2 below, the Option may be exercised in whole or in part from time to time by delivery of written notice of exercise and payment to Stock Option Record Office, The Allstate Corporation, 2775 Sanders Road, Ste F5, Northbrook, Illinois 60062, unless the Company advises the Participant to send the notice and payment to a different address or a designated representative. Such notice and payment must be received not later than the Expiration Date, specifying the number of shares of Stock to be purchased. The minimum number of Shares to be purchased in a partial exercise shall be the lesser of 25 shares and the number of shares remaining unexercised under this Award. In the event that the Expiration Date falls on a day that is not a regular business day at the Company's executive offices in Northbrook, Illinois, such written notice must be delivered no later than the next regular business day following the Expiration Date.     The Option Exercise Price shall be payable: (a) in cash or its equivalent, (b) by tendering previously acquired Stock (owned for at least six months) having an aggregate Fair Market Value at the time of exercise equal to the total Option Exercise Price, (c) by broker-assisted cashless exercise or (d) by a combination of (a), (b), and/or (c).     With respect to tax withholding required upon exercise of the Option, the Participant may elect to satisfy such withholding requirements in whole or in part, by having Stock with a Fair Market Value equal to the minimum statutory total tax which could be imposed on the transaction withheld from the shares due upon Option exercise.     2.  Termination of Employment.  Except as otherwise specifically provided in Section 4 of this Annex A with respect to vesting, in The Allstate Corporation Change of Control Severance Plan (to the extent such plan is applicable to the Participant) or in another written agreement with the Company to which the Participant is a party, if the Participant has a Termination of Employment, the following provisions shall apply:      (i) if the Participant's Termination of Employment is on account of death or Disability, then the Option, to the extent not vested, shall vest, and the Option may be -------------------------------------------------------------------------------- exercised, in whole or in part, by the Participant (or his personal representative, estate or transferee, as the case may be) at any time on or before the earlier to occur of (x) the Expiration Date of the Option and (y) the second anniversary of the date of such Termination of Employment;     (ii) if the Participant's Termination of Employment is on account of Retirement at the Normal Retirement Date or Health Retirement Date, the Option to the extent it is not vested, shall continue to vest in accordance with its terms, and when vested, may be exercised, in whole or in part, by the Participant at any time on or before the earlier to occur of (x) the Expiration Date of the Option and (y) the fifth anniversary of the date of such Termination of Employment;     (iii) if the Participant's Termination of Employment is on account of Retirement at the Early Retirement Date, any portion of the Option that is not vested shall be forfeited, and the Option, to the extent it is vested on the date of Termination of Employment, may be exercised, in whole or in part, by the Participant at any time on or before the earlier to occur of (x) the Expiration Date of the Option and (y) the fifth anniversary of the date of such Termination of Employment;     (iv) if the Participant's Termination of Employment is for any other reason, any portion of the Option that is not vested shall be forfeited, and the Option, to the extent it is vested on the date of Termination of Employment, may be exercised, in whole or in part, by the Participant at any time on or before the earlier to occur of (x) the Expiration Date of the Option and (y) three months after the date of such Termination of Employment; and     (v) if (A) the Participant's Termination of Employment is for any reason other than death and (B) the Participant dies after such Termination of Employment but before the date the Option must be exercised as set forth in the preceding subsections, any portion of the Option that is not vested shall be forfeited and the Option, to the extent it is vested on the date of the Participant's death, may be exercised, in whole or in part, by the Participant's personal representative, estate or transferee, as the case may be, at any time on or before the earliest to occur of (x) the Expiration Date of the Option, (y) the second anniversary of the date of death and (z) the applicable anniversary of the Termination of Employment as set forth in subsections (i) through (iv) above.     3.  Transferability of Options.  Except as set forth in this Section 3, the Option shall be exercisable during the Participant's lifetime only by the Participant, and may not be assigned or transferred other than by will or the laws of descent and distribution. The Option, to the extent vested, may be transferred by the Participant during his lifetime to any "Family Member", defined as any child, stepchild, grandchild, parent, stepparent, grandparent, spouse or sibling, including adoptive relationships; a trust in which these persons have more than fifty (50) percent of the beneficial interest; a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty (50) percent of the voting interests. A transfer of the Option pursuant to this Section 3 may only be effected by the -------------------------------------------------------------------------------- Company at the written request of a Participant and shall be effective only when recorded in the Company's record of outstanding Options. In the event an Option is transferred, any Reload Options associated with such transferred Option shall terminate. Such transferred Option may not be subsequently transferred by the transferee except by will or the laws of descent and distribution. Otherwise, a transferred Option shall continue to be governed by and subject to the terms and limitations of the Plan and this Option Award Agreement, and the transferee shall be entitled to the same rights as the Participant, as if no transfer had taken place.     4.  Change of Control.  (a) Except as otherwise specifically provided in The Allstate Corporation Change of Control Severance Plan (to the extent such plan is applicable to the Participant) or another written agreement with the Company to which the Participant is a party, the Option, to the extent not vested, shall vest (i) on the Change of Control Effective Date of a Change of Control, as defined in paragraphs (a), (b), (d) and (e) of the definition of Change of Control in Section 8, that is not a Merger of Equals, or (ii) on the Consummation Date of a Change of Control as defined in paragraph (c) of such definition of a Change of Control that is not a Merger of Equals or (iii) if applicable, on a later Merger of Equals Cessation Date, and the Option may be exercised in whole or in part, subject to the time periods for exercise set forth in Section 2 of this Annex A.     (b) Notwithstanding the vesting provisions in Section 2, if a Participant has a Termination of Employment during the Post-Merger of Equals Period, which Termination of Employment is initiated by the Participant's employer for a reason other than Cause or Disability, then the Option, to the extent not vested, shall vest and the Option may be exercised, in whole or in part, subject to the time periods for exercise set forth in Section 2 of this Annex A.     5.  Ratification of Actions.  By accepting the 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 the Company, the Board or the Compensation and Succession Committee.     6.  Notices.  Any notice hereunder to the Company shall be addressed to its Stock Option Record Office and any notice hereunder to the Participant shall be addressed to him at the address specified on this Option Award Agreement, subject to the right of either party to designate at any time hereafter in writing some other address.     7.  Governing Law and Severability.  To the extent not preempted by Federal law, this Option Award Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law provisions. In the event any provision of the Option Award Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Option Award Agreement, and this Option Award Agreement shall be construed and enforced as if the illegal or invalid provision had not been included. --------------------------------------------------------------------------------     8.  Definitions.  In addition to the following definitions, capitalized terms not otherwise defined herein shall have the meanings given them in the Plan.     "Allstate Incumbent Directors" means, determined as of any date by reference to any baseline date:     (a) the members of the Board on the date of such determination who have been members of the Board since such baseline date, and     (b) the members of the Board on the date of such determination who were appointed or elected after such baseline date and whose election, or nomination for election by stockholders of the Company or the Surviving Corporation, as applicable, was approved by a vote or written consent of two-thirds (100% for purposes of paragraph (a) of the definition of "Merger of Equals") of the directors comprising the Allstate Incumbent Directors on the date of such vote or written consent, but excluding each such member whose initial assumption of office was in connection with (1) an actual or threatened election contest, including a consent solicitation, relating to the election or removal of one or more members of the Board, (2) a "tender offer" (as such terms is used in Section 14(d) of the Exchange Act), (3) a proposed Reorganization Transaction, or (4) a request, nomination or suggestion of any Beneficial Owner of Voting Securities representing 15% or more of the aggregate voting power of the Voting Securities of the Company or the Surviving Corporation, as applicable.     "Approved Passive Holder" means, as of any date, any Person that satisfies all of the following conditions:     (a) as of such date, such Person is a 20% Owner, but is the Beneficial Owner of less than 30% of the then-outstanding Common Stock and of Voting Securities representing less than 30% of the combined voting power of all then-outstanding Voting Securities of the Company;     (b) prior to becoming a 20% Owner, such Person has filed, and as of such date has not withdrawn, or made any subsequent filing or public statement inconsistent with, a statement with the Securities Exchange Commission ("SEC") pursuant to Section 13(g) of the Exchange Act that includes a certification by such person to the effect that such beneficial ownership does not have the purpose or effect of changing or influencing the control of the Company; and     (c) prior to such Person's becoming a 20% Owner, at least two-thirds of the Allstate Incumbent Directors (such Allstate Incumbent Directors to be determined as of the Date of Grant as the baseline date) shall have voted in -------------------------------------------------------------------------------- favor of a resolution adopted by the Board to the effect that: (1) the terms and conditions of such Person's investment in the Company will not have the effect of changing or influencing the control of the Company, and (2) notwithstanding clause (a) of the definition of "Change of Control," such Person's becoming a 20% Owner shall be treated as though it were a Merger of Equals for purposes of the Plan.     "Beneficial Owner" means such term as defined in Rule 13d-3 of the SEC under the Exchange Act.     "Cause" means any of the events or conditions which constitute cause for immediate termination of employment of the Participant as provided from time to time in the applicable Human Resources Policy of the Company or one of its Subsidiaries.     "Change of Control" means, except as provided at the end of this definition, the occurrence of any one or more of the following:     (a) Any person (as such term is used in Rule 13d-5 of the SEC under the Securities Exchange Act of 1934, as amended ("Exchange Act")) or group (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act), other than a Controlled Affiliate of the Company or any employee benefit plan (or any related trust) of the Company or any of its Controlled Affiliates, becomes the Beneficial Owner of 20% or more of the common stock of the Company or of Voting Securities representing 20% or more of the combined voting power of all Voting Securities of the Company (such a person or group that is not a Similarly Owned Company (as defined below), a "20% Owner"), except that no Change of Control shall be deemed to have occurred solely by reason of such beneficial ownership by a corporation (a "Similarly Owned Company") with respect to which both more than 70% of the common stock of such corporation and Voting Securities representing more than 70% of the combined voting power of the Voting Securities of such corporation are then owned, directly or indirectly, by the persons who were the direct or indirect owners of the common stock and Voting Securities of the Company immediately before such acquisition, in substantially the same proportions as their ownership, immediately before such acquisition, of the common stock and Voting Securities of the Company, as the case may be; or     (b) Allstate Incumbent Directors (as determined using the Date of Grant as the baseline date) cease for any reason to constitute at least two-thirds of the directors of the Company then serving (provided, however, that this clause (b) shall be inapplicable during a Post-Merger of Equals Period); or     (c) Approval by the stockholders of the Company of a merger, reorganization, consolidation, or similar transaction, or a plan or agreement for -------------------------------------------------------------------------------- the sale or other disposition of all or substantially all of the consolidated assets of the Company or a plan of liquidation of the Company (any of the foregoing, a "Reorganization Transaction") that, based on information included in the proxy and other written materials distributed to the Company's stockholders in connection with the solicitation by the Company of such stockholder approval, is not expected to qualify as an Exempt Reorganization Transaction; provided, however, that if (1) the merger or other agreement between the parties to a Reorganization Transaction expires or is terminated after the date of such stockholder approval but prior to the consummation of such Reorganization Transaction (a "Reorganization Transaction Termination") or (2) immediately after the consummation of the Reorganization Transaction, such Reorganization Transaction does qualify as an Exempt Reorganization Transaction notwithstanding the fact that it was not expected to so qualify as of the date of such stockholder approval, then such stockholder approval shall not be deemed a Change of Control for purposes of any Termination of Employment as to which the Termination Date occurs on or after the date of the Reorganization Transaction Termination or the date of the consummation of the Exempt Reorganization Transaction, as applicable; or     (d) The consummation by the Company of a Reorganization Transaction that for any reason fails to qualify as an Exempt Reorganization Transaction as of the date of such consummation, notwithstanding the fact that such Reorganization Transaction was expected to so qualify as of the date of such stockholder approval; or     (e) A 20% Owner who had qualified as an Approved Passive Holder ceases to qualify as such for any reason other than ceasing to be a 20% Owner (such cessation of Approved Passive Holder status to be considered for all purposes of the Plan (including the definition of "Change of Control Effective Date") a Change of Control distinct from and in addition to the Change of Control specified in clause (a) above). Notwithstanding the occurrence of any of the foregoing events, a Change of Control shall not occur with respect to a Participant if, in advance of such event, such Participant agrees in writing that such event shall not constitute a Change of Control.     "Change of Control Effective Date" means the date on which a Change of Control first occurs while an Award is outstanding.     "Consummation Date" means the date on which a Reorganization Transaction is consummated.     "Controlled Affiliate" of a Person means any corporation, business trust, or -------------------------------------------------------------------------------- limited liability company or partnership with respect to which such Person owns, directly or indirectly, Voting Securities representing more than 50% of the aggregate voting power of the then-outstanding Voting Securities.     "Exempt Reorganization Transaction" means a Reorganization Transaction that results in the Persons who were the direct or indirect owners of the outstanding common stock and Voting Securities of the Company immediately before such Reorganization Transaction becoming, immediately after the consummation of such Reorganization Transaction, the direct or indirect owners, of both more than 70% of the then-outstanding common stock of the Surviving Corporation and Voting Securities representing more than 70% of the combined voting power of the then-outstanding Voting Securities of the Surviving Corporation, in substantially the same respective proportions as such Persons' ownership of the common stock and Voting Securities of the Company immediately before such Reorganization Transaction.     "Merger of Equals" means, as of any date, a transaction that, notwithstanding the fact that such transaction may also qualify as a Change of Control, satisfies all of the conditions set forth in paragraphs (a) or (b) below:     (a) if such date is on or after the Consummation Date, a Reorganization Transaction in respect of which all of the following conditions are satisfied as of such date, or if such date is prior to the Consummation Date, a proposed Reorganization Transaction in respect of which the merger agreement or other documents (including the exhibits and annexes thereto) setting forth the terms and conditions of such Reorganization Transaction, as in effect on such date after giving effect to all amendments thereof or waivers thereunder, require that the following conditions be satisfied on and, where applicable, after the Consummation Date:     (1) at least 50%, but not more than 70%, of the common stock of the surviving Corporation outstanding immediately after the consummation of the Reorganization Transaction, together with Voting Securities representing at least 50%, but not more than 70%, of the combined voting power of all Voting Securities of the Surviving Corporation outstanding immediately after such consummation shall be owned, directly or indirectly, by the persons who were the owners directly or indirectly of the common stock and Voting Securities of the Company immediately before such consummation in substantially the same proportions as their respective direct or indirect ownership, immediately before such consummation, of the common stock and Voting Securities of the Company, respective; and     (2) Allstate Incumbent Directors (determined as of such date using the date immediately preceding the Change of Control Effective Date as the baseline date) shall, throughout the period beginning on the -------------------------------------------------------------------------------- Change of Control Effective Date and ending on the third anniversary of the Change of Control Effective Date, continue to constitute not less than 50% of the members of the Board; and     (3) The person who was the CEO of the Company immediately prior to the Change of Control Effective Date shall serve as (x) the CEO of the Company throughout the period beginning on the Change of Control Effective Date and ending on the Consummation Date and (y) the CEO of the Surviving Corporation at all times during the period commencing on the Consummation Date and ending on the first anniversary of the Consummation Date; provided, however, that a Reorganization Transaction that qualifies as a Merger of Equals shall cease to qualify as a Merger of Equals (a "Merger of Equals Cessation") and shall instead qualify as a Change of Control that is not a Merger of Equals from and after the first date during the Post-Change period (such date, the "Merger of Equals Cessation Date") as of which any one or more of the following shall occur for any reason:      (i) if any condition of clause (1) of paragraph (a) of this definition shall for any reason not be satisfied immediately after the consummation of the Reorganization Transaction; or     (ii) if as of the close of business on any date on or after the Change of Control Effective Date, any condition of clauses (2) or (3) of paragraph (a) of this definition shall not be satisfied; or     (iii) if on any date prior to the first anniversary of the Consummation Date, the Company shall make a filing with the SEC, issue a press release, or make a public announcement to the effect that the Company is seeking or intends to seek a replacement for the then-CEO of the Company, whether such replacement is to become effective before or after such first anniversary.     (b) As of such date, each Person who is a 20% Owner qualifies as an Approved Passive Holder. The Committee shall give all Participants written notice of any Merger of Equals Cessation and the applicable Merger of Equals Cessation Date as soon as practicable after the Merger of Equals Cessation Date.     "Merger of Equals Cessation Date"—see the definition of "Merger of Equals".     "Person" means any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or government instrumentality, division, agency, -------------------------------------------------------------------------------- body or department.     "Post-Change Period" means the period commencing on the Change of Control Effective Date and ending on the third anniversary of the Change of Control Effective Date.     "Post-Merger of Equals Period" means the period commencing on a Change of Control Effective Date of a Change of Control that qualifies as a Merger of Equals and ending on the third anniversary of such Change of Control Effective Date or, if sooner, the Merger of Equals Cessation Date.     "Reorganization Transaction"—see clause (c) of the definition of "Change of Control."     "Reorganization Transaction Termination"—see clause (c) of the definition of "Change of Control."     "Surviving Corporation" means the corporation resulting from a Reorganization Transaction or, if securities representing at least 50% of the aggregate Voting Power of such resulting corporation are directly or indirectly owned by another corporation, such other corporation.     "20% Owner"—see clause (a) of the definition of "Change of Control."     "Voting Securities" of a corporation means securities of such corporation that are entitled to vote generally in the election of directors of such corporation. --------------------------------------------------------------------------------

Exhibit 10.22(d) Supplemental Agreement No. 4 to Purchase Agreement No. 2060 between The Boeing Company and Continental Airlines, Inc.   Relating to Boeing Model 767-400ER Aircraft   THIS SUPPLEMENTAL AGREEMENT, entered into as of December 1, 2000, by and between THE BOEING COMPANY, a Delaware corporation with its principal office in Seattle, Washington, (Boeing) and Continental Airlines, Inc., a Delaware corporation with its principal office in Houston, Texas (Customer); WHEREAS, the parties hereto entered into Purchase Agreement No. 2060 dated October 10, 1997, (the Purchase Agreement) relating to Boeing Model 767-400ER aircraft, (Aircraft); and WHEREAS, Boeing and Customer have mutually agreed to amend and restate the terms of the "Special Matters" letter applicable to the Aircraft to reflect certain agreements between Boeing and Customer comparable to similar agreements between Boeing and Customer regarding other aircraft; and WHEREAS, Boeing and Customer have mutually agreed to amend the Purchase Agreement to incorporate the effect of these and certain other changes; NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties agree to amend the Purchase Agreement as follows:   1. Table of Contents: Remove and replace, in its entirety, the "Table of Contents", with the "Table of Contents" attached hereto, to reflect the changes made by this Supplemental Agreement No. 4. 2. Letter Agreements: Remove and replace, in its entirety, Letter Agreement 6-1162-GOC-086 "Special Matters" with the revised Letter Agreement 6-1162-GOC-086R1, attached hereto. The Purchase Agreement will be deemed to be supplemented to the extent herein provided as of the date hereof and as so supplemented will continue in full force and effect.   EXECUTED IN DUPLICATE as of the day and year first written above.     THE BOEING COMPANY Continental Airlines, Inc.       By: /s/ J. A. McGarvey   By: /s/ Gerald Laderman   Its: Attorney-In-Fact   Its: Senior Vice President - Finance TABLE OF CONTENTS   ARTICLES Revised By: 1. Quantity, Model and Description 2. Delivery Schedule 3. Price 4. Payment 5. Miscellaneous   TABLE 1. Aircraft Information Table SA No. 3   EXHIBIT A. Aircraft Configuration SA No. 3 B. Aircraft Delivery Requirements and Responsibilities   SUPPLEMENTAL EXHIBITS BFE1. BFE Variables CS1. Customer Support Variables EE1. Engine Escalation/Engine Warranty and Patent Indemnity [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]   TABLE OF CONTENTS   LETTER AGREEMENTS Revised By: 2060-1 not used 2060-2 Demonstration Flights 2060-3 Spares Initial Provisioning 2060-4 Flight Crew Training Spares 2060-5 Escalation Sharing 6-1162-JMG-165 Installation of Cabin Systems Equipment SA No. 2     TABLE OF CONTENTS   CONFIDENTIAL LETTER AGREEMENTS Revised By: 6-1161-GOC-084R1 [CONFIDENTIAL MATERIAL SA No. 3 OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]   6-1162-GOC-085 [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] 6-1162-GOC-086R1 Special Matters SA No. 4           SUPPLEMENTAL AGREEMENTS Dated as of: Supplemental Agreement No. 1 December 18, 1997 Supplemental Agreement No. 2 June 8, 1999 Supplemental Agreement No. 3 October 31, 2000 Supplemental Agreement No. 4 December 1, 2000   December 1, 2000 6-1162-GOC-086R1     Continental Airlines, Inc. 1600 Smith Street Houston, TX 77002   Subject: Special Matters Reference: Purchase Agreement No. 2060 (the Purchase Agreement)between The Boeing Company (Boeing) and Continental Airlines, Inc. (Customer) relating to Model 767-400ER aircraft (the Aircraft) Ladies and Gentlemen: This Letter Agreement amends and supplements the Purchase Agreement. All terms used and not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement. This Letter Agreement supersedes and replaces in its entirety Letter Agreement 6-1162-GOC-086, dated October 10, 1997. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] 9. Confidential Treatment. Boeing and Customer understand that certain information contained in this Letter Agreement, including any attachments hereto, are considered by both parties to be confidential. Boeing and Customer agree that each party will treat this Letter Agreement and the information contained herein as confidential and will not, without the other party's prior written consent, disclose this Letter Agreement or any information contained herein to any other person or entity except as may be required by applicable law or governmental regulations.     Very truly yours, THE BOEING COMPANY     By /s/ J. A. McGarvey Its Attorney-In-Fact     ACCEPTED AND AGREED TO this Date:_______December 1, 2000 CONTINENTAL AIRLINES, INC.     By /s/ Gerald Laderman Its     Senior Vice President - Finance     

EXHIBIT 10.6                      Severance Agreements have been executed by the Company and the indicated employees, each substantially identical in all material respects to the following Form of Severance Agreement except as noted below.    EMPLOYEE  -------------------------------------------------------------------------------- POSITION -------------------------------------------------------------------------------- DATE OF AGREEMENT  --------------------------------------------------------------------------------        Neil M. Bardach       Vice President - Finance         Chief Financial Officer August 1, 1998        Allen Cheng          Vice President March 1, 2001        Howard R. Crabtree       Vice President, Organization         and Human Resources January 1, 1997        Anton Dulski       Chief Operating Officer January 1, 1997        Kenneth Massimine         Vice President March 1, 2001        Paul R. Saueracker       President and         Chief Executive Officer January 1, 1997        John A. Sorel        Vice President March 1, 2001     _____________________ [DATE]       Mr. _______________ TITLE Minerals Technologies Inc. 405 Lexington Avenue New York, NY 10174-1901   Dear Mr.______________:     Minerals Technologies Inc. (the "Company") considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel. In this connection, should the Company receive a proposal from a third party, whether solicited by the Company or unsolicited, concerning a possible business combination with, or the acquisition of a substantial share of the equity or voting securities of, the Company, the Board of Directors of the Company (the "Board") has determined that it is imperative that it and the Company be able to rely upon your continued services without concern that you might be distracted by the personal uncertainties and risks that such a proposal might otherwise entail.     Accordingly, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, yourself included, to their assigned duties without distraction in the face of potentially disturbing circumstances that could arise out of a proposal for a change in control of the Company. The Board has also determined that it is in the best interests of the Company and its stockholders to ensure your continued availability to the Company and its subsidiaries in the event of a "potential change in control" (as defined in Section 2 hereof).     In order to induce you to remain in the employ of the Company and its subsidiaries and in consideration of your agreement set forth in Section 2(ii) hereof, the Company agrees that you shall receive the severance benefits set forth in this letter agreement ("Agreement") in the event your employment with the Company and its subsidiaries is terminated subsequent to a Change in Control (as defined in Section 2 hereof) under the circumstances described below.     1. Term of Agreement. This Agreement shall commence as of _____________, and shall continue in effect through ______________; provided, however, the term of this Agreement shall automatically be extended for one additional year commencing on January 1 , ______ and each January 1 thereafter, unless, not later than June 30 of the preceding year, the Company shall have given notice that it does not wish to extend this Agreement; provided, further, that, notwithstanding any such notice by the Company not to extend, if a Change in Control shall have occurred during the original or any extended term of this Agreement, this Agreement shall continue in effect for a period of forty-eight (48) months beyond the expiration of the term in effect immediately before such Change in Control.     2. Change in Control. (i) No benefits shall be payable hereunder unless there shall have been a Change in Control of the Company, as set forth below. For purposes of this Agreement, a "Change in Control" of the Company shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Company is then subject to such reporting requirement; provided that, without limitation, such a Change in Control shall be deemed to have occurred if (A) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as determined for purpose of Regulation 13D-G under the Exchange Act as currently in effect), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of the Company's then outstanding securities; or (B) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any new director, whose election to the Board or nomination for election to the Board 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 (C) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the holders of the voting securities of the Company outstanding immediately prior thereto holding immediately thereafter securities representing more than 80% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (D) 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 of all or substantially all of the Company's assets.     (ii) You agree that, subject to the terms and conditions of this Agreement, in the event of a potential change in control of the Company occurring after the date hereof, you will not voluntarily terminate your employment with the Company and its subsidiaries for a period of six (6) months from the occurrence of such potential change in control of the Company. If more than one potential change in control occurs during the term of this Agreement, the provisions of the preceding sentence shall be applicable to each potential change in control occurring prior to the occurrence of a Change in Control. For purposes of this Agreement, a "potential change in control of the Company" shall be deemed to have occurred if (A) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (B) any person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; (C) any person becomes the beneficial owner, directly or indirectly, of securities of the Company representing 9.5% or more of the combined voting power of the Company's then outstanding securities; or (D) the Board adopts a resolution to the effect that, for purposes of this Agreement, a potential change in control of the Company has occurred.     3. Termination Following Change in Control. If any of the events described in Section 2(i) hereof constituting a Change in Control shall have occurred, you shall be entitled to the benefits provided in Section 4(iv) hereof upon the subsequent termination of your employment with the Company and its subsidiaries during the term of this Agreement unless such termination is (A) a result of your death or Retirement, or (B) your termination for other than Good Reason, or (C) your being terminated by the Company or any of its subsidiaries for Disability or for Cause.     (i) Disability; Retirement. For purposes of this Agreement, "Disability" shall mean permanent and total disability as such term is defined under Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Any question as to the existence of your Disability upon which you and the Company cannot agree shall be determined by a qualified independent physician selected by you (or, if you are unable to make such selection, such selection shall be made by any adult member of your immediate family or your legal representative), and approved by the Company, said approval not to be unreasonably withheld. The determination of such physician made in writing to the Company and to you shall be final and conclusive for all purposes of this Agreement. For purposes of this Agreement, "Retirement" shall mean your voluntary termination of employment with the Company in accordance with the Company's retirement policy (excluding early retirement) generally applicable to its salaried employees or in accordance with any retirement arrangement established with your consent with respect to you.     (ii) Cause. For purposes of this Agreement, "Cause" shall mean your willful breach of duty in the course of your employment, or your habitual neglect of your employment duties. For purposes of this Section 3(ii), no act, or failure to act, on your part shall be deemed "willful" unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company and its subsidiaries. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth above in this Section 3(ii) and specifying the particulars thereof in detail.     (iii) Good Reason. You shall be entitled to terminate your employment for Good Reason. For the purpose of this Agreement, "Good Reason" shall mean the occurrence, without your express written consent, of any of the following circumstances unless, in the case of paragraphs 3(iii)(A), (E), (F), (G), or (H), such circumstances are fully corrected prior to the Date of Termination (as defined in Section 3(v)) specified in the Notice of Termination (as defined in Section 3(iv)) given in respect thereof:         (A) the assignment to you of any duties inconsistent with your status as TITLE of Minerals Technologies Inc., your removal from that position, or a substantial diminution in the nature or status of your responsibilities from those in effect immediately prior to the Change in Control;         (B) a reduction by the Company or any of its subsidiaries in your annual base salary or bonus as in effect on the date hereof or as the same may be increased from time to time;         (C) the relocation of the executive office in which you are located prior to the Change in Control to a location more than fifty miles therefrom or the Company or any of its subsidiaries requiring you to be based anywhere other than the executive office in which you are located prior to the Change in Control except for required travel on the business of the Company and its subsidiaries to an extent substantially consistent with your present business travel obligations;         (D) the failure by the Company to pay to you any portion of an installment of deferred compensation under any preferred compensation program of the Company within seven (7) days of the date such compensation is due;         (E) the failure by the Company or any of its subsidiaries to continue in effect any incentive compensation plan in which you participate prior to the Change in Control, unless an equitable alternative compensation arrangement (embodied in an ongoing substitute or alternative plan) has been provided for you, or the failure by the Company or any of its subsidiaries to continue your participation in any such incentive plan on the same basis, both in terms of the amount of benefits provided and the level of your participation relative to other participants, as existed at the time of the Change in Control;         (F) except as required by law, the failure by the Company or any of its subsidiaries to continue to provide you with benefits at least as favorable as those enjoyed by you under the employee benefit and welfare plans of the Company and its subsidiaries, including, without limitation, the pension, life insurance, medical, dental, health and accident, disability, deferred compensation retirement and savings plans, in which you were participating at the time of the Change in Control, the taking of any action by the Company or any of its subsidiaries which would directly or indirectly materially reduce any of such benefits or deprive you of any material fringe benefit enjoyed by you at the time of the Change in Control, or the failure by the Company or any of its subsidiaries to provide you with the number of paid vacation days to which you are entitled at the time of the Change in Control;         (G) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 5 hereof; or         (H) any purported termination of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3(iv) below (and, if applicable, the requirements of Section 3(ii) above); for purposes of this Agreement, no such purported termination shall be effective. Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.     (iv) Notice of Termination. Any purported termination of your employment by the Company and its subsidiaries or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 6 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.     (v) Date of Termination, Etc. "Date of Termination" shall mean (A) if your employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the full-time performance of your duties during such thirty (30) day period), and (B) if your employment is terminated pursuant to Section 3(ii) or (iii) above or for any other reason (other than Disability), the date specified in the Notice of Termination (which, in the case of a termination pursuant to Section 3(ii) above shall not be less than thirty (30) days, and in the case of a termination pursuant to Section 3(iii) above shall not be less than thirty (30) nor more than sixty (60) days, respectively, from the date such Notice of Termination is given); provided that, if within thirty (30) days after any Notice of Termination is given the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the grounds for termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, by a binding arbitration award or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or the time for appeal therefrom having expired and no appeal having been perfected); provided further that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Company and its subsidiaries will continue to pay you your full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary and bonus) and continue you as a participant in all incentive compensation, benefit and insurance plans in which you were participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this Section 3(v). Amounts paid under this Section 3(v) are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement.     4. Compensation Upon Termination or During Disability. Following a Change in Control of the Company, as defined by Section 2(i), upon termination of your employment or during a period of Disability you shall be entitled to the following benefits, provided that such period of Disability or Date of Termination occurs during the term of this Agreement:     (i) During any period that you fail to perform your full-time duties with the Company and its subsidiaries as a result of your Disability, you shall continue to receive an amount equal to your base salary and bonus at the rate in effect at the commencement of any such period through the Date of Termination for Disability. Thereafter, your benefits shall be determined in accordance with the insurance programs of the Company and its subsidiaries then in effect.     (ii) If your employment shall be terminated by the Company or any of its subsidiaries for Cause or by you other than for Good Reason, the Company (or one of its subsidiaries, if applicable) shall pay you your full base salary and bonus through the Date of Termination at the rate in effect at the time Notice of Termination is given and shall pay any amounts to be paid to you pursuant to any other compensation plans, programs or employment agreements then in effect, and the Company shall have no further obligations to you under this Agreement.     (iii) If your employment shall be terminated by reason of your death or Retirement, your benefits shall be determined in accordance with the retirement and insurance programs of the Company and its subsidiaries then in effect.     (iv) If your employment by the Company and its subsidiaries shall be terminated by (a) the Company and its subsidiaries other than for Cause, your death, Retirement, or Disability or (b) by you for Good Reason, then you shall be entitled to the benefits provided below:         (A) The Company (or one of its subsidiaries, if applicable) shall pay you your full base salary and bonus through the Date of Termination at the rate in effect at the time the Notice of Termination is given, no later than the fifth day following the Date of Termination, plus all other amounts to which you are entitled under any compensation plan of the Company applicable to you, at the time such payments are due.         (B) The Company shall pay as severance pay to you a severance payment (the "Unadjusted Severance Payment") equal to 2.99 times your "Base Amount" as such term is defined under Section 280G(b)(3) of the Code. Your Base Amount shall be determined in accordance with Section 280G(b)(3) of the Code and with the proposed, temporary or final regulations promulgated under that Section in effect, if any. In the absence of such regulations, if you were not employed by the Company (or any corporation affiliated with the Company (an "Affiliate") within the meaning of Section 1504 of the Code or a predecessor of the Company) during the entire five calendar years (the "Base Period") preceding the calendar year in which a Change in Control of the Company occurred, your average annual compensation for the purposes of such determination shall be the average of your annual compensation for both complete and partial calendar years during the Base Period during which you were so employed, determined by annualizing any compensation (other than nonrecurring items) includible in your gross income for any partial calendar year. For purposes of the preceding sentence, compensation payable to you by the Company or any Affiliate or predecessor of the Company shall include every type and form of compensation includible in your gross income in respect of your employment by the Company or any Affiliate or predecessor of the Company, including compensation income recognized as a result of your exercise of stock options or sale of the stock so acquired, except to the extent otherwise provided in proposed, temporary or final regulations promulgated under Section 280G of the Code defining base amount.         (C) The Unadjusted Severance Payment shall not be reduced by the amount of any other payment or the value of any benefit received or to be received by you in connection with your termination of employment or contingent upon a Change in Control of the Company (whether payable pursuant to the terms of this Agreement or any other agreement, plan or arrangement with the Company or an Affiliate, predecessor or successor of the Company or any person whose actions result in a Change in Control of the Company or an Affiliate of such person) unless (1) in the opinion of tax counsel selected by the Company's Vice President-General Counsel and reasonably acceptable to you, such other payment or benefit constitutes a "parachute payment" within the meaning of Section 280G(b)(2) of the Code, and (2) in the opinion of such tax counsel, the Unadjusted Severance Payment plus all other payments or benefits which constitute "parachute payments" within the meaning of Section 280G(b)(2) of the Code would result in a portion of the Unadjusted Severance Payment being subject to the excise tax under Section 4999 of the Code. In such event, the amount of the Unadjusted Severance Payment shall be reduced by the minimum amount necessary such that no portion thereof will be subject to the excise tax under Section 4999 of the Code. The Unadjusted Severance Payment, as reduced, if at all, pursuant to the provisions of this paragraph shall be referred to as the Adjusted Severance Payment. In determining whether the Unadjusted Severance Payment shall be reduced under this paragraph, (i) there shall not be included in the computation any payment if you shall have effectively waived your receipt or enjoyment of such payment or benefit, and (ii) the value of any non-cash benefit or any deferred cash payment shall be determined by the Company's independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.         (D) Except to the extent that the payment thereof would subject any payment hereunder to the excise tax under Section 4999 of the Code:         (1) The Company shall also pay to you all legal fees and expenses reasonably incurred by you in connection with this Agreement (including all such fees and expenses, if any, incurred in contesting or disputing the nature of any such termination for purposes of this Agreement or in seeking to obtain or enforce any right or benefit provided by this Agreement); and         (2) For a twenty-four (24) month period after termination of your employment, the Company shall arrange to provide you with life, disability, accident and health insurance benefits substantially similar to those which you are receiving or entitled to receive immediately prior to the Notice of Termination; provided, however, that this Agreement in no way diminishes any rights to those benefits to which you would be entitled if you were to retire as an employee of Minerals Technologies Inc. Benefits otherwise receivable by you pursuant to this Section 4(iv)(D)(2) shall be reduced to the extent comparable benefits are actually provided to you by a subsequent employer during the twenty-four (24) month period following your termination, and any such benefits actually provided to you shall be reported to the Company.         (E) If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that, notwithstanding the good faith of you and the Company in applying the terms of this Section 4(iv), the aggregate "parachute payments" paid to or for your benefit are in an amount that would result in any portion of such "parachute payments" being subject to the excise tax under Section 4999 of the Code, then you shall have an obligation to pay the Company upon demand an amount equal to the sum of (1) the excess of the aggregate "parachute payments" paid to or for your benefit over the aggregate "parachute payments" that would have been paid to or for your benefit without any portion of such "parachute payments" being subject to the excise tax under Section 4999 of the Code; and (2) interest on the amount set forth in clause (1) of this sentence at the applicable Federal rate (as defined in Section 1274(d) of the Code) from the date of your receipt of such excess until the date of such payment; provided, however, that in the event and to the extent that an excise tax is nevertheless imposed on said amount your obligation to pay said amount to the Company is hereby waived.         (F) You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation earned by you as the result of employment by another employer or by retirement benefits received after the Date of Termination or otherwise, except as specifically provided in this Section 4.         (G) The Company shall pay you the Unadjusted Severance Payment in a lump sum no later than the fifth day following the Date of Termination; provided, however, that if the Company in good faith believes that the Unadjusted Severance Payment shall be reduced under the provisions of Section 4(iv)(C) hereof, the Company shall pay to you at such time a good faith estimate of the Adjusted Severance Payment (the "Estimated Adjusted Severance Payment," the computation of which shall be given to you in writing together with a written explanation of the basis for making such adjustment) which amount shall in no event be less than 50% of the Unadjusted Severance Payment. The Company shall, within 60 days of the Date of Termination, either pay to you the balance of the Unadjusted Severance Payment together with interest thereon at the applicable Federal rate (as defined in Section 1274(d) of the Code) or deliver to you a copy of the opinion of the tax counsel referred to in Section 4(iv)(C) hereof establishing the amount of the Adjusted Severance Payment. If the Adjusted Severance Payment exceeds the Estimated Adjusted Severance Payment, the difference shall be paid to you at such time together with interest thereon at the applicable Federal rate (as defined in Section 1274(d) of the Code).     5. Successors; Binding Agreement.     (i) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company is required to perform it. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled hereunder if you had terminated your employment for Good Reason following a Change in Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.     (ii) This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.     6. Notice. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Office of the Vice President-General Counsel of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.     7. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any conditions or provision of this Agreement 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. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York, including Section 198 (1-a) of the New York Labor Law. All references to sections of the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law. The obligations of the Company under Section 4 shall survive the expiration of the term of this Agreement.     8. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.     9. 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.     10. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject. Sincerely,     By: __________________________       Paul R. Saueracker       President and Chief Executive Officer   Agreed to as of the _____day of ________, 200_____.     _____________________________ 

  Exhibit 10.1        SPACELABS MEDICAL, INC. 15220 N.E. 40th Street Redmond, Washington 98073 December 5, 2001 Mr. Carl A. Lombardi Chairman, President and Chief Executive Officer Spacelabs Medical, Inc. 15220 N.E. 40th Street Redmond, Washington 98073 Dear Carl:      This letter will confirm the agreements that have been reached between you and the Board of Directors of Spacelabs Medical, Inc. (“Company”) in light of our discussions regarding your continued service with the Company and the rights and obligations of you and the Company with respect thereto.      As we have discussed, the Board has determined that it is in the best interests of the Company and its shareholders that you postpone your retirement and continue to serve the Company and its subsidiaries in all of your current capacities for a defined period while the Company evaluates strategic options and matters of management succession. We have agreed that you will continue such service until the earlier of the date of the 2002 annual meeting of the Company’s shareholders (but not later than May 31, 2002 unless you otherwise agree) and a date mutually agreed upon between you and the Company (“Retirement Date”), and you then will retire from all of your positions as a director, officer or employee of the Company and its affiliates.      Your retirement in accordance with the terms of this agreement will be deemed a termination of your employment by the Company without Cause as contemplated by and defined in the severance agreement between you and the Company dated March 16, 2001 (“Severance Agreement”), with the result that you will be entitled to the lump sum payments and other benefits provided for thereunder upon satisfaction of the conditions set forth therein (unless Section 2 of the Severance Agreement applies, in which case the Amended and Restated Change of Control Agreement between you and the Company dated as of July 24, 1998 (“Change of Control Agreement”) will control). The benefits will be the greater of those calculated as of your Retirement Date and those calculated as of the date hereof.   --------------------------------------------------------------------------------   Mr. Carl A. Lombardi December 5, 2001 Page 2      The Severance Agreement and the Change of Control Agreement remain in full force and effect. In the event that your employment with the Company terminates prior to the Retirement Date, the rights and obligations of you and the Company will be determined under the Severance Agreement and the Change of Control Agreement.      Your employment pursuant to this agreement continues to be “at-will” and may be terminated by either the Company or you at any time with or without Cause, subject to your rights under this agreement, the Severance Agreement and the Change of Control Agreement.      If the foregoing accurately reflects our agreement, please countersign a copy of this agreement and return it to Gene DeFelice, whereupon this will be a legally binding agreement between you and the Company entered into in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.     Sincerely,     SPACELABS MEDICAL, INC.     By   -------------------------------------------------------------------------------- Phillip M. Nudelman   Chairman of the Compensation Committee, acting pursuant to a resolution of the Board of Directors AGREED AND ACCEPTED:   -------------------------------------------------------------------------------- Carl A. Lombardi  

QuickLinks -- Click here to rapidly navigate through this document Exhibit 10.4 INTEGRATED TELECOM EXPRESS, INC. 2001 NONSTATUTORY STOCK OPTION PLAN     1.  Purposes of the Plan.  The purposes of this Nonstatutory Stock Option Plan are: •to attract and retain the best available personnel for positions of substantial responsibility, •to provide additional incentive to Employees and Consultants, and •to promote the success of the Company's business.     Options granted under the Plan will be Nonstatutory Stock Options.     2.  Definitions.  As used herein, the following definitions shall apply:     (a) "Administrator" means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan.     (b) "Applicable Laws" means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options are, or will be, granted under the Plan.     (c) "Board" means the Board of Directors of the Company.     (d) "Code" means the Internal Revenue Code of 1986, as amended.     (e) "Committee" means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan.     (f)  "Common Stock" means the Common Stock of the Company.     (g) "Company" means Integrated Telecom Express, Inc., a Delaware corporation.     (h) "Consultant" means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.     (i)  "Director" means a member of the Board.     (j)  "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code.     (k) "Employee" means any person, including Officers, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company.     (l)  "Exchange Act" means the Securities Exchange Act of 1934, as amended.     (m) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows:     (i)  If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; --------------------------------------------------------------------------------     (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;     (iii) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator.     (n) "Notice of Grant" means a written or electronic notice evidencing certain terms and conditions of an individual Option grant. The Notice of Grant is part of the Option Agreement.     (o) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.     (p) "Option" means a nonstatutory stock option granted pursuant to the Plan, that is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.     (q) "Option Agreement" means an agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.     (r) "Option Exchange Program" means a program whereby outstanding options are surrendered in exchange for options with a lower exercise price.     (s) "Optioned Stock" means the Common Stock subject to an Option.     (t)  "Optionee" means the holder of an outstanding Option granted under the Plan.     (u) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code.     (v) "Plan" means this 2001 Nonstatutory Stock Option Plan.     (w) "Service Provider" means an Employee including an Officer, Consultant or Director.     (x) "Share" means a share of the Common Stock, as adjusted in accordance with Section 12 of the Plan.     (y) "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Code.     3.  Stock Subject to the Plan.  Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan is four million five hundred thousand (4,500,000) Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.     If an Option expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated).     4.  Administration of the Plan.       (a)  Administration.  The Plan shall be administered by (i) the Board or (ii) a Committee, which committee shall be constituted to satisfy Applicable Laws. 2 --------------------------------------------------------------------------------     (b)  Powers of the Administrator.  Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion:     (i)  to determine the Fair Market Value of the Common Stock;     (ii) to select the Service Providers to whom Options may be granted hereunder;     (iii) to determine whether and to what extent Options are granted hereunder;     (iv) to determine the number of shares of Common Stock to be covered by each Option granted hereunder;     (v) to approve forms of agreement for use under the Plan;     (vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;     (vii) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option shall have declined since the date the Option was granted;     (viii)to institute an Option Exchange Program;     (ix) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan;     (x) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;     (xi) to modify or amend each Option (subject to Section 14(b) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Options longer than is otherwise provided for in the Plan;     (xii) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option previously granted by the Administrator;     (xiii)to determine the terms and restrictions applicable to Options;     (xiv) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by an Optionee to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and     (xv) to make all other determinations deemed necessary or advisable for administering the Plan.     (c)  Effect of Administrator's Decision.  The Administrator's decisions, determinations and interpretations shall be final and binding on all Optionees and any other holders of Options. 3 --------------------------------------------------------------------------------     5.  Eligibility.  Options may be granted to Service Providers; provided, however, that notwithstanding anything to the contrary contained in the Plan, Options may not be granted to Officers and Directors except in connection with an Officer's initial service to the Company.     6.  Limitation.  Neither the Plan nor any Option shall confer upon an Optionee any right with respect to continuing the Optionee's relationship as a Service Provider with the Company, nor shall they interfere in any way with the Optionee's right or the Company's right to terminate such relationship at any time, with or without cause.     7.  Term of Plan.  The Plan shall become effective upon its adoption by the Board. It shall continue in effect for ten (10) years, unless sooner terminated under Section 14 of the Plan.     8.  Term of Option.  The term of each Option shall be stated in the Option Agreement.     9.  Option Exercise Price and Consideration.       (a)  Exercise Price.  The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator.     (b)  Waiting Period and Exercise Dates.  At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised.     (c)  Form of Consideration.  The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. Such consideration may consist entirely of:     (i)  cash;     (ii) check;     (iii) promissory note;     (iv) other Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;     (v) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan;     (vi) a reduction in the amount of any Company liability to the Optionee, including any liability attributable to the Optionee's participation in any Company-sponsored deferred compensation program or arrangement;     (vii) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or     (viii)any combination of the foregoing methods of payment.     10.  Exercise of Option.       (a)  Procedure for Exercise; Rights as a Shareholder.  Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option may not be exercised for a fraction of a Share.     An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the 4 -------------------------------------------------------------------------------- Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. 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 of the Plan.     Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.     (b)  Termination of Relationship as a Service Provider.  If an Optionee ceases to be a Service Provider, other than upon the Optionee's death or Disability, the Optionee may exercise his or her Option, but only within such period of time as is specified in the Option Agreement, and only to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee's termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.     (c)  Disability of Optionee.  If an Optionee ceases to be a Service Provider as a result of the Optionee's Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee's termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.     (d)  Death of Optionee.  If an Optionee dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee's estate or by a person who acquires the right to exercise the Option by bequest or inheritance, but only to the extent that the Option is vested on the date of death. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee's termination. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. The Option may be exercised by the executor or administrator of the Optionee's estate or, if none, by the person(s) entitled to exercise the Option under the Optionee's will or the laws of descent or distribution. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 5 --------------------------------------------------------------------------------     (e)  Buyout Provisions.  The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.     11.  Non-Transferability of Options.  Unless determined otherwise by the Administrator, an Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. If the Administrator makes an Option transferable, such Option shall contain such additional terms and conditions as the Administrator deems appropriate.     12.  Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.       (a)  Changes in Capitalization.  Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option.     (b)  Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until ten (10) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.     (c)  Merger or Asset Sale.  In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase 6 -------------------------------------------------------------------------------- or receive, for each Share of Optioned Stock, immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.     13.  Date of Grant.  The date of grant of an Option shall be, for all purposes, the date on which the Administrator makes the determination granting such Option, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant.     14.  Amendment and Termination of the Plan.       (a)  Amendment and Termination.  The Board may at any time amend, alter, suspend or terminate the Plan.     (b)  Effect of Amendment or Termination.  No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to options granted under the Plan prior to the date of such termination.     15.  Conditions Upon Issuance of Shares.       (a)  Legal Compliance.  Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.     (b)  Investment Representations.  As a condition to the exercise of an Option the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.     16.  Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.     17.  Reservation of Shares.  The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 7 -------------------------------------------------------------------------------- QuickLinks Exhibit 10.4

Exhibit 10(g) SECOND AMENDMENT TO SCHERING-PLOUGH CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN      The Schering-Plough Corporation Supplemental Executive Retirement Plan, as amended and restated to February 24, 1998, as further amended as of November 1, 1998 (as so amended, the "SERP") is hereby amended effective as of October 1, 2000 as follows: 1.  SECTION 4.6 is hereby amended by deleting it in its entirety and replacing it with the following language:      "The benefits under this Plan shall be payable to a Participant or Former Participant in the normal form such Participant's or Former Participant's retirement benefits would be payable under the Basic Plan determined solely on the basis of his marital status on his retirement benefit commencement date and without regard for any optional form of benefits elected under the Basic Plan. Notwithstanding the preceding sentence, a Participant or Former Participant may elect that payment of any benefits under this Plan shall be made in accordance with any optional form of benefit available under the Basic Plan or as hereinafter provided in this Section 4.6. A Participant or Former Participant may elect (the "Participant's Lump Sum Election") to receive payment of the actuarial equivalent of the aggregate of his benefits under this Plan and any Survivor's Benefit payable to his Surviving Spouse under this Plan in a lump sum (x) in cash on his Early Retirement Date, Normal Retirement Date, Deferred or Postponed Retirement Date, or Change of Control Termination Date, or the first day of any month thereafter not later than the first day of the month coincident with or next following the second anniversary of such Early Retirement Date, Normal Retirement Date, Deferred or Postponed Retirement Date, or Change of Control Termination Date, as the case may be, or on the fifth, tenth, fifteenth or twentieth anniversary of his Early Retirement Date, Normal Retirement Date, Deferred or Postponed Retirement Date, or Change of Control Termination Date, as the case may be, or (y) in two, three, four, five, ten, fifteen, or twenty equal annual cash installments commencing on his Early Retirement Date, Normal Retirement Date, Deferred or Postponed Retirement Date, or Change of Control Termination Date or the first day of any month thereafter not later than the first day of the month coincident with or next following the second anniversary of such Early Retirement Date, Normal Retirement Date, Deferred or Postponed Retirement Date, or Change of Control Termination Date, as the case may be. If a Participant or a Former Participant terminates his employment by Retirement or following a Change of Control and dies with a Participant's Lump Sum Election in effect but prior to the payment of the full amount of such lump sum or annual installments, payment of the unpaid amount thereof shall be made to his Surviving Spouse, designated Beneficiary or estate in accordance with such Election. Payment made in accordance with either of the two preceding sentences to the Participant or Former Participant, his Surviving Spouse, designated Beneficiary or estate shall constitute full and complete satisfaction of the Company's obligation in respect of the benefits of such Participant or Former Participant and any Survivor's benefit of his Surviving Spouse. If a Participant or Former Participant dies before Retirement, the Company shall have no obligation in respect of his benefits under this Plan and shall be obligated to pay any Survivor's Benefit, if, but only if, his spouse shall survive him. If the Participant or Former Participant does not make the Participant's Lump Sum Election, he may nevertheless elect (the "Survivor's Lump Sum Election") that if he should die prior to termination of employment, his Surviving Spouse shall receive the actuarial equivalent of her Survivor's Benefit, if any, in a lump sum (x) in cash on the Optional Survivor's Benefit Payment Date or the first day of any month thereafter not later than the first day of the month coincident with or next following the second anniversary of the Optional Survivor's Benefit Payment Date or on the fifth, tenth, fifteenth, or twentieth anniversary of the Optional Survivor's Benefit Payment Date, or (y) in two, three, four, five, ten, fifteen, or twenty equal annual cash installments commencing on the Optional Survivor's Benefit Payment Date or the first day of any month thereafter not later than the first day of the month coincident with or next following the second anniversary of the Optional Survivor's Benefit Payment Date. A Participant or a Former Participant may make any election pursuant to this Section 4.6. or may modify or rescind such an election previously made: (a), in the case of an election of a form of benefit other than a lump sum or annual installments pursuant to a Participant's Lump Sum Election or a Survivor's Lump Sum Election, at any time prior to the Participant's or Former Participant's Retirement or Change of Control Termination Date, except that in the case of a Participant or Former Participant whose employment is terminated other than by Retirement or following a Change of Control, such election, modification or rescission must be made at least 90 days prior to his Normal Retirement Date; (b), in the case of a Participant's Lump Sum Election by a Participant or a Former Participant whose Retirement occurs on or after October 1, 1994, and on or before July 1, 1995, at least 30 days prior to the date of his Retirement; (c), in the case of a Participant's Lump Sum Election by a Participant or a Former Participant who is not covered by clause (b) of this sentence, not later than the end of the calendar year preceding the calendar year in which the termination of his employment occurs and at least six months prior to such termination of employment; and (d), in the case of a Survivor's Lump Sum Election by a Participant of Former Participant, at least six months prior to his death; provided, however, that in the event of a Change of Control, a Participant or Former Participant may make a Participant's Lump Sum Election or a Survivor's Lump Sum Election, or modify or rescind such an Election previously made, within a period of 60 days following such Change of Control but in no event later than 30 days prior to the date of the termination of his employment. Notwithstanding any provision of this Plan to the contrary, after September 1, 2000, a Participant or Former Participant who has made a Participant's Lump Sum Election may, at any time following his termination of employment (or the Surviving Spouse of a Participant or Former Participant who has made a Survivor's Lump Sum Election may, at any time after the Participant's or Former Participant's death), make an irrevocable election (an "Early Distribution Election") to receive an early distribution of all or part of his benefits under this Plan in a single lump sum cash payment as soon as practicable; provided, that the amount actually distributed shall be the elected amount less a penalty of 10% of the elected amount and such penalty amount shall be irrevocably forfeited, and the amount elected shall be deemed fully distributed. Any election pursuant to this Section 4.6, or any modification or rescission of a previous election, shall be made in writing and filed with the Committee before the applicable limitation of time specified in this Section 4.6, and any election purported to be filed after the applicable limitation of time shall be void. Unless otherwise specified in the written form of election, the actuarial equivalent of the benefits payable to a Participant or a Former Participant who has made a Participant's Lump Sum Election, and the actuarial equivalent of any Survivor's Benefit payable to his Surviving Spouse pursuant to a Survivor's Lump Sum Election, shall be paid in five equal annual installments commencing on his Early Retirement Date, Normal Retirement Date, Deferred or Postponed Retirement Date, or Change of Control Termination Date, or the first day of the month coincident with or next following his death, as the case may be, with interest payable at the three-month U.S. Treasury bill rate as reported in The Wall Street Journal on the first business day of each calendar quarter. If benefits under this Plan are payable to a Participant or Former Participant in a different form than his retirement benefits under the Basic Plan, or if benefits under this Plan are payable to a Participant or Former Participant prior to his retirement benefits under the Basic Plan, the amount of the offset provided in this Plan for such Participant's or Former Participant's Basic Plan Benefit shall be actuarially converted into the form of benefit payable under this Plan but solely for purposes of calculating the amount of such offset. Notwithstanding any provision of this Plan to the contrary, a lump sum payment shall be made in lieu of any installments if the actuarial equivalent of the aggregate of his benefits under this Plan and any Survivor's Benefit payable to his Surviving Spouse under this Plan is less than or equal to $5,000 or such other amount as may be established by the Committee from time to time. The amount of any lump sum payment shall be equal to the actuarial present value of the benefits payable under this Plan to a Participant, Former Participant or Surviving Spouse (less the amount of any benefits previously paid to the Participant, Former Participant or Surviving Spouse (including the amount of the 10% penalty) in the case of an Early Distribution Election made after commencement of payment of any benefits under this Plan), calculated as of the Early Retirement Date, Normal Retirement Date, Deferred or Postponed Retirement Date, Change of Control Termination Date or date of death of the Participant or Former Participant, as the case may be, by utilizing (a) the interest rate determined as of such Retirement Date, Change of Control Termination Date or date of death under the regulations of the Pension Benefit Guaranty Corporation for determining the present value of a lump sum distribution on plan termination that were in effect on September 1, 1993 , and (b) the other applicable actuarial assumptions in use as of such Retirement Date, Change of Control Termination Date or date of death under the Basic Plan. The amount of any annual installment shall be calculated by converting the benefits payable under this Plan to a Participant, Former Participant or Surviving Spouse, as the case may be, into a lump sum amount in accordance with the preceding sentence and by dividing such amount by the number of installments elected or deemed to have been elected by the Participant or Former Participant. The amount of any lump sum or annual installment of the benefit of any Participant or Former Participant that is not paid within fifteen days after the date of his Retirement or Change of Control Termination Date, and the amount of any lump sum or annual installment of any Survivor's Benefit of his Surviving Spouse that is not paid within fifteen days after the Optional Survivor's Benefit Payment Date, shall bear interest from such fifteenth day after the date of Retirement, Change of Control Termination Date or the Optional Survivor's Benefit Payment Date, as the case may be, to but excluding the date of payment of such amount, at the Deferral Rate, compounded semi-annually. Interest on any such amount shall be paid on the date such amount is paid or, at the election of the Participant or Former Participant, as the case may be, such interest shall be paid currently on a semiannual basis (with such election to be made on or before the last date on which a Participant's Lump Sum Election or Survivor's Lump Sum Election, as applicable, may be made). If the benefits under this Plan are to continue after a Participant's or Former Participant's death for the benefit of his spouse or a designated beneficiary, then such Participant or Former Participant shall have the right at any time to change the recipient of the survivorship benefit payable under this Plan; provided, however, that any such change, if made after the applicable deadline set forth in the Basic Plan, shall not affect the amount of the benefit payable under this Plan as originally calculated or the term for which such benefit is payable, also as originally calculated. The Committee may, in its sole discretion, defer the payment of any lump sum or initial annual installment to a Participant or a Former Participant who is a "covered employee" as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended, if such payment would be subject to such Section's limitation on deductibility; provided, however, that such payment shall not be deferred to a date later than the earliest date in the year in which such payment would not be subject to such limitation; and further provided that the Company shall, at the time of payment of any amount so deferred, pay interest thereon from the due date thereof at the Deferral Rate, compounded semi-annually." 2.  SECTION 6. Committee, is hereby amended by adding at the end of Section 6.1 the following language:      "In connection with the administration of this Plan, the Committee may delegate in writing part or all of its authority under this Plan to such party or parties as it may deem necessary or appropriate." 3.  Section 7.3 is hereby amended by adding at the beginning thereof the following language:      "The Plan is intended to constitute a nonqualified deferred compensation arrangement maintained for a select group of management or highly compensated employees within the meaning of Title I of ERISA." 4.  Section 7.6 is hereby amended by deleting it in its entirety and replacing it with the following language:      "The Company may withhold from any payment required to be made under the Plan any federal, state or local taxes required by law to be withheld with respect to such payment and such sums as the Company may reasonably estimate are necessary to cover any other amounts for which the Company may be legally liable and which may be assessed with regard to such payment." 5.  SECTION 7, Miscellaneous is hereby further amended by adding new Sections 7.7 and 7.8 as follows:      "7.7 The masculine pronoun shall mean the feminine wherever appropriate.       7.8 The Plan shall be construed, administered and enforced under ERISA and the laws of the State of New Jersey, except where ERISA controls." 6.  Except as specified above, the SERP is hereby ratified and confirmed without amendment.

Exhibit 10(n)             AGREEMENT FOR PURCHASE AND SALE OF ASSETS DATED AS OF SEPTEMBER 29, 2000 BETWEEN INTERNET CONNECTIONS, INC., AS SELLER AND HICKORY TECH CORPORATION, AS BUYER         AGREEMENT FOR PURCHASE AND SALE OF ASSETS           This Agreement for Purchase and Sale of Assets is made and entered into as of the 29th day  of September, 2000, by and between Internet Connections, Inc., a Minnesota  corporation ("Seller"), its principal stockholders, Yvonne Karsten, also known as Yvonne Cariveau, Dale Karsten, John Pfeifer, George and Elizabeth Pfeifer and Michael and Karen Green (“Stockholders”), and Hickory Tech Corporation, a Minnesota corporation,  ("Buyer"). RECITALS   A. Seller is an Internet Service Provider (“ISP) and is in the business of providing internet connection services to business and residential customers, including leased line internet access (DSL, ISDN, T-1, Point-to-Point and similar high speed access service) and including dialup internet access (modem access service), routing of internet connections and traffic to backbone networks (collectively, the “ISP Business” and sometimes referred to as the “Internet Service Provider Business”) and Web Hosting and Design Services (web site services, including hosting web site files and information for third party customers on third party servers connected to the internet via backbone network, but excluding  all internet routing and traffic and excluding any internet access for such customers), all to residential and business consumers, wherever located; and         A. Buyer desires to acquire Seller’s entire ISP Business, including the related customer base, employees, specified equipment, intangibles and selected accounts receivable, including  all assets, of any description, used or useful in the operation of Seller’s ISP Business, (excluding, however, Seller’s Web Hosting and Design Service business) and Seller wishes to sell, assign and transfer all of its ISP Business and related assets to Buyer.           NOW, THEREFORE, for and in consideration of the foregoing and the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer make the following AGREEMENT. ARTICLE 1 PURCHASE AND SALE OF ASSETS           1.0     Sale and Transfer.     Upon the terms and subject to the conditions hereinafter set forth, Seller agrees to sell, convey, transfer, assign and deliver to Buyer all of Seller’s ISP Business and related assets described below and as may be more specifically listed on Schedule 1.0, attached  hereto (the "Assets"). The items listed on Schedule 1.01, attached hereto (the "Excluded Assets") shall be retained by Seller. Buyer agrees to purchase, and Seller agrees to sell, the following Assets from Seller:           1.1     Equipment, Tools, and Supplies.     All equipment, tools, and supplies, of any description, used and or useful in the operation of Seller’s ISP Business, as listed on Schedule 1.1.           1.2     Software.     All of Seller’s rights, including rights to copyright and rights to use, under any “shop right” or similar doctrine, computer software, computer code, computer programs, program designs, program manuals used or useful in the operation of the ISP Business, listed on Schedule 1.2.           1.3     ISP Customer Base.     The entire ISP customer base of Seller, consisting of approximately 4,848 business and residential ISP customers, wherever such customers may be located, including Seller’s customer service database, user logs, radius logs, server usage data, data assembled or organized under Ticket Que Software, and data assembled or organized under Quickbooks software, as may be more specifically listed on Schedule 1.3.           1.4     ISP Contracts.     All contracts and contract rights of Seller, including all rights of Seller pursuant to any “backbone” or similar contract with MRNet or GoodNet or any similar internet traffic provider, that relate in any way to Seller’s ISP business as may be more specifically listed on Schedule 1.4.           1.5     Domain Names.     All domain names used or useful in the operation of Seller’s ISP business as may be more specifically listed on Schedule 1.5.           1.6     Intangibles.     All franchises,  rights, patents, trademarks, licenses, copyrights, and brand names, used or useful in the operation of Seller’s ISP business; and all computer code, computer programs, program designs, product manuals, catalogs, and price lists; and all documents relating to suppliers to Seller’s ISP business; and all customer lists, catalogs, and marketing materials used by Seller in the operation of its ISP business, listed on Schedule 1.6.           1.7     Accounts Receivable.     All rights to payment under any contract receivable any under any account receivable no more than 90 days old as of September 30, 2000, all related to Seller’s ISP business, as listed on Schedule 1.7.           1.8     No General Assumption of Liabilities.     Except for Permitted Encumbrances listed on Schedule 1.8,  Buyer shall not assume and has not agreed to assume any of Seller’s liabilities.   Seller warrants that the assets described in Sections 1.1 through 1.7, above, to be delivered to Buyer at the Closing, comprise all tangible and intangible assets, of any description, required to operate the ISP Business following closing, and the ISP network so transferred by Seller is capable of supporting all customers included in the ISP Business. ARTICLE 2 PRICE           2.1     Purchase Price.  Buyer shall pay to Seller as full consideration for the transfer of the Assets, a total purchase price equal to the aggregate of the following:   Base Price for the ISP Business, free and clear of all debts and liens $1,000,000.00       Plus Base Price Adjustment for Annualized Run-Rate on Revenues in excess of $1,090,000.00 realized during the month of October 2000 TBD       Plus Face value of ISP accounts receivable, not more than 90 days old at September 30, 2000 TBD       Less Amounts for customer deposits and customer advances for future service TBD           2.2     Adjustment for Annualized Run-Rate on Revenues.  In the event Buyer realizes from Seller’s existing ISP business an ISP revenue run rate during the first full month following Closing, including pro-rata portion of advance customer payments, at an annualized rate greater than $1,090,000.00, Buyer will adjust the Base Price to eleven times that monthly billing figure.  No adjustment will be made to the Base Price in the event the annualized run rate on revenues does not exceed $1,090,000.00 during the first full month following Closing. Any adjustment required by this Section shall be paid to Seller no later than 60 days after Closing.  “Annualized Run Rate on Revenues” means gross revenues derived from the ISP Business for a particular month, multiplied by twelve.           2.3     Earnest Money.  Upon execution of this Agreement and subject to the terms of the “Earnest Money Escrow Agreement” attached hereto as Exhibit 2.3, Buyer will deliver to Wells Fargo Bank Minnesota, N.A. (the “Escrow Agent”) the amount of One Hundred Thousand Dollars ($100,000.00) which, together with all interest thereon, shall be referred to as the “Buyer Deposit”.   The Buyer Deposit shall be held by the Escrow Agent pursuant to the Earnest Money Escrow Agreement, and subject to the following: In the event the Closing shall not occur as a result of any default by Seller, Seller shall not be entitled to any portion of the Buyer Deposit and, promptly after termination of this Agreement, the Buyer Deposit (together with all interest earned thereon) shall be promptly returned to Buyer. In the event the Closing shall not occur as a result of any default by Buyer, Buyer shall not be entitled to any portion of the Buyer Deposit and, promptly after termination of this Agreement, the Buyer Deposit (together with all interest earned thereon) shall be promptly delivered to Seller. At the Closing, the Purchase Price, less the Buyer Deposit,  shall be payable to Seller in cash by wire transfer of immediately available funds to such bank account(s) as Seller shall designate prior to Closing.           2.4     Allocation of the Purchase Price.  The Purchase Price shall be allocated as set forth on Schedule 2.4. Seller agrees to negotiate in good faith any suballocations or reallocations reasonably requested by Buyer.  Buyer and Seller shall exchange at Closing IRS Form 8594, Asset Allocation Statement, and the Buyer and Seller agree to report this transaction for tax purposes in accordance with such allocation, and to attach the applicable asset allocation statement to their respective income tax returns for the taxable year of reporting this transaction.           2.5.    Taxes.  Seller shall pay any and all sales, use, transfer, stamp, conveyance, value added or similar taxes, duties, excises or governmental charges imposed by any taxing jurisdiction, including all recording fees, notarial fees and other similar costs incurred in connection with the sale, transfer or assignment of the Assets or otherwise on account of this Agreement.           2.6.    Costs.  Each party shall  pay at Closing its own Brokerage and Attorneys' fees incurred in connection with the sale of the Assets to Buyer.   ARTICLE 3 CLOSING           3.1     Closing.  Provided that all conditions precedent have been satisfied or waived prior to then, the Closing of the purchase and sale of the Assets (the "Closing") shall take place at the offices of Blethen, Gage & Krause, 127 South Second Street in the City of Mankato, Minnesota on October 9, 2000, at 10:00 o'clock a.m., local time, or on such other date as the parties mutually agree, but in no event shall Closing occur later than that date.  The date that the Closing actually occurs is referred to as the "Closing Date". Provided that the Closing actually occurs, the effective time of Closing shall in all events be deemed to have occurred for all purposes as of the close of Seller’s business on September 30, 2000.           3.2     Deliveries by Seller to Buyer.  At or prior to the Closing, Seller will deliver to Buyer the following documents (the "Transaction Documents") and purchased assets: a.                 Certified copies of all of Seller's resolutions pertaining to the authorizations of this Agreement and the consummation of the transactions referred to in this Agreement (the "Transactions") by Seller, including all necessary shareholder consents; b.                 Duly executed bills of sale, assignments, and other instruments of transfer, in form sufficient to convey to Buyer all of the rights, title and interest of Seller in and to the Assets in accordance with the terms hereof.  The Bill of Sale, shall substantially conform to Exhibit 3.2b,  attached hereto and made a part hereof.  The Bill of Sale will include all assets and goods of every description described in Sections 1.1 through 1.7 above,  excluding all accompanying liability excepting only Permitted Encumbrances listed on Schedule 1.8.  If any such assets or rights thereto are not assignable because of the provisions thereof or under law, the Seller will use its best efforts to obtain the necessary consents thereto.  If consent cannot be obtained, the Seller shall retain the right. The Buyer's accountants shall determine an appropriate reduction of the purchase price for the rights retained by the Seller, and the Buyer shall purchase the remaining Assets for the reduced price; c.                 UCC-3  Termination Statements substantially in the same form as Exhibit 3.2c, terminating the security interests of all creditors who may have any interest in the Assets to be conveyed to the Buyer by this Agreement.  Seller represents that the creditors listed on Schedule 5.2f is a full and complete list of its creditors existing as of September 1, 2000. d.                 Releases of Tax Liens, releasing any liens imposed by any taxing authorities upon the Assets or the ISP Business at any time prior to the completion of the transfer of the Assets to Seller; e.                 All customer files, customer service databases, userlogs, radius logs, server usage data, data assembled or organized under Ticket Que Software, data assembled or organized under Quickbooks software, customer histories, customer lists , sales data, and literature used and/or useful in the ISP Business. f.                  A certificate of Seller certifying as to certain corporate matters with respect to Seller, together with all of the attachments referred to therein; and g.                 Opinion of Counsel, substantially in the same form as Exhibit 3.2g attached hereto; and h.                 Such other certificates and documents as Buyer or its counsel may reasonably request.           3.3     Deliveries by Buyer to Seller.  At or prior to the Closing, Buyer will deliver to Seller: a.                 The balance of the Purchase Price, as required by Section 2.3; b.                 Certified copies of Buyer's resolutions pertaining to the authorization of this Agreement and the consummation of the Transactions by Buyer; c.                 A certificate of Buyer certifying as to the accuracy of Buyer's representations and warranties on and as of the Closing Date and that Buyer has performed and complied with all of the terms, provisions and conditions to be performed and complied with on or before the Closing Date; d.                 A certificate of Buyer certifying as to certain corporate matters, together with all of the attachments referred to therein; e.                 Such other certificates and documents as Seller or its counsel may reasonably request.           3.4     Records to be Retained by Seller.         Title to all of Seller's records, documents and papers of every kind and nature pertaining to the ISP Business sold hereunder shall remain in Seller, but any thereof which Buyer may reasonably require for use in connection with the operation of the ISP Business after the Closing Date shall either be delivered to Buyer or made available to it in such manner as may best meet the respective needs of the parties.  To the extent that Seller’s records commingle information related to Seller’s Web Hosting or Web Design customers, Seller specifically prohibits Buyer’s access thereto to the extent of such commingling.  In any case the party receiving or retaining such records shall make them available to the other during a period of five years following the Closing Date.  After the expiration of said five-year period either shall, before destroying any of such records received by it, offer them to the other.           Seller shall promptly forward to Buyer all correspondence, mail, payments, and documents received by Seller after the Closing Date which relate to the operations of the ISP Business occurring prior to or after the Closing Date.  Buyer shall have the right to endorse in the name of Seller all checks or other forms of payments which it is entitled to retain hereunder.           Buyer shall promptly forward to Seller all correspondence, mail, payments, and documents not related to the operation of the ISP Business, such as matters concerning the Seller's web weaving business, income taxes, corporate charter, or corporate governance. ARTICLE 4 CONDITIONS           4.1     Conditions to Buyer's Obligations.  The obligation of Buyer to consummate the Transactions shall be subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may, to the extent allowed by law, be waived by Buyer:           a.       No Material Inaccuracy.  There shall be no material inaccuracy in the representations and warranties of Seller or its Stockholders set forth in section 5 and these representations and warranties shall be true and correct in all material respects as of the Closing Date as though made on and as of that date, and Buyer shall have received a certificate dated the Closing Date from Seller and the Stockholders to that effect.  No later than two business days prior to Closing, Buyer and Seller shall deliver to the other updated Schedules necessary to maintain the accuracy of the Schedules, and the representations and warranties made in this Agreement.           b.       Performance of Covenants.  Seller and its Stockholders shall have performed all obligations required to be performed by them under this Agreement prior to the Closing Date, and Buyer shall have received from Seller and its Stockholders a certificate dated the Closing Date to that effect.           c.       Certificates; Documents.  Seller shall have delivered the certificates and other documents required by Section 3.2.           d.       Release of Liens.  Seller shall have obtained a release of any and all tax liens and security interests in the Assets and shall have delivered transfer documents satisfactory in form to counsel for Buyer assigning and conveying all the Assets free and clear of any and all liens and encumbrances.           e.       Corporate Approvals.  The Transactions shall have received all necessary corporate approvals by Seller.           f.        Opinion of Counsel.  Buyer shall have received an opinion of counsel for Seller, satisfactory in scope and substance to counsel for Buyer, to the effect that:     i.        Seller is a corporation duly organized and in good standing under the laws of the State of Minnesota.     ii.        Seller has full corporate power to carry out the transaction provided for in this Agreement; all corporate and other proceedings required to be taken by or on the part of Seller to authorize it to execute and deliver this Agreement and to consummate the transactions contemplated by this Agreement have been duly and validly taken; and this Agreement has been duly and validly authorized, executed and delivered by Seller and its stockholders, and is a legally binding obligation of each enforceable in accordance with its terms.     iii.       Seller has taken all steps required to comply with all provisions of the security interests of any and all creditors in the Assets have been duly and validly released.     iv.       Counsel does not know of any facts that by the consummation of this Agreement will (i) give rise to or cause any default under any of the terms, conditions, or provisions of any note, bond, mortgage, indenture, license agreement, or any other instrument or obligation to which Seller is a party or by which it or any of its properties or the Assets may be bound, or (ii) violate any court order, writ, injunction, or decree applicable to Seller or any of its properties or Assets.           g.       No Adverse Proceedings.  No action or proceeding against Buyer or Seller or the Stockholders shall have been instituted or threatened that, if successful, could prohibit consummation or require substantial rescission of the transactions contemplated under this Agreement.           h.       No Material Adverse Change.  There shall have been no material adverse change to the ISP Business since July 1, 2000.           4.2     Conditions to Seller's Obligations.  The obligations of Seller to consummate the Transactions shall be subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may, to the extent allowed by law, be waived by Seller:           a.       Representations and Warranties.  All representations and warranties of Buyer made in this Agreement shall be true and correct in all material respects on and as of the Closing Date as though made at such time, other than changes contemplated by this Agreement or approved by Seller in writing, and there shall have been delivered to Seller a Certificate of Buyer to that effect, dated the Closing Date, signed by authorized officers of Buyer.           b.       Covenants.  Buyer shall have performed and complied with all covenants and agreements required by the Transaction Documents to be performed by it on or prior to the Closing Date.           c.       Corporate Approvals.  The Transactions shall have received all necessary corporate and Board of Director approval(s).           d.       Certificates; Documents.  Buyer shall have delivered the certificates and other documents required under Section 3.3.           4.3.    Delivery of Possession; Destruction or Damage to Property Prior to Closing:  Force Majeure.   At the time of Closing, all property agreed to be sold hereunder shall be delivered to Buyer at Closing, and shall be delivered to Buyer in the same condition as at the close of business on July 1, 2000, except for ordinary use and wear thereof, changes occurring in the ordinary course of business between July 1, 2000, and the Date of Closing, and damage or loss from causes beyond the reasonable power and control of Seller; provided, however, that if at the time of Closing the machinery, equipment, and other tangible property to be sold hereunder shall have suffered loss or damage on account of fire, flood, accident, act of war, civil commotion, or any other cause or event beyond the reasonable power and control of Seller (whether or not similar to the foregoing), to an extent that substantially affects the value of the property to be sold hereunder, Buyer shall have the right at its election to complete the purchase, in which event it shall be entitled to all insurance proceeds (excluding use and occupancy insurance proceeds) collectible by reason of such loss or damage or, if it does not so elect, it shall have the right, which shall be in lieu of any other right or remedy whatsoever, to terminate this Agreement.  In the latter event all parties shall be released from liability hereunder.  If such loss or damage does not substantially affect the value of such property, Buyer shall complete the sale but shall be entitled to all insurance proceeds (excluding use and occupancy insurance proceeds) collectible by reason of such loss or damage.  In any case where Buyer shall become entitled to insurance proceeds by reason of loss or damage to assets agreed to be sold hereunder as above provided, the purchase price of the Assets so lost or damaged shall not be reduced because of such loss or damage.  Loss or damage shall be considered to affect substantially the value of said property within the meaning of this paragraph if the book value of the Assets so lost or damaged exceeds ten per cent in book value of all such tangible Assets.           If the Seller is unable to complete the sale hereunder in accordance with its terms for any reason beyond the Seller's power and control, the Buyer may elect to accept as full performance such partial performance as Seller can make.  If the Buyer rejects the Seller's partial performance, the Buyer's sole and exclusive remedy shall be to terminate this Agreement and Seller shall promptly return all earnest money to Buyer upon such termination.  In the latter event all parties shall be released from all liability hereunder. ARTICLE 5 REPRESENTATIONS AND WARRANTIES           5.1     Buyer's Representations and Warranties.  Buyer represents and warrants to Seller that:             a.       Organization. Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Minnesota and Buyer has full corporate power and authority to execute and deliver the Transaction Documents, to consummate the Transactions and to perform all of its obligations under the Transaction Documents. Buyer has obtained all corporate approvals necessary to consummate the Transactions and authorize the execution, delivery and performance of the Transaction Documents.           b.       Corporate Authority. When executed by Buyer, each of the Transaction Documents shall be duly and validly executed and delivered by Buyer. Each of the Transaction Documents, when executed by Buyer, shall constitute a valid and binding agreement of Buyer enforceable against Buyer in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to creditors' rights generally and by principles of equity.           c.       Funds. On the Closing Date, Buyer shall have sufficient funds available to pay the Purchase Price and to consummate the Transactions.           5.2     Seller's Representations and Warranties.  Seller represents and warrants to Buyer that:           a.       Organization.  Seller is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Minnesota and has full power and authority to execute and deliver the Transaction Documents.           b.       Authorization, Execution and Delivery.  When executed by Seller each of the Transaction Documents shall be duly and validly executed and delivered by Seller.  Each of the Transaction Documents, when executed by Seller, shall constitute a valid, legal, and binding agreement by Seller enforceable against Seller in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to creditors' rights generally and by principles of equity.           c.       Title to Assets.  Except as shown on Schedule 5.2c., Seller has good and marketable title to all Assets listed or described in Article 1, some of which are more specifically described in Schedules 1.1 through 1.7, and which are to be sold or delivered to Buyer pursuant to this Agreement, free and clear of all mortgages, liens, pledges, charges, or encumbrances of any nature whatsoever.  Seller has no other assets similar to those listed on Schedules 1.1 through 1.7 that would be useful to the ISP Business or usable in the operation of the ISP Business.           d.       Litigation and Claims.  Except as described on Schedule 5.2d., there are no (a) legal, administrative, arbitration, or other proceedings pending against Seller that will adversely affect the Assets sold herein by the Seller to the Buyer.  To the best knowledge of the Stockholders of Seller, Seller has substantially complied with and is not in default in any material respect under any laws, ordinances, requirements, engineering standards, regulations, or orders applicable to the ISP Business, including without limitation, all applicable safety and pollution, laws or regulations.           e.       Tax Matters.  As of the Closing Date there will be no liens for federal, state or local taxes upon the Assets.  All taxes of any kind whatsoever due and payable by the Seller with respect to the Assets through the Closing Date will have been paid in full.  There are no liens for federal, state or local taxes upon the Assets, except for statutory liens for taxes or assessments not yet delinquent or the validity of which is being contested in good faith by appropriate proceedings.                     Seller has filed, or will cause to be filed, all federal, state and local tax returns and reports of any kind (including, without limitation, income, franchise, sales, use, excise, employment and real and personal property) which Seller is obligated to file with respect to the Assets for all periods up to and including the Closing Date and shall pay all taxes due on such returns prorated as of the Closing Date based on the current year's valuation and mill levies, which proration shall be final and conclusive.           f.        Creditors.  Attached to this Agreement as Schedule 5.2f  is a true and correct list of all creditors of Seller affecting the ISP Business, including the names, addresses, and amounts owed as of August 31, 2000, and any collateral or security applicable to the indebtedness owed to each of these creditors.  As of the date hereof, and as of the Date of Closing, Seller had and shall not have any liability of any nature affecting the Assets, whether absolute, accrued, or contingent, and whether due or to become due that are not reflected on Schedule 5.2f, and Seller does not know of any basis for the assertion against it of any such liability.           g.       Equipment in Good Operating Condition.  All Assets listed on Schedule 1.1 are in good operating condition and repair and will continue to be in good operating condition and repair as of the Closing.  Seller has not received a citation to the effect that these Assets do not comply with any applicable governmental law or regulation.           h.       No Adverse Conditions.  There are no adverse conditions or circumstances that may interfere with Buyer’s use and enjoyment of or opportunity to resell or encumber any of the Assets of Seller to be purchased by this Agreement or that might otherwise impede Buyer’s ability to use these Assets or to conduct the ISP Business using these Assets.           i.        Operable Network.  The assets described in Sections 1.1 through 1.7, to be delivered to Buyer at the Closing, comprise all tangible and intangible assets, of any description, required to operate the ISP Business following closing, and the ISP network so transferred by Seller is capable of supporting all customers included in the ISP Business.           j.        No Omissions or Misrepresentations.  No representation, warranty, or statement of Seller or Stockholders omits or will omit to state any material fact necessary to make each representation or warranty or statement in this Agreement accurate and not misleading in any material respect.   ARTICLE 6 COVENANTS           6.1     Covenants of Buyer.  Buyer hereby covenants and agrees that from the execution date hereof to the Closing Date:           a.       Continued Efforts.  Buyer will use its continual best efforts to: (I) cause to be fulfilled and satisfied all of the conditions to the Closing to be performed or satisfied by Buyer; (ii) cause to be performed all of the matters required of Buyer at the Closing; and (iii) take such steps and do all such acts as may be necessary to make all of its warranties and representations true and correct as of the Closing Date with the same effect as if the same had been made, and this Agreement had been dated, as of the Closing Date.           6.2     Covenants of Seller.  Seller hereby covenants and agrees that from the execution date hereof to the Closing Date:           a.       Continued Efforts.  Seller will use its continual best efforts to:  (i) cause to be fulfilled and satisfied all of the conditions to the Closing to be performed or satisfied by Seller; (ii) cause to be performed all of the matters required of Seller at the Closing.           b.       Maintenance of Business.  From the date hereof and until the time of Closing, Seller shall continue to operate and maintain its business in substantially the same manner as it is presently carried out.  Seller shall maintain its books and records in the normal and usual manner.  Seller shall keep the Assets, taken as a whole, in a normal state of repair and operating efficiency to enable the Buyer to operate the ISP Business following Closing in the same manner as it is currently being conducted.           c.       Right of Inspection.  Buyer may, prior to Closing, make or cause to be made such investigation of the ISP Business and Assets of Seller to be sold by this Agreement and of Seller’s financial and legal condition as respect Seller’s sale of the Assets as  Buyer deems necessary or advisable to familiarize itself with the ISP Business and Assets.  Seller will permit Buyer and its authorized representatives, to examine Seller’s premises and the books and records with respect to the ISP Business at reasonable hours, and Seller’s officers will furnish Buyer with such other information with respect to the ISP Business and Assets to be purchased by this Agreement as Buyer shall from time to time request.  No investigation by Buyer shall affect the representations and warranties of Seller or the Stockholders, and each such representation and warranty shall survive any such investigation.             d.       Maintenance of Assets.  Seller will maintain all the Assets to be sold pursuant to this Agreement in customary repair, order, and condition, reasonable wear and use, and damage by fire or unavoidable casualty excepted.           e.       Corporate Existence.  Pending the Closing, Seller will maintain its corporate existence and powers and will not dissolve and liquidate.           f.        Payment of Taxes.  Except for taxes contested in good faith, Seller will pay all ad valorem and other taxes and similar governmental charges levied against it or upon its properties and business as they become due.           g.       Disposition of Assets.  Except pursuant to the terms of any contract executed on or before the date of this Agreement and made known to Buyer, or upon the direction of Buyer, Seller will refrain from disposing of or encumbering any of its Assets other than in the ordinary course of its business, and it will not enter into or assume any obligation with respect to any contract, agreement, lease, license, or commitment except in the ordinary course of business or as contemplated by this Agreement prior to Closing.           h.       No Breach of Existing Agreements.  Seller will not knowingly do any act or omit to do any act that will cause a breach of any contract, agreement, obligation, lease, license or commitment prior to Closing.           I.        Notification of Buyer.  Seller will promptly notify Buyer in writing of any threatened lawsuit, claim, or any adverse change or any projected or threatened adverse change in its financial position.           j.        Cancellation of Insurance.  Seller will not change or cancel any insurance policy except in the ordinary course of business that would affect the nature or amount of existing insurance coverage.           k.       Consent of Creditors.  Seller and Stockholders will exercise their best efforts to obtain any and all necessary consents of secured creditors  with respect to the transaction contemplated by this Agreement.           l.        Full Cooperation.  Seller and Stockholders will fully cooperate with Buyer and its counsel and accountants in connection with any steps required to be taken under this Agreement.  Seller will instruct its accountants, agents, and employees to allow Buyer and its representatives full access to any and all work papers and to confer with any and all persons in connection with Buyer’s investigation of Seller and the ISP Business.             6.3     Mutual Covenants.           a.       Confidentiality.  Each party to this Agreement agrees to hold all information, whether received before or after entering into this Agreement, in confidence (the "Confidential Information") until the Closing Date, and agrees that until then each party will use the same solely for the purposes of this Agreement.  Each party agrees to make no more copies of such Confidential Information than is reasonably necessary for the purposes, consistent with this Agreement, for which it will be used.  Each party agrees that it will not make disclosure of any such Confidential Information received from the other party to anyone except as specifically permitted by this Agreement and as required by law.  Each party may disclose Confidential Information to its employees to whom disclosure is necessary for the purposes set forth above, provided that the disclosing party shall notify each such employee that disclosure is made in confidence and instruct such employees that such Confidential Information shall be kept in confidence by such employee in accordance with this Agreement.  Furthermore, each party may disclose such Confidential Information to consultants and attorneys engaged by such party, to partners and prospective partners, and to lenders, but only pursuant to a written confidentiality agreement with such consultants and attorneys, partners, prospective partners, and lenders, except that according to such confidentiality agreement no further disclosure of the Confidential Information shall be permitted.  Each party also agrees that it will make requests for Confidential Information of the other only if necessary to accomplish the purposes set forth in this Agreement.  The obligations set forth herein shall be satisfied by each party through the exercise of the same degree of care used to protect its own information of like importance.           If the Transactions are not consummated for any reason, each party agrees to return to the other party all such Confidential Information, including all copies thereof, immediately on request.  The obligations arising under this section shall survive any termination or abandonment of this Agreement.           b.       Cooperation.  Each party covenants to use all reasonable efforts, commencing promptly on the execution and delivery of this Agreement, to take, or cause to be taken in good faith, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations, expeditiously and practicably to consummate and make effective the Transactions, including, but not limited to, using its reasonable efforts to obtain all necessary actions, waivers, consents and approvals from third parties or governmental or regulatory bodies. ARTICLE 7 INDEMNIFICATION           7.1     Indemnification of Buyer.  Seller shall, from and after the Closing, indemnify and save Buyer harmless from and against any and all costs, liability, or expense, including reasonable attorneys’ fees, arising out of (a) any breach of warranty, covenant, agreement, or representation made by Seller or Stockholders in this Agreement; (b) any nonfulfillment of any agreement of Seller or Stockholders under this Agreement or any misrepresentation in or omission from this Agreement or from any certificates or other instrument furnished or to be furnished to Buyer; and (c) all actions, suits, proceedings, demands, assessments, judgments, costs, and expenses incident to any of the foregoing.   Stockholders agree that if Seller receives any claim from, or is named in any suit by, a creditor of Seller, Stockholders will contact the creditor in writing advising the creditor of the fact that Buyer has not assumed any liabilities or obligations of Seller or will file an answer in the lawsuit on behalf of Buyer.  Seller shall give written notice as soon as practicable to Buyer of the occurrence or nonoccurrence of any event or the discovery by Seller of any circumstance against which Seller may be called upon to indemnify Buyer under this Agreement.             7.2     Indemnification of Seller.  Buyer shall, from and after the Closing, indemnify and save Seller harmless from and against any and all costs, liability, or expense, including reasonable attorneys’ fees, arising out of (a) any breach of warranty, covenant, agreement, or representation made by Buyer in this Agreement; (b) any nonfulfillment of any agreement of Buyer under this Agreement or any misrepresentation in or omission from this Agreement or from any certificates or other instrument furnished or to be furnished to Seller; and (c) all actions, suits, proceedings, demands, assessments, judgments, costs, and expenses incident to any of the foregoing.   Buyer agrees that if Buyer receives any claim from, or is named in any suit by, a creditor of Seller, Buyer will contact the creditor in writing advising the creditor of the fact that Buyer has not assumed any liabilities or obligations of Seller or will file an answer in the lawsuit on behalf of Buyer.  Buyer shall give written notice as soon as practicable to Seller and Stockholders of the occurrence or nonoccurrence of any event or the discovery by Buyer of any circumstance against which Buyer may be called upon to indemnify Seller under this Agreement. ARTICLE 8 TERMINATION           8.1     Termination By Buyer. If any condition precedent to Buyer's obligation to effect the Closing, as set forth in Section 4.1, is not satisfied and such condition is not waived, if waivable, by Buyer on or prior to the Closing Date, Buyer shall not be obligated to effect the Closing and may terminate this Agreement.           8.2     Termination By Seller.  If any condition precedent to Seller's obligation to effect the Closing, as set forth in Section 4.2, is not satisfied and such condition is not waived, if waivable, by Seller on or prior to the Closing Date, Seller shall not be obligated to effect the Closing and may terminate this Agreement.           8.3     Effect of Termination.  In the event of the termination of this Agreement pursuant to Section 8.1 or 8.2, this Agreement shall thereafter become void, without further liability on the part of any party hereto or its respective shareholders, directors, officers or employees in respect thereof, except that nothing herein shall relieve any party from liability for any breach of this Agreement prior to termination under Section 8.1 or 8.2. ARTICLE 9 POST CLOSING MATTERS           9.1     Seller’s Name Not Sold:  Seller has retained the use of its name, “Internet Connections” and has not sold that name to Buyer.           9.2     Public Announcements; Notice to Trade and Accounts.  No publication and/or press release of any nature shall be issued pertaining to this Agreement or the transactions contemplated hereby without the mutual consent of Seller and Buyer, or except as may be required by law.  Each party agrees that from and after the Closing for a reasonable period, it will cooperate and cause its employees to cooperate with the other in making such permitted announcements to the trade pursuant to this Agreement, as the other reasonably may request with such mutual consent.           9.3     Offers of Employment.   Seller agrees to make available to Buyer the employees listed on Schedule 9.3, now employed by Seller in the ISP Business, for the purpose of interviewing the same for employment by Buyer.           9.4     Preferred Vendor Status   In conjunction with the sale and transfer of the ISP Business to Buyer, and for a period of two years following the Date of Closing, Buyer and Seller agree to grant to the other Preferred Vendor status.  Buyer and Seller agree that a “Preferred Vendor”  is a vendor to whom efforts are made to give the first opportunity to fill outsourcing needs and to whom efforts to refer business is made, provided that such vendor maintains high quality service to its customers.           9.5     Website Service Contract In conjunction with the sale and transfer of the  ISP Business to Buyer, Buyer agrees to execute and deliver to the Seller at the Closing a three-year website service contract, substantially in the same form as Exhibit 9.5 attached hereto.           9.6     Seller’s Non-Compete Agreement.  For a period of two years from the Closing, Seller agrees to be bound by the provisions of the Non-Competition Agreement, a true and correct copy of which is attached hereto as Exhibit 9.6a.  Seller further agrees to deliver and cause to be delivered to the Closing Non-Competition Agreements, duly executed by its principals and stockholders Yvonne Karsten, also known as Yvonne Cariveau, Dale Karsten, John Pfeifer, George and Elizabeth Pfeifer, Erik Green, Michael and Karen Green, Daniel Green, Matt Green, Joel Green, Cynthia Huffman, Donna Brown, Gordon and Yvonne Cariveau, and Dale Flo, substantially in the same form as Exhibit 9.6b, attached hereto.           9.7     Buyer’s Non-Compete Agreement.  For a period of two years from the Closing, Buyer agrees to be bound by the provisions of the Non-Competition Agreement, a true and correct copy of which is attached hereto as Exhibit 9.7.           9.8     Billing Services.      In conjunction with the sale and transfer of the ISP Business to Buyer, and at no additional cost to Buyer, Seller agrees to provide billing services to Buyer for the ISP Business for two complete billing cycles following the time of Closing.           9.9     Transitional Support Services.     In conjunction with the sale and transfer of the ISP Business to Buyer, and at no additional cost to Buyer, Seller agrees to provide transitional support services to Buyer in accordance with the provisions of the Memorandum of Understanding Regarding Transitional Support attached as Exhibit 9.9 hereto. ARTICLE 10 ARBITRATION           10.1   Arbitrability.  All claims by Buyer or Seller by one against the other arising out of or related in any manner to this Agreement or Assets or the Transactions shall be resolved by arbitration, as prescribed herein.           10.2   Rules.  A single arbitrator engaged in the practice of law and who has at least eight (8) years of litigation experience shall conduct the arbitration under the then current commercial arbitration rules of the American Arbitration Association ("AAA"), unless otherwise provided herein.  The arbitrator shall be selected in accordance with AAA procedures.  The arbitration shall be conducted in Mankato, Minnesota.           10.3   Discovery; Damages; Expenses.  The Buyer and Seller shall allow and participate in discovery in accordance with the Federal Rules of Civil Procedure.  The arbitrator shall rule on unresolved discovery disputes.  The arbitrator shall only have authority to award contractual damages and shall not have the authority to award punitive or exemplary  damages, other non-compensatory damages or any other form of relief.  Each party shall bear its own costs and attorneys' fees.  The arbitrator's decision and award shall be final and binding, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.           10.4   Judicial or Administrative Action.  If any party files a judicial or administrative action asserting claims subject to arbitration, as prescribed herein, and the other party successfully stays such action and/or compels arbitration of said claims, the party filing said action shall pay the other party's costs and expenses incurred in seeking such stay and/or compelling arbitration, including reasonable attorneys' fees. ARTICLE 11 GENERAL           11.1   Time of the Essence.  Time is of the essence with respect to each and every term, condition, obligation and provision hereof, and failure to timely perform or remedy any of the terms, conditions, obligations or provisions hereof by either party shall constitute a material breach of and a noncurable default under this Agreement by the party so failing to perform (but which may be waived by the nonbreaching party).           11.2   Survival of Representations and Warranties.  The representations and warranties made herein shall not survive beyond the Closing Date or a termination of this Agreement, and shall not merge into any document.           11.3   Notices.  All notices hereunder will be in writing and served by certified mail, return receipt requested.  Notice shall be deemed to have been duly given on the date mailed by the notifying party.  Notice shall be sent as follows:           If to Seller:   ATTN: Yvonne Karsten, President   Internet Connections, Inc.   Suite 210   209 South Second Street   Mankato, MN 56001             with a copy (which shall not constitute notice) to:       ATTN: Andrew Willaert, Esq.   Gislason & Hunter, LLP   Suite 250   424 North Riverfront Drive   Mankato, MN 56001             If to Buyer:   Hickory Tech Corporation   Office of the Chief Financial Officer   David A. Christensen   221 East Hickory Street   Mankato, MN 56001             with a copy (which shall not constitute notice) to:   ATTN:  Michael C. Karp, Esq.   Blethen Gage & Krause, PLLP   127 South Second Street   P.O. Box 3049   Mankato, MN  56001             11.4   Waivers.  No failure of a party to enforce a provision of this Agreement will be construed as a general or a specific waiver of that provision, or of a party's right to enforce that provision, or of a party's right to enforce any other provision of this Agreement.  No waiver of any breach of any covenant or other provision herein contained shall be deemed to be a waiver of any preceding or succeeding breach, or of any other covenant or provision herein contained.  No extension of time for performance of any obligation or act shall be deemed to be an extension of the time for performance of any other obligation or act.           11.5   Headings; Capitalized Terms.  The subject headings of the sections and subsections of this Agreement are included only for purposes of convenience, and shall not affect the construction or interpretation of any of its provisions.  All capitalized terms shall have the meaning attributed to them in this Agreement.           11.6   Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and when each of the parties hereto has executed and delivered to the other party one or more counterparts, this Agreement shall be binding and effective, even though no single counterpart has been executed by both of the parties.           11.7   Successors and Assigns.  This Agreement shall be binding on and shall inure to the benefit of the parties hereto and their permitted successors and assigns; provided, however, that no assignment shall be permitted except as provided for in this Agreement.           11.8   Assignment.  The rights and obligations of the parties to this Agreement or any interest in this Agreement shall not be assigned, transferred, hypothecated, pledged or otherwise disposed of without the prior written consent of the non-assigning party, which consent may be withheld in such party's sole discretion.           11.9   Additional Instruments and Assistance.  Each party hereto shall from time to time execute and deliver such further instruments, provide additional information and render such further assistance as the other party or its counsel may reasonably request in order to complete and perfect the Transactions.           11.10 Governing Law.  This Agreement shall be construed in accordance with the laws of the State of Minnesota.           11.11 Severability.  If any term or provision of this Agreement is, to any extent, held or deemed to be invalid or unenforceable when applied to any person or circumstance, the remaining provisions of this Agreement and the enforcement of such provision to other persons or circumstances, or to another extent, shall not be affected thereby, and each provision of this Agreement shall be enforced to the fullest extent allowed by law.           11.12 Amendments.  This Agreement may not be modified, changed, supplemented or terminated, nor may any obligations hereunder be waived by a party, except by written instrument signed by the party to be charged or by its agent duly authorized in writing or as otherwise expressly permitted herein.           11.13 No Construction Against the Drafting Party.  Each party hereto acknowledges the such party and its counsel have reviewed this Agreement and participated in its drafting.  This Agreement shall not be construed against either party for having prepared it.           11.14 Integration.  This Agreement, including all schedules and exhibits attached hereto, constitutes the entire agreement between the parties, and there are not agreements, understandings, warranties or representations between the parties except as set forth or noted herein.  This Agreement is not made for the benefit of any person, firm, corporation or association other than the parties hereto.  The parties do not intend to confer any benefit hereunder on any person, firm or corporation other than the parties hereto.           IN WITNESS WHEREOF, the parties to this Agreement have executed it as of the date first above written. BUYER:   SELLER:       Hickory Tech Corporation   a Minnesota Corporation   Internet Connections, Inc. a Minnesota Corporation         By: --------------------------------------------------------------------------------   By: --------------------------------------------------------------------------------   Robert D. Alton Its: Chief Executive Officer   Yvonne Karsten Its: President       By: --------------------------------------------------------------------------------   By: --------------------------------------------------------------------------------   David A. Christensen Its: Chief Financial Officer   Its: Secretary-Treasurer       Date: --------------------------------------------------------------------------------   Date: --------------------------------------------------------------------------------           STOCKHOLDERS:           --------------------------------------------------------------------------------     Yvonne Karsten, a/k/a Yvonne Cariveau           --------------------------------------------------------------------------------     Dale Karsten           --------------------------------------------------------------------------------     John Pfeifer           --------------------------------------------------------------------------------     George Pfeifer           --------------------------------------------------------------------------------     Elizabeth Pfeifer           --------------------------------------------------------------------------------     Michael Green           --------------------------------------------------------------------------------     Karen Green     Date: --------------------------------------------------------------------------------         Index To Exhibits and Schedules   Exhibit 2.3 Earnest Money Escrow Agreement Exhibit 3.2b Bill of Sale Exhibit 3.2c UCC-3 Termination Statements Exhibit 3.2g Opinion of Counsel Exhibit 9.5 Website Service Contract Exhibit 9.6 Seller Noncompetition and Confidentiality Agreement Exhibit 9.6b Investor  Noncompetition and Confidentiality Agreement Exhibit 9.7 Buyer  Noncompetition and Confidentiality Agreement Exhibit 9.9 Memorandum Regarding Seller’s Transitional Support     Schedule 1.0 Assets Schedule 1.01 Excluded Assets Schedule 1.1 Equipment, Tools &supplies Schedule 1.2 Software Schedule 1.3 Customers Schedule 1.4 Contracts Schedule 1.5 Domain Names Schedule 1.6 Intangibles Schedule 1.7 Accounts Receivable Schedule 1.8 Permitted Encumbrances Schedule 2.4 Purchase Price Allocation Schedule 5.2c Exceptions to Good Title Schedule 5.2d Litigation Schedule 5.2f Creditors Schedule 9.3 Employees    

-------------------------------------------------------------------------------- Exhibit 10.3 EMPLOYMENT AGREEMENT 1. PARTIES: The Parties to this Employment Agreement (hereafter referred to as the “Agreement”) are DR. RONALD D. SUGAR (hereafter referred to as “Executive”) and NORTHROP GRUMMAN CORPORATION (hereafter referred to as “Northrop Grumman” or “the Company”).       2. EMPLOYMENT: For the past several months, Executive has been employed by Northrop Grumman as Corporate Vice President and President of Litton Industries, Inc. (“Litton”), a wholly owned subsidiary of Northrop Grumman. Executive’s employment has been governed by the terms of several employment agreements, including but not limited to his Change of Control Employment Agreement and letter agreements dated June 21, 2000 and December 21, 2000 (hereafter collectively referred to as the “Litton Agreements”). Northrop Grumman and Executive now wish to terminate the Litton Agreements and to enter into new employment terms and conditions as set forth in this Agreement in connection with Executive’s election to the position of President and Chief Operating Officer of Northrop Grumman on September 19, 2001.       3. TERM: The term of this Agreement shall commence as of September 19, 2001 (the “Effective Date”) and shall end three years thereafter, unless sooner terminated as hereinafter provided.           -------------------------------------------------------------------------------- 4. POSITION AND DUTIES: Executive shall serve as President and Chief Operating Officer (or such other higher office to which Executive is elected) and shall be an elected officer of the Company. He will also continue as a member of the Company’s Board of Directors (the “Board”). Executive shall, during the term hereof:         A. have such duties and responsibilities as the Chief Executive Officer (“CEO”) of the Company shall designate that are consistent with the Executive’s position as President and Chief Operating Officer of the Company. The Executive shall perform such duties and responsibilities in accordance with the practices and policies of the Company as are in effect from time to time. While employed as President and Chief Operating Officer, the Executive shall report exclusively to the CEO.         B. devote all of his business time (excluding periods of vacations and absences made necessary because of illness or other traditionally approved leave purposes), energy and skill in the performance of his duties with the Company; provided, however, that the foregoing will not prevent the Executive from (i) participating in charitable, civic, educational, professional, community or industry affairs or serving on the boards of directors or advisory boards of other companies, and (ii) managing his and his family’s personal investments. -------------------------------------------------------------------------------- 5. COMPENSATION AND BENEFITS: During the term of this Agreement, the following terms shall apply:         A. Base Salary: Executive’s base salary during the term of this Agreement shall be no less than $750,000 per year, which amount shall be subject to periodic increases, but not decreases, in accordance with the Company’s normal salary review process.         B. ICP Bonus: Commencing on the Effective Date, Executive shall participate in the Incentive Compensation Plan (“ICP”), a bonus plan for elected officers of the Company. His target bonus under this plan shall be 70%. He shall receive a pro-rata ICP bonus for the period of time from the Effective Date through December 31, 2001. This pro-rata ICP bonus shall be paid at the time that other elected officers receive their ICP bonuses in 2002.         C. Pro-Rata Bonus: For the period April 3, 2001 to the Effective Date, Executive shall receive a pro-rata bonus. The pro-rata calculation shall be made by using a fraction, the numerator of which is the number of days since April 3, 2001 to the Effective Date, and the denominator of which is 365, multiplied times $775,000, for a total pro-rata bonus of $358,836. This pro-rata bonus shall be paid at the time that elected officers receive their ICP bonuses in 2002, but no later than March 31, 2002. Executive --------------------------------------------------------------------------------   acknowledges that payment of this bonus, combined with other bonuses previously paid to him, fully satisfies all requirements in his Litton Agreements to pay him bonuses for his services through the Effective Date.       D. Benefits: Executive is currently covered by benefit plans of Litton. Executive shall continue to be covered by his current Litton pension plans (including the Litton Industries Inc. Retirement Plan B, the Litton Industries Inc. Restoration Plan, the Litton Financial Security and Savings Program and the Litton Industries Inc. Supplemental Executive Retirement Plan)(the “Litton pension plans”) as well as various Litton welfare plans through December 31, 2001. The Company acknowledges that Executive is fully vested in the Litton Industries Inc. Restoration Plan and the Litton Industries Inc. Supplemental Executive Retirement Plan by virtue of his June 21, 2000 letter agreement. Effective January 1, 2002, Executive shall no longer accrue benefits (except with respect to vesting service in the qualified plan) under the Litton pension plans nor participate in the Litton welfare plans, but rather shall participate in the Northrop Grumman welfare plans and commence benefit accruals under the Northrop Grumman pension plans in which Northrop Grumman elected officers who are direct reports to the Company’s CEO participate. These plans include, but are not limited to, the Northrop Grumman Retirement Plan, the Northrop Grumman Savings and Investment Plan, and three non-qualified --------------------------------------------------------------------------------     supplemental executive retirement plans known as “ERISA 1”, “ERISA 2” and the “CPC SERP.” As of the Effective Date, Executive shall be credited with five years of vesting service (but not benefit service) under each of the three non-qualified supplemental executive retirement plans.       E. Stock and Stock Options: As of the Effective Date, Executive has been awarded a grant of 30,000 non-qualified stock options and 10,000 Restricted Performance Stock Rights (“RPSRs”). These options and RPSRs shall be subject to the terms and conditions of the Company’s 2001 Long Term Incentive Stock Plan (“LTISP”), the Guide to Administration for the LTISP (“Guide”) and the grant certificates provided to Executive. Executive shall also be eligible to receive future grants under the LTISP in accordance with the Company’s normal practice of awarding such grants to elected officers.       6. PERQUISITES: Executive shall continue to be eligible for his current Litton perquisites through December 31, 2001. Effective January 1, 2002,Executive shall be eligible for the perquisites provided to Company elected officers who are direct reports to the Company’s CEO. These perquisites, which are periodically modified by the Company, are listed on Exhibit A of this Agreement. Notwithstanding Exhibit A, Executive’s Financial Planning and Income Tax Preparation Benefit shall be subject to a maximum of $15,000 (not $9,000) per year. In addition, Executive shall be entitled to four weeks vacation per year. -------------------------------------------------------------------------------- 7. RETIREE MEDICAL BENEFIT: Executive shall be eligible to participate in the Special Officer Retiree Medical Program on the same terms and conditions as other elected officers. That program currently provides lifetime medical benefits to elected officers who retire and to their spouses, if the Executive has at least 5 years of service as an elected officer. The program further provides that it may be modified or terminated by the Company at any time. Executive’s service as an elected officer commenced April 3, 2001.       In the event that the Executive is not eligible to receive medical benefits under the Special Officer Retiree Medical Program, the Company will make the benefits otherwise provided under such program available to Executive and his spouse (during the lifetime of each) provided that the Executive (or, after his death, his spouse) reimburses the Company for the full premium for such coverage.       8. SPECIAL AGREEMENT: As of the Effective Date, Executive shall be provided with a March 2000 Special Agreement (“Special Agreement”) with the Company providing the same protection for Executive in the event of a Change in Control of the Company as is provided to other elected officers.       9. TERMINATION OF LITTON AGREEMENTS: Executive hereby waives and relinquishes any and all rights and benefits he may have under his Litton Agreements, and he agrees not to make any claim, now or in the future, for --------------------------------------------------------------------------------   benefits under the Litton Agreements. Executive acknowledges that he has been paid all sums due under the terms of those Agreements with the exception of the pro-rata bonus referenced in Section 5.C. of this Agreement. Executive and Northrop Grumman hereby agree to terminate the Litton Agreements in their entirety as of the Effective Date; provided, however, that this termination shall not affect Executive’s rights to any pension benefits in which he is vested by virtue of the Litton Agreements.       10. SPECIAL RETENTION BENEFITS: As of the Effective Date, Executive has been awarded a grant of 66,480 Restricted Stock Rights (“RSRs”). One third of these RSRs shall vest on September 18, 2002, one third shall vest on September 18, 2003, and the remaining one third shall vest on September 18, 2004; provided, however, that in the event Executive’s employment is terminated for any of the following reasons, all remaining RSRs shall vest and all shares not yet issued pursuant to the grant certificate shall be issued as of the date of such termination: (i) the death of Executive; or (ii) Executive’s “Disability” (as hereinafter defined); or (iii) termination by Northrop Grumman without “Cause” (as hereinafter defined); or (iv) termination by Executive for “Good Reason” (as hereinafter defined); provided further, that the Company shall have the right to pay equivalent cash value in lieu of issuing all or a portion of the shares of stock required by this Section 10. Except as otherwise modified by this Section 10, the RSR grant shall be governed by the terms of the LTISP, the Guide, and the grant certificate. -------------------------------------------------------------------------------- 11. TERMINATION OF EMPLOYMENT BY THE COMPANY:         A. The Company shall have the right to terminate Executive’s employment at any time, with or without Cause, upon giving at least 10 day’s advance written notice to the Executive of the date when such termination shall become effective. If the Company terminates Executive’s employment without “Cause” (as that term is defined below), then Executive shall receive, within 30 days after he signs a release (substantially in the form of Exhibit C hereto) which is not revoked, the Accrued Obligations (as defined below) (with the exception of certain benefits under Accrued Obligations, which will be paid as soon as administratively practicable), and all of the Special Severance Benefits set forth in Sections 15.A and 15.C of this Agreement, and the Benefit Continuation set forth in Section 15.B shall commence as of the date of such termination.           For purposes of this Agreement, “Cause” shall mean the occurrence of either or both of the following: (i) the willful misconduct by the Executive with regard to the Company that is significantly injurious to the Company, provided, however, that no act or failure to act on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in the best interests of the Company; or (ii) the conviction of the Executive of (or the pleading by the Executive of nolo contendere to) --------------------------------------------------------------------------------   any felony (other than traffic related offenses or as a result of vicarious liability).       B. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless the provisions of this paragraph B are complied with. Executive shall be given written notice by the CEO of the intention to terminate him for Cause, and he shall then be entitled to a meeting before the Board to present his position, provided he requests in writing such a meeting within ten calendar days of his receipt of the written notice from the CEO of the intention to terminate him. Following such a meeting, if Executive is then furnished written notice by the Board confirming that, in its judgment, grounds for Cause on the basis of the original notice exist, Executive shall thereupon be terminated for Cause, which determination shall be subject to review by the arbitrator on a de novo basis.       C. In the event that Executive is terminated for “Cause,” Executive will be entitled to receive only (w) any unpaid base salary through the date of termination and any accrued vacation; (x) any unpaid bonus for services rendered during the calendar year prior to the calendar year in which the termination occurs; (y) reimbursement for any unreimbursed expenses incurred through the date of termination; and (z) all other payments, benefits or fringe benefits to which the Executive may be entitled subject --------------------------------------------------------------------------------     to, and in accordance with, the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant (including, but not limited to, any then vested stock options, RPSRs or RSRs) (collectively, (w) through (z) are referred to as “Accrued Obligations”), and will not receive any of the Special Severance Benefits set forth in Section 15.       12. TERMINATION OF EMPLOYMENT BY DEATH OR DISABILITY OF EXECUTIVE:         A. Death: In the event that Executive dies during the term of this Agreement, this Agreement shall automatically terminate as of the date of death without further obligation on the part of the Company, except that the Company shall pay to Executive’s estate, within 30 days of death, the Accrued Obligations (with the exception of certain benefits under certain Accrued Obligations, which shall be paid as soon as administratively practicable), all of the Special Severance Benefits set forth in Sections 15.A and 15.C of this Agreement, and the Benefit Continuation set forth in Section 15.B shall apply to his eligible dependents commencing as of the date of death.         B. Disability: If the Executive’s employment terminates by reason of his Disability (as defined below) during the term of this Agreement, this --------------------------------------------------------------------------------     Agreement shall terminate without further obligation to Executive, except that the Company shall provide to Executive, within 30 days after he signs a release (substantially in the form of Exhibit C hereto) which is not revoked, the Accrued Obligations (with the exception of certain benefits under Accrued Obligations, which shall be paid as soon as administratively practicable), and all of the Special Severance Benefits set forth in Sections 15.A and 15.C of this Agreement, and the Benefit Continuation set forth in Section 15.B shall commence as of the date of such termination. For purposes of this Agreement, “Disability” shall be defined as the inability of the Executive to perform his material duties hereunder due to the same or a related physical or mental injury, infirmity or incapacity for 180 days in any 365-day period. The Company may terminate the Executive for a Disability as of the end of the aforementioned period or at any time thereafter during which the Disability continues upon 30 days prior written notice provided the Executive has not returned to full time employment prior to the end of such 30-day period.       13. TERMINATION OF EMPLOYMENT BY EXECUTIVE FOR GOOD REASON: Executive shall have the right to terminate his employment with Northrop Grumman for “Good Reason” as that term is defined below. If he terminates his employment for “Good Reason,” the Executive shall receive, within 30 days after he signs a release (substantially in the form of Exhibit C hereto) which is not revoked, the Accrued Obligations (with the exception of certain benefits under --------------------------------------------------------------------------------   Accrued Obligations which shall be paid as soon as administratively practicable), and all of the Special Severance Benefits set forth in Sections 15.A and 15.C of this Agreement, and the Benefit Continuation in Section 15.B shall commence as of the date of such termination. For purposes of this Agreement, “Good Reason” shall mean without the Executive’s express written consent, the occurrence of any one or more of the following:         A. failure of the Company to elect Executive to the position of CEO on or before March 1, 2003;         B. the election of a person other than Kent Kresa or Executive as CEO of the Company;         C. the election of a Company employee other than Kent Kresa or Executive as Chairman of the Board of Northrop Grumman (the election of a non-employee to be Chairman shall not be “Good Reason”);         D. any reduction or diminution in the Executive’s then titles or positions (including as a Director), a material reduction in the nature or status of the Executive’s then authorities, duties, and/or responsibilities (when such authorities, duties, and/or responsibilities are viewed in the aggregate), other than an insubstantial and inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by the Executive; --------------------------------------------------------------------------------     provided that Good Reason will be deemed to exist if the Executive’s reporting relationship is changed such that the Executive does not report to the Company’s CEO;         E. a reduction by the Company of the Executive’s base salary as in effect on the Effective Date, or as the same shall be increased from time to time;         F. any material failure by the Company to comply with any of the provisions of this Agreement, other than isolated and inadvertent failure(s) not occurring in bad faith and remedied by the Company promptly after receipt of notice thereof given by the Executive;         G. the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform the Company’s obligations under this Agreement, as contemplated in Section 19 herein;           Provided, however, that after April 30, 2003, Executive shall only be entitled to terminate for “Good Reason” for the reasons set forth in Paragraphs D, E, F and G of this Section 13.           Should Executive desire to terminate his employment for “Good Reason,” he shall first give at least 30 days prior written notice of his intent to so --------------------------------------------------------------------------------     terminate to the CEO of the Company, and give the Company an opportunity to cure the event giving rise to “Good Reason.”       14. TERMINATION OF EMPLOYMENT WITHOUT GOOD REASON: The Executive shall have the right to terminate his employment with Northrop Grumman at any time without Good Reason by giving written notice to the CEO at least thirty days in advance of such termination. In the event that Executive’s employment with the Company is terminated during the term of this Agreement by Executive without Good Reason, Executive shall not be entitled to any additional payments or benefits hereunder, other than Accrued Obligations.       15. SPECIAL SEVERANCE BENEFITS: In the event Executive’s employment terminates due to his death or Disability, or if he is terminated by Northrop Grumman without “Cause,” or if he terminates employment for “Good Reason,” then he shall be entitled to receive the following Special Severance Benefits, provided, however, that he first signs a release of claims in a form substantially similar to Exhibit C:         A. Salary and Bonus: A payment equal to the sum of (i) one times the Executive’s current annual base salary and (ii) the highest of any of the following: (x) Executive’s target bonus percentage under the ICP multiplied by his then current annual base salary; or (y) the last bonus paid to Executive under the ICP prior to his termination; or (z) $775,000, and --------------------------------------------------------------------------------     (iii) a pro-rata portion of the Executive’s target bonus under the ICP for the calendar year in which the Executive’s termination occurs (determined by multiplying such amount by a fraction, the numerator of which is the number of days during the calendar year in which the termination occurs, and the denominator of which is 365).         B. Benefit Continuation: Three years of continued coverage for Executive and his eligible dependents under the Company’s medical, dental, vision and life insurance plans and programs applicable to Executive at the time of his termination, on the same terms and conditions as apply to other elected officers during this three-year period.         C. Other Benefits: In addition to the benefits noted above, the following additional benefits shall be paid Executive: (i) a lump sum payment equal to three times the value of his annual car allowance; (ii) continuation of his then current financial planning benefits through the end of his third financial planning year; (iii) the income tax preparation reimbursement benefit for the year in which he terminates employment and for the following two full calendar years; and (iv) outplacement benefits provided through an outside provider selected by the Executive, at a cost not to exceed $50,000 in total. --------------------------------------------------------------------------------   The foregoing severance benefits shall be offset by any severance benefits Executive is entitled to receive under any other Company plan, program, practice or agreement.       16. GROSS-UP FOR SECTION 280G PURPOSES: In the event that the Executive becomes or has already become entitled to payments and/or benefits or any other amounts in the “nature of compensation” which would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), (including without limitation as a result of this Agreement, the Litton Agreements (including the Change in Control Employment Agreement) or any other plan, arrangement or agreement with the Company or any affiliate (including Litton), or from any person whose actions result in a change of ownership or effective control of the Company or Litton covered by Section 280G(b)(2) of the Code or any person affiliated with the Company or Litton or such person), the provisions of Exhibit B shall apply. For purposes of Exhibit B, the term “Change in Control” shall mean a change of ownership or effective control (as such terms area used in Section 280G and the proposed regulations thereunder) heretofore or hereafter of the Company or Litton.       17. NO MITIGATION; NO OFFSET: Except as set forth in this Agreement, the Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including without limitation, set-off, counterclaim, recoupment, --------------------------------------------------------------------------------   defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obliged 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, nor shall the amount of any payment thereunder be reduced by any compensation earned by the Executive as a result of employment by another employer.       18. TRADE SECRETS: In the course of performing his duties for his former employer Litton and for the Company, Executive will receive, and acknowledges that he has received, confidential information, including without limitation, information not available to competitors relating to the Company’s existing and contemplated financial plans, products, business plans, operating plans, research and development information, and customer information, all of which is hereinafter referred to as “Trade Secrets.” Executive agrees that he will not, either during his employment or subsequent to the termination of his employment with the Company, directly or indirectly disclose, publish or otherwise divulge any Northrop Grumman or Litton Trade Secrets to anyone outside the Company, or use such information in any manner which would adversely affect the business or business prospects of the Company; provided, however, that the foregoing shall not preclude Executive from complying with due legal process or governmental inquiry or from taking actions or making disclosures while employed by the Company in good faith performance of his duties and obligations hereunder. Executive further agrees that if, at the time of the termination of his employment --------------------------------------------------------------------------------   with the Company, he is in possession of any documents or other written or electronic materials constituting, containing or reflecting Trade Secrets, he will return and surrender all such documents and materials to the Company upon leaving its employ. The restrictions and protection provided for in this paragraph shall be in addition to any protection afforded to Trade Secrets by law or equity.       19. INVENTIONS: Executive agrees that all inventions, discoveries and improvements, and all new ideas for manufacturing and marketing products or services of the Company, which Executive has conceived during his prior employment with Litton or may conceive while employed by the Company, whether during or outside business hours, on the premises of the Company or elsewhere, alone or in collaboration with others, or which he has acquired or may acquire from others, whether or not the same can be patented or registered under patent, copyright, or trademark laws, shall be and become the sole and exclusive property of the Company. Executive agrees to promptly disclose and fully acquaint his management with any such inventions, discoveries, improvements and ideas which he has conceived, made or acquired, and shall, at the request of the Company, make a written disclosure of the same and execute such applications, assignments, and other written instruments as may reasonably be required to grant to the Company sole and exclusive right, title and interest thereto and therein and to enable the Company to obtain and maintain patent, copyright and trademark protection therefore. -------------------------------------------------------------------------------- 20. NON-SOLICITATION AND NON-DISPARAGEMENT:         A. For a period of one year following Executive’s termination of employment, Executive shall not, directly or indirectly, through aid, assistance or counsel, on his own behalf or on behalf of another person or entity (i) solicit or offer to hire any person who was, within a period of six months prior to Executive’s termination, employed by the Company, or (ii) by any means issue or communicate any public statement that may be critical or disparaging of the Company, its products, services, officers, directors or employees; provided the foregoing shall not apply to truthful statements made in compliance with legal process or governmental inquiry.         B. For a period of one year following Executive’s termination from employment, the Company shall not by any means issue or communicate any public statement that may be critical or disparaging of the Executive, provided the foregoing shall not apply to truthful statements made in compliance with legal process, governmental inquiry or as required by legal filing or disclosure requirements.       21. ASSIGNMENT: This Agreement is personal to Executive and shall not be assigned by him. However, this Agreement shall be binding upon any entity succeeding to all or substantially all of the assets or business of the Company, --------------------------------------------------------------------------------   whether by merger, consolidation, acquisition or otherwise and may not otherwise be assigned by the Company.       22. TAX WITHHOLDING: The Company shall be entitled to withhold from any amounts payable pursuant to this Agreement all taxes as legally shall be required (including without limitation United States federal taxes, and any other state, city or local taxes).       23. SAVINGS CLAUSE: If any provision under this Agreement or its application is adjudicated to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application.       24. ENTIRE AGREEMENT: This Agreement represents the complete agreement and understanding between Executive and the Company pertaining to the subject matters contained herein, and supersedes all prior agreements or understandings, written or oral, between the Parties with respect to such subject matters.       25. INDEMNIFICATION: The Company hereby covenants and agrees to indemnify the Executive and hold him harmless to the fullest extent permitted by law and under the By-laws of the Company against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including --------------------------------------------------------------------------------   attorney’s fees), losses, and damages resulting from the Executive’s good faith performance of his duties and obligations with the Company or with Litton (including service prior to the Effective Date hereof). The Company, within 30 days of presentation of invoices, shall advance to the Executive reimbursement of all legal fees and disbursements incurred by the Executive in connection with any potentially indemnifiable matter; provided, however, that in order to receive such advanced fees and disbursements, Executive must first sign an undertaking reasonably satisfactory to the Company that he will promptly repay the Company all advanced fees and disbursements in the event it is finally determined that Executive cannot be indemnified for the matter at issue under applicable law or Company By-laws; and provided further, that Executive shall consult with the Company prior to selecting his counsel and shall make a reasonable effort to select counsel reasonably acceptable to the Company.       26. LIABILITY INSURANCE: The Company shall cover the Executive under directors and officers liability insurance both during and, while potential liability exists (but no less than six years), after the term of this Agreement in the same amount and to the same extent, if any, as the Company covers its other officers and directors. -------------------------------------------------------------------------------- 27. ARBITRATION: Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator in the State of California (in the major city nearest Executive’s residence) in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association then in effect. The decision of the arbitrator will be final and binding upon the parties hereto. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The arbitrator may, but need not, award the prevailing party in any dispute (as determined by the arbitrator) its or his legal fees and expenses.       28. SURVIVAL OF CERTAIN PROVISIONS. The following provisions of this Agreement shall survive and continue to be in effect to the extent applicable following Executive’s termination of employment: Section 7 (retiree medical benefit); Section 10 (special retention benefits); Section 11 (termination of employment by the Company); Section 12 (termination of employment by death or disability of Executive); Section 13 (termination of employment by Executive for good reason); Section 14 (termination of employment without good reason); Section 15 (special severance benefits); Section 16 (gross-up for Section 280G purposes); Section 17 (no mitigation; no offset); Section 18 (trade secrets); Section 19 (inventions); Section 20 (non-solicitation and non-disparagement); Section 22 (tax withholding); Section 25 (indemnification); Section 26 (liability insurance); and Section 27(arbitration). The survival of Section 16 shall also cover payments or benefits received after the termination of employment and this --------------------------------------------------------------------------------   Agreement if resulting from a Change in Control (as defined in Section 16) prior to such termination.       29. GOVERNING LAW: This Agreement shall be construed in accordance with and governed by the laws of the State of California without regard to principles of conflict of law.   Dated: -------------------------------------------------------------------------------- Executive                 -------------------------------------------------------------------------------- By Ronald D. Sugar             Dated: -------------------------------------------------------------------------------- NORTHROP GRUMMAN CORPORATION                 By: -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Exhibit A to Employment Agreement Executive Perquisites for Elected Officers Who Report to the CEO   Deferred Compensation Plan Executive Life Insurance—three times base salary, up to a maximum of $600,000 Executive Accidental Death and Dismemberment Insurance—6 times base salary, up to a maximum of $1,000,000 Travel Accident Insurance Long Term Disability—covers 65% of base pay up to a maximum of $15,000 per month including social security Executive Medical—covers 100% of covered charges for Executive and dependents Executive Dental—covers 100% of covered benefits for Executive and dependents with a $2,000 annual maximum Annual Executive Physical Exam Personal Liability Insurance of $5,000,000 Car Allowance of $15,000 per year Financial Planning and Income Tax Preparation Benefit—covers 100% of combined charges up to a maximum of $9,000 per year First Class Air Travel Payment for Two Airline Clubs Reimbursement for Two Private Club Membership up to $5,000 per year These perquisites are periodically modified by the Company. -------------------------------------------------------------------------------- Exhibit B: Gross-Up Provisions             Equalization Payment. If upon or following a Change in Control, the tax imposed by Section 4999 of the Code or any similar or successor tax (the “Excise Tax”) applies, solely because of the Change in Control, to any payments, benefits and/or amounts received by the Executive as Severance Benefits or otherwise, including without limitation, any fees, costs and expenses paid under this Agreement and/or any amounts received or deemed received, within the meaning of any provision of the Code, by the Executive as a result of (and not by way of limitation) any automatic vesting, lapse of restrictions and/or accelerated target or performance achievement provisions, or otherwise, applicable to outstanding grants or awards to the Executive under any of the Company’s incentive plans, including without limitation, the 1993 Long Term Incentive Stock Plan, the 1987 Long Term Incentive Plan and the 1981 Long-Term Incentive Plan, the Company shall pay to the Executive in cash an additional amount or amounts (the “Gross-Up Payment(s)”)) such that the net amount retained by the Executive after the deduction of any Excise Tax on such payments, benefits and/or amounts so received and any Federal, state and local income tax and Excise Tax upon the Gross-Up Payment(s) provided for by this Section shall be equal to such payments, benefits and/or amounts so received had they not been subject to the Excise Tax. Such payment(s) provided for by this Section shall be equal to such payments, benefits and/or amounts so received had they not been subject to the Excise Tax. Such payment(s) shall be made by the Company to the Executive as soon as practicable following the receipt or deemed receipt of any such payments, benefits and/or amounts so received, and may be satisfied by the Company making a payment or payments on Executive’s account in lieu of withholding for tax purposes but in all events shall be made within thirty (30) days of the receipt or deemed receipt by the Executive of any such payment, benefit and/or amount.             Tax Computation. For purposes of determining whether any payments, benefits and/or amounts, including amounts paid as Severance Benefits, will be subject to Excise Tax, and the amount of any such Excise Tax:   (a) Any other payments, benefits and/or amounts received or to be received by the Executive in connection with or contingent upon a Change in Control of the Company or the Executive’s termination of employment, (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, or with any Person whose actions result in a Change in Control of the Company or any person affiliated with the Company or such Persons) shall be combined to determine whether the Executive has received any “parachute payment” within the meaning of Section 280G(b)(2) of the code, and if so, the amount of any “excess parachute payments” within the meaning of Section 280(G)(b)(1) that shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company’s independent auditors and acceptable to the Executive, such other --------------------------------------------------------------------------------     payments, benefits and/or amounts (in whole or in part) do not constitute parachute payments, or such excess parachute payments 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 value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code.         For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay Federal income taxes at the highest marginal rate of Federal income taxation in the calendar year in which the Gross-Up Payment is to be made. Such highest marginal rate shall take into account the loss of itemized deduction by the Executive and shall also include the Executive’s share of the hospital insurance portion of FICA and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Effective Date of termination, net of the maximum reduction in Federal income taxes that could be obtained from the deduction of such state and local taxes.             Subsequent Recalculation. In the event the Internal Revenue Service adjusts the computation of the Company under this Section herein, so that the Executive did not receive the greatest net benefit, the Company shall reimburse the Executive as provided herein for the full amount necessary to place the Executive in the same after-tax position as he would have been in had no Excise Tax applied. -------------------------------------------------------------------------------- EXHIBIT C RELEASE AGREEMENT 1. PARTIES: The parties to this Release Agreement (referred to hereafter as “Agreement”) are DR. RONALD D. SUGAR (referred to hereafter as “Executive”) and NORTHROP GRUMMAN CORPORATION (referred to hereafter as “Northrop Grumman” or the “Company”).       2. RECITALS: This Agreement is made with reference to the following facts:         2.1 Executive and Northrop Grumman are parties to an Employment Agreement, one of the terms of which provides Executive, under certain conditions, with Special Severance Benefits in exchange for a release.         2.2 This Agreement is the release Executive is required to sign in order to receive those Special Severance Benefits.       3. CONSIDERATION: In exchange for the Executive’s agreement to abide by all of the terms of this Agreement, Northrop Grumman will provide Executive with the Special Severance Benefits set forth in Section 15 of the Employment Agreement. -------------------------------------------------------------------------------- 4. COMPLETE RELEASE: In consideration of the promises contained herein, and for other good and valuable consideration the receipt of which is hereby acknowledged, Executive does hereby acknowledge full and complete satisfaction of and does hereby agree to release, absolve and discharge Releasees (as defined below) from all claims, causes of action, demands, damages or costs he may have against Releasees on behalf of himself or others arising prior to the date he signs this Agreement. “Releasees” shall mean the Company, its subsidiaries, affiliated and related companies, past, present and future, and each of them, as well as its and their employees, officers, directors, and agents (in their capacities as employees, officers, directors and agents), past and present, and each of them in such capacities.         4.1 This waiver and release includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs arising under the Age Discrimination in Employment Act, which prohibits discrimination in employment based on age, and retaliation; Title VII of the Civil Rights Act of 1964, which prohibits discrimination in employment based on race, color, religion, sex or national origin, and retaliation; the Americans with Disabilities Act, which prohibits discrimination based on disability and retaliation; the California Fair Employment and Housing Act, which prohibits discrimination in employment based on race, color, religion, sex, national origin, ancestry, physical disability, mental disability, medical condition, marital status or age, and retaliation; or any other federal, state or local laws or regulations prohibiting employment discrimination or retaliation --------------------------------------------------------------------------------   whether such claim be based upon an action filed by Executive or by any governmental agency.       4.2 This waiver and release also includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs arising under Executive’s Employment Agreement, or in relation to the Company’s employee handbook and personnel policies, or any oral or written representations or statements made by officers, directors, lawyers, employees or agents of the Company, past and present, and each of them, or under any state or federal law regulating wage, hours, compensation or employment, or any claim for retaliation, wrongful discharge, breach of contract, breach of the implied covenant of good faith and fair dealing, intentional or negligent infliction of emotional distress, intentional or negligent misrepresentation, or defamation.       4.3 This waiver and release also includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs arising under or in relation to any severance plan, program, or arrangement.       4.4 This waiver and release also includes, but is not limited to, any rights, claims, causes of action, demands, damages or costs arising under the federal False Claims Act. -------------------------------------------------------------------------------- 4.5 This release covers both claims that Executive knows about and those he may not know about. Executive hereby specifically waives and relinquishes all rights and benefits provided by Section 1542 of the Civil Code of the State of California, and does so understanding and acknowledging the significance of this specific waiver of Section 1542. Section 1542 of the Civil Code of the State of California states 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.”       4.6 Notwithstanding the provisions of Section 1542 and for the purpose of implementing a full and complete release, Executive expressly acknowledges that this Agreement is intended to include all claims which he does not know or suspect to exist in his favor at the time of his signature on the Agreement, and that this Agreement will extinguish any such claims       4.7 Notwithstanding anything to the contrary herein, this Agreement does not waive or release: (i) any rights or claims which Executive may have under the Age Discrimination in Employment Act or other laws which arise after the date he signs this Agreement, (ii) any rights or claims Executive may have under his Employment Agreement with the Company which survive --------------------------------------------------------------------------------     termination of employment; (iii) any rights Executive may have for indemnification from the Company; (iv) any rights which Executive may have under the Company’s Directors and Officers liability insurance policy; (v) any rights Executive may have under stock grants provided to him by the Company; (vi) any rights Executive may have as a shareholder of Northrop Grumman; and (vii) any rights Executive may have to vested benefits under any Company employee benefit plan.       5. ARBITRATION: Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator in the State of California (in the major city nearest Executive’s residence) in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association then in effect. The decision of the arbitrator will be final and binding upon the parties hereto. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The arbitrator may, but need not, award the prevailing party in any dispute (as determined by the arbitrator) its or his legal fees and expenses.       6. PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT; ADVICE OF COUNSEL: Executive agrees and understands that he has been given a period of twenty-one (21) calendar days from his receipt of this Agreement to review and consider this Agreement before signing it. Executive further understands that he may use as much of this review period as he wishes prior to signing; he can --------------------------------------------------------------------------------   sign this Agreement at any time prior to the expiration of the twenty-one calendar day period. At the end of this period, this offer of Special Severance Benefits will be deemed automatically withdrawn if not earlier signed by Executive and delivered to the Company. Executive is advised and encouraged to consult with his own legal counsel prior to signing this Agreement.       7. RIGHT TO REVOKE AGREEMENT: Executive may revoke this Agreement within seven (7) calendar days of signing it. Revocation can be made by delivering a written notice of revocation to Chief Human Resources Officer, Northrop Grumman Corporation, 1840 Century Park East, Los Angeles, CA 90067. For this revocation to be effective, written notice must be received by the Chief Human Resources Officer no later than 5:00 p.m. PST on the seventh calendar day after Executive signs this Agreement. If Executive revokes this Agreement, it shall not be effective or enforceable, and Executive will not receive the benefits described in Section 3 of this Agreement.       8. NON-ADMISSION OF LIABILITY: Nothing contained herein shall be construed as an admission by either Executive or by Northrop Grumman of liability of any kind.       9. SEVERABILITY: The provisions of this Agreement are severable, and if any part of it is found to be illegal or invalid and thereby unenforceable, the validity of the remaining parts, terms or provisions shall not be affected and shall remain fully enforceable. The unenforceable part, term or provision shall be deemed not to be a part of this Agreement. -------------------------------------------------------------------------------- 10. SOLE AND ENTIRE AGREEMENT: Except as otherwise expressly set forth herein, this Agreement sets forth the entire agreement between the parties hereto, and fully supersedes any and all discussions, prior agreements or understandings between the parties hereto pertaining to the subject matter of this Agreement.       11. GOVERNING LAW: This Agreement shall be interpreted and enforced in accordance with the laws of the State of California without regard to rules regarding conflicts of law. EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS, CONFER WITH COUNSEL, AND TO CAREFULLY CONSIDER ALL OF THE PROVISIONS OF THIS AGREEMENT BEFORE SIGNING IT. HE FURTHER AGREES THAT HE HAS READ THIS AGREEMENT, UNDERSTANDS IT, AND IS VOLUNTARILY ENTERING INTO IT. PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.   EXECUTIVE     DATED: -------------------------------------------------------------------------------- BY: --------------------------------------------------------------------------------     NORTHROP GRUMMAN CORPORATION   DATED: -------------------------------------------------------------------------------- BY: --------------------------------------------------------------------------------   TITLE: --------------------------------------------------------------------------------

Exhibit 10.14(a) OPTION AGREEMENT AND AWARD NOTICE (PURSUANT TO THE TERMS OF THE CONTINENTAL AIRLINES, INC. INCENTIVE PLAN 2000)   This OPTION AGREEMENT AND AWARD NOTICE (this "Option Agreement") is between Continental Airlines, Inc., a Delaware corporation ("Company"), and __________________ ("Optionee"), and is dated as of the date set forth immediately above the signatures below. Grant of Option . The Company hereby grants to Optionee the right, privilege and option as herein set forth (the "Option") to purchase up to _______________ (###,###) shares (the "Shares") of Class B common stock, $.01 par value per share, of Company ("Common Stock"), in accordance with the terms of this Option Agreement. The Shares, when issued to Optionee upon the exercise of the Option, shall be fully paid and nonassessable. The Option is granted pursuant to and to implement in part the Continental Airlines, Inc. Incentive Plan 2000 (as amended and in effect from time to time, the "Plan") and is subject to the provisions of the Plan, which is hereby incorporated herein and is made a part hereof, as well as the provisions of this Option Agreement. Optionee agrees to be bound by all of the terms, provisions, conditions and limitations of the Plan and this Option Agreement. All capitalized terms have the meanings set forth in the Plan unless otherwise specifically provided. All references to specified paragraphs pertain to paragraphs of this Option Agreement unless otherwise provided. The Option is not intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). Option Term . Subject to earlier termination as provided herein, the Option shall terminate on ________________________. The period during which the Option is in effect is referred to as the "Option Period". Option Exercise Price . The exercise price (the "Option Price") of the Shares subject to the Option shall be $______ per Share (which is the Market Value per Share on the date hereof). Vesting . Subject to the following provisions of this Paragraph 4, the total number of Shares subject to this Option shall vest in twenty-five percent (25%) increments on each of ______________________, ____________________, __________________ and __________________. The vested Shares that may be acquired under the Option may be purchased at any time after they become vested, in whole or in part, during the Option Period. In addition, the total number of Shares subject to this Option shall vest and become exercisable upon the occurrence of one of the events as described in Paragraph 6(c) or 6(d). Method of Exercise . To exercise the Option, Optionee shall deliver an irrevocable written notice to Company (to the attention of the Secretary of the Company) stating the number of Shares with respect to which the Option is being exercised together with payment for such Shares. Payment shall be made (i) in cash or by check acceptable to Company, (ii) in nonforfeitable, unrestricted shares of Company's Common Stock owned by Optionee at the time of exercise of the Option having an aggregate market value (measured by the Market Value per Share) at the date of exercise equal to the aggregate exercise price of the Option being exercised or (iii) by a combination of (i) and (ii). In addition, at the request of Optionee, and to the extent permitted by applicable law and subject to Paragraph 15, the Option may be exercised pursuant to a "cashless exercise" arrangement with any brokerage firm approved by the Administrator or its delegate under which arrangement such brokerage firm, on behalf of Optionee, shall pay to Company the exercise price of the Options being exercised, and Company, pursuant to an irrevocable notice from Optionee, shall promptly after receipt of the exercise price deliver the shares being purchased to such firm. Optionee acknowledges and agrees that the Company may provide personal information regarding Optionee and any grant of a stock option or other Award under the Plan, or under any program adopted under the Plan, including but not limited to this Option, to any third party engaged by the Company to provide administrative or brokerage services relating to the Plan or any such program. Termination of Employment; Change in Control . Voluntary or involuntary termination of employment, retirement, death or Disability of Optionee, or occurrence of a Change in Control, shall affect Optionee's rights under the Option as follows: Involuntary Termination for Gross Misconduct. The Option shall terminate immediately and shall not be exercisable if Optionee's employment (defined below) is terminated involuntarily for gross misconduct (defined below). Other Involuntary Termination or Voluntary Termination. If Optionee's employment is terminated involuntarily other than for gross misconduct or if Optionee voluntarily terminates employment, then immediately (i) the Option shall terminate as to Shares subject thereto to the extent not yet then vested pursuant to Paragraph 4 or pursuant to Paragraph 6(c) below, and (ii) the Option shall terminate as to all remaining Shares subject thereto to the extent not exercised pursuant to Paragraph 5 within 30 days after such termination of employment. Change in Control. If a Change in Control shall occur, then immediately the Option shall vest and become exercisable in full; provided, that if the Change in Control is the result of a business combination with Northwest or any Person controlling, controlled by or under common control with Northwest, the Committee shall determine whether, in connection with such business combination, a change in the composition of the persons with authority to exercise policy-making functions with respect to the business of the Company has or is reasonably expected to occur, such that the expectations of employees of the Company concerning the direction and management of the Company would be reasonably expected to be materially affected, and a Change in Control shall be deemed to occur as a result of such business combination only if the Committee determines that such a change has or is reasonably expected to occur. Notwithstanding any determination by the Committee that such a change has not or is not reasonably expected to occur, if Optionee's employment with the Company (or any subsidiary which is the principal employer of Optionee) is terminated by the Company (or such subsidiary) at any time during the two year period following the date of the closing of a business combination with Northwest or any Person controlling, controlled by or under common control with Northwest which, but for the determination by the Committee, would constitute a Change in Control, and such termination of employment by the Company is for any reason other than (I) death, (II) Disability, (III) the willful and continued failure by Optionee substantially to perform his duties and obligations to the Company or such subsidiary (other than any such failure resulting from a Disability) which failure continues after the date which is 30 days after the Company has given written notice thereof to Optionee which notice specifies the aspects in which Optionee has failed to perform his duties or obligations to the Company or such subsidiary and sets forth specific corrective action required of Optionee to be taken within 30 days of the date of giving of the notice, or (IV) the willful engaging by Optionee in misconduct concerning the Company or such subsidiary, then upon such termination of employment by the Company the Option shall immediately vest and become exercisable in full during the 30 day period following such termination of employment. Retirement, Death or Disability. If Optionee's employment is terminated by retirement, death or Disability, then immediately the Option shall become exercisable in full, whether or not otherwise exercisable, for a term of one year thereafter by Optionee or, in the case of death, by the person or persons to whom Optionee's rights under the Option shall pass by will or by the applicable laws of descent and distribution, or in the case of Disability, by Optionee's personal representative. However, in no event may any Option be exercised by anyone after the earlier of (y) the expiration of the Option Period or (z) one year after Optionee's death, retirement or Disability (described above). Definitions. For purposes of the Option, "employment" means employment by Company or a subsidiary (as the term "subsidiary" is defined in the Plan). In this regard, neither the transfer of a Participant from employment by Company to employment by a subsidiary nor the transfer of a Participant from employment by a subsidiary to employment by Company shall be deemed to be a termination of employment of the Participant. Moreover, the employment of a Participant shall not be deemed to have been terminated because of absence from active employment on account of temporary illness or during authorized vacation or during temporary leaves of absence from active employment granted by Company or a subsidiary for reasons of professional advancement, education, health, or government service, or during military leave for any period if the Participant returns to active employment within 90 days after the termination of military leave, or during any period required to be treated as a leave of absence by virtue of any valid law or agreement. "Gross misconduct" means such misconduct, dishonesty, wilful and repeated disobedience or other action or inaction as might reasonably be expected to injure Company or any of its subsidiaries or its or their business interests or reputation. The Administrator's determination in good faith regarding whether a termination of employment, gross misconduct or Disability has occurred shall be conclusive and determinative. Reorganization of Company and Subsidiaries . The existence of the Option shall not affect in any way the right or power of Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in Company's capital structure or its business, or any merger or consolidation of Company or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Shares or the rights thereof, or the dissolution or liquidation of 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. Adjustment of Shares . In the event of stock dividends, spin-offs of assets or other extraordinary dividends, stock splits, combinations of shares, recapitalizations, mergers, consolidations, reorganizations, liquidations, issuances of rights or warrants and similar transactions or events involving Company, appropriate adjustments shall be made to the terms and provisions of this Option, in the same manner as is provided for adjustments to the terms and provisions of the warrants issued by Company to Air Canada and to Air Partners, L.P. under the Warrant Agreement dated as of April 27, 1993. No Rights in Shares . Optionee shall have no rights as a stockholder in respect of Shares until such Optionee becomes the holder of record of such Shares. Certain Restrictions . By exercising the Option, Optionee agrees that if at the time of such exercise the sale of Shares issued hereunder is not covered by an effective registration statement filed under the Securities Act of 1933 ("Act"), Optionee will acquire the Shares for Optionee's own account and without a view to resale or distribution in violation of the Act or any other securities law, and upon any such acquisition Optionee will enter into such written representations, warranties and agreements as Company may reasonably request in order to comply with the Act or any other securities law or with this Option Agreement. Optionee agrees that Company shall not be obligated to take any affirmative action in order to cause the issuance or transfer of Shares hereunder to comply with any law, rule or regulation that applies to the Shares subject to the Option. Shares Reserved . Company shall at all times during the Option Period reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Option. 12. Nontransferability of Option. The Option granted pursuant to this Option Agreement is not transferable other than by will, the laws of descent and distribution or by qualified domestic relations order. The Option will be exercisable during Optionee's lifetime only by Optionee or by Optionee's guardian or Personal Representative. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities, or torts of Optionee. 13. Amendment and Termination. No amendment or termination of the Option which would impair the rights of Optionee shall be made by the Board or the Administrator at any time without the written consent of Optionee. No amendment or termination of the Plan will adversely affect the rights, privileges and option of Optionee under the Option without the written consent of Optionee. 14. No Guarantee of Employment. The Option shall not confer upon Optionee any right with respect to continuance of employment or other service with Company or any subsidiary, nor shall it interfere in any way with any right Company or any subsidiary would otherwise have to terminate such Optionee's employment or other service at any time. 15. Withholding of Taxes. Company shall have the right to (i) make deductions from any settlement or exercise of an Award made under the Plan, including the delivery of shares, or require shares or cash or both be withheld from any Award, in each case in an amount sufficient to satisfy withholding of any taxes required by law or (ii) take any other action as may be necessary or appropriate to satisfy any such tax withholding obligations. 16. No Guarantee of Tax Consequences. Neither Company nor any subsidiary nor the Administrator makes any commitment or guarantee that any federal, state, local or foreign tax treatment will apply or be available to any person eligible for benefits under the Option. 17. Severability. In the event that any provision of the Option shall be held illegal, invalid, or unenforceable for any reason, such provision shall be fully severable, but shall not affect the remaining provisions of the Option, and the Option shall be construed and enforced as if the illegal, invalid, or unenforceable provision had never been included herein. 18. Governing Law. The Option shall be construed in accordance with the laws of the State of Texas to the extent federal law does not supersede and preempt Texas law. 19. Miscellaneous Provisions. (a) Not a Contract of Employment; No Acquired Rights. The adoption and maintenance of the Plan shall not be deemed to be a contract of employment between the Company or any of its subsidiaries and any person. Receipt of an Award under the Plan at any given time shall not be deemed to create the right to receive in the future an Award under the Plan, or any other incentive awards granted to an employee of the Company or any of its subsidiaries, and shall not constitute an acquired labor right for purposes of any foreign law. The Plan shall not afford any recipient of an Award any additional right to severance payments or other termination awards or compensation under any foreign law as a result of the termination of such recipient's employment for any reason whatsoever. (b) Not a Part of Salary. The grant of an Award under the Plan is not intended to be a part of the salary of the recipient. (c) Foreign Indemnity. Optionee agrees to indemnify Company for the Optionee's portion of any social insurance obligations or taxes arising under any foreign law with respect to the grant or exercise of this Option or the sale or other disposition of the Shares acquired hereunder. (d) Conflicts With Any Employment Agreement. If Optionee has an employment agreement with Company or any of its subsidiaries which contains different or additional provisions relating to vesting of options, or otherwise conflicts with the terms of this Option Agreement, the provisions of the employment agreement shall govern. (e) Electronic Delivery and Signatures. Optionee hereby consents and agrees to electronic delivery of any Plan documents, proxy materials, annual reports and other related documents. If the Company establishes procedures for an electronic signature system for delivery and acceptance of Plan documents (including documents relating to any programs adopted under the Plan), Optionee hereby consents to such procedures and agrees that his or her electronic signature is the same as, and shall have the same force and effect as, his or her manual signature. Optionee consents and agrees that any such procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan, including any program adopted under the Plan.     ******* IN WITNESS WHEREOF, the parties have entered into this Option Agreement as of the ___ of ______________, ________.   "COMPANY" CONTINENTAL AIRLINES, INC. By Order of the Administrator   By: Name: Jeffery A. Smisek Title:   "OPTIONEE"   ________________________________________ Name:

Exhibit 10.30 MANUFACTURERS' SERVICES LIMITED 2000 EQUITY INCENTIVE PLAN, AS AMENDED   1.              DEFINED TERMS                     Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms. 2.               GENERAL                     The Plan has been established to advance the interests of the Company by giving Stock-based and other incentives to selected Employees, directors and other persons (including both individuals and entities) who provide services to the Company or its Affiliates. 3.               ADMINISTRATION                     The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; prescribe forms, rules and procedures (which it may modify or waive); and otherwise do all things necessary to carry out the purposes of the Plan.  Once an Award has been communicated in writing to a Participant, the Administrator may not, without the Participant's consent, alter the terms of the Award so as to affect adversely the Participant's rights under the Award, unless the Administrator expressly reserved the right to do so.  In the case of any Award intended to be eligible for the performance-based compensation exception under Section 162(m), the Administrator shall exercise its discretion consistent with qualifying the Award for such exception. 4.               LIMITS ON AWARD UNDER THE PLAN   a. Number of Shares.  A maximum of (1) 6,004,126 shares of Stock, plus (2) any shares of Stock available under the Company's Existing Plan as a result of termination of options under the Existing Plan, plus (3) an annual increase to be added on the date of each annual meeting of the stockholders of the Company, beginning with the 2000 annual meeting of the stockholders, equal to one percent (1.0%) of the outstanding shares of Stock on such date or such lesser amount determined by the Board, may be delivered in satisfaction of Awards under the Plan.  The shares of Stock may be authorized, but unissued, or reacquired shares of Stock.  For purposes of the preceding sentence, the following shares shall not be considered to have been delivered under the Plan: (i) shares remaining under an Award that terminates without having been exercised in full; (ii) shares subject to an Award, where cash is delivered to a Participant in lieu of such shares; (iii) shares of Restricted Stock that have been forfeited in accordance with the terms of the applicable Award; and (iv) shares held back, in satisfaction of the exercise price or tax withholding requirements, from shares that would otherwise have been delivered pursuant to an Award.  The number of shares of Stock delivered under an Award shall be determined net of any previously acquired Shares tendered by the Participant in payment of the exercise price or of withholding taxes.  A maximum of 6,004,126 shares of Stock may be issued as ISO Awards under the Plan.   b. Type of Shares.  Stock delivered by the Company under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company and held in treasury.  No fractional shares of Stock will be delivered under the Plan.         c. Option & SAR Limits.  The maximum number of shares of Stock for which Stock Options may be granted to any person in any calendar year, the maximum number of shares of Stock subject to SARs granted to any person in any calendar year and the aggregate maximum number of shares of Stock subject to other Awards that may be delivered to any person in any calendar year shall each be 1,000,000.  For purposes of the preceding sentence, the repricing of a Stock Option or SAR shall be treated as a new grant to the extent required under Section 162(m).  Subject to these limitations, each person eligible to participate in the Plan shall be eligible in any year to receive Awards covering up to the full number of shares of Stock then available for Awards under the Plan.         d. Other Award Limits.  No more than $1,000,000 may be paid to any individual with respect to any Cash Performance Award.  In applying the limitation of the preceding sentence: (A) multiple Cash Performance Awards to the same individual that are determined by reference to performance periods of one year or less ending with or within the same fiscal year of the Company shall be subject in the aggregate to one limit of such amount, and (B) multiple Cash Performance Awards to the same individual that are determined by reference to one or more multi-year performance periods ending in the same fiscal year of the Company shall be subject in the aggregate to a separate limit of such amount.  With respect to any Performance Award other than a Cash Performance Award or a Stock Option or SAR, the maximum Award opportunity shall be 1,000,000 shares of Stock or their equivalent value in cash, subject to the limitations of Section 4.c. 5.               ELIGIBILITY AND PARTICIPATION                     The Administrator will select Participants from among those key Employees, directors and other individuals or entities providing services to the Company or its Affiliates who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company and its Affiliates.  Eligibility for ISOs is further limited to those individuals whose employment status would qualify them for the tax treatment described in Sections 421 and 422 of the Code. 6.               RULES APPLICABLE TO AWARDS                     a.               ALL AWARDS                     (1)           Terms of Awards.  The Administrator shall determine the terms of all Awards subject to the limitations provided herein.  In the case of an ISO, the term shall be ten (10) years from the date of grant or such shorter term as may be provided in the Award.  Moreover, in the case of an ISO granted to a Participant who, at the time the ISO is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of capital stock of the Company or any Parent or Subsidiary, the term of the ISO shall be five (5) years from the date of grant or such shorter term as may be provided in the Award.                     (2)            Performance Criteria.  Where rights under an Award depend in whole or in part on satisfaction of Performance Criteria, actions by the Company that have an effect, however material, on such Performance Criteria or on the likelihood that they will be satisfied will not be deemed an amendment or alteration of the Award.                     (3)            Alternative Settlement.  The Company may at any time extinguish rights under an Award in exchange for payment in cash, Stock (subject to the limitations of Section 4) or other property on such terms as the Administrator determines, provided the holder of the Award consents to such exchange.                     (4)            Transferability Of Awards.  Except as the Administrator otherwise expressly provides, Awards may not be transferred other than by will or by the laws of descent and distribution, and during a Participant's lifetime an Award requiring exercise may be exercised only by the Participant (or in the event of the Participant's incapacity, the person or persons legally appointed to act on the Participant's behalf).                     (5)            Vesting, Etc.  Without limiting the generality of Section 3, the Administrator may determine the time or times at which an Award will vest (i.e., become free of forfeiture restrictions) or become exercisable and the terms on which an Award requiring exercise will remain exercisable.  Unless the Administrator expressly provides otherwise, immediately upon the cessation of the Participant's employment or other service relationship with the Company and its Affiliates an Award requiring exercise will cease to be exercisable and all Awards to the extent not already fully vested will be forfeited, except that:   (A) all Stock Options and SARs held by a Participant immediately prior to his or her death or Disability , to the extent then exercisable, will remain exercisable by such Participant's executor, administrator or representative or the person or persons to whom the Stock Option or SAR is transferred by will or the applicable laws of descent and distribution, and to the extent not then exercisable will vest and become exercisable upon such Participant's death or Disability by such Participant's executor, administrator or representative or the person or persons to whom the Stock Option or SAR is transferred by will or the applicable laws of descent and distribution, in each case for the lesser of (i) a one year period ending with the first anniversary of the Participant's death or Disability or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6.a.(5) and shall thereupon terminate;     (B) all Stock Options and SARs held by the Participant immediately prior to the cessation of the Participant's employment or other service relationship for reasons other than death or Disability and except as provided in (C) below, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of three months or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6.a.(5), and shall thereupon terminate; and         (C) all Stock Options and SARs held by the Participant whose cessation of employment or other service relationship is determined by the Administrator in its sole discretion to result from the breach by the Participant of any Non-Compete Agreement or non-compete provision contained in any Employment Agreement shall immediately terminate upon such cessation. Unless the Administrator expressly provides otherwise, a Participant's "employment or other service relationship with the Company and its Affiliates" will be deemed to have ceased, in the case of an employee Participant, upon termination of the Participant's employment with the Company and its Affiliates (whether or not the Participant continues in the service of the Company or its Affiliates in some capacity other than that of an employee of the Company or its Affiliates), and in the case of any other Participant, when the service relationship in respect of which the Award was granted terminates (whether or not the Participant continues in the service of the Company or its Affiliates in some other capacity).                     (6)            Taxes.  The Administrator will make such provision for the withholding of taxes as it deems necessary.  The Administrator may, but need not, hold back shares of Stock from an Award or permit a Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements, but not in excess of the minimum tax withholding rates applicable to the employee. (7)            Dividend Equivalents, Etc.  The Administrator may provide for the payment of amounts in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award. (8)            Rights Limited.  Nothing in the Plan shall be construed as giving any person the right to continued employment or service with the Company or its Affiliates, or any rights as a shareholder except as to shares of Stock actually issued under the Plan.  The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of employment or service for any reason, even if the termination is in violation of an obligation of the Company or Affiliate to the Participant. (9)            Section 162(m).  In the case of an Award intended to be eligible for the performance-based compensation exception under Section 162(m), the Plan and such Award shall be construed to the maximum extent permitted by law in a manner consistent with qualifying the Award for such exception.                     b.               AWARDS REQUIRING EXERCISE                     (1)            Time And Manner Of Exercise. Unless the Administrator expressly provides otherwise, (a) an Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives a written notice of exercise (in form acceptable to the Administrator) signed by the appropriate person and accompanied by any payment required under the Award; and (b) if the Award is exercised by any person other than the Participant, the Administrator may require satisfactory evidence that the person exercising the Award has the right to do so.                     (2)            Exercise Price.  The Administrator shall determine the exercise price of each Stock Option provided that each Stock Option intended to qualify for the performance-based exception under Section 162(m) of the Code and each ISO must have an exercise price that is not less than the fair market value of the Stock subject to the Stock Option, determined as of the date of grant.  An ISO granted to an Employee described in Section 422(b)(6) of the Code must have an exercise price that is not less than 110% of such fair market value.                     (3)            Payment Of Exercise Price, If Any.  Where the exercise of an Award is to be accompanied by payment: (a) all payments will be by cash or check acceptable to the Administrator, or, if so permitted by the Administrator (with the consent of the optionee of an ISO if permitted after the grant), (i) through the delivery of shares of Stock which have been outstanding for at least six months (unless the Administrator approves a shorter period) and which have a fair market value equal to the exercise price, (ii) by delivery of a promissory note of the person exercising the Award to the Company, payable on such terms as are specified by the Administrator, (iii) by delivery of an unconditional and irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay the exercise price, or (iv) by any combination of the foregoing permissible forms of payment; and (b) where shares of Stock issued under an Award are part of an original issue of shares, the Award shall require an exercise price equal to at least the par value of such shares.                     (4)            ISOs.  No ISO may be granted under the Plan after May 15, 2010, but ISOs previously granted may extend beyond that date.                     c.               AWARDS NOT REQUIRING EXERCISE                     Awards of Restricted Stock and Unrestricted Stock may be made in return for either (i) services determined by the Administrator to have a value not less than the par value of the Awarded shares of Stock, or (ii) cash or other property having a value not less than the par value of the Awarded shares of Stock payable in such combination and type of cash, other property (of any kind) or services as the Administrator may determine. 7.               EFFECT OF CERTAIN TRANSACTIONS                     a.               MERGERS, ETC.                     In the event of a Covered Transaction, all outstanding Awards shall vest and if relevant become exercisable and all deferrals, other than deferrals of amounts that are neither measured by reference to nor payable in shares of Stock, shall be accelerated, immediately prior to the Covered Transaction and upon consummation of such Covered Transaction all Awards then outstanding and requiring exercise shall be forfeited unless assumed by an acquiring or surviving entity or its affiliate as provided in the following sentence.  In the event of a Covered Transaction, unless otherwise determined by the Administrator, all Awards that are payable in shares of Stock and that have not been exercised, exchanged or converted, as applicable, shall be converted into and represent the right to receive the consideration to be paid in such Covered Transaction for each share of Stock into which such Award is exercisable, exchangeable or convertible, less the applicable exercise price or purchase price for such Award.  In connection with any Covered Transaction in which there is an acquiring or surviving entity, the Administrator may provide for substitute or replacement Awards from, or the assumption of Awards by, the acquiring or surviving entity or its affiliates, any such substitution, replacement or assumption to be on such terms as the Administrator determines, provided that no such replacement or substitution shall diminish in any way the acceleration of Awards provided for in this section.                     b.              CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK                     (1)            Basic Adjustment Provisions.  In the event of a stock dividend, stock split or combination of shares, recapitalization or other change in the Company's capital structure after January 1, 2000, the Administrator will make appropriate adjustments to the maximum number of shares that may be delivered under the Plan under Section 4.a., and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change.                     (2)            Certain Other Adjustments.  The Administrator may also make adjustments of the type described in paragraph (1) above to take into account distributions to common stockholders other than those provided for in Section 7.a. and 7.b.(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder; provided, that no such adjustment shall be made to the maximum share limits described in Section 4.c. or 4.d., or otherwise to an Award intended to be eligible for the performance-based exception under Section 162(m), except to the extent consistent with that exception, nor shall any change be made to ISOs except to the extent consistent with their continued qualification under Section 422 of the Code.                     (3)            Continuing Application of Plan Terms. References in the Plan to shares of Stock shall be construed to include any stock or securities resulting from an adjustment pursuant to Section 7.b.(1) or 7.b.(2) above. 8.               LEGAL CONDITIONS ON DELIVERY OF STOCK                     The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until the Company's counsel has approved all legal matters in connection with the issuance and delivery of such shares; if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and all conditions of the Award have been satisfied or waived.  If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act.  The Company may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock. 9.               AMENDMENT AND TERMINATION                     Subject to the last sentence of Section 3, the Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, or may at any time terminate the Plan as to any further grants of Awards; provided, that (except to the extent expressly required or permitted by the Plan) no such amendment will, without the approval of the stockholders of the Company, effectuate a change for which stockholder approval is required in order for the Plan to continue to qualify under Section 422 of the Code and for Awards to be eligible for the performance-based exception under Section 162(m). 10.           NON-LIMITATION OF THE COMPANY'S RIGHTS                     The existence of the Plan or the grant of any Award shall not in any way affect the Company's right to Award a person bonuses or other compensation in addition to Awards under the Plan. 11. GOVERNING LAW                     The Plan shall be construed in accordance with the laws of the Commonwealth of Massachusetts. EXHIBIT A Definition of Terms                     The following terms, when used in the Plan, shall have the meanings and be subject to the provisions set forth below:                     "Administrator":  The Board or, if one or more has been appointed, the Committee.                     "Affiliate":  Any corporation or other entity owning, directly or indirectly, 50% or more of the outstanding Stock of the Company, or in which the Company or any such corporation or other entity owns, directly or indirectly, 50% of the outstanding capital stock (determined by aggregate voting rights) or other voting interests.                     "Award":  Any or a combination of the following:                     (i) Stock Options.                     (ii) SARs.                     (iii) Restricted Stock.                     (iv) Unrestricted Stock.                     (v) Deferred Stock.                     (vi) Securities (other than Stock Options) that are convertible into or exchangeable for Stock on such terms and conditions as the Administrator determines.                     (vii) Cash Performance Awards.                     (viii) Performance Awards.                     (ix) Grants of cash, or loans, made in connection with other Awards in order to help defray in whole or in part the economic cost (including tax cost) of the Award to the Participant.                     "Board":  The Board of Directors of the Company.                     "Cash Performance Award":  A Performance Award payable in cash.  The right of the Company under Section 6.a.(3) to extinguish an Award in exchange for cash or the exercise by the Company of such right shall not make an Award otherwise not payable in cash a Cash Performance Award.                     "Code":  The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect.                     "Committee":  One or more committees of the Board which in the case of Awards granted to officers of the Company shall be comprised solely of two or more outside directors within the meaning of Section 162(m).  Any Committee may delegate ministerial tasks to such persons (including Employees) as it deems appropriate.                     "Company":  Manufacturers' Services Limited.                     "Covered Transaction":  Any of (i) a consolidation or merger in which the Company is not the surviving corporation or which results in the acquisition of at least 40% of the Company's then outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the Company's assets, or (iii) a dissolution or liquidation of the Company.                     "Deferred Stock":  A promise to deliver Stock or other securities in the future on specified terms.                     "Disability":  As defined in any Employment Agreement or, if there is no such Employment Agreement, or if such Employment Agreement does not contain any such defined term, then “Disability” shall mean the physical or mental incapacity of the Participant and consequent inability of the Participant, for a period of six (6) consecutive months or for an aggregate of twelve (12) months in any twenty-four (24) consecutive month period, to perform his duties with the Company.  Any question as to the existence of the Disability of such Participant as to which the Participant and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Participant and the Company.  If the Participant and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing.  The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Plan.                     "Employee":  Any person who is employed by the Company or an Affiliate.                     "Existing Plan":  The Company's Second Amended and Restated Non-Qualified Stock Option Plan.                     "ISO":  A Stock Option intended to be an "incentive stock option" within the meaning of Section 422 of the Code.  No Stock Option Awarded under the Plan will be an ISO unless the Administrator expressly provides for ISO treatment.                     "Parent":  A "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code.                     "Participant":  An Employee, director or other person providing services to the Company or its Affiliates who is granted an Award under the Plan.                     "Performance Award":  An Award subject to Performance Criteria.  The Committee in its discretion may grant Performance Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) and Performance Awards that are not intended so to qualify.                     "Performance Criteria":  Specified criteria the satisfaction of which is a condition for the exercisability, vesting or full enjoyment of an Award.  For purposes of Performance Awards that are intended to qualify for the performance-based compensation exception under Section 162(m), a Performance Criterion shall mean an objectively determinable measure of performance relating to any of the following (determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): (i) sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or other items, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; network deployment; sales of particular products or services; customer acquisition, expansion and retention; or any combination of the foregoing; or (ii) acquisitions and divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity) and refinancings; transactions that would constitute a change of control; or any combination of the foregoing.  A Performance Criterion measure and targets with respect thereto determined by the Administrator need not be based upon an increase, a positive or improved result or avoidance of loss.                     "Plan":  The Manufacturers' Services Limited 2000 Equity Incentive Plan as from time to time amended and in effect.                     "Restricted Stock":  An Award of Stock subject to restrictions requiring that such Stock be redelivered to the Company if specified conditions are not satisfied.                     "Section 162(m)":  Section 162(m) of the Code.                     "SARs":  Rights entitling the holder upon exercise to receive cash or Stock, as the Administrator determines, equal to a function (determined by the Administrator using such factors as it deems appropriate) of the amount by which the Stock has appreciated in value since the date of the Award.                     "Stock":  Common Stock of the Company, par value $ .001 per share.                     "Stock Options":  Options entitling the recipient to acquire shares of Stock upon payment of the exercise price.                     "Subsidiary":  A "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Code.                     "Unrestricted Stock":  An Award of Stock not subject to any restrictions under the Plan.  

QuickLinks -- Click here to rapidly navigate through this document EXHIBIT 10.29 May 8, 2001 Joyce Keshmiry RE:  HearMe Retention Program—PERSONAL and CONFIDENTIAL     This letter includes all of the information in my memo of April 24, 2001 with one addition. We have added information granting you an extension to your option exercise period.     You are critical to the Company's success. If you agree to remain with the Company and continue to meet performance expectations for the next six months, the Company agrees to the following: •We guarantee your salary through July 31, 2001. •We will give you a retention bonus of six (6) months pay. To earn this retention bonus you must: -Remain an employee until your services are no longer required; or -Remain an employee until the close of a sale of the Company.     The retention bonus will be paid on the earliest to occur of: -The date at which HearMe no longer requires your services; or -The close of a sale of the company; or -October 31, 2001. •We will give you severance pay equal to two weeks of pay plus one week of pay for every year of service (minimum of three weeks pay) if you remain an employee through July 31, 2001, and until HearMe (or an acquiring company in the event of a sale) no longer requires your services. •We will forgive the full amount of your loan, including accrued interest, if you remain an employee until HearMe no longer requires your services or until the close of a sale of the Company. •You will be eligible for an extension of your exercise period for all vested options from the typical 90 days to one year following your termination of employment if you remain an employee until HearMe (or an acquiring company in the event of a sale) no longer requires your services.     This plan is based on the premise that you stay with HearMe and perform at or above the expectation level for your position. If you terminate your employment with HearMe prior to the earliest to occur of October 31, 2001, or the close of a sale of the company, you will forfeit any remaining guaranteed salary, retention bonus, and severance pay.     This retention program does not change the at-will nature of your employment relationship with HearMe. However, even in the event of a change of ownership, HearMe will honor the above-described terms. Sincerely, Rob Csongor CEO -------------------------------------------------------------------------------- QuickLinks EXHIBIT 10.29

QuickLinks -- Click here to rapidly navigate through this document EXHIBIT 10.1 Information marked [XXX CONFIDENTIAL TREATMENT REQUESTED] has been omitted pursuant to a request for confidential treatment. Such omitted information has been filed separately with the Securities and Exchange Commission. [LETTERHEAD] November 13, 1998 Ticketmaster Corporation 3701 Wilshire Boulevard Seventh Floor Los Angeles, California 90010 Attn:   Mr. Terry Barnes     President and Chief Executive Officer Gentlemen:     This letter agreement (the "Agreement") sets forth the mutually binding agreement between SFX Entertainment, Inc., a Delaware corporation, on behalf of itself and the SFX Affiliates (collectively, "SFX"), and Ticketmaster Corporation, a Delaware corporation ("Ticketmaster"), for the amendment and extension of the existing ticketing agreements with respect to each of SFX's venues which are currently under contract with Ticketmaster, a ticketing services agreement for those SFX venues which are not presently under contract with Ticketmaster, and SFX's related promoters in the United States and internationally.     Subject to the terms and conditions set forth herein, and in consideration of the mutual promises and covenants set forth herein, SFX and Ticketmaster hereby agree as follows:     1.  Definitions.  As used in this Agreement, the following capitalized terms shall have the respective meanings set forth below, unless otherwise defined herein: (a)"Agreement"— This letter agreement dated as of November 13, 1998, as this letter agreement may be superseded, replaced or amended by the Master Agreement intended to be negotiated and executed by the parties hereto. (b)"Attraction"— A concert, theatrical presentation, motor sports or other sports event or other entertainment feature to be held at a Facility in the continental United States or internationally (provided Ticketmaster is providing ticket service operations in the international location) in respect of which SFX owns or Controls the Right to Sell Tickets to the public or which is held at an "SFX Facility" or a "Non-SFX Facility"; provided, however, an Attraction shall not include any event at the Lakewood Amphitheater located in Atlanta, Georgia, or the Starplex Amphitheater located in Dallas, Texas. (c)"Business Day"— Any day other than a Saturday, a Sunday or any other day on which the banks in the State of New York are closed. (d)"Controls the Right to Sell Tickets"— means that SFX has the ability, whether by contract, ownership, management or otherwise, to determine the manner in which and/or means by which Tickets may be sold to the public at any Facility. To the extent that SFX does not have such ability, SFX shall use its reasonable best efforts in its capacity as Facility manager, consultant, minority partner or otherwise to recommend and secure the exclusive use of the TM System by such Facility for such Attraction; provided, however, that after SFX exercises its reasonable best efforts in the manner described above, on an Attraction by Attraction basis, its failure to secure said rights shall not be deemed to be a breach of this Agreement. (e)"Customer Convenience Charge"— The amount charged to a Ticket purchaser by Ticketmaster for the use of the TM System. -------------------------------------------------------------------------------- (f)"Effective Date"— means January 1, 1999. (g)"Facility(ies)"— Any and all amphitheaters, theaters, arenas, stadiums and other facilities of any nature whatsoever where an Attraction is to be held, including, but not limited to, SFX Facilities and Non-SFX Facilities, whether now existing or existing at any time during the term hereof. (h)"Non-SFX Facility(ies)"— Any Facility other than an SFX Facility with which Ticketmaster has a ticketing services agreement in effect at the time of the performance of the Attraction. (i)"Outlet"— A physically existing retail Ticket selling agency where Tickets for an Attraction are made available through the TM System and are offered for sale to the public. (j)"SFX Affiliate(s)"— any entity or person which is directly or indirectly controlled by, under common control with or controls SFX, or any other such entity or person, including, but not limited to, the entities set forth on Exhibit A hereto. (k)"SFX Facility(ies)"— Any Facility (i) which SFX owns, operates, manages, controls or leases, or for which any such entity otherwise has any other right to sell, or Controls the Right to Sell Tickets, whether as of the date hereof or at any time in the future during the term of the Agreement, and (ii) with which, at the time of the performance of the Attraction, Ticketmaster does not have a ticketing services agreement. (l)"Telephone Sales"— All sales of Tickets through the TM System by telephone, television, computer and/or the Internet. (m)"TM Affiliate(s)"— Any entity which is directly or indirectly controlled by Ticketmaster, other than any entity which is solely a licensee of the TM System and the Ticketmaster mark and which does not otherwise satisfy any of the conditions set forth in the first part of this sentence. (n)"TM System"— The computer hardware, software, related procedures and personnel, repair and maintenance services established and maintained by Ticketmaster for the purpose of selling, auditing and controlling the sale of Tickets for Attractions. (o)"Ticket"— A printed evidence of the right to occupy space at or to attend an Attraction.     2.  Ticketing Services Agreement.  SFX hereby grants to Ticketmaster, and Ticketmaster accepts from SFX, the exclusive right during the term of this Agreement to sell, as SFX's agent, all Tickets made available generally to the public through any and all means, including but not limited to at Outlets and/or by Telephone Sales, for any Attraction scheduled or presented by SFX at any Facility; provided, however, that SFX shall have the right to conduct box office, season, subscription, affinity and club programs, box seats and group sales of Tickets, but may not use the services of any third party computerized or electronic ticketing service or entity to conduct such sales. SFX and Ticketmaster shall use their respective reasonable best efforts to draft and execute a long form Master Agreement to amend and extend the existing Agreements on the terms and conditions contained herein, and to apply this Agreement to any Facility not already under contract with Ticketmaster and as set forth herein. In the event of any inconsistencies or conflicts between this Agreement and any existing agreement between SFX and Ticketmaster, then the terms of this Agreement shall prevail unless and until such Master Agreement is executed. This Agreement shall constitute a legal, valid, binding and enforceable agreement between the parties. All SFX Facilities which upon the Effective Date of this Agreement either have existing ticket servicing agreements with Ticketmaster or a Ticketmaster Affiliate, or which do not have ticket servicing agreements with any third party, shall be subject to the terms and conditions of this Agreement and the Master Agreement as of the Effective Date. In the event that during the term of this Agreement, SFX or an SFX Affiliate has or acquires any facility, company, promoter or other entity which owns, has a contract with or is otherwise lawfully bound to any ticketing 2 -------------------------------------------------------------------------------- service or system other than the TM System, SFX shall not be obligated to change such arrangement or to divest itself of, or to decline to enter into, any such transaction; provided, however, that at such time as SFX or an SFX Affiliate is no longer obligated to use the services of any third party ticketing provider, or presently has or in the future may have the ability to enter into an agreement with Ticketmaster, then any such applicable facility, company, promoter or entity shall become an SFX Facility or SFX Affiliate, as applicable, and shall be bound by the terms and conditions of this Agreement and the Master Agreement.     3.  Term and Effective Date.  This Agreement shall extend each of the existing SFX agreements with Ticketmaster for a period from the current respective expiration dates (as set forth on Exhibit B hereto) through December 31, 2005, respectively pursuant to the terms and conditions of this Agreement and the Master Agreement. This Agreement shall be effective as of the Effective Date and shall be for a term of seven (7) years commencing as of January 1, 1999. Ticketmaster shall have the option in its sole discretion to renew the Agreement for an additional period of three (3) years on the terms and conditions in effect in the last year of the Agreement, including any such annual increases to the Customer Convenience Charges and handling fees provided herein, provided that upon exercise of that option to extend the term, Ticketmaster shall pay to SFX in consideration for the right to extend the Agreement, a non-refundable payment in the amount of [XXX CONFIDENTIAL TREATMENT REQUESTED] at any time within the six (6) month period prior to the expiration of the initial term.     4.  Revenue Sharing Agreement.  SFX and Ticketmaster agree to share the "per ticket" Customer Convenience Charges, and the "per order" handling fees with respect to the services provided by both Ticketmaster and SFX (defined as the quotient of the total amount of handling fees collected by Ticketmaster per year divided by the number of orders processed by Ticketmaster per year) (collectively, "Per-Order Ticket Revenues"), on all Tickets for Attractions for which such charges and fees are received and retained according to the following methodology: The first [XXX CONFIDENTIAL TREATMENT REQUESTED] of Per-Order Ticket Revenues shall be retained by Ticketmaster, and the next [XXX CONFIDENTIAL TREATMENT REQUESTED] of Per-Order Ticket Revenues or portion thereof shall be paid to SFX. All Per-Order Ticket Revenues above [XXX CONFIDENTIAL TREATMENT REQUESTED] shall be divided equally between SFX and Ticketmaster. Settlement and payment of all amounts owed to SFX under this Section 4 shall be made on a weekly basis, with a reconciliation and any adjustments made on a quarterly basis. In the event that Ticketmaster does not receive a minimum amount of [XXX CONFIDENTIAL TREATMENT REQUESTED] of Per-Order Ticket Revenues per year on an annual blended basis for each of the initial [XXX CONFIDENTIAL TREATMENT REQUESTED] years of the Agreement, then SFX shall pay to Ticketmaster an amount equal to the total amount of any such shortfall (up to a maximum of [XXX CONFIDENTIAL TREATMENT REQUESTED] per year and in an aggregate amount not to exceed [XXX CONFIDENTIAL TREATMENT REQUESTED]). Commencing in year [XXX CONFIDENTIAL TREATMENT REQUESTED] of this Agreement, SFX shall pay any amounts to be paid hereunder ratably over years [XXX CONFIDENTIAL TREATMENT REQUESTED], [XXX CONFIDENTIAL TREATMENT REQUESTED] and [XXX CONFIDENTIAL TREATMENT REQUESTED] from the amounts otherwise payable to SFX under Sections 4, 5 and 6 of this Agreement. The parties shall mutually agree to the amount and timing of any increases to be made to the Customer Convenience Charges and the handling fees over the term of this Agreement. The initial Customer Convenience Charges, the handling fees at an agreed to minimum of [XXX CONFIDENTIAL TREATMENT REQUESTED] per order and minimal annual increases shall be set forth on a schedule to be attached to the Master Agreement; provided, however, that in the event the parties are unable to reach agreement on the amount of the annual increases for the then existing Customer Convenience Charges and handling fees, such increases each year commencing as of January 1, 1999 shall be the greater of [XXX CONFIDENTIAL TREATMENT REQUESTED]% per annum or the percentage increase in the national Consumer Price Index over the immediately 3 -------------------------------------------------------------------------------- preceding twelve months as promulgated by the United States Department of Labor, Bureau of Labor Statistics.     5.  Rights to Premium Service Charge.  The amount of any additional service charge with respect to VIP or premium Tickets sold to Attractions which entitle the purchaser to additional services or perquisites at any Facility (i.e., premium parking, special entrances, priority seating, wait service, etc.), or with respect to special events for which such additional service charge is separately negotiated by SFX and agreed to by the owner or operator of the Facility, and which are in excess of the applicable base Customer Convenience Charge per Ticket for that Attraction, shall be divided as follows: [XXX CONFIDENTIAL TREATMENT REQUESTED]% shall be retained by Ticketmaster, and [XXX CONFIDENTIAL TREATMENT REQUESTED]% shall be paid to SFX. Settlement and payment of all amounts owed to SFX under this Section 5 shall be made on a weekly basis.     [XXX CONFIDENTIAL TREATMENT REQUESTED]       7.  Signing Bonus; Annual Advances.  In consideration for SFX entering into and performing this Agreement, Ticketmaster shall, on the fifth Business Day after the date of the execution of this Agreement, pay to SFX a non-refundable signing bonus in the amount of [XXX CONFIDENTIAL TREATMENT REQUESTED]. Additionally, on the fifth Business Day of January, 1999, and on the fifth Business Day of January of each of the years 2000, 2001, 2002 and 2003, Ticketmaster shall advance to SFX the sum of [XXX CONFIDENTIAL TREATMENT REQUESTED]. The advances made to SFX on the fifth Business Day of January of each of the first five years of the term of the Agreement shall be fully recoupable without interest by Ticketmaster throughout the course of the year and shall be offset against any and all amounts otherwise due to SFX under Sections 4, 5 and 6 hereof until all amounts are recouped in full; provided, however, that all amounts from advances which have not been recouped by Ticketmaster in the event of a termination of the Agreement prior to the expiration of its term shall be paid by SFX to Ticketmaster in full promptly following the effective date of such termination.     8.  Internet Marketing.  SFX shall have the right to place links to Ticketmaster's Ticketmaster.com web site from SFX owned or operated facilities for the purpose of selling Tickets to Attractions, and Ticketmaster shall place links from its Ticketmaster.com web site to SFX owned and operated web sites to enable purchasers of Tickets to Attractions to gain access to SFX's transaction page. Ticketmaster shall provide SFX with a box on the Ticketmaster web site at which Tickets for SFX's Attractions are sold for SFX's use in connection with its sponsorship sales, and shall also provide prominent space for SFX to include ticket header sponsorship information on the web page outside the box for SFX's use in connection with the sale of Tickets to SFX's Attractions.     9.  Credit Card Charges.  With respect to all Tickets which are purchased through the use of American Express, Master Card, Visa, or Discover Card, SFX shall instruct Ticketmaster to increase the Customer Convenience Charge by an amount equal to [XXX CONFIDENTIAL TREATMENT REQUESTED], provided that Ticketmaster may increase such amount by the amount of any increase in inter-bank fees.     10.  Additional Business Opportunities.  Ticketmaster and SFX agree to use their reasonable best efforts to develop future merchandising and promotional opportunities, including but not limited to joint ventures for licensing, merchandising and affinity and similar programs to be sold through Ticketmaster Direct and other sources (including various existing and to-be-formed Internet sites), and to use reasonable efforts to cause additional promotional programming and other opportunities through Home Shopping Network, USA Network and other assets of USAI on commercially reasonable terms.     11.  Access to Data Bases.  At SFX's request, Ticketmaster shall deliver to SFX without cost the data bases for all Attractions in accessible electronic form and in a reasonably expeditious manner for SFX's use, subject to Ticketmaster obtaining any requisite consents prior to such delivery. Alternatively, 4 -------------------------------------------------------------------------------- SFX may from time to time request that Ticketmaster provide SFX with certain reasonable services utilizing the SFX data bases and the Ticketmaster data bases, and upon such request Ticketmaster shall provide such services and shall be compensated for providing such services at its direct cost (excluding corporate overhead allocations) plus [XXX CONFIDENTIAL TREATMENT REQUESTED]%. Additionally, from time to time, Ticketmaster and SFX shall cooperate to develop affinity merchandising and similar programs to be shared jointly between the parties utilizing both SFX's and Ticketmaster's data bases, and the profits from any sales generated by such particular programs shall be shared equally between the parties after deducting the direct costs thereof (excluding corporate overhead allocations).     12.  Affinity Programs.  At SFX's request, Ticketmaster shall mail information about current or future affinity programs (i.e., programs which provide additional benefits to the purchaser of a Ticket) which SFX provides to Ticketmaster to any consumer who purchases a Ticket through Telephone Sales to an Attraction at an SFX Facility or a Non-SFX Facility (provided SFX first receives the written consent to so solicit from the third party having a ticketing agreement with Ticketmaster for such Attraction at the Non-SFX Facility), at Ticketmaster's direct cost (excluding corporate overhead allocations) plus [XXX CONFIDENTIAL TREATMENT REQUESTED]%. Ticketmaster and SFX shall cooperate in expanding such services utilizing Ticketmaster's phone operators and other Ticketmaster assets and personnel (such as Ticketmaster's monthly Guide) on economic terms and conditions to be mutually agreed to by the parties.     13.  Storage Fee; Additional Ticketmaster Income; Promotion Efforts.  Ticketmaster agrees to eliminate the account storage fee or any similar fee which is being charged to SFX or any SFX Affiliate as of the Effective Date. SFX agrees that it will provide an amount of business opportunities to Ticketmaster's various businesses (other than the ticketing business, i.e., Ticketmaster Direct) which will result, on an annual basis, in additional operating income to Ticketmaster of at least [XXX CONFIDENTIAL TREATMENT REQUESTED], based on Ticketmaster's representation that its business operates at no less than a [XXX CONFIDENTIAL TREATMENT REQUESTED]% margin. Such additional operating income shall come from services which Ticketmaster provides to SFX for licensing, merchandising and affinity and similar programs and/or other revenue sources described herein. SFX shall use its reasonable best efforts to promote the use of IVR and Internet sales of Tickets at all SFX Facilities and for all SFX Attractions.     14.  Representations and Warranties of SFX.  SFX represents and warrants to Ticketmaster that: (a)SFX and each of the SFX Affiliates is a corporation duly organized and in good standing in its state of incorporation and has adequate power to enter into and perform this Agreement; (b)This Agreement has been duly authorized, executed and delivered on behalf of SFX and constitutes the legal, valid and binding agreement of SFX, enforceable in accordance with its terms; (c)The entering into and performance of this Agreement will not violate any judgment, order, law or regulation applicable to SFX or any provision of SFX's charter or bylaws, or result in any breach of, constitute a default under, or result in the creation of any line, charge, security interest or other encumbrance upon any assets of SFX pursuant to any instrument to which SFX is a party or by which it or its assets may be bound; (d)SFX has the right to sell, or Controls the Right to sell, Tickets to each SFX Facility which is subject to the terms of this Agreement at which any of its Attractions are held, and is duly authorized to execute, perform and deliver this Agreement; and (e)SFX has the right, authority and power to enter into this Agreement on behalf of and bind itself and each of the SFX Affiliates. 5 --------------------------------------------------------------------------------     15.  Representations and Warranties of Ticketmaster.  Ticketmaster represents and warrants to SFX that: (a)Ticketmaster is a corporation duly organized and in good standing in its state of incorporation and has adequate power to enter into and perform this Agreement; (b)This Agreement has been duly authorized, executed and delivered on behalf of Ticketmaster and constitutes the legal, valid and binding agreement of Ticketmaster, enforceable in accordance with its terms; (c)The entering into and performance of this Agreement will not violate any judgment, order, law or regulation applicable to Ticketmaster or any provision of Ticketmaster's charter or bylaws, or result in any breach of, constitute a default under, or result in the creation of any line, charge, security interest or other encumbrance upon any assets of Ticketmaster pursuant to any instrument to which Ticketmaster is a party or by which it or its assets may be bound; (d)Ticketmaster is duly authorized to execute, perform and deliver this Agreement; and (e)Ticketmaster has the right, authority and power to enter into this Agreement on behalf of and bind each of the TM Affiliates.     16.  Miscellaneous.       (a)  Notices.  Any notice required or permitted to be given by the provisions of this Agreement shall be conclusively deemed to have been received by a party hereto on the day it is delivered by hand or fax to such party at the addresses or fax numbers indicated below (or at such other address or fax number such party shall specify to the other party in writing including by fax), or, if sent by registered or certified mail, on the third Business Day after the day on which mailed, addressed to such party at such address: If to SFX, at:   SFX Entertainment, Inc. 650 Madison Avenue 16th Floor New York, New York 10022 Attn: Michael G. Ferrel, President & CEO Fax No. (212) 486-4869 with a copy to:   SFX Entertainment, Inc. 650 Madison Avenue 16th Floor New York, New York 10022 Attn: Richard A. Liese, Esq. Fax No. (212) 486-4830 If to Ticketmaster, at:   Ticketmaster Corporation 3701 Wilshire Boulevard Seventh Floor Los Angeles, California 90010 Attn: Terry Barnes, President & CEO Fax No. (213) 480-4884 6 -------------------------------------------------------------------------------- with a copy to:   Ticketmaster Corporation 8800 Sunset Boulevard West Hollywood, California 90069 Attn: Eugene Cobuzzi, COO Fax No. (310) 360-6509 with a copy to:   Ticketmaster Corporation 555 West 57th Street New York, New York 10019 Attn: Daniel R. Goodman, Esq. Fax No. (212) 399-1395 and with a copy to:   Ticketmaster Corporation 8800 West Sunset Boulevard West Hollywood, California 90069 Attn: Stuart DePina, CFO Fax No. (310) 360-0625     (b)  Applicable Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. Any action that is or may be commenced by any party pertaining to this Agreement and the subject matter hereof shall be commenced in a Federal or state court located in New York County, New York. The parties hereto hereby consent to the jurisdiction of such court.     (c)  Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be deemed to be one and the same Agreement.     (d)  Amendments.  This Agreement shall not be changed, modified, altered or amended in any respect without the mutual consent of the parties hereto, which consent shall be evidenced by a written amendment to this Agreement executed by the parties.     (e)  Entire Agreement.  This written Agreement and the Exhibit hereto constitute the sole and only agreement of the parties relating to the matters covered hereby. Any prior or contemporaneous agreements, promises, negotiations or representations not expressly set forth in this Agreement are of no force or effect.     (f)  Joint and Several Obligations.  Notwithstanding anything to the contrary contained in this Agreement, all agreements, covenants, duties and obligations of SFX hereunder shall be the joint and several agreements, covenants, duties and obligations of SFX and each of the SFX Affiliates.     (g)  Existing Agreements.  Upon the execution of this Agreement, and except as otherwise provided herein, including the extension of the existing Agreement on the terms set forth herein, all existing ticketing servicing agreements between Ticketmaster and any of SFX or the SFX Affiliates shall automatically terminate as of the Effective Date hereof with respect to activities following such date, and shall be of no further force or effect with respect to activities following such date.     (h)  Confidentiality.  It is the intent of the parties hereto that the terms, conditions and provisions of this Agreement shall remain confidential and shall not be disclosed to any other person without the prior consent of the non-disclosing party. However, the parties acknowledge that (i) in operating under this Agreement and the Master Agreement, multiple employees of each of them will be privy to some or all of the provisions hereof and (ii) certain regulatory processes (including, but not limited to, those related to the Securities and Exchange Commission) may require disclosure of some or all of the provisions hereof, and that any disclosure pursuant thereto, or any inadvertent disclosure by a recipient thereof of any non-material terms, shall not constitute 7 -------------------------------------------------------------------------------- a breach of this Agreement. In the event either party is requested or required (by oral questions, interrogatories, requests for information or documents in legal proceedings, subpoena, civil investigative demand or other similar process) to disclose all or any portions of this Agreement, the party from whom the disclosure is sought shall provide the other party with immediate oral, followed by prompt written, notice of any such request or requirements so that such party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. If, in the absence of a protective order or other remedy, the party from whom disclosure is sought is, nonetheless, legally compelled to disclose all or any portions of this Agreement, such party may, without liability hereunder, disclose the Agreement or only that portion of the Agreement which it is legally required to disclose.     (i)  Severability.  In the event any one or more of the provisions contained in this Agreement 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 provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. Further, in the event that any provision of this Agreement shall be held to be unenforceable by virtue of its scope, but may be made enforceable by a limitation thereof, such provision shall be deemed to be amended to the minimum extent necessary to render it enforceable under the laws of the jurisdiction in which enforcement is sought.     17.  Indemnity.       (a)  SFX shall protect, indemnify, save and hold Ticketmaster and the TM Affiliates, including all of their respective officers, directors, shareholders, employees and/or agents, harmless from and against any and all claims, actions, damages, expenses (including court costs and reasonable attorneys' fees), obligations, losses, liabilities and liens imposed or incurred by, or asserted against, Ticketmaster, the TM Affiliates or their successors or assigns, by any person or entity, caused by or occurring as a result of SFX's use of the TM System at a Facility, except to the extent that such claim shall relate to Ticketmaster's gross negligence or wilful misconduct with respect thereto, the performance of this Agreement or the breach of any covenant, representation or warranty contained in this Agreement by SFX, its agents, employees or any other person (other than Ticketmaster or a TM Affiliate) acting under the direction and on behalf of SFX.     (b)  Ticketmaster shall protect, indemnify, save and hold SFX and the SFX Affiliates, including all of their respective officers, directors, shareholders, employees and/or agents, harmless from and against any and all claims, actions, damages, expenses (including court costs and reasonable attorneys' fees), obligations, losses, liabilities and liens imposed or incurred by, or asserted against, SFX, the SFX Affiliates or their successors or assigns, by any person or entity, caused by or arising out of any alleged patent, trademark, or copyright infringement, asserted against SFX with respect to SFX's use of the TM System, except to the extent that any such claim shall relate to SFX's negligence or wilful misconduct with respect thereto, the performance of this Agreement or the breach of any covenant, representation or warranty contained in this Agreement by Ticketmaster, its agents, employees or any other person (other than SFX or an SFX Affiliate) acting under the direction and on behalf of Ticketmaster.     18.  Press Releases.  It is the intention of the parties to issue a press release regarding the general nature of the terms and conditions of this Agreement after the execution by both parties of this Agreement. Notwithstanding the foregoing, neither party shall make or issue any public statements, disclosure or press release with respect to the matters contemplated herein without the prior consent of the other, which consent shall not be unreasonably withheld, provided that (i) press releases in conformity with the disclosure requirements of the Securities and Exchange Commission, in a form which shall be previously approved by Ticketmaster and SFX, may be issued by SFX and/or Ticketmaster if deemed necessary, (ii) that the parties hereto shall continue such communications with 8 -------------------------------------------------------------------------------- directors, employees, customers, suppliers, franchisees, lenders, lessors, shareholders, partners and other particular groups as may be legally required or necessary or appropriate and not inconsistent with the best interests of the other parties for the proper consummation of the transactions contemplated herein, and (iii) as required by law.     19.  Expenses.  Each of SFX and Ticketmaster shall be solely responsible for and bear all of their respective expenses, including, without limitations, expenses of legal counsel, accountants and other advisors, incurred at any time in connection with all negotiations and documentation relating to the parties' entering into this Agreement and the Master Agreement.     In order to confirm your agreement to the terms and conditions set forth herein, kindly execute and return the signed copy hereof to the undersigned.         Very truly yours,         SFX ENTERTAINMENT, INC.         By:   /s/ MICHAEL G. FERREL    -------------------------------------------------------------------------------- Michael G. Ferrel         Its:   President and Chief Executive Officer AGREED TO AND ACCEPTED THIS 13th DAY OF NOVEMBER, 1998:         TICKETMASTER CORPORATION         By:   /s/ TERRY BARNES    -------------------------------------------------------------------------------- Terry Barnes         Its:   President and Chief Executive Officer         9 -------------------------------------------------------------------------------- QuickLinks Information marked [XXX CONFIDENTIAL TREATMENT REQUESTED] has been omitted pursuant to a request for confidential treatment. Such omitted information has been filed separately with the Securities and Exchange Commission. [LETTERHEAD] November 13, 1998

  Exhibit 10(b)   SECOND AMENDMENT TO SUBORDINATED LOAN AGREEMENT FOR EQUITY CAPITAL              This SECOND AMENDMENT TO SUBORDINATED LOAN AGREEMENT FOR EQUITY CAPITAL (this "Amendment") is entered into and effective as of September 13, 1999, (the "Effective Date"), by and between Sun America Inc. ("Lender") and Sun America Asset Management Corporation, Inc. ("Borrower"), with reference to the following recitals: RECITALS.           A.     Effective September 13, 1993, Lender and Borrower entered into a Subordinated Loan Agreement for Equity Capital (the "Agreement"), pursuant to the terms of which Lender loaned to Borrower the sum of $14,000,000.00 (the "Principle Amount") and upon which interest was to be paid quarterly at the rate of seven percent (7%) per annum from the effective date of that Agreement (the "Loan").           B.    The Loan was scheduled to mature on September 13, 1996. However, pursuant to a Subordinated Loan Agreement Amendment Extending the Maturity Date dated September 3. 1996 (the "September 1996 Amendment"), the parties agreed to extend the maturity date of the Loan to September 13, 1999 and to change the interest payable thereon from seven percent (7%) to nine percent (9%) per annum.           C.    On the Effective Date, Borrower has paid to Lender the sum of $7,000,000.00, constituting partial repayment of the Principle Amount, leaving an unpaid principle balance of $7,000,000.00 (the "Unpaid Principle Amount") plus interest payable thereon as calculated in accordance with this Amendment.           D.    In accordance with the terms and conditions of this Amendment, Lender and Borrower desire to amend the Agreement to extend the maturity date with respect to the Unpaid Principle Amount and to amend the interest rate payable thereon.           NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Amendment and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree to amend the Agreement as follows:           Section 1. Amendment to the Agreement.          The second paragraph on the first page of the Agreement is amended to read in full as follows:   "In consideration of the sum of $7,000,000.00 and subject to the terms and conditions hereinafter set forth, the Borrower promises to pay to the Lender or assigns on September 13, 2002 (the "Scheduled Maturity Date") (the last day of the month at least three years from the effective date of this Agreement) at the principal office of the Lender the above-mentioned sum and interest thereon payable at the rate of eight percent (8%) per annum (interest to be paid quarterly) from the effective date of this Agreement, which date shall be the date so agreed upon by the Lender and Borrower."              Section 3.      Conflicts. Except as specifically amended by this Amendment, the provisions of the September 1996 Amendment shall be superseded by this Amendment and the Agreement shall continue in effect and shall bind the parties hereto. In the event there is a conflict between the provisions of the Agreement and this Amendment, the provisions of this Amendment shall in all respects control.             Section 4.      Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original and all of which, taken together, shall constitute one and the same agreement.   (The signature page follows)                 IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of the Effective Date.                   -2- --------------------------------------------------------------------------------  LENDER:                                                                                                               SUNAMERICA INC              By:    /s/James R. Belardi              Name:   James R. Belardi            Title:   Executive Vice President    BORROWER:                                                                                                                SUNAMERICA ASSET MANAGEMENT CORPORATION, INC.               By:    /s/Debbie Potash-Turner               Name:   Debbie Potash-Turner                                        Title:     Chief Financial Officer   -3- --------------------------------------------------------------------------------          

PROMISSORY NOTE   $75,000 January 19, 2001 Oakton, Virginia   for value received, SPORTSCOMBINE.COM, INC., a Delaware corporation ("Payor") promises to pay to VirtualSellers and/or assigns ("Holder"), the principal sum of $75,000 with interest on the outstanding principal amount at prime +2% interest (Interest only). Interest shall accrue until the maturity date, when all interest and principal will be paid in full. In no event shall interest charged or received by Holder be greater than the maximum interest rate permitted by applicable law. 1. All payments of interest and principal shall be in lawful money of the United States of America, and shall be made pro rata among all Holders. All payments shall be applied first to accrued interest, and thereafter to principal. 2. The entire outstanding principle and all unpaid accrued interest shall become fully due and payable on July 19, 2001, (the "Maturity Date"), with the option on the part of the Payor to extend for an additional six months, and/or unless otherwise agreed to in writing by both parties. If the option is exercised, interest for the initial six months will be due at that time, after which monthly interest only payments will be made until the loan is paid in full. 3. In the event of any default hereunder, Payor shall pay all reasonable attorneys' fees and court costs incurred by Holder in enforcing and collecting this Note. 4. Payor hereby waives demand, notice, presentment, protest and notice of dishonor. 5. The terms of this Note shall be construed in accordance with the laws of the Commonwealth of Virginia, as applied to contracts entered into by Virginia residents within the Commonwealth of Virginia, which contracts are to be performed entirely within the Commonwealth of Virginia. 6. Any term of this Note may be amended or waived with the written consent of Payor and the Holder.   SPORTCOMBINE.COM, INC. /s/ Kevin C. Samson By: Kevin C. Samson Title: President

EXHIBIT 10.39 AMENDMENT #2 to the Purchase of Equipment and Services Agreement Between Sprint/United Management Company And Hybrid Networks, Incorporated     This is the Second Amendment ("Amendment 2") to the Purchase of Equipment and Services Agreement ("Agreement") dated May 1, 2000, between Sprint/United Management Company ("Sprint"), a Kansas corporation, with offices at 2330 Shawnee Mission Parkway, Westwood, Kansas 66205 and Hybrid Networks, Inc. ("Hybrid"), a Delaware corporation, with its principal offices at 6409 Guadalupe Mines Road, San Jose, CA 95120.     This Amendment 2 shall be effective (the "Effective Date") as of December 31, 2000.     In order to facilitate the parties' working relationship, Sprint and Hybrid have agreed to certain modifications of the Agreement and the December 22, 2000 Amendment to the Agreement ("Amendment 1"), as follows: 1.Notwithstanding anything else set forth in the Agreement or in Amendment #1, the Warranty Period for all Equipment, shipped by Hybrid prior to the Effective Date of this Amendment #2, shall be 18 months from the date of shipment. The Warranty Period is independent of Substantial Completion and Final Acceptance of any System, including but not limited to Sprint's Final Acceptance of the Phoenix System (P.O. #1233953). In the case of Software, the Warranty Period is 90 days from the date of shipment by Hybrid to Sprint of the Software. Equipment or Software that is corrected or replaced pursuant to warranty is warranted only for the remaining portion of the original 18-month or original 90-day Warranty Period, respectively. 2.All elements of "Project: SAM" noted on Schedule A to the May 1, 2000 High Level Requirements letter specified in Paragraph 1.24 of the Agreement are deleted from Schedule A and inserted instead in Schedule B to that May 1, 2000 High Level Requirements letter. The December, 2000 date for release of the SAM Modem and Headend to Sprint for testing is deleted and instead, the "Project: Sam" will be scheduled on a "best efforts" basis after further project, product and business definition. Notwithstanding the foregoing and for the avoidance of any doubt, moving "Project: Sam" from Schedule A to Schedule B does not impact the pricing of any CPE Equipment, which is $195.00 per CPE Equipment as of December 1, 2000. 3.If the Phoenix System does not achieve Final Acceptance on or prior to December 31, 2001, Hybrid shall, at its sole option and discretion, either: (i) issue a credit to Sprint against any then outstanding invoices and future purchases in the amount of $661,640.65; or (ii) pay to Sprint the sum of $661,640.65. The failure of the Phoenix System to achieve Final Acceptance on or prior to December 31, 2001 shall not constitute a breach by Hybrid of the Final Acceptance provisions of the Agreement, Amendment 1 or Amendment 2 as they relate to the Phoenix System. The parties understand and agree that Sprint's waiver of this particular breach is not and will not be construed to be a waiver of any other right or remedy that Sprint may have under the Agreement, Amendment #1 or Amendment #2, including, without limitation, other rights or remedies related to the Phoenix System. 4.Unless otherwise specified in this Amendment #2, all capitalized terms used herein shall have the meanings set forth in the Agreement. 1 -------------------------------------------------------------------------------- 5.In the event of a conflict between the terms of this Amendment 2 and the terms of Amendment 1 or the Agreement, the terms of this Amendment 2 shall control. 6.All other terms and conditions of the Agreement, including Amendment 1 remain unchanged. Except as specifically stated herein, nothing in this Amendment 2 waives either party's rights under the Agreement or Amendment 1.     IN WITNESS WHEREOF, each party has executed this Amendment 2 by a duly authorized representative. The parties acknowledge that they have read, understood and agreed to the terms of this Amendment 2. SPRINT/UNITED MANAGEMENT COMPANY   HYBRID NETWORKS, INC. By:  --------------------------------------------------------------------------------   By:  -------------------------------------------------------------------------------- Name:  --------------------------------------------------------------------------------   Name: Judson W. Goldsmith Title:  --------------------------------------------------------------------------------   Title: Vice President of Finance Dated:  --------------------------------------------------------------------------------   Dated:  -------------------------------------------------------------------------------- 2 --------------------------------------------------------------------------------

QuickLinks -- Click here to rapidly navigate through this document INTRAWARE, INC. CHANGE OF CONTROL SEVERANCE AGREEMENT     This Change of Control Severance Agreement (the "Agreement") is made and entered into by and between            (the "Employee") and Intraware, Inc. (the "Company"), effective as of the latest date set forth by the signatures of the parties hereto below. R E C I T A L S     A.  It is expected that the Company from time to time will consider the possibility of an acquisition by another company or other change of control as a means of enhancing stockholder value. The Board of Directors of the Company (the "Board") recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities. The Board has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company.     B.  The Board believes that it is in the best interests of the Company and its stockholders to provide the Employee with an incentive to continue his employment and to motivate the Employee to maximize the value of the Company upon a Change of Control for the benefit of its stockholders.     C.  The Board believes that it is imperative to provide the Employee with certain severance benefits upon Employee's termination of employment following a Change of Control which provides the Employee with enhanced financial security and provides incentive and encouragement to the Employee to remain with the Company notwithstanding the possibility of a Change of Control.     D.  Certain capitalized terms used in the Agreement are defined in Section 6 below. The parties hereto agree as follows:     1.  Term of Agreement.  This Agreement shall terminate upon the date that all obligations of the parties hereto with respect to this Agreement have been satisfied.     2.  At-Will Employment.  The Company and the Employee acknowledge that the Employee's employment is and shall continue to be at-will, as defined under applicable law. If the Employee's employment terminates for any reason, including (without limitation) any termination prior to the announcement of a Change of Control, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation except for those payments that may be available in accordance with the Company's established employee plans and practices or pursuant to other agreements with the Company.     3.  Severance Benefits.       (a)  Termination In Connection With A Change of Control.  If the Employee's employment terminates as a result of Involuntary Termination (as defined below) other than for Cause at any time after the announcement of a Change of Control or twelve (12) months following a Change of Control or the announcement of a Change of Control, whichever comes later (a "Severance Termination"), then, subject to Section 5, the Employee shall be entitled to receive the following severance benefits:     (1)  Severance Payment.  A cash payment in an amount equal to fifty percent (50%) of the Employee's Annual Compensation plus a pro rata payment of the current year bonus award based on the target bonus for the Employee; 1 --------------------------------------------------------------------------------     (2)  Continued Employee Benefits.  One hundred percent (100%) Company-paid health, dental and life insurance coverage at the same level of coverage as was provided to such employee immediately prior to the Severance Termination (the "Company-Paid Coverage"). If such coverage included the Employee's dependents immediately prior to the Severance Termination, such dependents shall also be covered at Company expense. Company-Paid Coverage shall continue until the earlier of (i) six (6) months from the date of the Involuntary Termination or (ii) the date that the Employee and his dependents become covered under another employer's group health, dental or life insurance plans that provide Employee and his dependents with comparable benefits and levels of coverage. For purposes of Title X of the Consolidated Budget Reconciliation Act of 1985 ("COBRA"), the date of the "qualifying event" for Employee and his dependents shall be the date upon which the Company-Paid Coverage terminates.     (3)  Option Accelerated Vesting.  Employee shall receive one (1) year of additional vesting, in addition to any vesting acceleration as provided in section 11 (c) of the 1996 Stock Option Plan (as amended), on all outstanding stock options as of the Termination Date of Employee's Severance Termination (but, in no event, shall any option become vested and exercisable as to more than one hundred percent (100%) of the shares subject to such option). The vested portion of Employee's options (including the portion of such options which becomes vested pursuant to this Section) shall remain exercisable for such period of time as is prescribed in the respective stock option agreements.     (4)  Timing of Severance Payments.  Any severance payment to which Employee is entitled under Section 3(a)(1) shall be paid by the Company to the Employee (or to the Employee's successor in interest, pursuant to Section 7(b)) in cash and in full, not later than thirty (30) calendar days following the Termination Date, subject to Section 9(f).     (b)  Voluntary Resignation; Termination For Cause.  If the Employee's employment terminates by reason of the Employee's voluntary resignation (and is not an Involuntary Termination), or if the Employee is terminated for Cause, then the Employee shall not be entitled to receive severance or other benefits except for those (if any) as may then be established under the Company's then existing option, severance and benefits plans and practices or pursuant to other agreements with the Company.     (c)  Disability; Death.  If the Company terminates the Employee's employment as a result of the Employee's Disability, or such Employee's employment is terminated due to the death of the Employee, then the Employee shall not be entitled to receive severance or other benefits except for those (if any) as may then be established under the Company's then existing severance and benefits plans and practices or pursuant to other agreements with the Company.     (d)  Termination Apart from Change of Control.  In the event the Employee's employment is terminated for any reason, either prior to the announcement of a Change of Control or after the twelve (12)-month period following a Change of Control, then the Employee shall be entitled to receive severance and any other benefits only as may then be established under the Company's existing severance and benefits plans and practices or pursuant to other agreements with the Company.     4.  Attorney Fees, Costs and Expenses.  The Company shall reimburse Employee for the reasonable attorney fees, costs and expenses incurred by the Employee in connection with any action brought by Employee to enforce his rights hereunder, provided such action is not decided in favor of the Company.     5.  Limitation on Payments.   2 --------------------------------------------------------------------------------     (a) In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Employee (i) constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for this Section 5, would be subject to the excise tax imposed by Section 4999 of the Code, then the Employee's severance benefits under Section 3(a)(1) shall be either     (A) delivered in full, or     (B) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code. Any taxes due under Section 4999 shall be the responsibility of the employee.     (b) If a reduction in the payments and benefits that would otherwise be paid or provided to the Employee under the terms of this Agreement is necessary to comply with the provisions of Section 5(a), the Employee shall be entitled to select which payments or benefits will be reduced and the manner and method of any such reduction of such payments or benefits (including but not limited to the number of options that would vest under Section 3(a)) subject to reasonable limitations (including, for example, express provisions under the Company's benefit plans) (so long as the requirements of Section 5(a) are met). Within thirty (30) days after the amount of any required reduction in payments and benefits is finally determined in accordance with the provisions of Section 5(c), the Employee shall notify the Company in writing regarding which payments or benefits are to be reduced. If no notification is given by the Employee, the Company will determine which amounts to reduce. If, as a result of any reduction required by Section 5(a), amounts previously paid to the Employee exceed the amount to which the Employee is entitled, the Employee will promptly return the excess amount to the Company.     (c) Unless the Company and the Employee otherwise agree in writing, any determination required under this Section 5 shall be made in writing by the Company's Accountants immediately prior to Change of Control, whose determination shall be conclusive and binding upon the Employee and the Company for all purposes. For purposes of making the calculations required by this Section 5, the Accountants may, after taking into account the information provided by the Employee, 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 Employee 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.     6.  Definition of Terms.  The following terms referred to in this Agreement shall have the following meanings:     (a)  Annual Compensation.  "Annual Compensation" means an amount equal to the greater of (i) Employee's Company salary for the twelve (12) months preceding the Change of Control or (ii) Employee's Company Salary on an annualized basis.     (b)  Cause.  "Cause" shall mean (i) any act of personal dishonesty taken by the Employee in connection with his responsibilities as an employee and intended to result in substantial personal enrichment of the Employee, (ii) the conviction of a felony, (iii) a willful act by the Employee that constitutes gross misconduct and that is injurious to the Company, or (iv) for a period of not less than thirty (30) days following delivery to the Employee of a written demand for performance 3 -------------------------------------------------------------------------------- from the Company that describes the basis for the Company's belief that the Employee has not substantially performed his duties, continued violations by the Employee of the Employee's obligations to the Company that are demonstrably willful and deliberate on the Employee's part. Any dismissal for cause in accordance with Subsection (iv) of this Section 6(b) must be approved by the Company's Board of Directors prior to the dismissal date.     (c)  Change of Control.  "Change of Control" means 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) becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then outstanding voting securities;     (ii) A change in the composition of the Board occurring within a twelve-month period, 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 the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company);     (iii) The consummation of 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 or such surviving entity's parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or such surviving entity's parent outstanding immediately after such merger or consolidation;     (iv) The consummation of the sale or disposition by the Company of all or seventy-five percent (75%) or more of the Company's assets.     (d)  Disability.  "Disability" shall mean that the Employee has been unable to perform his Company duties as the result of his incapacity due to physical or mental illness, and such inability, at least twenty-six (26) weeks after its commencement, is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Employee or the Employee's legal representative (such Agreement as to acceptability not to be unreasonably withheld). Termination resulting from Disability may only be effected after at least thirty (30) days' written notice by the Company of its intention to terminate the Employee's employment. In the event that the Employee resumes the performance of substantially all of his duties hereunder before the termination of his employment becomes effective, the notice of intent to terminate shall automatically be deemed to have been revoked.     (e)  Involuntary Termination.  "Involuntary Termination" shall mean (i) without the Employee's express written consent, the significant reduction of the Employee's duties, authority or responsibilities, relative to the Employee's duties, authority or responsibilities as in effect immediately prior to such reduction, or the assignment to Employee of such reduced duties, authority or responsibilities; (ii) without the Employee's express written consent, a substantial reduction, without good business reasons, of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction; (iii) a reduction by the Company in the base salary or target bonus of the Employee as in effect immediately prior to such reduction; (iv) a material reduction by the Company in the kind or level of employee benefits, 4 -------------------------------------------------------------------------------- including bonuses, to which the Employee was entitled immediately prior to such reduction with the result that the Employee's overall benefits package is significantly reduced; (v) the relocation of the Employee to a facility or a location more than twenty-five (25) miles from the Employee's then present location, without the Employee's express written consent; (vi) any purported termination of the Employee by the Company that is not effected for Disability or for Cause, or any purported termination for which the grounds relied upon are not valid; (vii) the failure of the Company to obtain the assumption of this Agreement by any successors contemplated in Section 7(a) below; or (viii) any act or set of facts or circumstances that would, under California case law or statute constitute a constructive termination of the Employee.     (f)  Termination Date.  "Termination Date" shall mean (i) if this Agreement is terminated by the Company for Disability, thirty (30) days after notice of termination is given to the Employee (provided that the Employee shall not have returned to the performance of the Employee's duties on a full-time basis during such thirty (30)-day period), (ii) if the Employee's employment is terminated by the Company for any other reason, the date on which a notice of termination is given, provided that if within thirty (30) days after the Company gives the Employee notice of termination, the Employee notifies the Company that a dispute exists concerning the termination or the benefits due pursuant to this Agreement, then the Termination Date shall be the date on which such dispute is finally determined, either by mutual written agreement of the parties, or a by final judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired and no appeal having been perfected), or (iii) if the Agreement is terminated by the Employee, the date on which the Employee delivers the notice of termination to the Company.     7.  Successors.       (a) Company's Successors. Any successor to the Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, 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 Section 7(a) or which becomes bound by the terms of this Agreement by operation of law.     (b) Employee's Successors. The terms of this Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.     8.  Notice.       (a)  General.  Notices and all other communications contemplated by this Agreement 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 Employee, mailed notices shall be addressed to him at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.     (b)  Notice of Termination.  Any termination by the Company for Cause or by the Employee as a result of a voluntary resignation or an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with Section 8(a) of this Agreement. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the termination date (which shall be 5 -------------------------------------------------------------------------------- not more than thirty (30) days after the giving of such notice). The failure by the Employee to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of the Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his rights hereunder.     9.  Miscellaneous Provisions.       (a)  No Duty to Mitigate.  The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source.     (b)  Waiver.  No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.     (c)  Whole Agreement.  This Agreement and any outstanding stock option agreements represent the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior arrangements and understandings regarding same. Other than the agreements described in the preceding sentence, no agreements, representations or understandings (whether oral or written and whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter hereof.     (d)  Choice of Law.  The validity, interpretation, construction and performance of this Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California without regard to principles of conflicts of laws.     (e)  Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.     (f)  Withholding.  All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes.     (g)  Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. 6 --------------------------------------------------------------------------------     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below. COMPANY   INTRAWARE, INC.     By:      --------------------------------------------------------------------------------     Title:      --------------------------------------------------------------------------------     Date:      -------------------------------------------------------------------------------- EMPLOYEE      --------------------------------------------------------------------------------     Date:      -------------------------------------------------------------------------------- 7 -------------------------------------------------------------------------------- QuickLinks INTRAWARE, INC. CHANGE OF CONTROL SEVERANCE AGREEMENT

Exhibit 10(k) McDONALD’S CORPORATION 2001 OMNIBUS STOCK OWNERSHIP PLAN -------------------------------------------------------------------------------- THE PLAN McDonald’s Corporation, a Delaware corporation (the “Company”), established the McDonald’s Corporation 2001 Omnibus Stock Ownership Plan (the “Plan”) effective as of May 17, 2001. This Plan permits the grant of stock options, restricted stock, stock appreciation rights, performance units, stock bonuses and other stock-based awards. This Plan is subject to approval by the Company’s stockholders at the May 17, 2001 Annual Meeting. 1. Purpose The purpose of this Plan is to advance the interest of the Company by encouraging and enabling the acquisition of a larger personal financial interest in the Company by those employees and non-employee directors and senior directors upon whose judgment and efforts the Company is largely dependent for the successful conduct of its operations. An additional purpose of this Plan is to provide a means by which employees of the Company and its Subsidiaries and non-employee directors and senior directors can acquire and maintain Stock ownership, thereby strengthening their commitment to the success of the Company and their desire to remain in the employ or in the service of the Company and its Subsidiaries. It is anticipated that the acquisition of such financial interest and Stock ownership will stimulate the efforts of such employees and directors on behalf of the Company, strengthen their desire to continue in the service of the Company, and encourage shareholder and entrepreneurial perspectives through Stock ownership. It is also anticipated that the opportunity to obtain such financial interest and Stock ownership will prove attractive to promising new employees and will assist the Company in attracting such employees. 2. Definitions As used in this Plan, the terms set forth below shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):      (a) “Affiliate Service” of a Grantee who is an employee of the Company means the Grantee’s Company Service plus the Grantee’s aggregate number of years of employment with any Subsidiary during the period before it became a Subsidiary, unless the Committee determines otherwise in connection with an entity’s becoming a Subsidiary.      (b) “Award” means any stock options, shares of restricted stock, stock appreciation rights, performance units, stock bonuses or other stock-based awards granted under this Plan.       (c) “Award Agreement” has the meaning specified in Section 4(c)(v).      (d) “Board” means the Board of Directors of the Company.      (e) “Business Combination” has the meaning specified in Section 2(g)(iii).      (f) “Cause” means (i) in the case of a Grantee who is an employee of the Company or a Subsidiary, the Grantee’s commission of any act or acts involving dishonesty, fraud, illegality or moral turpitude, and (ii) in the case of a Grantee who is a non-employee director or senior director of the Company, cause pursuant to Article Thirteenth (c) of the Company’s Restated Certificate of Incorporation.       (g) “Change in Control” means the happening of any of the following events:                     (i) the acquisition by any Person of “beneficial ownership” (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 20% or more of either (A)  the then-outstanding shares of Stock (“Outstanding Company Common Stock”) or (B)  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 Section 2(g)(i), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company or (4) any acquisition by any entity pursuant to a transaction that complies with Sections 2(g)(iii)(A), (B) and (C); 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 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; or                     (iii) consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company and/or any entity controlled by the Company, or a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any entity controlled by the Company (each, a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of 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, an entity that, 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 entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 20% 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 (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 shareholders of the Company of a complete liquidation or dissolution of the Company.      (h) “Code” means the Internal Revenue Code of 1986, as amended, and regulations and rulings thereunder. References to a particular section of, or rule under, the Code shall include references to successor provisions.       (i) “Committee” has the meaning specified in Section 4(a).       (j) “Company” has the meaning specified in the first paragraph.      (k) “Company Service” of a Grantee who is an employee of the Company or a Subsidiary means the Grantee’s aggregate number of years of employment with the Company and its Subsidiaries during periods when those entities were Subsidiaries.      (l) “Disability” as it regards employees means, a “disability” within the meaning of the Company’s Profit Sharing Program, as amended from time to time.      “Disability” as it regards non-employee directors and senior directors means a physical or mental condition that prevents the director from performing his or her duties as a member of the Board or a senior director, as applicable, and that is expected to be permanent or for an indefinite duration exceeding one year.      (m) “Disaffiliation” of a Subsidiary means the Subsidiary’s ceasing to be a Subsidiary for any reason (including, without limitation, as a result of a public offering, or a spinoff or sale by the Company, of the stock of the Subsidiary).      (n) “Dividend Equivalent Amount” has the meaning specified in Section 9(c)(iii)(C).       (o) “Effective Date” means May 17, 2001.       (p) “Fair Market Value” of any security of the Company means, as of any applicable date, the closing price of the security at the close of normal trading hours on the New York Stock Exchange, or, if no such sale of the security shall have occurred on such date, on the next preceding date on which there was such a sale.       (q) “Foreign Equity Incentive Plan” has the meaning specified in Section 15.       (r) “Grant Date” has the meaning specified in Section 6(a)(i).       (s) “Grantee” means an individual who has been granted an Award.      (t) “Immediate Family” means a Grantee’s spouse, children, grandchildren, stepchildren, parents, stepparents, grandparents, siblings, nieces, nephews and in-laws.      (u) “including” or “includes” means “including, without limitation,” or “includes, without limitation.”      (v) “Incumbent Board” has the meaning specified in Section 2(g)(ii).      (w) “Job Loss” includes a Termination of Employment resulting from a corporate restructuring or reorganization, job restructuring, reduction in force, outsourcing or replacement of jobs by technology.      (x) “Measuring Period” has the meaning specified in Section 6(f)(i)(B).       (y) “Minimum Consideration” means $.01 per share or such larger amount determined pursuant to resolution of the Board to be “capital” (within the meaning of Section 154 of the Delaware General Corporation Law).      (z) “1934 Act” means the Securities Exchange Act of 1934, as amended, and regulations and rulings thereunder. References to a particular section of, or rule under, the 1934 Act shall include references to successor provisions.      (aa) “non-employee director” means a member of the Board who is not an employee of the Company.      (bb) “Option Price” means the per-share purchase price of Stock subject to a stock option.      (cc) “other stock-based awards” means an Award made pursuant to Section 6(h).      (dd) “Outstanding Company Common Stock” has the meaning specified in Section 2(g)(i).      (ee) “Outstanding Company Voting Securities” has the meaning specified in Section 2(g)(i).      (ff) “Outstanding Performance Unit” has the meaning specified in Section 22(c).      (gg) “Performance Percentage” has the meaning specified in Section 6(f)(i)(C).      (hh) “Permissible Transferee” has the meaning specified in Section 8.      (ii) “Person” means any “individual,” “entity” or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act.      (jj) “Plan” means this McDonald’s Corporation 2001 Omnibus Stock Ownership Plan.      (kk) “Qualified Performance-Based Award” means any Award that is intended to qualify for the Section 162(m) Exemption, as provided in Section 24.      (ll) “Qualified Performance Goal” means a performance goal established by the Committee in connection with the grant of a Qualified Performance-Based Award, which (i) is based on the attainment of specified levels of one or more Specified Performance Goals, and (ii) is set by the Committee within the time period prescribed by Section 162(m) of the Code; provided, that in the case of a stock option or stock appreciation right, the Qualified Performance Goal shall be considered to have been established without special action by the Committee, by virtue of the fact that the Stock subject to such Award must increase in value over its Fair Market Value on the Grant Date (or over a higher value) in order for the Grantee to realize any compensation from exercising the stock option or stock appreciation right.      (mm) “Retirement” as it regards employees means a Termination of Employment any time after attaining either (i) age 60 with at least 20 years of Affiliate Service, or (ii) combined age and years of Affiliate Service equal to or greater than 70, other than a Termination of Employment for Cause.      “Retirement” as it regards non-employee directors and senior directors means Termination of Directorship with at least 10 years of service as a member of the Board and/or a senior director or after age 70.      (nn) “Section 16 Grantee” means an individual subject to potential liability under Section 16(b) of the 1934 Act with respect to transactions involving equity securities of the Company.      (oo) “Section 162(m) Exemption” means the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code.      (pp) “Special Circumstances” for a Termination of Employment of a Grantee means (i) Job Loss or (ii) the Grantee becomes an owner-operator of a McDonald’s restaurant in connection with the Termination of Employment.      (qq) “Specified Performance Goal” means any of the following measures as applied to the Company as a whole or to any Subsidiary, division or other unit of the Company: earnings per share, economic profit, owner-operator cash flow, transaction counts, customer satisfaction rating, comparable sales growth, sales, net profit after tax, gross profit, operating profit, cash generation, unit volume, return on equity, return on assets, change in working capital, return on capital or shareholder return.      (rr) “Stock” means the common stock of the Company, par value $.01 per share.      (ss) “Subsidiary” means any entity in which the Company directly or through intervening subsidiaries owns 25% or more of the total combined voting power or value of all classes of stock, or, in the case of an unincorporated entity, a 25% or more interest in the capital and profits.       (tt) “Tendered Restricted Stock” has the meaning specified in Section 9(a).       (uu) “Termination of Directorship” means the first date upon which a non-employee director or a senior director is neither a member of the Board nor a senior director.      (vv) “Termination of Employment” of a Grantee means the termination of the Grantee’s employment with the Company and the Subsidiaries. A Grantee employed by a Subsidiary also shall be deemed to incur a Termination of Employment if there occurs a Disaffiliation of that Subsidiary, unless either (i) the Grantee is, immediately after the Disaffiliation, an employee of the Company or one of the remaining Subsidiaries, or (ii) in connection with the Disaffiliation, the Awards held by the Grantee are assumed, or replaced with new awards, by the former Subsidiary or an entity that controls the former Subsidiary following the Disaffiliation.      (ww) “Unit Value” has the meaning specified in Section 9(c)(iii). 3.   Scope of this Plan       (a)    The total number of shares of Stock reserved and available for grant under this Plan shall not exceed 64,000,000, subject to adjustment as provided in Section 23. Such shares may be treasury shares or newly-issued shares or both, as may be determined from time to time by the Board or by the Committee appointed pursuant to Section 4.      (b) Subject to adjustment as provided in Section 23, the maximum number of Shares of Stock for which stock options and stock appreciation rights may be granted to any Grantee in any three-year period shall not exceed 5,000,000. In addition, Section 24 sets forth limits on the other Qualified Performance-Based Awards that any Grantee may receive.      (c) Subject to Sections 3(a) and (b) (as to the maximum number of shares of Stock available for delivery in connection with Awards) and to Section 3(d), and subject to adjustment as provided in Section 23, up to 3,000,000 shares of restricted stock and up to 200,000 bonus shares of Stock may be granted under this Plan.      (d) If and to the extent an Award shall expire or terminate for any reason without having been exercised in full, or shall be forfeited, the shares of Stock (including restricted stock) associated with the expired, terminated or forfeited portion of such Award shall become available for other Awards. 4.    Administration        (a) Subject to Section 4(b), this Plan shall be administered by a committee appointed by the Board (the “Committee”). All members of the Committee shall be “outside directors” (as defined or interpreted for purposes of the Section 162(m) Exemption). The composition of the Committee also shall be subject to such limitations as the Board deems appropriate to permit transactions in Stock pursuant to this Plan to be exempt from liability under Rule 16b-3 under the 1934 Act.      (b) The Board may, in its discretion, reserve to itself any or all of the authority and responsibility of the Committee. To the extent that the Board has reserved to itself the authority and responsibility of the Committee, all references to the Committee in this Plan shall be deemed to refer to the Board.      (c) The Committee shall have full and final authority, in its discretion, but subject to the express provisions of this Plan, as follows:                 (i) to grant Awards,                 (ii) to determine (A) when Awards may be granted, and (B) whether or not specific Awards shall be identified with other specific Awards, and, if so, whether they shall be exercisable cumulatively with or alternatively to such other specific Awards,                (iii) to interpret this Plan and to make all determinations necessary or advisable for the administration of this Plan,                (iv) to prescribe, amend, and rescind rules and regulations relating to this Plan, including rules and regulations with respect to the exercisability and nonforfeitability of Awards upon the Termination of Employment of a Grantee,                (v) to determine all terms and provisions of all Awards, including without limitation any restrictions or conditions (including specifying such performance criteria as the Committee deems appropriate, and imposing restrictions with respect to Stock acquired upon exercise of a stock option, which restrictions may continue beyond the Grantee’s Termination of Employment or Termination of Directorship, as applicable), which shall be set forth in a written agreement for each Award (the “Award Agreements”), which need not be identical, and, with the consent of the Grantee, to modify any such Award Agreement at any time,                (vi) to authorize foreign Subsidiaries to adopt Foreign Equity Incentive Plans as provided in Section 15,                (vii) to delegate any or all of its duties and responsibilities under this Plan to any individual or group of individuals it deems appropriate, except its duties and responsibilities with respect to Section 16 Grantees and with respect to Qualified Performance-Based Awards, and (A) the acts of such delegates shall be treated hereunder as acts of the Committee and (B) such delegates shall report to the Committee regarding the delegated duties and responsibilities,                (viii) to accelerate the exercisability of, and to accelerate or waive any or all of the restrictions and conditions applicable to, any Award or any group of Awards for any reason,                (ix) subject to Section 6(a)(ii), to extend the time during which any Award or group of Awards may be exercised or earned,                (x) to make such adjustments or modifications to Awards to Grantees working outside the United States as are necessary and advisable to fulfill the purposes of this Plan,                (xi) to impose such additional conditions, restrictions and limitations upon the grant, exercise or retention of Awards as the Committee may, before or concurrently with the grant thereof, deem appropriate, including requiring simultaneous exercise of related identified Awards and limiting the percentage of Awards that may from time to time be exercised by a Grantee, and               (xii) to prescribe rules and regulations concerning the transferability of any Awards, and to make such adjustments or modifications to Awards transferable pursuant to Section 8 as are necessary and advisable to fulfill the purposes of this Plan.      (d) The determination of the Committee on all matters relating to this Plan or any Award Agreement shall be made in its sole discretion, and shall be conclusive and final. No member of the Committee shall be liable for any action or determination made in good faith with respect to this Plan or any Award. 5.  Eligibility Awards may be granted to any employee (including any officer) of the Company or any of its domestic Subsidiaries, any employee, officer or director of any of the Company’s foreign Subsidiaries, and to any non-employee director or senior director of the Company. In selecting the individuals to whom Awards may be granted, as well as in determining the number of shares of Stock subject to, and the other terms and conditions applicable to, each Award, the Committee shall take into consideration such factors as it deems relevant in promoting the purposes of this Plan. 6.   Conditions to Grants        (a)    General conditions.                (i) The “Grant Date” of an Award shall be the date on which the Committee grants the Award or such later date as specified in advance by the Committee.                (ii) The term of each Award shall be a period of 10 years from the Grant Date; provided, that the Committee may determine that the term of an Award will be a different period, not longer than 15 years from the Grant Date; and provided, further, that in any event the term of each Award shall be subject to earlier termination as herein provided.                (iii) A Grantee may, if otherwise eligible, be granted additional Awards in any combination.      (b) Grant of Stock Options and Option Price. A stock option represents the right to purchase a share of Stock at a predetermined Option Price. No later than the Grant Date of any stock option, the Committee shall establish the Option Price of such stock option. The per-share Option Price of a stock option shall not be less than 100% of the Fair Market Value of a share of the Stock on the Grant Date. Such Option Price shall be subject to adjustment as provided in Section 23. The applicable Award Agreement may provide that the stock option shall be exercisable for restricted stock.      (c) Grant of Incentive Stock Options. At the time of the grant of any stock option, the Committee may designate such stock option as an “incentive stock option” as defined in Section 422 of the Code. Any stock option not so designated shall not be an incentive stock option, even if it otherwise meets the requirements of Section 422 of the Code. Any stock option so designated that nevertheless fails (either at the time of grant or at any time thereafter as a result of accelerated vesting or otherwise) to meet the requirements of Section 422 of the Code, in whole or in part, shall be treated as a stock option that is not an incentive stock option to the extent of such failure. The terms of any incentive stock option shall require the Grantee to notify the Committee or its designee of any “disqualifying disposition” (as defined in Section 421(b) of the Code) of any Stock issued pursuant to the exercise of the incentive stock option within 10 days after such disposition.      (d) Grant of Shares of Restricted Stock.                (i) Shares of restricted stock are shares of Stock that are awarded to a Grantee and that, during a restricted period, may be forfeitable to the Company upon such conditions as may be set forth in the applicable Award Agreement. Restricted stock may not be sold, assigned, transferred, pledged or otherwise encumbered during the restricted period.                (ii) The Committee shall, in its discretion, determine the amount, if any, that a Grantee shall pay for shares of restricted stock, subject to the following sentence. Except with respect to shares of restricted stock that are treasury shares, for which no payment need be required, the Committee shall require the Grantee to pay at least the Minimum Consideration for each share of restricted stock granted to such Grantee. Such payment shall be made in full by the Grantee before the delivery of the shares and in any event no later than 10 days after the Grant Date for such shares. In the discretion of the Committee and to the extent permitted by law, payment also may be made in accordance with Section 10.                (iii) The Committee may, but need not, provide that all or any portion of a Grantee’s Award of restricted stock, or restricted stock acquired upon exercise of a stock option, shall be forfeited:                          (A) except as otherwise specified in the Award Agreement, upon the Grantee’s Termination of Employment as provided in Section 13, or                          (B) if the Company or the Grantee does not achieve specified performance goals (if any) within a specified time period after the Grant Date and before the Grantee’s Termination of Employment, or                          (C) upon failure to satisfy such other conditions as the Committee may specify in the applicable Award Agreement; provided that, subject to Sections 4(c)(viii), 13, 14 and 22, in no case shall such Award become nonforfeitable before the first anniversary of the Grant Date.                (iv) If a share of restricted stock is forfeited, then, if the Grantee was required to pay for such share or acquired such share upon the exercise of a stock option: (A) the Grantee shall be deemed to have resold such share to the Company at the lesser of (1) the amount paid or, if the restricted stock was acquired on exercise of a stock option, the Option Price paid by the Grantee for such share, or (2) the Fair Market Value of a share of Stock on the date of such forfeiture; (B) the Company shall pay to the Grantee the amount determined under clause (A) of this sentence as soon as is administratively practical; and (C) such share shall cease to be outstanding, and shall no longer confer on the Grantee thereof any rights as a stockholder of the Company, from and after the later of the date the event causing the forfeiture occurred or the date of the Company’s tender of the payment specified in clause (B) of this sentence, whether or not such tender is accepted by the Grantee.                (v) The Committee may provide that any share of restricted stock shall be held (together with a stock power executed in blank by the Grantee) in escrow by the Secretary of the Company until such share becomes nonforfeitable or is forfeited. Any share of restricted stock shall bear an appropriate legend specifying that such share is non-transferable and subject to the restrictions set forth in this Plan and the applicable Award Agreement. If any share of restricted stock becomes nonforfeitable, the Company shall cause the certificate for such share to be issued or reissued without such legend.      (e) Grant of Stock Appreciation Rights. A stock appreciation right represents the right to receive a payment, in cash, shares of Stock or both (as determined by the Committee) equal to the excess of the Fair Market Value, on the date such Fair Market Value is determined, of a specified number of shares of Stock, over the Award’s grant or exercise price, if any. When granted, stock appreciation rights may, but need not, be identified with shares of Stock subject to a specific stock option, specific shares of restricted stock or specific performance units of the Grantee (including any stock option, shares of restricted stock or performance units granted on or before the Grant Date of the stock appreciation rights) in a number equal to or different from the number of shares of Stock subject to the stock appreciation rights so granted. If stock appreciation rights are identified with shares of Stock subject to a stock option, with shares of restricted stock or with performance units, then, unless otherwise provided in the applicable Award Agreement, the Grantee’s associated stock appreciation rights shall terminate upon, and to the extent of, (i) the expiration, termination, forfeiture or cancellation of such stock option, shares of restricted stock or performance units, (ii) the exercise of such option or performance units, or (iii) the date such shares of restricted stock become nonforfeitable.      (f) Grant of Performance Units. Performance units represent the right of a Grantee to receive shares or cash or a combination of shares and cash equal to the Fair Market Value of such shares at a future date in accordance with the terms of such grant. To the extent performance units are based upon a number of shares of Stock (whether such shares are to be delivered in kind or in cash), grants thereof shall be subject to the limitations imposed by Section 3.                (i) In connection with the grant of any performance unit, the Committee shall:                      (A)    determine performance goals applicable to such grant,                      (B)    designate a period, of not less than one year nor more than seven years, for the measurement of the extent to which performance goals are attained, which period may begin prior to the Grant Date (the “Measuring Period”), and                      (C)   assign a “Performance Percentage” to each level of attainment of performance goals during the Measuring Period, with the percentage applicable to minimum attainment being 0% and the percentage applicable to maximum attainment to be determined by the Committee from time to time.                (ii) In establishing performance goals, the Committee may consider any performance factor or factors it deems appropriate, including Specified Performance Goals, remaining employed for a specified period or any other factor the Committee deems appropriate. The Committee may, at any time, in its discretion, modify performance goals in order to facilitate their attainment for any reason, including recognition of unusual or nonrecurring events affecting the Company or a Subsidiary or changes in applicable laws, regulations or accounting principles. If a Grantee is promoted, demoted or transferred to a different business unit of the Company during a Measuring Period, then, to the extent the Committee determines the performance goals or Measuring Period are no longer appropriate, the Committee may (A) adjust, change or eliminate the performance goals or the applicable Measuring Period as it deems appropriate in order to make them appropriate and comparable to the initial performance goals or Measuring Period; or (B) make a cash payment to the Grantee in an amount determined in accordance with the method described in Section 13(b)(iii), substituting the effective date of such promotion, demotion or transfer for the Termination of Employment referred to in Section 13(b)(iii).                (iii) When granted, performance units may, but need not, be identified with shares of Stock subject to a specific stock option, specific shares of restricted stock or specific stock appreciation rights of the Grantee granted under this Plan in a number equal to or different from the number of the performance units so granted. If performance units are identified with shares of Stock subject to a stock option, shares of restricted stock or stock appreciation rights, then, unless otherwise provided in the applicable Award Agreement, the Grantee’s associated performance units shall terminate upon (A) the expiration, termination, forfeiture or cancellation of such stock option, shares of restricted stock or stock appreciation rights, (B) the exercise of such stock option or stock appreciation rights, or (C) the date such shares of restricted stock become nonforfeitable.                (iv) If a Grantee commences employment after the performance goals of a particular Measuring Period are established, the Committee may grant an Award that is proportionately adjusted based on the period of actual service during the Measuring Period.      (g) Grant of Stock Bonuses. The Committee may, in its discretion, grant shares of Stock to any employee eligible under Section 5 to receive Awards, other than executive officers of the Company.      (h) Grant of Other Stock-Based Awards. The Committee may, in its discretion, grant other stock-based awards. These are Awards, other than stock options, stock appreciation rights, restricted stock or performance units, that are denominated in, valued, in whole or in part, by reference to, or otherwise based on or related to, Stock. The purchase, exercise, exchange or conversion of other stock-based awards granted under this Section 6(h) shall be on such terms and conditions and by such methods as shall be specified by the Committee. Where the value of another stock-based award is based on the difference between the excess of the Fair Market Value, on the date such Fair Market Value is determined, over such Award’s exercise or grant price, the exercise or grant price for such an Award will not be less than 100% of the Fair Market Value on the Grant Date. 7. Grantee’s Agreement to Serve The Committee may, in its discretion, require each Grantee who is granted an Award to, execute such Grantee’s Award Agreement, and to agree that such Grantee will remain in the employ of the Company or any of its Subsidiaries or remain as a non-employee director or senior director, as applicable, for at least one year after the Grant Date. No obligation of the Company or any of its Subsidiaries as to the length of any Grantee’s employment or service as a non-employee director or senior director shall be implied by the terms of this Plan, any grant of an Award hereunder or any Award Agreement. The Company and its Subsidiaries reserve the same rights to terminate employment of any Grantee as existed before the Effective Date. 8. Non-Transferability Each Award (other than restricted stock) granted hereunder shall not be assignable or transferable other than by will or the laws of descent and distribution; provided, however, that a Grantee may, in a manner set forth in rules established by the Committee: (a) designate in writing a beneficiary to exercise his or her Award after the Grantee’s death; (b) transfer a stock option (other than an incentive stock option), stock appreciation right, performance unit or other stock-based award to a revocable inter vivos trust as to which the Grantee is both the settlor and the trustee; and (c) if permitted by the Committee pursuant to its rules, transfer an Award (other than restricted stock or an incentive stock option) for no consideration to any of the following permissible transferees (each a “Permissible Transferee”): (i) any member of the Immediate Family of the Grantee to whom such Award was granted, (ii) any trust for the benefit of members of the Grantee’s Immediate Family, (iii) any partnership whose partners are members of the Grantee’s Immediate Family or (iv) Ronald McDonald House Charities or any Ronald McDonald House; and further provided that (A) the transferee shall remain subject to all of the terms and conditions applicable to such Award prior to such transfer; (B) any such transfer shall be subject to and in accordance with the rules and regulations prescribed by the Committee in accordance with Section 4(c)(xii), and (C) except as otherwise expressly provided for in this Plan or in the Transfer Rules, a Permissible Transferee shall have all the rights and obligations of the Grantee hereunder and the Grantee shall not retain any rights with respect to the transferred Award, and further provided that the payment of any tax attributable to the exercise of an Award shall remain the obligation of the Grantee and the period during which an Award shall remain exercisable under Section 13 shall depend upon the time and nature of the Grantee’s Termination of Employment. Notwithstanding the foregoing, the Committee may, from time to time, in its sole discretion designate additional individuals, persons or classes as Permissible Transferees, and permit other transfers as the Committee determines to be appropriate.      Each share of restricted stock shall be non-transferable until such share becomes nonforfeitable. 9.    Exercise   (a)   Exercise of Stock Options. Subject to Sections 4(c)(viii), 13, 14 and 22 and such terms and conditions as the Committee may impose, each stock option shall be exercisable as and when determined by the Committee; provided that, unless the Committee determines otherwise, each stock option shall be exercisable in one or more installments commencing not earlier than the first anniversary of the Grant Date of such stock option.      Each stock option shall be exercised by delivery of notice of intent to purchase a specific number of shares of Stock subject to such stock option. Such notice shall be in a manner specified by and satisfactory to the Company. The Option Price of any shares of Stock or shares of restricted stock as to which a stock option shall be exercised shall be paid in full at the time of the exercise. Payment may, at the election of the Grantee, be made in any one or any combination of the following:           (i) cash,           (ii) Stock held by the Grantee for more than six months prior to exercise of the stock option, valued at its Fair Market Value at the time of exercise,           (iii) with the approval of the Committee, shares of restricted stock held by the Grantee for more than six months prior to exercise of the stock option, each valued at the Fair Market Value of a share of Stock at the time of exercise, or           (iv) through simultaneous sale through a broker of shares acquired on exercise, as permitted under Regulation T of the Board of Governors of the Federal Reserve System.      In the discretion of the Committee and to the extent permitted by law, payment may also be made in accordance with Section 10.      If restricted stock is used to pay the Option Price for Stock subject to a stock option (“Tendered Restricted Stock”), then the Committee may, but need not, specify that (i) all the shares of Stock acquired on exercise of the stock option shall be subject to the same restrictions as the Tendered Restricted Stock, determined as of the date of exercise of the stock option, or (ii) a number of shares of Stock acquired on exercise of the stock option equal to the number of shares of Tendered Restricted Stock shall, unless the Committee provides otherwise, be subject to the same restrictions as the Tendered Restricted Stock, determined as of the date of exercise of the stock option.      (b) Exercise of Stock Appreciation Rights. Subject to Sections 4(c)(viii), 13, 14 and 22 and such terms and conditions as the Committee may impose, each stock appreciation right shall be exercisable as and when determined by the Committee; provided that, unless the Committee determines otherwise, each stock appreciation right shall be exercisable not earlier than the first anniversary of the Grant Date of such stock appreciation right, to the extent the stock option with which it is identified, if any, may be exercised, to the extent the restricted stock with which it is identified, if any, has become nonforfeitable, or to the extent the performance unit with which it is identified, if any, may be exercised. Stock appreciation rights shall be exercised by delivery to the Company of written notice of intent to exercise a specific number of stock appreciation rights. Unless otherwise provided in the applicable Award Agreement, the exercise of stock appreciation rights that are identified with shares of Stock subject to a stock option, shares of restricted stock or performance units shall result in the cancellation or forfeiture of such stock option, shares of restricted stock or performance units, as the case may be, to the extent of such exercise.      The benefit for each share as to which a stock appreciation right is exercised shall be equal to:           (i) the Fair Market Value of a share of Stock on the date of such exercise, reduced by           (ii) an amount equal to:                  (A) for any stock appreciation right identified with shares of Stock subject to a stock option, the Option Price of such stock option, unless the Committee in the grant of the stock appreciation right specified a higher amount or                (B) for any other stock appreciation right, the Fair Market Value of a share of Stock on the Grant Date of such stock appreciation right, unless the Committee in the grant of the stock appreciation right specified a higher amount; provided that the Committee, in its discretion, may provide that the benefit for any stock appreciation right shall not exceed such percentage of the Fair Market Value of a share of Stock on such Grant Date as the Committee shall specify.      The benefit upon the exercise of a stock appreciation right shall be payable in cash, except that the Committee, may, in its discretion, provide in the Award Agreement that benefits, with respect to any particular exercise, may be paid wholly or partly in Stock.      (c) Exercise of Performance Units.           (i) Subject to Sections 4(c)(viii), 13, 14 and 22 and such terms and conditions as the Committee may impose, if, with respect to any performance unit, the minimum performance goals have been achieved during the applicable Measuring Period, then such performance unit shall vest and be exercisable commencing on the later of (A) the first anniversary of the Grant Date or (B) the first day after the end of the applicable Measuring Period. Performance units shall be exercised by delivery to the Company of written notice of intent to exercise a specific number of performance units; provided, however, that performance units not identified with shares of Stock subject to a stock option, shares of restricted stock or stock appreciation rights shall be deemed exercised on the date on which they first become exercisable. Unless otherwise provided in the applicable Award Agreement, the exercise of performance units that are identified with shares of Stock subject to a stock option, shares of restricted stock or stock appreciation rights shall result in the cancellation or forfeiture of such shares of Stock subject to a stock option, shares of restricted stock or stock appreciation rights, as the case may be, to the extent of such exercise.           (ii) The benefit for each performance unit exercised shall be an amount equal to the product of:                     (A) the Unit Value multiplied by                     (B) the Performance Percentage attained during the Measuring Period for such performance unit.           (iii) The “Unit Value” shall be, as specified by the Committee,                     (A) a dollar amount,                     (B) an amount equal to the Fair Market Value of a share of Stock on the Grant Date,                     (C) an amount equal to the Fair Market Value of a share of Stock on the exercise date of the performance unit, including, if so provided in the applicable Award Agreement, an amount equal to the value that would result if dividends paid on a share of Stock on or after the Grant Date and on or before the exercise date were invested in shares of Stock as of each respective dividend payment date (“Dividend Equivalent Amount”), or                     (D) an amount equal to the Fair Market Value of a share of Stock on the exercise date of the performance unit (plus, if so specified in the applicable Award Agreement, a Dividend Equivalent Amount), reduced by the Fair Market Value of a share of Stock on the Grant Date of the performance unit.           (iv) Unless expressly provided for in the applicable Award Agreement, the benefit upon the exercise of a performance unit shall be payable on or about April 1st following the close of the Measuring Period.           (v) Benefits upon exercise of a performance unit shall be payable in cash (unless deferred under the terms and conditions of the Company’s Deferred Income Plan or in accordance with such other rules and regulations as the Committee may approve), except that the Committee, may, in its discretion, provide in the applicable Award Agreement that benefits, with respect to any particular exercise, may be paid wholly or partly in Stock. In the event the applicable Award Agreement provides that the benefit may be paid wholly in Stock, unless the Committee, in its discretion, specifies at the time of exercise that the benefit shall be paid partly or wholly in cash, the number of shares of Stock payable in lieu of cash shall be determined by valuing the Stock at its Fair Market Value on the date such benefit is to be paid. 10. Loans and Guarantees The Committee may, in its discretion:      (a) allow a Grantee to defer payment to the Company of all or any portion of (i) the Option Price of a stock option, (ii) the purchase price of a share of restricted stock, or (iii) any taxes associated with a benefit hereunder that is not a cash benefit at the time such benefit is so taxable, or      (b) cause the Company to guarantee a loan from a third party to the Grantee, in an amount equal to all or any portion of such Option Price, purchase price or any related taxes.      Any such payment deferral or guarantee by the Company pursuant to this Section 10 shall be on such terms and conditions as the Committee may determine; provided that the interest rate applicable to any such payment deferral shall be not more favorable to the Grantee than the terms applicable to funds borrowed by the Company. Notwithstanding the foregoing, a Grantee shall not be entitled to defer the payment of such Option Price, purchase price or any related taxes unless the Grantee (i) enters into a binding obligation to pay the deferred amount and (ii) except with respect to treasury shares, pays upon exercise of a stock option or grant of shares of restricted stock, as the case may be, an amount equal to or greater than the Minimum Consideration thereof. If the Committee has permitted a payment deferral or caused the Company to guarantee a loan pursuant to this Section 10, then the Committee may, in its discretion, require the immediate payment of such deferred amount or the immediate release of such guarantee upon the Grantee’s Termination of Employment or Termination of Directorship, as applicable, or if the Grantee sells or otherwise transfers the Grantee’s shares of Stock purchased pursuant to such deferral or guarantee. 11. Notification under Section 83(b) The Committee may, on the Grant Date or any later date, prohibit a Grantee from making the election described below. If the Committee has not prohibited such Grantee from making such election, and the Grantee shall, in connection with the exercise of any stock option, or the grant of any share of restricted stock, make the election permitted under Section 83(b) of the Code (i.e., an election to include in such Grantee’s gross income in the year of transfer the amounts specified in Section 83(b) of the Code), such Grantee shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service, in addition to complying with any filing and notification required pursuant to regulations issued under the authority of Section 83(b) of the Code. 12.   Withholding Taxes        (a)    Whenever, under this Plan, cash or Stock is to be delivered upon exercise or payment of an Award or a share of restricted stock becomes nonforfeitable, or any other event occurs that results in taxation of a Grantee with respect to an Award, the Company shall be entitled to require (i) that the Grantee remit an amount sufficient to satisfy all U.S. federal, state and local withholding tax requirements related thereto, (ii) the withholding of such sums from compensation otherwise due to the Grantee or from any shares of Stock due to the Grantee under this Plan or (iii) any combination of the foregoing; provided, however, that no amount shall be withheld from any cash payment or shares of Stock relating to an Award that was transferred by the Grantee in accordance with this Plan and such cash payment or delivery to such Permissible Transferee shall in no way be conditioned upon the Grantee’s remittance obligation described herein.      (b) If any disqualifying disposition (as defined in Section 421(b) of the Code) is made with respect to shares of Stock acquired under an incentive stock option granted pursuant to this Plan or any election described in Section 11 is made, then the individual making such disqualifying disposition or election shall remit to the Company an amount sufficient to satisfy all U.S. federal, state and local withholding taxes thereby incurred; provided, that in lieu of or in addition to the foregoing, the Company shall have the right to withhold such sums from compensation otherwise due to the Grantee or from any shares of Stock due to the Grantee under this Plan.      (c) Notwithstanding the foregoing, in no event shall the amount withheld in the form of shares of Stock due to a Grantee under this Plan exceed the minimum required by applicable law. 13.   Termination of Employment        (a) For Cause. If a Grantee has a Termination of Employment for Cause,                (i) the Grantee’s shares of restricted stock that are forfeitable shall thereupon be forfeited, subject to the provisions of Section 6(d)(iv) regarding repayment of certain amounts to the Grantee; and                (ii) any unexercised stock option, stock appreciation right, or performance unit shall terminate immediately upon such Termination of Employment for Cause.      (b) On Account of Death or Disability. If a Grantee has a Termination of Employment on account of the Grantee’s death or Disability, then:                (i) the Grantee’s shares of restricted stock that were forfeitable shall thereupon become nonforfeitable;                (ii) any unexercised stock option or stock appreciation right (other than a stock appreciation right identified with a share of restricted stock or a performance unit), whether or not exercisable on the date of such Termination of Employment may be exercised, in whole or in part, at any time within three years after such Termination of Employment (or until the 15th anniversary of the Grant Date, if sooner) by the Grantee, or after the Grantee’s death, by (A) his or her personal representative or by the person to whom the stock option or stock appreciation right is transferred by will or the applicable laws of descent and distribution, (B) the Grantee’s beneficiary designated in accordance with Section 8, (C) the then-acting trustee of the trust described in Section 8(b); or (D) a Permissible Transferee of an Award assigned or transferred in accordance with Section 8; and                (iii) any unexercised performance unit shall be deemed exercised upon such Termination of Employment by the Grantee (or, if applicable, an individual or entity as specified in Section 13(b)(ii)) as follows: (A) the value of any vested performance units shall be payable at the same time that payments for that Measuring Period are made to other Grantees under this Plan; and (B) the value of any unvested performance units shall be payable on or about April 1st of the year following the year of such Termination of Employment; provided that the value of any unvested performance unit shall be equal to the product of the Unit Value multiplied successively by each of the following:                     (1) a fraction, the numerator of which is the number of months (including as a whole month any partial month) that have elapsed since the beginning of such Measuring Period until the date of such Termination of Employment and the denominator of which is the number of months (including as a whole month any partial month) in the Measuring Period; and                     (2) the percentage that would be earned under the terms of the applicable Award Agreement assuming that the rate at which the performance goals are achieved as of the December 31st following Termination of Employment would continue until the end of the Measuring Period.      (c) On Account of Retirement. (i) If a Grantee has a Termination of Employment on account of Retirement after age 60 with 20 years or more of Affiliate Service, any unexercised stock option or stock appreciation right (other than a stock appreciation right identified with a share of restricted stock or a performance unit) that is then exercisable or that would have become exercisable within three years of such Retirement if the Grantee had remained employed by the Company or a Subsidiary throughout such three-year period, may be exercised, in whole or in part, by the Grantee or Permissible Transferee of an Award assigned or transferred in accordance with Section 8, at any time within three years after the Grantee’s Retirement or until the 15th anniversary of the Grant Date, if sooner.                (ii) If a Grantee has a Termination of Employment on account of Retirement with combined age and years of Affiliate Service equal to or greater than 70, any unexercised stock option or stock appreciation right (other than a stock appreciation right identified with a share of restricted stock or a performance unit) that is then exercisable or that would have become exercisable within three years of such Retirement if the Grantee had remained employed by the Company or a Subsidiary throughout such three-year period may be exercised, in whole or in part, by the Grantee or Permissible Transferee of an Award assigned or transferred in accordance with Section 8, at any time within three years after the Grantee’s Retirement or until the end of the stated term of the Award, if sooner, provided that the Grantee executes and delivers to the Company a two-year non-competition agreement (in a form reasonably satisfactory to the Company); and further provided that the Grantee provides one year’s prior written notice of the Grantee’s intention to retire to the officer in charge of the Benefits and Compensation Department in Oak Brook, Illinois. If the Grantee violates the provisions of the non-competition agreement during the two-year period following Retirement, all unexercised stock options and stock appreciation rights (other than stock appreciation rights identified with restricted stock or performance units) will immediately terminate and will not be exercisable.                (iii) The nonforfeitability and exercisability of restricted stock (and any stock appreciation rights identified therewith) held by a Grantee who has a Termination of Employment on account of Retirement shall be determined under Section 13(f). The vesting and exercisability of the Grantee’s performance units (and any stock appreciation rights identified therewith) shall be determined under Section 13(b)(iii).      (d) On Account of Termination of Employment After Age 60. If a Grantee has a Termination of Employment after attaining age 60, other than a Termination of Employment for Cause or on account of death, Disability or Retirement, any unexercised stock option or stock appreciation right (other than a stock appreciation right identified with a share of restricted stock or a performance unit) to the extent exercisable on the date of such Termination of Employment, may be exercised, in whole or in part, by the Grantee or Permissible Transferee of an Award assigned or transferred in accordance with Section 8, at any time within one year after the Grantee’s Termination of Employment or until the 15th anniversary of the Grant Date, if sooner. The nonforfeitability and exercisability of the Grantee’s restricted stock (and any stock appreciation rights identified therewith) shall be determined under Section 13(f). The vesting and exercisability of the Grantee’s performance units (and any stock appreciation rights identified therewith) shall be determined under Section 13(b)(iii).      (e) Special Circumstances; Disaffiliation. (i) If a Grantee has a Termination of Employment under Special Circumstances, the Grantee or Permissible Transferee of an Award assigned or transferred in accordance with Section 8 will receive an extension of time to exercise any unexercised stock options and stock appreciation rights (other than stock appreciation rights identified with restricted stock or performance units) and accelerated vesting of these stock options and stock appreciation rights based on the following rules that incorporate age and years of Affiliate Service (in the case of a Job Loss) or Company Service (in other Special Circumstances): Age and Years of Company or Affiliate Service Additional Vesting and Time to Exercise 70 plus years 3 Years 60 to 69 years 2 Years 50 to 59 years 1 Year provided, that in no event may a stock option or stock appreciation right be exercised after the 15th anniversary of the Grant Date.                (ii) If a Grantee has a Termination of Employment because of a Disaffiliation, the provisions of this Section 13(e)(ii) and Section 13(e)(iii) (and no other provision of this Section 13 that might otherwise apply) shall determine the consequences for such Grantee’s Awards. In such a case, the Grantee or Permissible Transferee of an Award assigned or transferred in accordance with Section 8 will be permitted to exercise any stock options and stock appreciation rights (other than stock appreciation rights identified with restricted stock or performance units) that are unexercised and vested immediately before the Grantee’s Termination of Employment for one year following the Grantee’s Termination of Employment.                (iii) In addition, if a Grantee has a Termination of Employment because of Special Circumstances or Disaffiliation, the nonforfeitability and exercisability of restricted stock (and any stock appreciation rights identified therewith) held by the Grantee shall be determined under Section 13(f)(i), and the vesting and exercisability of the Grantee’s performance units (and any stock appreciation rights identified therewith) shall be determined under Section 13(b)(iii).      (f) Any Other Reason. If a Grantee has a Termination of Employment for a reason other than those specified in this Section 13,                (i) the Grantee’s shares of restricted stock (and any stock appreciation rights identified therewith), to the extent forfeitable on the date of the Grantee’s termination of employment, shall be forfeited on such date;                (ii) any unexercised stock option or stock appreciation right (other than a stock appreciation right identified with a share of restricted stock or a performance unit) to the extent exercisable on the date of the Grantee’s Termination of Employment, may be exercised, in whole or in part, by the Grantee or Permissible Transferee of an Award assigned or transferred in accordance with Section 8, not later than the 30th day following the Grantee’s termination of employment; provided that, if such 30th day is not a business day, such stock option or stock appreciation right may be exercised not later than the first business day following such 30th day; and provided, further, that in no event may a stock option or stock appreciation right be exercised after the 15th anniversary of the Grant Date; and                (iii) the Grantee’s performance units (and any stock appreciation rights identified therewith) shall not vest further and may not be exercised, in whole or in part, by the Grantee or Permissible Transferee of an Award assigned or transferred in accordance with Section 8; provided that the value of any vested performance units shall be payable to the Grantee at the same time that payments for that Measuring Period are made to other Grantees under this Plan.      (g) Selection of Rule. If a particular Grantee’s Termination of Employment is covered by more than one of the foregoing rules, then except as specifically provided in Section 13(e)(ii), for each Award held by the Grantee, the applicable rule that is the most favorable to the Grantee shall apply.      (h) Committee Discretion. Notwithstanding the foregoing, the Committee may determine that the consequences of a Termination of Employment or a Termination of Directorship for a particular Award will differ from those outlined above, either (i) in connection with the grant of the Award, or (ii) if the change is favorable to the Grantee, after it is granted. 14.    Termination of Directorship        (a) For Cause. If a Termination of Directorship occurs for Cause, any unexercised stock option or other Awards shall thereupon terminate.      (b) Retirement. If a Termination of Directorship occurs because of Retirement, any unexercised stock option, whether or not exercisable on the date of Retirement, may be exercised, in whole or in part, for a period of three years from the Grantee’s Retirement, or until the end of its stated term, if sooner. Any other unvested Awards shall become vested and payable to the Grantee.      (c) Death or Disability. If Termination of Directorship occurs because of the death or Disability of the Grantee, any unexercised stock option, whether or not exercisable on the date of such Termination of Directorship, may be exercised by the Grantee, a Permissible Transferee or by the Grantee’s personal representative after the Grantee’s death, in whole or in part, at any time within three years after such Termination of Directorship or until the 15th anniversary of the Grant Date, if sooner. Any other unvested Awards shall become vested and payable to the Grantee, a Permissible Transferee or by the Grantee’s personal representative after the Grantee’s death.      (d) Other Termination. If a Termination of Directorship occurs for any reason other than for Cause (as described in Section 14(a)) or the death, Disability or Retirement of a Grantee, any unexercised stock option to the extent exercisable on the date of the Termination of Directorship, may be exercised, in whole or in part, at any time within one year after the Termination of Directorship, or until the end of its stated term, if sooner. Any other Awards to the extent the Awards are unvested on the date of Termination of Directorship shall be forfeited and cancelled. 15. Equity Incentive Plans of Foreign Subsidiaries The Committee may authorize any foreign Subsidiary to adopt a plan for granting Awards (a “Foreign Equity Incentive Plan”). All awards granted under such Foreign Equity Incentive Plans shall be treated as grants under this Plan. Such Foreign Equity Incentive Plans shall have such terms and provisions as the Committee permits not inconsistent with the provisions of this Plan and that may be more restrictive than those contained in this Plan. Awards granted under such Foreign Equity Incentive Plans shall be governed by the terms of this Plan, except to the extent that the provisions of such Foreign Equity Incentive Plans are more restrictive than the terms of this Plan, in which case such terms of such Foreign Equity Incentive Plans shall control. 16.   Securities Law Matters        (a) If the Committee deems it necessary to comply with the Securities Act of 1933, as amended, and the regulations and rulings thereunder, the Committee may require a written investment intent representation by the Grantee and may require that a restrictive legend be affixed to certificates for shares of Stock.      (b) If, based upon the opinion of counsel for the Company, the Committee determines that the exercise or nonforfeitability of, or delivery of benefits pursuant to, any Award would violate any applicable provision of (i) U.S. federal or state securities law or (ii) the listing requirements of any national securities exchange on which are listed any of the Company’s equity securities, then the Committee may postpone any such exercise, nonforfeitability or delivery, as the case may be, but the Company shall use its best efforts to cause such exercise, nonforfeitability or delivery to comply with all such provisions at the earliest practicable date. 17. Funding Benefits payable under this Plan to any person shall be paid directly by the Company. The Company shall not be required to fund, or otherwise segregate assets to be used for payment of, benefits under this Plan. 18. No Employment Rights Neither the establishment of this Plan, nor the granting of any Award, shall be construed to (a) give any Grantee the right to remain employed by the Company or any of its Subsidiaries or to any benefits not specifically provided by this Plan or (b) in any manner modify the right of the Company or any of its Subsidiaries to modify, amend, or terminate any of its employee benefit plans. 19. Rights as a Stockholder A Grantee shall not, by reason of any Award (other than restricted stock), have any right as a stockholder of the Company with respect to the shares of Stock that may be deliverable upon exercise or payment of such Award until such shares have been delivered to him or her. Shares of restricted stock held by a Grantee or held in escrow by the Secretary of the Company shall confer on the Grantee all rights of a stockholder of the Company, except as otherwise provided in this Plan. The Committee, in its discretion, at the time of grant of restricted stock, may permit or require the payment of cash dividends thereon to be deferred, and, if the Committee so determines, reinvested in additional restricted stock to the extent shares are available under Section 3 or otherwise reinvested. Stock dividends, other non-cash dividends and distributions, and deferred cash dividends issued with respect to restricted stock shall be treated as additional shares of restricted stock that are subject to the same restrictions and other terms as apply to the shares with respect to which such dividends are issued. The Committee may, in its discretion, provide for crediting to and payment of interest on deferred cash dividends. 20. Nature of Payments Any and all grants, payments of cash, or deliveries of shares of Stock hereunder shall constitute special incentive payments to the Grantee, and shall not be taken into account in computing the amount of salary or compensation of the Grantee for the purposes of determining any pension, retirement, death or other benefits under (a) any pension, retirement, profit-sharing, bonus, life insurance or other employee benefit plan of the Company or any of its Subsidiaries or (b) any agreement between the Company or any Subsidiary, on the one hand, and the Grantee, on the other hand, except as such plan or agreement shall otherwise expressly provide. 21. Non-Uniform Determinations Neither the Committee’s nor the Board’s determinations under this Plan need be uniform, and may be made by the Committee or the Board selectively among individuals who receive, or are eligible to receive, Awards (whether or not such individuals are similarly situated). Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations, to enter into non-uniform and selective Award Agreements as to (a) the identity of the Grantees, (b) the terms and provisions of Awards, and (c) the treatment, under Section 13, of Terminations of Employment. Notwithstanding the foregoing, the Committee’s interpretation of this Plan’s provisions shall be uniform as to similarly situated Grantees. 22. Change in Control Provisions Notwithstanding any other provision of this Plan to the contrary, in the event of a Change in Control:      (a) All stock options and stock appreciation rights outstanding as of the date such Change in Control occurs shall become fully vested and exercisable.      (b) The restrictions and other conditions applicable to any restricted stock, performance units or other stock-based awards, including vesting requirements, shall lapse, and such Awards shall become free of all restrictions and fully vested.      (c) Any performance units relating to Measuring Periods ending on or before the date of the Change in Control occurs that have been earned but not paid shall become immediately payable in cash. In addition, each Grantee who has an outstanding performance unit relating to a Measuring Period that ends after the Change in Control (whether or not vested) (an “Outstanding Performance Unit”) shall be paid, as soon as practicable after the Change in Control, a cash payment equal to the product of (i) the amount payable with respect to such performance unit, based on the target level of the associated performance goals, times (ii) a fraction, the numerator of which is the number of full or partial months that have elapsed since the beginning of such Measuring Period through the date on which the Change in Control occurs, and the denominator of which is the total number of months in such Measuring Period. The Committee shall determine, before or as soon as practicable after, such Change in Control, whether the Outstanding Performance Units shall remain outstanding following the Change in Control, and if so, (i) the Committee shall make any appropriate adjustments to reflect the Change in Control (such as changes in the applicable performance goals) without enlarging or diminishing the award opportunity represented by the Outstanding Performance Units and (ii) any amounts that thereafter become payable with respect to any Outstanding Performance Unit shall be reduced to the extent necessary to avoid duplicating any amounts previously paid with respect to the same Outstanding Performance Unit pursuant to the preceding sentence.      (d) Upon a Termination of Employment or Termination of Directorship occurring in connection with or during the period of one year after such Change in Control, other than for Cause, a stock option shall remain exercisable for not less than one year and one day following such termination or until the expiration of the stated term of such stock option, whichever period is shorter. 23. Adjustments The Committee shall make such adjustments (if any) as it deems appropriate and equitable, in its discretion, to the following:      (a) the aggregate numbers of shares of Stock, shares of restricted stock and bonus stock available under Sections 3(a) and (c),      (b) the number of shares of Stock, shares of restricted stock, stock appreciation rights or performance units covered by an outstanding Award,      (c) the Option Price of an outstanding stock option,      (d) the Fair Market Value of Stock to be used to determine the amount of the benefit payable upon exercise of outstanding stock appreciation rights or performance units,      (e) the maximum numbers of shares of Stock for which certain Awards may be granted to any Grantee in any three-year period under Section 3(b) and clauses (i) and (iii) of Section 24(c), and      (f) such other adjustments to outstanding Awards as the Committee may determine to be appropriate and equitable, to reflect a stock dividend, stock split, reverse stock split, share combination, recapitalization, merger, consolidation, acquisition of property or shares, separation, spinoff, reorganization, stock rights offering, liquidation, Disaffiliation of a Subsidiary or similar event of or by the Company. Such adjustments may include, without limitation, (i) the cancellation of outstanding Awards in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such Awards, (ii) the substitution of other property (including, without limitation, other securities) for the Stock covered by outstanding Awards, and (iii) in connection with any Disaffiliation of a Subsidiary, arranging for the assumption, or replacement with new awards, of Awards held by Grantees employed by the affected Subsidiary by the Subsidiary or an entity that controls the Subsidiary following the Disaffiliation. 24.   Qualified Performance-Based Awards.      (a) The provisions of this Plan are intended to ensure that all stock options and stock appreciation rights granted hereunder to any Grantee who is or may be a “covered employee” (within the meaning of Section 162(m)(3) of the Code) at the time of exercise qualify for the Section 162(m) Exemption, and all such Awards shall therefore be considered Qualified Performance-Based Awards and this Plan shall be interpreted and operated consistent with that intention. The provisions referred to in the preceding sentence include without limitation the limitation on the total amount of such Awards to any Grantee set forth in Section 3(b); the requirement of Section 4(a) that the Committee satisfy the requirements for being “outside directors” for purposes of the Section 162(m) Exemption; the limitations on the discretion of the Committee with respect to Qualified Performance-Based Awards; and the requirements of Sections 6(b) and 6(e) that the Option Price of stock options and the base price for determining the value of stock appreciation rights be not less than the Fair Market Value of the Stock on the Grant Date (which requirement constitutes the Qualified Performance Goal).      (b) When granting any restricted stock, performance units or other stock-based awards other than stock options and stock appreciation rights, the Committee may designate such Award as a Qualified Performance-Based Award, based upon a determination that (i) the recipient is or may be a “covered employee” (within the meaning of Section 162(m)(3) of the Code) with respect to such Award, and (ii) the Committee wishes such Award to qualify for the Section 162(m) Exemption. The provisions of this Section 24 shall apply to all such Qualified Performance-Based Awards, notwithstanding any other provision of this Plan, other than Section 22.      (c) The maximum amount of Qualified Performance-Based Awards (other than stock options and stock appreciation rights) that may be granted to any Grantee in any three-year period shall not exceed the following: (i) 5,000,000 shares for all Qualified Performance-Based Awards that are performance units based upon a number of shares (rather than upon a dollar amount); (ii) $5,000,000 for all Qualified Performance-Based Awards that are performance units based upon a dollar amount; and (iii) 200,000 shares for all other Qualified Performance-Based Awards; provided, that the number of shares set forth in clauses (i) and (iii) shall be subject to adjustment as provided in Section 23.      (d) Each Qualified Performance-Based Award (other than a stock option or stock appreciation right) shall be earned, vested and payable (as applicable) only upon the achievement of one or more Qualified Performance Goals, together with the satisfaction of any other conditions, such as continued employment, as the Committee may determine to be appropriate; provided that (i) the Committee may provide, either in connection with the grant thereof or by amendment thereafter, that achievement of such Performance Goals will be waived upon the death or Disability of the Grantee, and (ii) the provisions of Section 22 shall apply notwithstanding this sentence.      (e) Except as specifically provided in Section 24(d), no Qualified Performance-Based Award may be amended, nor may the Committee exercise any discretionary authority it may otherwise have under this Plan with respect to a Qualified Performance-Based Award under this Plan, in any manner to waive the achievement of the applicable Performance Goals or to increase the amount payable pursuant thereto or the value thereof, or otherwise in a manner that would cause the Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption. 25. Amendment of this Plan The Board may from time to time in its discretion amend or modify this Plan or Awards without the approval of the stockholders of the Company, except as such stockholder approval may be required (a) to permit the grant of Awards under, and transactions in Stock pursuant to, this Plan to be exempt from liability under Section 16(b) of the 1934 Act or (b) under the listing requirements of any national securities exchange on which are listed any of the Company’s equity securities; provided that except as provided in the next sentence, no such amendment shall adversely affect any previously-granted Award without the consent of the Grantee, and no such amendment may be made that would cause a Qualified Performance Based Award to cease to qualify for the Section 162(m) Exemption. Notwithstanding the foregoing, the Board may from time to time amend this Plan or Awards, and the Committee may from time to time amend Awards, without the consent of affected Grantees, (i) to comply with applicable law, stock exchange rules or accounting rules, and (ii) to make changes that do not materially decrease the value of such Awards. 26. Termination of this Plan This Plan shall terminate on the 10th anniversary of the Effective Date or at such earlier time as the Board may determine. Any termination, whether in whole or in part, shall not affect any Award then outstanding under this Plan. 27. No Illegal Transactions This Plan and all Awards granted pursuant to it are subject to all laws and regulations of any governmental authority that may be applicable thereto; and, notwithstanding any provision of this Plan or any Award, Grantees shall not be entitled to exercise Awards or receive the benefits thereof and the Company shall not be obligated to deliver any Stock or pay any benefits to a Grantee if such exercise, delivery, receipt or payment of benefits would constitute a violation by the Grantee or the Company of any provision of any such law or regulation. 28. Controlling Law The law of the State of Illinois, except its law with respect to choice of law, shall be controlling in all matters relating to this Plan. 29. Severability If all or any part of this Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate any portion of this Plan not declared to be unlawful or invalid. Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner that will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

QuickLinks -- Click here to rapidly navigate through this document Vicinity Corporation 370 San Aleso Avenue Sunnyvale, California 94085 October 24, 2001 PERSONAL & CONFIDENTIAL Mr. Tim McMullen 709 Davis Way Laguna Beach, CA 92651     Re:  Amended and Restated Executive Employment Agreement Dear Tim:     You and Vicinity Corporation, a Delaware corporation ("Vicinity" or the "Company"), are parties to an Executive Employment Agreement dated April 24, 2001 (the "Original Agreement"), which sets forth, among other things, the terms of your employment with Vicinity. This Amended and Restated Executive Employment Agreement (this "Agreement") supersedes the Original Agreement and any other agreement or policy to which Vicinity is a party with respect to any compensation and benefits payable to you.     Please review this Agreement, co-sign and date the Agreement below the Company's signature, and return it to us to confirm that this Agreement reflects our agreement regarding the terms, mutual promises and covenants applicable to your employment by Vicinity. 1.  EMPLOYMENT BY THE COMPANY     (a) Position and Duties. Subject to terms set forth herein, the Company agrees to employ you in the position of Chief Operating Officer and you hereby accept such employment. You shall serve in an executive capacity and shall perform such duties as are customarily associated with the position of Chief Operating Officer and such other duties as are assigned to you by the Chairman of the Board of Directors (the "Board") and the Chief Executive Officer (once appointed). You will report to the Chairman (pending appointment of a Chief Executive Officer). During the term of your employment with the Company, you will devote your best efforts and substantially all of your business time and attention (except for vacation periods as set forth herein and reasonable periods of illness or other incapacities permitted by the Company's general employment policies) to the business of the Company.     (b) Employment at Will. Both the Company and you shall have the right to terminate your employment with the Company at any time, with or without Cause (defined below), and without prior notice. Without limiting the generality of the immediately preceding sentence, you expressly acknowledge that your employment is being commenced at a time that the Company has an immediate short-term need and that your tenure may be relatively short in tenure. If your employment with the Company is terminated by the Company without Cause, you will be eligible to receive the severance benefits to the extent provided in Section 3 of this Agreement. For the purposes of this Agreement, "Cause" means:      (i) your intentional action or failure to act that was performed in bad faith and to the material detriment of the business of the Company;     (ii) your intentional refusal or failure to act in accordance with any lawful and proper direction or order of the Chairman of the Board, Chief Executive Officer or the Board;     (iii) your willful and habitual neglect of your duties of employment;     (iv) your violation of any noncompetition or noninterference agreement that you enter into with the Company; or     (v) your conviction of a felony crime involving moral turpitude; -------------------------------------------------------------------------------- provided, however, that if any of the foregoing events under clauses (i), (ii), (iii) or (iv) above is capable of being cured, the Company shall provide written notice to you describing the nature of such event and you shall thereafter have five business days to cure such event.     (c) Employment Policies. The employment relationship between the parties shall also be governed by the general employment policies and practices of the Company, including those relating to protection of confidential information and assignment of inventions, except that when the terms of this Agreement differ from, or are in conflict with, the Company's general employment policies or practices, this Agreement shall control. 2.  COMPENSATION     (a) Base Salary. You shall receive for services to be rendered hereunder a monthly base salary of $18,750, subject to applicable tax withholding and payable on the regular payroll dates of the Company.     (b) Bonus. During the period of your employment with the Company and subject to the Company's achievement of performance objectives, you shall receive a quarterly bonus in an amount equal to 50% of the base salary paid to you during such quarter. These performance objectives shall be agreed upon by you and the Chairman of the Board and reduced to writing at a later date. The determination of whether such performance objectives have been achieved shall be made by the Board in good faith. Any such bonus paid to you by the Company shall be subject to applicable tax withholding.     (c) Standard Company Benefits. You shall be entitled to all rights and benefits for which you are eligible under the terms and conditions of the standard Company benefits and compensation practices that may be in effect from time to time and are provided by the Company to its executive employees generally. The Company shall reimburse you for your reasonable travel expenses incurred in connection with your employment by the Company, including appropriate lodging while you are in Northern California.     (d) Stock Options.      (i) The Company has granted to you non-qualified stock options to purchase an aggregate of 100,000 shares of the Company's common stock, par value $.001 per share (the "Common Stock") pursuant to a Stock Option Agreement (the "Existing Stock Option"). The shares subject to the Existing Stock Option shall vest on the one year anniversary of your date of employment with the Company; provided, however, that if your employment is terminated prior to the one year anniversary of your date of employment with the Company by the Company without Cause, then there nonetheless shall be vested a number of options representing 8,334 shares multiplied by the number of full months of service by you (defined as each 30-day anniversary of the commencement of your employment); provided, further, that (i) if your employment is terminated prior to the one year anniversary of your date of employment with the Company by the Company without Cause but after January 31, 2002, and (ii) you have provided reasonable cooperation in transition matters with the new Chief Executive Officer, any remaining unvested shares subject to the Existing Stock Option as of the date of the termination of your employment shall continue to vest at a rate of 8,334 shares per month on each monthly anniversary of your date of employment with the Company until all of the shares subject to the Existing Stock Option are vested.     (ii) The Company will grant to you additional non-qualified stock options to purchase an aggregate of 25,000 shares of the Company's Common Stock in accordance with the Company's 2000 Equity Participation Plan (the "New Option"). The exercise price of the New Option shall be $1.38 (representing the actual closing price on October 11, 2001, the date approved by the Board of Directors), and 100% of the shares subject to the New Option shall vest completely on July 31, 2002 if (A) you are still employed as the Chief Operating Officer on July 31, 2002, or if (B) your 2 -------------------------------------------------------------------------------- employment with the Company is terminated by the Company without Cause prior to such date, or if (C) the Company has hired a permanent Chief Executive Officer prior to such date and you have provided reasonable cooperation in transition matters with the new Chief Executive Officer. Notwithstanding the foregoing, 100% of the shares subject to the New Stock Option will vest on January 1, 2004, if you are still serving as Chief Operating Officer on such date.     (iii) Once vested, these options shall be exercisable for a period of five years from the date of grant, regardless of whether your employment with the Company is earlier terminated. In the event that your employment with the Company is terminated for any Cause, all unvested options shall be cancelled. 3.  SEVERANCE BENEFITS; RELEASE     (a) Severance Benefits. If your employment with the Company is terminated by the Company other than for Cause, or if you terminate your employment with the Company on or after January 31, 2002, or in the event of your death or permanent incapacity, (i) you shall receive (a) any monthly base salary that has accrued but is unpaid as of the date of such termination, (b) any bonus to which you are entitled to receive pursuant to Section 2(b) in connection with the Company's prior achievement of performance objectives, and (c) any business expenses incurred in accordance with Company policy and accrued but unreimbursed at the time of termination, and (ii) the Company shall continue to pay your monthly base salary of $18,750 for a period of three months after the date of termination of your employment. In the event that (x) you terminate your employment with the Company prior to January 31, 2002, or (y) your employment with the Company is terminated by the Company for Cause, you or your estate shall receive (a) any monthly base salary that has accrued but is unpaid as of the date of such termination and (b) any bonus to which you are entitled to receive pursuant to Section 2(b) in connection with the Company's prior achievement of performance objectives.     (b) Release. Upon the termination of your employment by the Company other than for Cause, and prior to the receipt of any benefits under Section 3(a) (except pursuant to clause (i) of the first sentence thereof), you shall execute a Release (the "Release") in the form attached hereto as Exhibit A. Such Release shall specifically relate to all of your rights and claims in existence at the time of such execution. It is understood that you have a certain period to consider whether to execute such Release, and you may revoke such Release within seven (7) business days after execution. In the event you do not execute such Release within the applicable period, or if you revoke such Release within the subsequent seven (7) business day period, none of the aforesaid benefits shall be payable under this Agreement.     (c) Mitigation. You shall not be required to mitigate damages or the amount of any payment provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by you as a result of employment by another employer or by any retirement benefits received by you after the date of termination of your employment with the Company.     (d) Exclusive Severence Benefits. This Section 3 shall constitute the sole benefits payable to you upon termination of employment, notwithstanding any contrary Company policy, oral statement, written statement or other communication. 4.  NON-SOLICITATION COVENANT     You hereby agree that you shall not, during the term of this Agreement and for 12 months after the termination of your employment, solicit or influence or attempt to influence any client, customer or other person either directly or indirectly, to direct his or its purchase of the Company's products and/or services to any person, firm, corporation, institution or other entity in competition with the business of 3 -------------------------------------------------------------------------------- the Company without the prior written consent of the Company's Board of Directors, which it may grant or withhold in its sole discretion. 5.  GENERAL PROVISIONS     (a) Waiver. If either party should waive any breach of any provisions of this Agreement, it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.     (b) Complete Agreement. This Agreement, Exhibit A hereto, the Existing Stock Option and the New Stock Option constitute the entire agreement between you and the Company and are the complete, final, and exclusive embodiment of their agreement with regard to this subject matter. They are entered into without reliance on any promise or representation other than those expressly contained herein or therein, and they cannot be modified or amended except in a writing signed by both parties. Any and all prior agreements, understandings or representations relating to your employment with the Company, including the Original Agreement, are hereby terminated and cancelled in their entirety and are of no further force or effect.     (c) Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.     (d) Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by you and the Company, and their respective successors, assigns, heirs, executors and administrators, except that you may not assign any of your duties hereunder and you may not assign any of your rights hereunder, without the written consent of the Company, which shall not be withheld unreasonably.     (e) Arbitration. Unless otherwise prohibited by law or specified below, all disputes, claims and causes of action, in law or equity, arising from or relating to this Agreement or its enforcement, performance, breach, or interpretation shall be resolved solely and exclusively by final and binding arbitration held in San Francisco County, California through Judicial Arbitration & Mediation Services/Endispute ("JAMS") under the then existing JAMS arbitration rules. However, nothing in this section is intended to prevent either patty from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Each party in any such arbitration shall be responsible for its own attorneys' fees, costs and necessary disbursement; provided, however, that if one party refuses to arbitrate and the other party seeks to comply arbitration by court order, if such other party prevails, it shall be entitled to recover reasonable attorneys' fees, costs and necessary disbursements. Pursuant to California Civil Code Section 1717, each party warrants that it was represented by counsel in the negotiation and execution of this Agreement, including the attorneys' fees provision herein.     (f)  Attorneys' Fees. If either party hereto brings any action to enforce rights hereunder, each party in any such action shall be responsible for its own attorneys' fees and costs incurred in connection with such action.     (g) Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of California. 4 --------------------------------------------------------------------------------     Please indicate your acceptance of the terms of this Agreement by execution below.     Very truly yours,     VICINITY CORPORATION a Delaware corporation     By:             -------------------------------------------------------------------------------- Ronald Smith Chairman of the Board of Directors Accepted and agreed:         EXECUTIVE         -------------------------------------------------------------------------------- Tim McMullen         5 -------------------------------------------------------------------------------- Exhibit A RELEASE (INDIVIDUAL TERMINATION)     Certain capitalized terms used in this Release are defined in the Executive Employment Agreement (the "Agreement") which I have executed and of which this Release is a part.     I hereby confirm my obligations under any proprietary information and inventions or similar agreement of the Company.     I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads 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."     I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims I may have against the Company.     Except as otherwise set forth in this Release, in consideration of benefits I will receive under the Agreement, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys' fees, damages, indemnities and obligations of every kind and nature in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the date I execute this Release, including but not limited to all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation, claims pursuant to any federal, state or local law or cause, of action, including but not limited to the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended ("ADEA"); the federal Employee Retirement Income Security Act of 1974, as amended, the federal Americans with Disabilities Act of 1990, the California Fair Employment and Housing Act, as amended, tort law, contract law, statutory law, common law, wrongful discharge, discrimination fraud, defamation, emotional distress, and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify me pursuant to the Company's indemnification obligation pursuant to agreement or applicable law.     I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA. I also acknowledge that the consideration given under the Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days following the execution of this Release by the patties to A–1 -------------------------------------------------------------------------------- revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth (8th) day after this Release is executed by me.           -------------------------------------------------------------------------------- Tim McMullen     Date:             -------------------------------------------------------------------------------- A–2 -------------------------------------------------------------------------------- QuickLinks RELEASE (INDIVIDUAL TERMINATION)

Exhibit 10.3   EXECUTIVE EMPLOYMENT AGREEMENT                   This Executive Employment Agreement is made and entered into by and between Labor Ready, Inc., a Washington corporation, including its subsidiaries ("Company"), and Joseph P. Sambataro, Jr. ("Executive"), effective as of September 24, 2001.   RECITALS                   WHEREAS, Company believes that Executive's experience, knowledge of corporate affairs, reputation and abilities are of great value to Company's future growth and profits; and                   WHEREAS, Company wishes to employ Executive and Executive is willing to be employed by Company; and                   WHEREAS, the Company’s Board of Directors has elected Executive to the offices of President and Chief Executive Officer;                   NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the Company and Executive agree as follows:                   1.             Employment.  The Company agrees to and hereby does employ Executive, and Executive hereby agrees to the employment of the Company, subject to the supervision and direction of the Board of Directors.  Executive’s employment shall be for a period commencing on September 24, 2001 and ending on December 31, 2004, unless such period is extended by written agreement of the parties or is sooner terminated pursuant to the provisions of Paragraphs 4, 13 or 14.                   2.             Duties of Executive.  Executive agrees to devote the necessary time, attention, skill and efforts to the performance of his duties as President and Chief Executive Officer of the Company and/or such other duties as may be assigned by the Board of Directors in its discretion.                   3.             Compensation.                                       (a)           Executive's initial salary shall be at the rate of Five Hundred Thousand and No/100 Dollars ($500,000.00) per year, payable biweekly, from September 24, 2001 until changed by the Board of Directors as provided herein.                                       (b)           Company, acting through its Board of Directors, may (but shall not be required to) increase, but may not decrease, Executive's compensation and award to Executive such bonuses as the board may see fit, in its sole and unrestricted discretion, commensurate with Executive's performance and the overall performance of the Company. Executive’s compensation shall be reviewed annually by the Compensation Committee of the Board of Directors.                     4.             Failure to Pay Executive.  The failure of Company to pay Executive his salary as provided in Paragraph 3 may, in Executive's sole discretion, be deemed a breach of this Agreement and, unless such breach is cured within fifteen days after written notice to Company, this Agreement shall terminate.  Executive’s claims against Company arising out of the nonpayment shall survive termination of this Agreement.                   5.             Options to Purchase Common Stock.  Executive is granted unvested options to purchase 400,000 shares of the Company’s common stock.  The terms and conditions of the options are set forth in Exhibit A.                   6.             Reimbursement for Expenses.  Company shall reimburse Executive for reasonable out-of-pocket expenses that Executive shall incur in connection with his services for Company contemplated by this Agreement, on presentation by Executive of appropriate vouchers and receipts for such expenses to Company.                   7.             Spousal Travel Allowance.  Company shall reimburse Executive for reasonable travel expenses incurred by Executive’s wife while accompanying Executive on Company-related travel, up to a maximum of Fifteen Thousand Dollars ($15,000.00) per year, on presentation by Executive of appropriate vouchers and receipts for such expenses to Company.                   8.             Housing Allowance.  Company shall reimburse Executive for reasonable housing expenses incurred by Executive as a result of his need to be in Company’s Tacoma office, up to a maximum of Two Thousand Dollars ($2,000.00) per month, on presentation by Executive of appropriate evidence of such expenditures to Company. In the event Company terminates this Agreement under Paragraph 13(b), Company shall indemnify Executive with respect to any remaining liability on a residential lease under this paragraph, up to a maximum of 12 months.                   9.             Vacation.  Executive shall be entitled each year during the term of this Agreement to a vacation of twenty (20) business days, no two of which need be consecutive, during which time his compensation shall be paid in full.  The length of annual vacation time shall increase by one day for every year of service to the Company after 2001 to a maximum of 25 business days per year.                   10.           Change in Ownership or Control.  In the event of a change in the ownership of Company, effective control of Company, or the ownership of a substantial portion of Company's assets, all unvested stock options shall immediately vest.                   11.           Liability Insurance and Indemnification.  The Company shall procure and maintain throughout the term of this Agreement a policy or policies of liability insurance for the protection and benefit of directors and officers of the Company.  Such insurance shall have a combined limit of not less than $10,000,000.00 and may have a deductible of not more than $100,000.00.  To the fullest extent permitted by law, Company shall indemnify and hold harmless Executive for any and all loss, cost, damage and expense including attorneys’ fees and court costs and any portion of the insurance deductible incurred or sustained by Executive, arising out of the proper discharge by Executive of his duties hereunder in good faith.                   12.           Other Benefits.  Executive shall be entitled to all benefits offered generally to employees of Company.  Nothing in this Agreement shall be construed as limiting or restricting any benefit to Executive under any pension, profit-sharing or similar retirement plan, or under any group life or group health or accident or other plan of the Company, for the benefit of its employees generally or a group of them, now or hereafter in existence. In addition, following expiration of this Agreement and until Executive and his wife both reach the age of 65 or are eligible for Medicare, whichever is later, Executive shall have the option of maintaining health insurance through the Company’s employee health insurance plan covering Executive and his wife, provided that Executive reimburses the Company therefor in an amount equal to the then-applicable employee contribution for such insurance.                   13.           Termination by Company.  Company may terminate this Agreement under either of the following circumstances:                                   (a)           Company may terminate this Agreement and Executive’s employment for cause (as defined hereinbelow) at any time upon written notice to Executive. The notice of termination must specify those actions or inactions upon which the termination is based. Cause shall exist if any of the following occurs:   (i)   Executive is convicted of a crime involving dishonesty, fraud or moral turpitude;       (ii)   Executive has engaged in fraud, embezzlement, theft or other dishonest acts;       (iii)   Executive violates Company’s Drug Free Workplace Policy;       (iv)   Executive takes any action intended to damage the assets (including tangible and intangible assets, such as name or reputation) of Company;       (v)   Executive fails to perform his duties in good faith, within ten (10) days after written notice from Company;       (vi)   Executive fails to commence implementation of actions approved by resolution of the board of directors, within ten (10) days after written notice from Company, or to thereafter diligently pursue the completion thereof; or       (vii)   Executive breaches this Agreement in any other material respect and does not cure such breach within ten (10) days after written notice from Company.                                   In the event of termination under this subparagraph, Company shall pay Executive all amounts due hereunder which are then accrued but unpaid, within thirty (30) days after Executive’s last day of employment.                                   (b)           Company shall have the right to terminate this Agreement at any time without cause by written notice to Executive. In the event of termination under this subparagraph, Company shall continue to pay Executive’s salary until the earlier of (i) one (1) year after the date of such termination, or (ii) the expiration date of this Agreement as provided in Paragraph 1 above.                 14.           Termination by Executive.                                   (a)  Executive may terminate this Agreement and his employment with Company at any time, upon giving Company at least thirty (30) days prior written notice. In the event of termination under this subparagraph 14(a), Company shall pay Executive all amounts due hereunder which are then accrued but unpaid, within thirty (30) days after Executive's last day of employment.                                   (b)  Executive may terminate this Agreement for cause at any time upon written notice to Company. Cause shall exist if Company has materially breached this Agreement and such material breach has not been cured by Company within ten (10) business days after receipt by Company of written notification from Executive of the details of such breach. If termination of the Agreement occurs pursuant to this subparagraph 14(b), Company shall continue to pay Executive’s salary until the earlier of (i) one (1) year after the date of such termination, or (ii) the expiration date of this Agreement as provided in Paragraph 1 above.                   15.           Communications to Company.  Executive shall communicate and channel to Company all knowledge, business, and customer contacts and any other matters of information that could concern or be in any way beneficial to the business of Company, whether acquired by Executive before or during the term of this Agreement; provided, however, that nothing under this Agreement shall be construed as requiring such communications where the information is lawfully protected from disclosure as a trade secret of a third party.                   16.           Binding Effect.  This Agreement shall be binding on and shall inure to the benefit of any successor or successors of employer and the personal representatives of Executive.                   17.           Confidential Information.                                   (a)           As the result of his duties, Executive will necessarily have access to some or all of the confidential information pertaining to Company's business.  It is agreed that "Confidential Information" of Company includes:   (1)           The ideas, methods, techniques, formats, specifications, procedures, designs, systems, processes, data and software products which are unique to Company;   (2)           All customer, marketing, pricing and financial information pertaining to the business of Company;   (3)           All operations, sales and training manuals;   (4)           All other information now in existence or later developed which is similar to the foregoing; and   (5)           All information which is marked as confidential or explained to be confidential or which, by its nature, is confidential.   (b)           Executive understands that he will necessarily have access to some or all of the Confidential Information.  Executive recognizes the importance of protecting the confidentiality and secrecy of the Confidential Information and, therefore, agrees to use his best efforts to protect the Confidential Information from unauthorized disclosure to other persons.  Executive understands that protecting the Confidential Information from unauthorized disclosure is critically important to the success and competitive advantage of Company and that the unauthorized disclosure of the Confidential Information would greatly damage Company.   (c)           Executive agrees not to disclose any Confidential Information to others or use any Confidential Information for his own benefit.  Executive further agrees that upon request of the Chairman of the Board or the Chief Executive Officer of Company, he shall immediately return all Confidential Information, including any copies of Confidential Information in his possession.                   18.           Covenants Against Competition.  It is understood and agreed that the nature of the methods employed in Company's business is such that Executive will be placed in a close business and personal relationship with the customers of Company. Thus, during the term of this Agreement and for a period of two (2) years immediately following the termination of Executive's employment, for any reason whatsoever, so long as Company continues to carry on the same business, said Executive shall not, for any reason whatsoever, directly or indirectly, for himself or on behalf of, or in conjunction with, any other person, persons, company, partnership, corporation or business entity:   (a)           Call upon, divert, influence or solicit or attempt to call, divert, influence or solicit any customer or customers of Company;   (b)           Divulge the names and addresses or any information concerning any customer of Company;   (c)           Solicit, induce or otherwise influence or attempt to solicit, induce or otherwise influence any employee of the Company to leave his or her employment;   (d)           Own, manage, operate, control, be employed by, participate in or be connected in any manner with the ownership, management, operation or control of the same, similar, or related line of business as that carried on by Company within a radius of twenty-five (25) miles from any then existing or proposed office of Company; and   The time period covered by the covenants contained herein shall not include any period(s) of violation of any covenant or any period(s) of time required for litigation to enforce any covenant.  If the provisions set forth are determined to be too broad to be enforceable at law, then the area and/or length of time shall be reduced to such area and time and that shall be enforceable.                 19.           Enforcement of Covenants.   (a)           The covenants set forth herein on the part of Executive shall be construed as an agreement independent of any other provision in this Agreement and the existence of any claim or cause of action of Executive against Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Company of the covenants contained herein.   (b)           Executive acknowledges that irreparable damage will result to Company in the event of the breach of any covenant contained herein and Executive agrees that in the event of any such breach, Company shall be entitled, in addition to any and all other legal or equitable remedies and damages, to a temporary and/or permanent injunction to restrain the violation thereof by Executive and all of the persons acting for or with Executive.                   20.           Law to Govern Contract.  It is agreed that this Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Washington.                   21.           Arbitration.  Company and Executive agree with each other that any claim of Executive or Company arising out of or relating to this Agreement or the breach of this Agreement or Executive’s employment by Company, including, without limitation, any claim for compensation due, wrongful termination and any claim alleging discrimination or harassment in any form shall be resolved by binding arbitration, except for claims in which injunctive relief is sought and obtained.  The arbitration shall be administered by the American Arbitration Association under its Employment Arbitration Rules at the American Arbitration Association Office nearest the place of employment.  The award entered by the arbitrator shall be final and binding in all respects and judgment thereon may be entered in any Court having jurisdiction.                   22.           Entire Agreement.  This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement.                   23.           Modification of Agreement.  Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if evidenced in writing signed by each party or an authorized representative of each party.                   24.           No Waiver.  The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as thereafter waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred.                   25.           Attorneys’ Fees.  In the event that any action (including arbitration pursuant to Paragraph 21 above) is filed in relation to this Agreement, the unsuccessful party in the action shall pay to the successful party, in addition to all other required sums, a reasonable sum for the successful party's attorneys' fees.                   26.           Notices.  Any notice provided for or concerning this Agreement shall be in writing and shall be personally delivered or sent by certified or registered mail, return receipt requested, to the respective address of each party as set forth below, or such other address as each party shall designate by written notice.  Notice shall be deemed delivered upon actual receipt.                   27.           Survival of Certain Terms.  The terms and conditions set forth in Paragraphs 17 through 22 and Paragraph 25 of this Agreement shall survive termination of the remainder of this Agreement.                                   IN WITNESS WHEREOF, each party to this Agreement has caused it to be executed on the date indicated below.   EXECUTIVE:   COMPANY:       Joseph P. Sambataro, Jr.   Labor Ready, Inc., a Washington corporation           By:         Date:     Date:     EXHIBIT A Stock Option Grant GRANT DATE:    October 2, 2001   GRANT PRICE:    Closing price on the Grant Date   TOTAL NUMBER OF SHARES:       400,000   VESTING SCHEDULE:        Options for the specified number of shares shall vest on the                                                 following dates:   DATE   NUMBER OF SHARES October 2, 2001   100,000 October 2, 2002   100,000 October 2, 2003   100,000 October 2, 2004   100,000   TERMS AND CONDITIONS OF THE STOCK OPTION GRANT:   1.             Except as otherwise provided herein, all unexercised options shall expire five (5) years after the Grant Date. The foregoing notwithstanding,   (a)   If this Agreement is terminated by Company for cause pursuant to Paragraph 13(a) hereof, all unexercised options shall expire upon the date of termination;   (b)   If this Agreement is terminated by Company pursuant to Paragraph 13(b) hereof, all options shall immediately vest and will not expire until five (5) years after the Grant Date; and   (c)   If this Agreement is terminated by Executive pursuant to Paragraph 14 hereof, all unexercised options shall expire ninety (90) days after the date of termination.   2.             The options are categorized as non-qualified stock options.  A non-qualified stock option requires payment of income taxes on the difference between the option price and the market value on the date of exercise.  Executive shall be responsible for any income tax consequences and expense associated with the grant or exercise of the options, and is responsible for consulting his individual tax advisor.   3.             Payment for shares purchased through the exercise of options may be made either in cash or its equivalent or by tendering previously acquired shares at market value, or both.                   The closing price on October 2, 2001 was $3.05.    

  ALLIANCE CAPITAL MANAGEMENT L.P. UNIT OPTION PLAN AGREEMENT             AGREEMENT, dated June 20, 2000 between Alliance Capital Management L.P. (the "Partnership"), Alliance Capital Management Holding L.P. (“Alliance Holding”) and Bruce W. Calvert (the "Participant"), an employee of the Partnership or a subsidiary of the Partnership (an "Employee Participant").           The 1997 Option Committee (the "Administrator") of the Board of the Board of Directors (the “Board”) of Alliance Capital Management Corporation, the general partner of the Partnership and Alliance Holding, pursuant to the Alliance Capital Management L.P. 1997 Long Term Incentive Plan, a copy of which has been delivered to the Participant (the "Plan"), has granted to the Participant an option to purchase units representing assignments of benefi­cial ownership of limited partnership interests in Alliance Holding(the "Units") as hereinafter set forth, and authorized the execution and delivery of this Agreement.           In accordance with that grant, and as a condition thereto, the Partnership, Alliance Holding and the Participant agree as follows:           1.       Grant of Option.  Subject to and under the terms and conditions set forth in this Agreement and the Plan, the Participant is the owner of an option (the "Option") to purchase the number of Units set forth in Section 1 of Exhibit A attached hereto at the per Unit price set forth in Section 2 of Exhibit A.           2.       Term and Exercise Schedule.  This Option shall not be exercisable to any extent prior to June 20, 2001 or after June 20, 2010 (the "Expiration Date").  Subject to the terms and condi­tions of this Agreement and the Plan, the Participant shall be entitled to exercise the Option prior to the Expiration Date and to purchase Units hereunder in accordance with the schedule set forth in Section 3 of Exhibit A.           The right to exercise this Option shall be cumulative so that to the extent this Option is not exercised when it becomes initially exercisable with respect to any Units, it shall be exercisable with respect to such Units at any time thereafter until the Expiration Date and any Units subject to this Option which have not then been purchased may not, thereafter, be pur­chased hereunder.  A Unit shall be considered to have been purchased on or before the Expiration Date if notice of the purchase has been given and payment therefor has actually been received pursuant to Sections 3 and 13, on or before the Expiration Date.           3.       Notice of Exercise, Payment and Certificate.  Exercise of this Option, in whole or in part, shall be by delivery of a written notice to the Partnership and Alliance Holding pursuant to Section 14 which specifies the number of Units being purchased and is accompanied by payment therefor in cash.  Promptly after receipt of such notice and purchase price, the Partnership and Alliance Holding shall deliver to the person exercising the Option a certificate for the number of Units purchased.  Units to be issued upon the exercise of this Option may be either authorized and unissued Units or Units which have been reacquired by the Partnership, a subsidiary of the Partnership, Alliance Holding or a subsidiary of Alliance Holding.           4.       Termination of Employment.  This Option may be exer­cised by an Employee Participant only while the Employee Participant is employed full-time by the Partnership, except as follows:           (a)      Disability.  If the Employee Participant's employment with the Partnership terminates because of Disability, the Employee Participant (or his personal representative) shall have the right to exercise this Option, to the extent that the Employee Participant was entitled to do so on the date of termination of his employ­ment, for a period which ends not later than the earlier of (i) three months after such termination, and (ii) the Expi­ration Date. "Disability" shall mean a determination by the Administrator that the Employee Participant is physically or mentally incapacitated and has been unable for a period of six con­secutive months to perform the duties for which he was responsible immediately before the onset of his incapacity.  In order to assist the Administrator in making a determina­tion as to the Disability of the Employee Participant for purposes of this paragraph (a), the Employee Participant shall, as reasonably re­quested by the Administrator, (A) make himself available for medical examinations by one or more physicians chosen by the Administrator and approved by the Employee Participant, whose approval shall not unreasonably be withheld, and (B) grant the Admin­istrator and any such physicians access to all relevant medical information concerning him, arrange to furnish copies of medical records to them, and use his best efforts to cause his own physicians to be available to discuss his health with them.           (b)      Death.  If the Employee Participant dies (i) while in the employ of the Partnership, or (ii) within one month after termination of his employment with the Partnership because of Disability (as determined in accordance with paragraph (a) above), or (iii) within one month after the Partnership terminates his employment for any reason other than for Cause (as determined in accordance with paragraph (c) be­low), this Option may be exercised, to the extent that the Employee Participant was entitled to do so on the date of his death, by the person or persons to whom the Option shall have been transferred by will or by the laws of descent and distribu­tion, for a period which ends not later than the earlier of (A) six months from the date of the Employee Participant's death, and (B) the Expiration Date.           (c)      Other Termination.  If the Partnership terminates the Employee Participant's employment for any reason other than death, Disability or for Cause, the Employee Participant shall have the right to exercise this Option, to the extent that he was entitled to do so on the date of the termination of his employment, for a period which ends not later than the earlier of (i) three months after such termination, and (ii) the Expiration Date.  "Cause" shall mean (A) the Employee Participant's continuing willful failure to perform his duties as an employee (other than as a result of his total or partial incapacity due to physical or mental illness), (B) gross negligence or malfeasance in the performance of the Employee Participant's duties, (c) a finding by a court or other governmental body with proper jurisdiction that an act or acts by the Employee Participant constitutes (1) a felony under the  laws of the United States or any state thereof (or, if the Employee Participant's place of employment is outside of the United States, a serious crime under the laws of the foreign jurisdiction where he is employed, which crime if committed in the United States would be a felony under the laws of the United States or the laws of New York), or (2) a violation of federal or state securities law (or, if the Employee Participant's place of employment is outside of the United States, of federal, state or foreign securities law) by reason of which finding of violation described in this clause (2) the Board determines in good faith that the continued employment of the Employee Participant by the Partnership would be seriously detrimental to the Partnership and its business, (D) in the absence of such a finding by a court or other governmental body with proper jurisdiction, such a determination in good faith by the Board by reason of such act or acts constituting such a felony, serious crime or violation, or (E) any breach by the Employee Participant of any obliga­tion of confidentiality or non-competition to the Partnership.           For purposes of this Agreement, employment by a subsidiary of the Partnership shall be deemed to be employment by the Partnership.  A "subsidiary" of the Partnership shall be any corporation or other entity of which the Partnership and/or its subsidiaries (a) have sufficient voting power (not depending on the happening of a contingency) to elect at least a majority of its board of directors, or (b) otherwise have the power to direct or cause the direction of its management and policies.           5.       No Right to Continued Employment.  This Option shall not confer upon the Participant any right to continue in the employ of the Partnership or any subsidiary of the Partnership or to be retained as a Director, and shall not interfere in any way with the right of the Partnership to terminate the service of the Participant at any time for any reason.           6.       Non-Transferability.  This Option is not transferable other than by will or the laws of descent and distribution and, except as otherwise provided in Section 4, during the lifetime of the Participant this Option is exercisable only by the Participant; except that a Participant may transfer this Option, without consideration, subject to such rules as the Committee may adopt to preserve the purposes of the Plan (including limiting such transfers to transfers by Participants who are senior executives), to a trust solely for the benefit of the Participant and the Participant's spouse, children or grandchildren (including adopted and stepchildren and grandchildren) (each a "Permitted Transferee").           7.       Payment of Withholding Tax.  (a) In the event that the Partnership or Alliance Holding determines that any federal, state or local tax or any other charge is required by law to be withheld with respect to the exercise of this Option, the Participant shall promptly pay to the Partnership, a subsidiary specified by the Partnership or Alliance Holding, on at least seven business days' notice, an amount equal to such withholding tax or charge or (b) if the Participant does not promptly so pay the entire amount of such withholding tax or charge in accordance with such notice, or make arrangements satisfactory to the Partnership and Alliance Holding regarding payment thereof, the Partnership or any subsidiary of the Partnership may withhold the remaining amount thereof from any amount due the Participant from the Partnership or the subsidiary.           8.       Dilution and Other Adjustments.  The existence of this Option shall not impair the right of the Partnership or Alliance Holding or their respective partners to, among other things, conduct, make or effect any change in the Partnership's or Alliance Holding’s business, any distribution (whether in the form of cash, limited partnership interests, other securities or other property), recapitalization (including, without limitation, any subdivision or combination of limited partnership interests), reorganization, consolidation, combination, repurchase or exchange of limited partnership interests or other securities of the Partnership or Alliance Holding, issuance of warrants or other rights to purchase limited partnership interests or other securities of the Partnership or Alliance Holding, or any incorporation of the Partnership or Alliance Holding.  In the event of such a change in the partnership interests of the Partnership or Alliance Holding, the Board shall make such adjustments to this Option, including the purchase price specified in Section 1, as it deems appropriate and equitable.  In the event of incorpo­ra­tion of the Partnership or Alliance Holding, the Board shall make such arrangements as it deems appropriate and equitable with respect to this Option for the Participant to purchase stock in the resulting corporation in place of the Units subject to this Option.  Any such adjust­ment or arrangement may provide for the elimination of any fractional Unit or shares of stock which might otherwise become subject to this Option.  Any decision by the Board under this Section shall be final and binding upon the Participant.           9.       Rights as an Owner of a Unit.  The Participant (or a transferee of this Option pursuant to Sections 4 and 6) shall have no rights as an owner of a Unit with respect to any Unit covered by this Option until he becomes the holder of record of such Unit, which shall be deemed to occur at the time that notice of pur­chase is given and payment in full is received under Section 3 and 13.  By such actions, the Participant (or such transferee) shall be deemed to have consented to, and agreed to be bound by, all other terms, conditions, rights and obligations set forth in the then current Amended and Restated Agreement of Limited Partnership of Alliance Holding, and the thencurrent Amended and Restated Agreement of Limited Partnership of the Partnership.  Except as provided in Section 9, no adjustment shall be made with respect to any Unit for any distribution for which the record date is prior to the date on which the Participant becomes the holder of record of the Unit, regardless of whether the distribution is ordinary or extraordinary, in cash, securities or other property, or of any other rights.           10.     Administrator.  If at any time there shall be no 1997 Option Committee of the Board, the Board shall be the Administrator.           11.     Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.           12.     Interpretation.  The Participant accepts this Option subject to all the terms and provisions of the Plan, which shall control in the event of any conflict between any provision of the Plan and this Agreement, and accepts as binding, conclusive and final all decisions or interpretations of the Board or the Administrator upon any questions arising under the Plan and/or this Agreement.           13.     Notices.  Any notice under this Agreement shall be in writing and shall be deemed to have been duly given when deliv­ered personally or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Partnership, to the Secretary of Alliance Capital Management Corporation at 1345 Avenue of the Americas, New York, New York  10105, or if the Partnership should move its principal office, to such principal office, in the case of Alliance Holding, to the Secretary of Alliance Capital Management Corporation at 1345 Avenue of the Americas, New York, New York 10105, or if Alliance Holding should move its principal office, to such principal office, and, in the case of the Participant, to his last permanent address as shown on the Partnership's records, subject to the right of either party to designate some other address at any time hereafter in a notice satisfying the requirements of this Section.           14.     Sections and Headings.  All section references in this Agreement are to sections hereof for convenience of reference only and are not to affect the meaning of any provision of this Agreement.     ALLIANCE CAPITAL MANAGEMENT L.P.     By: Alliance Capital Management       Corporation, its General Partner           By: /s/ Dave H. Williams --------------------------------------------------------------------------------       Dave H. Williams       Chairman of the Board       ALLIANCE CAPITAL MANAGEMENT HOLDING L.P .     By: Alliance Capital Management       Corporation, its General Partner             By: /s/ Dave H. Williams --------------------------------------------------------------------------------       Dave H. Williams       Chairman of the Board             /s/ Bruce W. Calvert --------------------------------------------------------------------------------       Bruce W. Calvert       EXHIBIT A To Unit Option Plan Agreement Dated June 20, 2000 between Alliance Capital Management L.P., Alliance Capital Management Holding L.P. and Bruce W. Calvert   1. The number of Units that the Participant is entitled to purchase pursuant to the Option granted under this Agreement is 300,000.         2. The per Unit price to purchase Units pursuant to the Option granted under this Agreement is $48.50 per Unit.   3. Percentage of Units With Respect to     Which the Option First Becomes     Exercisable on the Date Indicated --------------------------------------------------------------------------------     1. June 20, 2001 20%     2. June 20, 2002 20%     3. June 20, 2003 20%     4. June 20, 2004 20%     5. June 20, 2005 20%        

QuickLinks -- Click here to rapidly navigate through this document EXHIBIT 10.27 REGISTRATION RIGHTS AGREEMENT     This Registration Rights Agreement (the "Agreement") is entered into as of March 30, 2001 by and among Tetra Tech, Inc., a Delaware corporation ("Tetra Tech"), and the parties listed on Schedule A attached hereto (each, a "Holder" and collectively, the "Holders"). R    E    C    I    T    A    L    S     A.  Tetra Tech and the Holders are parties to the Stock Purchase Agreement of even date (the "Stock Purchase Agreement"), pursuant to which Tetra Tech will purchase all of the outstanding shares of capital stock of Williams, Hatfield & Stoner, Inc., a Florida corporation ("WHS").     B.  Pursuant to the Stock Purchase Agreement, the shareholders of WHS will receive shares of the common stock, $.01 par value, of Tetra Tech ("Tetra Tech Common Stock"); and     C.  This Agreement is the Registration Rights Agreement referred to in Section 6.2 of the Stock Purchase Agreement and, pursuant thereto, must be entered into by the parties in connection with the consummation of the transactions contemplated by the Stock Purchase Agreement. A    G    R    E    E    M    E    N    T     NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:     1.  Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings:     "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time.     "Form S-3" shall mean such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by Tetra Tech with the SEC.     "Prospectus" shall mean 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 the Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such Prospectus.     "Register", "registered" and "registration" shall mean and refer to a registration effected by preparing and filing a Registration Statement and taking all other actions that are necessary or appropriate in connection therewith, and the declaration or ordering of effectiveness of such Registration Statement by the SEC.     "Registration Expenses" shall have the meaning set forth in Section 4.     "Registrable Securities" shall mean the shares of Tetra Tech Common Stock (i) issued pursuant to the Stock Purchase Agreement, and (ii) issued as a dividend or other distribution with respect to or in exchange for or in replacement of the shares referenced in (i) above; provided, however, that Registrable Securities shall not include any shares of Tetra Tech Common Stock that have previously been registered and sold to the public or have been sold pursuant to Rule 144 (or similar successor Rule) after the date of this Agreement.     "Registration Statement" shall mean any registration statement of Tetra Tech in compliance with the Securities Act that covers Registrable Securities pursuant to the provisions of this Agreement, including, without limitation, the Prospectus, all amendments and supplements to such Registration -------------------------------------------------------------------------------- Statement, including all post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.     "Rule 144" shall mean Rule 144 promulgated under the Securities Act or any similar successor rule, as the same shall be in effect from time to time.     "Rule 144A" shall mean Rule 144A promulgated under the Securities Act or any similar successor rule, as the same shall be in effect from time to time.     "Rule 415" shall mean Rule 415 promulgated under the Securities Act, or any similar successor rule, as the same shall be in effect from time to time.     "Securities Act" shall mean the Securities Act of 1933, as amended from time to time.     "SEC" shall mean the Securities and Exchange Commission.     "Underwritten offering" shall mean a registration in which securities of Tetra Tech are sold to an underwriter or through an underwriter as agent for reoffering to the public.     2.  Registration for Holders.     (a) Tetra Tech shall file a Registration Statement on Form S-3, providing for the registered sale by the Holders, pursuant to Rule 415, and/or any similar rule that may be adopted by the SEC, of the Registrable Securities from time to time during the effectiveness of the registration. Subject to subparagraph (c) below, Tetra Tech shall file such Registration Statement on or before April 30, 2001, and shall keep such Registration Statement continuously effective for a period ending on the date on which all such Holders are eligible to sell Registrable Securities under Rule 144 (or similar successor rule) without any volume limitation. Tetra Tech represents and warrants that it is currently eligible to file a Registration Statement on Form S-3. However, if, at the time Tetra Tech is required to file a Registration Statement pursuant to this Section 2(a), Tetra Tech is not eligible to file a Registration Statement on Form S-3 to register resales by stockholders, Tetra Tech shall initially file a Registration Statement on Form S-1 and shall comply with the provisions of the immediately preceding sentence. Upon becoming eligible to use the Registration Statement on Form S-3 to register resales by stockholders (whether pursuant to a ruling or waiver from the SEC or otherwise), Tetra Tech shall promptly file a Registration Statement on Form S-3 or convert the existing Registration Statement to Form S-3 relating to the offer and sale of Registrable Securities by the Holders from time to time. Thereafter, Tetra Tech shall use commercially reasonable efforts to cause such new or amended Registration Statement to be declared effective by the SEC as promptly as practicable.     (b) No Holder shall have the right to register securities under this Agreement unless such Holder provides and/or confirms in writing prior to or after the filing of the Registration Statement such information (including, without limitation, information as to the number of Registrable Securities that such Holder has sold pursuant to any such Registration Statement from time to time) as Tetra Tech reasonably requests in connection with such Registration Statement.     (c) Notwithstanding the foregoing, for a period not to exceed 90 days, Tetra Tech shall not be obligated to prepare and file the Registration Statement required hereunder if Tetra Tech, in its good faith judgment, reasonably believes that the filing of such Registration Statement would require the disclosure of material non-public information regarding Tetra Tech and, accordingly, that the filing thereof, at the time requested, or the offering of Tetra Tech Common Stock pursuant thereto, would materially and adversely affect (i) a pending or scheduled public offering or private placement of securities of Tetra Tech, (ii) an acquisition, merger, consolidation or similar transaction by or of Tetra Tech, (iii) preexisting and continuing negotiations, discussions or pending proposals with respect to any of the foregoing transactions, or (iv) the financial condition of Tetra 2 -------------------------------------------------------------------------------- Tech in view of the disclosure of any pending or threatened litigation, claim, assessment or governmental investigation which might be required thereby.     In the event that Tetra Tech, in good faith, reasonably believes that such conditions are continuing after such 90-day period, it may, with the consent of the Holders of a majority of the Registrable Securities subject (or to be subject) to the Registration Statement, which consent shall not be unreasonably withheld, extend such 90-day period for an additional 30 days. Any further delay shall require the consent of the Holders of all such shares.     In the event of any delay in the filing of the Registration Statement pursuant to this subparagraph (c), Tetra Tech will effect such filing as soon as practicable.     3.  Registration Procedures. In connection with Tetra Tech's registration obligations pursuant to Section 2 hereof, Tetra Tech will use commercially reasonable efforts to effect such registration to permit the sale of the Registrable Securities covered thereby in accordance with the Holders' intended method or methods of disposition thereof (which shall include, without limitation, cash sales in market or other transactions), and pursuant thereto Tetra Tech will:     (a) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective as soon as practicable; provided that, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, Tetra Tech will furnish to the Holders of the Registrable Securities covered by such Registration Statement and their counsel, copies of all such documents proposed to be filed at least ten days prior thereto, and Tetra Tech will not file any such Registration Statement or amendment thereto or any Prospectus or any supplement thereto to which any such Holder shall reasonably object within such ten day period; provided, further, that Tetra Tech will not name or otherwise provide any information with respect to any Holder in any Registration Statement or Prospectus without the express written consent of such Holder, unless required to do so by the Securities Act and the rules and regulations thereunder;     (b) prepare and file with the SEC such amendments, post-effective amendments and supplements to the Registration Statement and the Prospectus as may be necessary to comply with the provisions of the Securities Act and the rules and regulations thereunder with respect to the disposition of all securities covered by such Registration Statement;     (c) notify the selling Holders (i) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by Tetra Tech of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (v) of the happening of any event which makes any statement made in the Registration Statement, the Prospectus or any document incorporated therein by reference untrue or which requires the making of any changes in the Registration Statement, the Prospectus or any document incorporated therein by reference in order to make the statements therein not misleading in light of the circumstances then existing;     (d) make every commercially reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement at the earliest possible moment;     (e) deliver to each selling Holder, without charge, such reasonable number of conformed copies of the Registration Statement (and any post-effective amendment thereto) and such number of copies of the Prospectus (including each preliminary prospectus) and any amendment or 3 -------------------------------------------------------------------------------- supplement thereto (and any documents incorporated by reference therein) as such Holder may reasonably request. Tetra Tech consents to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders in connection with the offer and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto;     (f)  prior to any offering of Registrable Securities covered by a Registration Statement, register or qualify or cooperate with the selling Holders 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 any such selling Holder reasonably requests, and use commercially reasonable efforts to keep each such registration or qualification effective, including through new filings, or amendments or renewals, during the period such Registration Statement is required to be kept effective pursuant to the terms of this Agreement; and do any and all other acts or things necessary or advisable to enable the disposition in all such jurisdictions reasonably requested by the Holders of the Registrable Securities covered by such Registration Statement, provided that under no circumstances shall Tetra Tech be required in connection therewith or as a condition thereof to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;     (g) cooperate with the selling Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, free of any and all restrictive legends, such certificates to be in such denominations and registered in such names as the Holders may request;     (h) upon the occurrence of any event contemplated by Section 3(c)(v) above, prepare a supplement or post-effective amendment to the Registration Statement or the Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;     (i)  make generally available to the holders of Tetra Tech's outstanding securities earnings statements satisfying the provisions of Section 11(a) of the Securities Act, no later than 60 days after the end of any 12 month period (or 90 days, if such period is a fiscal year) beginning with the first month of Tetra Tech's first fiscal quarter commencing after the effective date of the Registration Statement, which statements shall cover said 12 month period;     (j)  provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by each Registration Statement from and after a date not later than the effective date of such Registration Statement;     (k) use its best efforts to cause all Registrable Securities covered by each Registration Statement to be listed, subject to notice of issuance, prior to the date of the first sale of such Registrable Securities pursuant to such Registration Statement, on each securities exchange on which the Tetra Tech Common Stock is then listed, and admitted to trading on the Nasdaq Stock Market, if the Tetra Tech Common Stock is then admitted to trading on the Nasdaq Stock Market; and     (l)  enter into such agreements (including underwriting agreements in customary form containing, among other things, reasonable and customary indemnities) and take such other actions as a majority of the Holders shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities; and     (m) cooperate with the selling Holders and the managing underwriter or underwriters in their marketing efforts with respect to the sale of the Registrable Securities, including participation by Tetra Tech management in "road show" presentations. 4 --------------------------------------------------------------------------------     Each Holder agrees that, upon receipt of any notice from Tetra Tech of the happening of any event of the kind described in Section 3(c)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Securities under the Prospectus related to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(h) hereof, or until it is advised in writing by Tetra Tech that the use of the Prospectus may be resumed.     It shall be a condition precedent to the obligations of Tetra Tech to take any action pursuant to this Section 3 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to Tetra Tech upon request such information regarding itself and the Registrable Securities held by it as shall be required by the Securities Act to effect the registration of such Holder's Registrable Securities.     4.  Registration Expenses. All expenses incident to any registration to be effected hereunder and incident to Tetra Tech's performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, National Association of Securities Dealers, Inc., stock exchange and qualification fees, fees and disbursements of Tetra Tech's counsel and of independent certified public accountants of Tetra Tech (including the expenses of any special audit required by or incident to such performance), the fees and disbursements of one counsel and one accountant representing the Holders in such offering, expenses of the underwriters that are customarily requested in similar circumstances by such underwriters (excluding discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals relating to the distribution of the Registrable Securities, which will be borne by the Holders), all such expenses being herein called "Registration Expenses," will be borne by Tetra Tech. Tetra Tech will also pay its internal expenses, the expense of any annual audit and the fees and expenses of any person retained by Tetra Tech.     5.  Indemnification.     (a) Indemnification by Tetra Tech. Tetra Tech agrees to indemnify and hold harmless each Holder of Registrable Securities, its officers, directors, partners and employees and each person who controls such Holder (within the meaning of Section 15 of the Securities Act) from and against any and all losses, claims, damages and liabilities (including any investigation, legal or other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted) (collectively, "Damages") to which such Holder may become subject under the Securities Act, the Exchange Act or other federal or state securities law or regulation, at common law or otherwise, insofar as such Damages arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary prospectus or any amendment or supplement thereto, (ii) 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 (iii) any violation or alleged violation by Tetra Tech of the Securities Act, the Exchange Act or any state securities or blue sky laws in connection with the Registration Statement, Prospectus or preliminary prospectus or any amendment or supplement thereto, provided that Tetra Tech will not be liable to any Holder to the extent that such Damages arise from or are based upon any untrue statement or omission (x) based upon written information furnished to Tetra Tech by such Holder expressly for the inclusion in such Registration Statement, (y) made in any preliminary prospectus if such Holder failed to deliver a copy of the Prospectus with or prior to the delivery of written confirmation of the sale by such Holder to the party asserting the claim underlying such Damages and such Prospectus would have corrected such untrue statement or omission and (z) made in any Prospectus if such untrue statement or omission was corrected in an amendment or supplement to such Prospectus which was delivered to Holder prior to Holder's sale and such Holder failed to deliver such amendment or supplement prior to or 5 -------------------------------------------------------------------------------- concurrently with the sale of Registrable Securities to the party asserting the claim underlying such Damages.     (b) Indemnification by Holder of Registrable Securities. Each Holder of Registrable Securities whose Registrable Securities are sold under a Prospectus which is a part of a Registration Statement agrees to indemnify and hold harmless Tetra Tech, its directors and each officer who signed such Registration Statement and each person who controls Tetra Tech (within the meaning of Section 15 of the Securities Act), and each other Holder of Registrable Securities whose Registrable Securities are sold under the Prospectus which is a part of such Registration Statement (and such Holder's officers, directors and employees and each person who controls such Holder within the meaning of Section 15 of the Securities Act), under the same circumstances as the foregoing indemnity from Tetra Tech to each Holder of Registrable Securities but only if and to the extent that such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement of a material fact or omission of a material fact that was made in the Prospectus, the Registration Statement, or any amendment or supplement thereto, in reliance upon and in conformity with information relating to such Holder furnished in writing to Tetra Tech by such Holder expressly for use therein, provided that in no event shall the aggregate liability of any selling Holder of Registrable Securities exceed the amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. Tetra Tech and the selling Holders shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as customarily furnished by such persons in similar circumstances.     (c) Conduct of Indemnification Proceedings. Any person entitled to indemnification hereunder will (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person and not of the indemnifying party unless (A) the indemnifying party has agreed to pay such fees or expenses, (B) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (C) in the reasonable judgment of such person and the indemnifying party, based upon advice of their respective counsel, a conflict of interest may exist between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person). If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). No indemnified party will be required to consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by all claimants or plaintiffs to such indemnified party of a release from all liability in respect to such claim or litigation. Any indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim. As used in this Section 5(c), the terms "indemnifying party", "indemnified party" and other terms of similar import are intended to include only Tetra Tech (and its officers, directors and control persons as set forth above) on the one hand, and the Holders (and their officers, directors, partners, employees, attorneys and control persons as set forth above) on the other hand, as applicable.     (d) Contribution. If for any reason the foregoing indemnity is unavailable under applicable law, then the indemnifying party shall contribute to the amount paid or payable by the indemnified 6 -------------------------------------------------------------------------------- party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties acknowledge and agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in this Section 5(d). Notwithstanding the foregoing, no Holder shall be required to contribute any amount in excess of the amount such Holder would have been required to pay to an indemnified party if the indemnity under Section 5(b) hereof was available. 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. The obligation of any person to contribute pursuant to this Section 5(d) shall be several and not joint.     (e) Timing of Payments. An indemnifying party shall make payments of all amounts required to be made pursuant to the foregoing provisions of this Section 5 to or for the account of the indemnified party from time to time promptly upon receipt of bills or invoices relating thereto or when otherwise due or payable.     (f)  Survival. The indemnity and contribution agreements contained in this Section 5 shall remain in full force and effect, regardless of any investigation made by or on behalf of Tetra Tech, a participating Holder, its officers, directors, partners, attorneys, agents or any person, if any, who controls Tetra Tech or such Holder as aforesaid, and shall survive the transfer of such Registrable Securities by such Holder.     6.  Preparation; Reasonable Investigation. In connection with the preparation and filing of a Registration Statement pursuant to the terms of this Agreement:     (a) Tetra Tech shall, with respect to a Registration Statement filed pursuant to Section 2, give the Holders of such Registrable Securities so registered, their underwriters, if any, and their respective counsel and accountants the opportunity to participate in the preparation of such Registration Statement (other than reports and proxy statements incorporated therein by reference and properly filed with the SEC) and each Prospectus included therein or filed with the SEC, and each amendment thereof or supplement thereto; and     (b) Tetra Tech shall give the Holders of such Registrable Securities so registered, their underwriters, if any, and their respective counsel and accountants such reasonable access to its books and records and such opportunities to discuss the business of Tetra Tech with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of such Holders or such underwriters, to conduct a reasonable investigation within the meaning of Section 11(b)(3) of the Securities Act.     7.  Rule 144. Tetra Tech covenants that it will use commercially reasonable efforts to file, on a timely basis, the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and it will take such further action as any Holder may reasonably request (including, without limitation, compliance with the current public information requirements of Rule 144(c) and Rule 144A), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the conditions provided by Rule 144, Rule 144A or any similar rule or regulation 7 -------------------------------------------------------------------------------- hereafter adopted by the SEC. Upon the request of any Holder, Tetra Tech will promptly deliver to such Holder a written statement verifying that it has complied with such information and requirements.     8.  Specific Performance. Each Holder, in addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. Tetra Tech 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 Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.     9.  Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by United States first-class mail, postage prepaid, sent by facsimile or delivered personally by hand or nationally recognized courier addressed (a) if to a Holder, as indicated on the list of Holders attached hereto as Schedule A, or at such other address as such Holder or permitted assignee shall have furnished to Tetra Tech in writing, or (b) if to Tetra Tech, at such address for Tetra Tech set forth in the Stock Purchase Agreement. All such notices and other written communications shall be effective on the date of mailing, facsimile transfer or delivery.     10. Successors and Assigns: Assignment of Rights. The rights and benefits of a Holder hereunder may not be assigned to a transferee or assignee without the consent of Tetra Tech; provided, however, that, no later than the 10th day prior to the filing of the Registration Statement under Section 2 hereof, the rights and benefits of a Holder hereunder may be transferred in connection with a transfer or assignment of any Registrable Securities held by such Holder (i) by gift to immediate family members of such Holder, or trusts or other entities for the sole benefit thereof, or (ii) by gift to any entity in which such Holder, his or her immediate family members, or trusts or other entities for the sole benefit thereof beneficially own all of the voting securities; provided, however, that in each case, the transferee executes an instrument pursuant to which the transferee agrees to be bound by the terms and conditions hereof as a Holder, and such other documents as Tetra Tech or its counsel may reasonably require, after which, such transferee shall be deemed a "Holder" hereunder. Any transfer of Registrable Securities, and rights hereunder, shall be subject to compliance with applicable securities laws and the restrictions contained in the Investment Letter executed by each Holder pursuant to the Reorganization Agreement.     11. Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.     12. Entire Agreement; Amendment; Waiver. This Agreement, the Reorganization Agreement and the other agreements contemplated thereby constitute the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof. Without limiting the foregoing, the rights of the Holders to registration pursuant to the terms of this Agreement shall be subject to the limitations on resale contained in the Investment Letter (as defined in the Reorganization Agreement). Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated, except by a written instrument signed by Tetra Tech and the holders of at least 51% of the Registrable Securities and any such amendment, waiver, discharge or termination shall be binding upon all the parties hereto, but in no event shall the obligation of any party hereto be materially increased, except upon the written consent of such party.     13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be original, and all of which together shall constitute one instrument.     14. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California without giving effect to principles of conflicts of laws thereof. 8 --------------------------------------------------------------------------------     15. No Third Party Beneficiaries. The covenants and agreements set forth herein are for the sole and exclusive benefit of the parties hereto and their respective successors and assigns and such covenants and agreements shall not be construed as conferring, and are not intended to confer, any rights or benefits upon any other persons.     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.     TETRA TECH, INC.     By: /s/ LI-SAN HWANG    -------------------------------------------------------------------------------- Li-San Hwang Chairman, Chief Executive Officer and President     HOLDERS:     /s/ ANTHONY A. NOLAN    -------------------------------------------------------------------------------- Anthony A. Nolan     /s/ JAMES F. EBERHART    -------------------------------------------------------------------------------- James F. Eberhart     /s/ DAN B. GLERUM    -------------------------------------------------------------------------------- Dan B. Glerum     /s/ NANCY L. HURLBERT    -------------------------------------------------------------------------------- Nancy L. Hurlbert     /s/ LYNDON M. CAREY    -------------------------------------------------------------------------------- Lyndon M. Carey     /s/ STEVEN M. WATTS    -------------------------------------------------------------------------------- Steven M. Watts 9 -------------------------------------------------------------------------------- SCHEDULE A SCHEDULE OF HOLDERS Holder's Name/Address/Facsimile No. --------------------------------------------------------------------------------   Number of Shares of Tetra Tech Common Stock Issued Pursuant to the Stock Purchase Agreement -------------------------------------------------------------------------------- Anthony A. Nolan c/o Williams, Hatfield & Stoner, Inc. 2101 N. Andrews Avenue, Suite 300 Ft. Lauderdale, Florida 33311-3940 Facsimile: (954) 565-5421   66,779 James F. Eberhart c/o Williams, Hatfield & Stoner, Inc. 2101 N. Andrews Avenue, Suite 300 Ft. Lauderdale, Florida 33311-3940 Facsimile: (561) 738-6157   33,167.00 Dan B. Glerum c/o Williams, Hatfield & Stoner, Inc. 2101 N. Andrews Avenue, Suite 300 Ft. Lauderdale, Florida 33311-3940 Facsimile: (954) 565-5421   6,789 Nancy L. Hurlbert c/o Williams, Hatfield & Stoner, Inc. 2101 N. Andrews Avenue, Suite 300 Ft. Lauderdale, Florida 33311-3940 Facsimile: (561) 738-6157   11,575 Lyndon M. Carey c/o Williams, Hatfield & Stoner, Inc. 2101 N. Andrews Avenue, Suite 300 Ft. Lauderdale, Florida 33311-3940 Facsimile: (954) 565-5421   5,787 Steven M. Watts c/o Williams, Hatfield & Stoner, Inc. 2101 N. Andrews Avenue, Suite 300 Ft. Lauderdale, Florida 33311-3940 Facsimile: (954) 565-5421   3,450 10 -------------------------------------------------------------------------------- QuickLinks REGISTRATION RIGHTS AGREEMENT SCHEDULE OF HOLDERS

EXHIBIT 10.20   [Pursuant to Rule 24b-2, certain information has been deleted and filed separately with the Commission.]   AGREEMENT OF LIMITED LIABILITY COMPANY OF COMMUNITY FIRST MORTGAGE, LLC   This Agreement of Limited Liability Company (the "Agreement"), is entered into June 15, 2001 by and between Wells Fargo Ventures, LLC, with its principal place of business at 1 Home Campus, Des Moines, Iowa 50328-0001, ("Wells Fargo Member") and Community First Home Mortgage, Inc. with its principal place of business at 520 Main, Fargo, ND 58124-0001, (“Community Member”) who do hereby form the limited liability company agreement of Community First Mortgage, LLC (the "Company"), pursuant to the Delaware Limited Liability Company Act, upon the following terms and conditions:   ARTICLE I Definitions and Glossary of Terms   Section 1.1 Definitions. The following terms used in the Agreement shall have (unless otherwise expressly provided herein or unless the context otherwise requires) the following respective meanings:   "Accountants" means KPMG Peat Marwick, or such other certified public accountants as the Operating Committee may select.   "Act" shall mean the Delaware Limited Liability Company Act, 6 Del, C. §18-101 through §18-1107, as amended from time to time.   "Affiliate" means any 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 or entity specified.   “Agreement” shall mean this Agreement of Limited Liability Company of Community First Mortgage, LLC.   "Budget" means the budget established annually pursuant to Section 8.3.   “Capital Account” means, with respect to any Unit Holder, the account maintained for such Unit Holder in accordance with the provisions of Section 4.1 hereof.   “Capital Contribution" shall mean any contribution to the capital of the Company in cash or property by a Member whenever made.   “Certificate” means the Certificate of Formation of the Company and any and all amendments thereto and restatements thereof filed on behalf of the Company with the office of the Secretary of State of the State of Delaware pursuant to the Delaware Act.   “Closing Date” shall mean the date of execution of this Agreement.   "Code" shall mean the Internal Revenue Code of 1986, as amended.  Any reference to any specific provision of the Code or any regulations thereunder shall be deemed to refer also to any successor provisions thereto.   "Company" shall mean Community First Mortgage, LLC, the Delaware limited liability company governed by this Agreement.   "Company Distributions" shall mean cash or property which is distributed pursuant to Section 5.4 or Section 11.7 of this Agreement.   "Company Expenses" shall mean all expenditures and costs paid out by the Company in the course of the conduct of its business.   "Company Revenues" shall mean all receipts from operations and use of assets received by the Company and all other income, receipts, or gain received by the Company in the course of the conduct of its business.   “Fiscal Year” means (i) the period commencing upon the formation of the Company and ending on December 31, of the year of formation, (ii) any subsequent twelve (12) month period commencing on January 1 and ending on December 31, or (iii) any portion of the period described in Clause (ii) of this sentence for which the Company is required to allocate Profits, Losses and other items of company income, gain, loss or deduction pursuant to Article V hereof.   "Intercompany Net Cash Balance" means the net of the Company's funds on deposit with Wells Fargo and any amounts owed by the Company to Wells Fargo excluding advances by Wells Fargo pursuant to Section 8.8.   "Interest" shall mean the personal property ownership right of a Member in the Company and shall entitle such Member to an allocation of Company Revenues and Company Expenses pursuant to Article V of the Agreement and to a share of the Company Distributions pursuant to Article V of the Agreement.  Each Member's Interest is evidenced by and composed of the Units owned by that Member, and such allocation and share of Company Revenues, Company Expenses, and Company Distributions shall be determined based upon the number of Units owned by such Member.   "Loan Policies" shall mean those policies, standards and procedures of Wells Fargo, as amended from time to time, relating to residential mortgage loan origination by Retail Offices including the All-Office Memos, Loan Production Memos, Product Catalogs, Conventional Loan Standards Manual, VA Handbook, FHA Underwriting Manual, Compliance Manual, Disclosure Manual, Code of Ethics, Ncyclopedia and other communications with their terminology adjusted to apply to the Company rather than to Retail Offices.   "Losses" shall mean the taxable loss of the Company as determined for federal income tax purposes under Code section 703(a) including items separately stated pursuant to section 703(a)(1).   “Managing Officer” means the individual responsible for the day to day operation of the Company.   "Member" shall mean a person who has been admitted to the Company as a member as provided in the Agreement and section 18-301 of the Act.   "Net Cash Available" means cash on deposit or cash equivalents which includes the Intercompany Net Cash Balance less amounts required to maintain minimum regulatory net worth requirements (in excess of other Company assets if otherwise insufficient, or if cash is required) and less such other amounts the Operating Committee may determine are required to be set aside in reserve to fund future operating and capital expenditures.   “Wells Fargo” shall mean Wells Fargo Home Mortgage, Inc., a California corporation.   “Operating Committee” means the Operating Committee of the Company, constituted as provided in Section 6.1.   “Person” includes any individual, association, partnership (general or limited), joint venture, trust, estate, limited liability company, corporation or partnership, or other legal entity or organization.   "Profits" shall mean the taxable income of the Company as determined for federal income tax purposes under Code section 703(a) including items separately stated pursuant to section 703(a)(1).   "Retail Offices" means Wells Fargo's wholly-owned loan production offices in operation from time to time.   "Units" with respect to any Member, shall mean the ownership interests of the particular Member which quantify the share of that particular Member in the right, privilege, or interest being addressed.   “Unit Holder” means any person who holds one (1) or more Units, regardless of whether such Person is a Member and regardless of whether such Units were initially acquired by such Person from the Company or by assignment from another Unit Holder.   ARTICLE II Formation, Name and Registered Agent   Section 2.1  Formation.  Wells Fargo Member and Community Member, by execution of this Agreement and the filing of the Certificate with the Delaware Secretary of State, hereby enter into and form the Company as a limited liability company under and pursuant to the Delaware Act.  The name and mailing address of each Member or Unit Holder shall be listed on the Schedule of Capital Contributions attached hereto.  The Company shall be required to update the names and addresses on the Schedule of Capital Contributions from time to time as necessary to accurately reflect the information therein.  Any amendment or revision to the names and addresses on the Schedule of Capital Contributions made in accordance with this Agreement shall not be deemed an amendment to this Agreement.  Any reference in this Agreement to the Schedule of Capital Contributions shall be deemed to be a reference to the Schedule of Capital Contributions as amended and in effect from time to time.  The Members agree that the rights, powers, duties and liabilities of the Members and Managing Officer shall be as provided in the Delaware Act, except as otherwise provided in this Agreement.   Section 2.2  Name and Registered Agent.  The name of the Company is Community First Mortgage, LLC.  Its registered agent is Corporation Service Company or such other agent as the Members may hereafter determine.   ARTICLE III Business Purpose   Section 3.1  Character of the Business.  The purpose of the Company shall be to carry on the business of residential mortgage lending.   Section 3.2  Other Qualifications.  The Members agree that the Company shall file or record such documents and take such other actions under the laws of any jurisdiction as are necessary or desirable to permit the Company to do business in any such jurisdiction as is selected by the Company and to promote the limitation of liability for the Members in any such jurisdiction.   Section 3.3  Prohibited Activities.  The Company shall not participate in any activity that violates the Real Estate Settlement Procedures Act of 1974 or any other law or regulation.  The Company shall not engage in any prohibited activities for a national bank or its subsidiaries and shall obtain any required regulatory approvals for a national bank subsidiary before commencing any activity.   Section 3.4  Limitations on Other Activities.   (a)  Except as provided in this section, [Confidential Treatment Requested]   (b)  While it is a Member, subject to the exceptions stated below[Confidential Treatment Requested]   (c) [Confidential Treatment Requested]   (d)  Neither Member shall be accountable to Company or to the other Member for any activity or business permitted under this Article 3 except for the business of Company.  Neither Member shall have any right by virtue of this Agreement or by their status as a Member to be apprised of the independent business or activities of the other Member, nor to be allowed to participate therein or to the income or profits derived therefrom.  Neither Member shall be required to devote full time to Company, but only so much time as may be necessary to accomplish the purposes of Company and the duties specifically set forth in any agreements related to Company.   Section 3.5  Transactions Involving the Members.   (a) Community Member shall cooperate with and promote Company and its loan products to customers of Community Member or its Affiliates consistent with all applicable legal requirements. [Confidential Treatment Requested]   (b)  Except as may be expressly provided for in this Agreement or in any agreements executed between Company and any Member or as approved by the Operating Committee, no payment will be made by Company to any Member for the services of such Member or the employees of such Member.   (c) [Confidential Treatment Requested]   ARTICLE IV Capital Accounts   Section 4.1  Capital Accounts.  A separate capital account shall be maintained for each Member of the Company.  Each Member’s Capital Contributions and its share of all Company Revenues shall be credited to its capital account and each Member’s share of all costs, expenses, losses and Distributions (including return of capital) of the Company shall be debited to its account, all as allocated under this Agreement. Each Member's initial Capital Contribution, as reflected on Exhibit A, is due and payable upon execution of this Agreement.  Any subsequent Capital Contribution pursuant to Section 8.8 shall be due and payable within 15 days of receipt of notice of the need for the additional Capital Contribution.   Section 4.2  Units.  A Unit Holder’s limited liability company interest in the Company shall be represented by the “Unit” or “Units” held by such Unit Holder.  Each Unit Holder’s respective Units shall be set forth on the Schedule of Capital Contributions attached hereto.  Each Unit Holder hereby agrees that its limited liability company interest in the Company and its Units shall for all purposes be personal property.  A Unit Holder has no interest in specific Company property.   Section 4.3  Status of Capital Contributions.   (a)  Except as otherwise provided in this Agreement, the amount of a Unit Holder’s Capital Contributions may be returned to it, in whole or in part, at any time, but only with the consent of all Members.  Any such returns of Capital Contributions shall be made to all Unit Holders in proportion to the number of Units then held by each Unit Holder.  Notwithstanding the foregoing, no return of a Unit Holder’s Capital Contributions shall be made hereunder if such distribution would violate applicable state law.  Under circumstances requiring a return of any Capital Contribution, no Unit Holder shall have the right to demand or receive property other than cash, except as may be specifically provided in this Agreement.   (b)  Except as provided in Section 8.8 and by applicable state law, the Members shall be liable only to make their capital contributions pursuant to Section 4.1 hereof, and no Member or Assignee shall be required to lend any funds to the Company or, after a Member’s Capital Contributions have been fully paid pursuant to Section 4.1 hereof, to make any additional capital contributions to the Company.  No Unit Holder shall have any personal liability for the repayment of any Capital Contribution of any other Member or Assignee.   ARTICLE V Allocation of Revenues, Expenses, Profits and Losses   Section 5.1  Allocation of Revenues and Expenses.  All Company Revenues and Company Expenses shall be allocated among the Members in proportion to their respective Units.   Section 5.2  Allocation of Profits and Losses.  All Profits and Losses shall be allocated among the Members in proportion to their respective Units.   Section 5.3  Allocation of Items for Federal Income Tax Purposes.  To the extent permitted by law, all items of Company taxable income, gain, loss, credit, and deduction recognized or allowable for Federal income tax purposes shall be allocated and credited or charged to the Members in the same manner as the revenues, income, receipts, costs, or expenses giving rise to such items of taxable income, gain, loss, credit, or deduction are allocated and credited or charged.  Any Member allocated and charged a particular cost or expense shall be entitled to such deductions or credits as are attributable to such cost or expense in computing such Member's taxable income or tax liability to the exclusion of any other Member.  Upon the sale or other transfer of any asset of the Company, any recapture of depreciation deductions or other deductions previously taken shall be allocated to the Member to whom such deductions were originally allocated, and any recapture of investment tax credit shall be allocated to the Member to whom such credit was originally allocated.   Section 5.4. Distribution of Cash.  All Company Distributions shall be made among the Members in proportion to their respective Units.  Cash of the Company which is not required, in the judgment of the Members, to meet obligations of the Company nor reasonably necessary for future Company operations shall be distributed not less frequently than quarter-annually to the Members in proportion to their respective Units, not later than ninety (90) days after the end of each quarter-annual period with respect to which such distribution is being made.   Section 5.5 [Confidential Treatment Requested]   ARTICLE VI MANAGEMENT OF THE COMPANY   Section 6.1  General.  The overall management and control of the business and affairs of the Company shall be vested in the Operating Committee consisting of four individuals, with each Member appointing individuals to the Operating Committee in proportion to their respective Units.  The Company may have a Managing Officer appointed by the Operating Committee.  The Managing Officer of the Company shall not be appointed to the Operating Committee.  The number of individuals on the Operating Committee may be reset by the Operating Committee from time to time, provided that each Member shall appoint individuals to the Operating Committee in proportion to its respective Units.  Each Member may remove and replace the individuals appointed by it at any time and for any reason.  Any vacancy on the Operating Committee shall be filled by the Member that had appointed the individual to the position that has become vacant.   Section 6.2  Operating Committee Procedures.  Except where herein expressly provided to the contrary, all decisions with respect to the management and control of the Company shall be made and agreed to by the Operating Committee and shall be binding on the Company.  [Confidential Treatment Requested]  Action may be taken by the Operating Committee by telephone conference, by meeting in person, by written action in lieu of a meeting or in such other manner approved by all Members.   Section 6.3  Loan Policies.  The Company expressly adopts the Loan Policies effective on the Closing Date as provided to the Company by Wells Fargo.  Any updates to the Loan Policies issued by Wells Fargo shall automatically be adopted by the Company unless the Operating Committee expressly decides not to adopt a particular policy.  Any employee who violates the Loan Policies shall be subject to termination unless the Operating Committee expressly decides not to terminate the employee.   Section 6.4  Major Decisions.  No act shall be taken or funds expended or obligation incurred by the Company, any individual on the Operating Committee, or the Managing Officer with respect to a matter within the scope of any of the major decisions ("Major Decisions") affecting the Company, as defined below, unless such Major Decision has been approved by the Operating Committee.  A decision shall be a Major Decision if it satisfies one of the following:   (a)  Decisions relating to the selection, evaluation, retention and compensation of the Managing Officer or any other executive officers of the Company as may be appointed by the Operating Committee;   (b)  Decisions regarding new business ventures and material deviations by the Company from the Loan Policies in effect from time to time;   (c)  Decisions relating to the hiring policy, compensation, terms of employment or termination of non–clerical or non–support staff employees of the Company;   (d)  Decisions relating to matters involving transactions, expenditures, commitments or other contractual obligations (or groups of similar transactions or such other events) in an amount in excess of [Confidential Treatment Requested] except transactions to originate, fund and sell residential real estate mortgage loans that are in the day–to–day course of the Company's business;   (e)  Decisions relating to obtaining any financing for the Company pursuant to Section 8.8;   (f)  Decisions relating to the terms, conditions, limits and deductibles of any risk financing program in addition to the program provided by Wells Fargo or its Affiliate pursuant to the Service Agreement referenced under Section 6.9;   (g)  Decisions related to establishing or maintaining cash, cash equivalents or reserves for the Company;   (h)  Decisions relating to amendment or termination of the Service Agreement referenced under Section 6.9 and obtaining a substitute service provider upon termination of such Service Agreements; and   (i)  Any other decision or action referred to the Operating Committee by an individual on the Operating Committee which by any provision of this Agreement or by law is required to be approved by the Operating Committee.   Section 6.5  Managing Officer. The Managing Officer shall be responsible for the implementation of the decisions of the Operating Committee and for conducting the ordinary and usual day–to–day business and affairs of the Company, as limited by this Agreement.  The Managing Officer of the Company, shall in good faith use his or her best efforts to implement or cause to be implemented all Major Decisions approved by the Operating Committee and to conduct or cause to be conducted the ordinary and usual business of the Company in accordance with and subject to the direction of the Operating Committee and the Loan Policies and in accordance with the business plan and current Budget approved by the Members.  The Managing Officer may, except as otherwise determined by the Operating Committee, delegate in writing to other officers, employees or agents of the Company matters for which the Managing Officer may be responsible in accordance with this section, but the Managing Officer shall continue to be responsible for such matters. The initial and successor managing officers are listed on the Schedule of Initial and Successor Managing Officers.   Section 6.6  FHA Matters.  Section 6.6 shall be limited in application solely to any and all matters involving the Federal Housing Administration ("FHA") of the United States Department of Housing and Urban Development and FHA–insured loans.  In the event of any conflict between the provisions set forth in this Section and any other provision of this Agreement, the provisions set forth in this Section will take precedence over all other provisions of this Agreement with respect to all FHA matters.  The Managing Officer is designated to deal exclusively with FHA in all aspects of the FHA mortgage insurance program, including, without limitation, the making of applications for mortgage insurance claims and collecting the benefits of mortgage insurance for the Company.  The Managing Officer is hereby appointed as the managing agent (the "Managing Agent") of the Company with respect to FHA matters.  The Operating Committee may choose a person other than the Managing Officer as Managing Agent on the condition that there will at any time be one and only one Managing Agent with which FHA deals exclusively.  Any such substitute person shall have the rights and responsibilities of the Managing Officer as Managing Agent under this Section.  If (a) the Managing Agent resigns or (b) another Managing Agent is appointed, FHA will be immediately advised of such event and, if applicable, the name of the new Managing Agent.  The Company shall inform FHA of any amendment to this Agreement it intends to make that could affect the Company's dealings with FHA and FHA–insured mortgages.  Upon dissolution of the Company, any FHA–insured mortgages owned or serviced by the Company may only be transferred to another FHA–approved mortgage lender.   Section 6.7  Office Space.  The Members shall lease to the Company in each of their offices as determined by the Operating Committee, space from which the Company will conduct the business of the Company.  Such space shall be separately identified and segregated in a manner required by all applicable laws and regulations.  Rental rates charged to the Company by a Member shall be set at rates that reflect actual market rates for comparable space in the area in which each office used by the Company is located.  The foregoing lease arrangements, which shall terminate automatically upon the dissolution of the Company subject to an additional period as necessary to wind down the business of the Company, shall be set forth in separate written lease agreements to be agreed upon and executed between the lessor Member and the Company.   Section 6.8  Computer Network.  If the Company will process its own loans or otherwise needs access to a loan origination system, Wells Fargo, or one of its Affiliates, shall lease to the Company (and the Company shall be required to utilize), the computer software and computer network used by Retail Offices to conduct a residential mortgage business.  The terms and conditions of these lease arrangements, which shall terminate automatically upon any dissolution of the Company subject to an additional period as necessary to wind down the business of the Company, shall be set forth in a separate written lease agreement to be agreed upon and executed by the Wells Fargo or its Affiliate and the Company (attached as Exhibit 1).  Terms of the lease agreement shall be set at rates that reflect actual rates charged Retail Offices for Wells Fargo's internal reporting purposes for similar software and network access as adjusted from time to time.   Section 6.9  Service Agreement.  Wells Fargo, or its Affiliate, shall provide to the Company, certain services required by the Company in conducting a residential mortgage lending business, as set forth in the Service Agreement (attached as Exhibit 2) to be executed between Wells Fargo and the Company.   Section 6.10  Loan Sales.  The Company shall provide residential mortgage loan financing to its customers.  Wells Fargo, or one of its Affiliates, shall purchase mortgage loans if offered by the Company in accordance with the terms of a separate written Loan Purchase Agreement (attached as Exhibit 3) to be executed by Wells Fargo or one of its Affiliates, and the Company.  The Company shall sell at least [Confidential Treatment Requested] of its annual loan production to investors other than Wells Fargo.   Section 6.11  Credit Agreement.  The Company shall fund its loans through a warehouse line of credit provided by Wells Fargo (attached as Exhibit 4) or such other source as determined by the Operating Committee.   ARTICLE VII Other Rights, Liabilities and Obligations of Members   Section 7.1  Liability of Members.  No Member shall be personally liable for the expenses, liabilities, debts, or obligations of the Company except as specifically set forth in this Agreement or as provided in the Act.   Section 7.2  Other Provisions Applicable to Members.  Except as otherwise specifically provided in this Agreement, no Member shall have the right to withdraw or retire from, or reduce its contribution to the capital of, the Company.  No Member shall have the right to demand or receive property other than cash in return for its Capital Contribution.  No Member shall have priority over any other Member either as to the return of its Capital Contribution or as to profits or distributions except as specifically set forth in this Agreement.   ARTICLE VIII Accounting and Fiscal Matters   Section 8.1  Maintenance of and Access to Records.  Wells Fargo or its Affiliate on behalf of the Company shall keep complete and accurate books of account and records relative to the Company's business based on information submitted to it by the Company.  The accrual method of accounting shall be used by the Company for financial and income tax purposes.  The Company's books and records shall at all times be maintained at the principal business office of Wells Fargo, or the Accountants, or such other place agreed upon by the Members, and shall be available for inspection by each of the Members or their duly authorized representatives during reasonable business hours.  The fiscal year of the Company shall end on December 31 of each year or such other date as determined by the Operating Committee and allowed by the Code. Wells Fargo shall cause to be prepared financial statements in accordance with the Service Agreement attached as Exhibit 2.   Section 8.2  Bank Accounts.  Wells Fargo shall deposit all of the funds of the Company into one or more bank accounts for the Company.  Unless otherwise required by regulatory authority, each such account shall be established with an Affiliate of Wells Fargo that holds deposits insured by the Federal Deposit Insurance Corporation.  Wells Fargo shall separately account for all funds of the Company.  The Company may withdraw its funds only to pay the Company's debts, pay expenses or to be distributed to the Members or as directed by the Operating Committee pursuant to this Agreement.   Section 8.3  Budget.  The Company shall prepare a preliminary annual Budget for the first partial fiscal year of the Company.  At least thirty (30) days prior to the end of each fiscal year of the Company, the Managing Officer will develop and deliver to the Operating Committee for its review and approval a Budget for the Company for the next fiscal year.  As set forth in Section 6.4(d), approval of the Budget shall be a Major Decision.   Section 8.4  Company Tax Returns.  Wells Fargo, its Affiliate, or such other person agreed upon by the Members, shall, for each fiscal year, cause to be prepared and filed on behalf of the Company such federal, state and city tax returns as may be required by law, and in connection therewith, shall make any elections deemed advisable; provided, however, the Company shall be given prior written notice thereof.  Copies of such tax returns shall be delivered to each Member within 10 days after each such filing.  The Company's federal and state income tax returns shall be approved by the Operating Committee in advance of filing.   Section 8.5  Tax Audits.  Wells Fargo or its Affiliate is hereby designated to manage administrative tax proceedings conducted by the Internal Revenue Service or state tax authorities with respect to the Company.  The taking of any action or the failure to take any action in connection with any such proceeding, except to the extent required by law, is a matter for Wells Fargo, subject to the direction of the Operating Committee.  Wells Fargo shall give prompt written notice to the Members of any such administrative proceeding.  Any Member has the right to participate in such administrative proceedings relating to the determination of tax items at the Company level.  Expenses of such administrative proceedings undertaken by Wells Fargo will be paid for out of the assets of the Company.  If any Member elects to participate in such proceedings, the Member will be responsible for its expenses incurred in connection with such participation.  Further, the cost of any adjustments to a Member and the cost of any resulting audits or adjustments of a Member’s tax return, will be borne solely by the affected Member.   Section 8.6  Internal Audit.  The ongoing activities of the Company shall be subject to regulatory audit by Wells Fargo Audit Services, Inc. at no direct cost to the Company.  Wells Fargo Audit Services, Inc. shall have no liability with respect to the Company.  A copy of any regulatory audit report prepared by Wells Fargo Audit Services, Inc. related to the Company shall be provided to the Operating Committee.   Section 8.7  The Accountants.  Any services provided by the Accountants under this Agreement shall be an expense of the Company.  The Accountants shall prepare annual audited financial statements as set forth in Exhibit 2.   Section 8.8 [Confidential Treatment Requested]   ARTICLE IX Limitations on Dispositions of Members' Interests   Section 9.1  Basic Restrictions.  Except as otherwise provided in this Article IX, no Member may sell, assign, give, hypothecate, pledge, transfer, bequeath, or otherwise dispose of any or all of its Interest, in whole or in part, voluntarily, involuntarily, by operation of law, or otherwise, to any other person or entity.   Section 9.2  Representations and Warranties.  Each Member hereby represents and warrants to the Company and to the other Members that its acquisition of its Interest is made as principal for its account for investment purposes only and not with a view to the resale or distribution of such Interest.  Each Member agrees that it will not sell, assign, give, hypothecate, pledge, transfer, bequeath, or otherwise dispose of any or all of its Interest to any person or entity who or which does not similarly represent and warrant and agree as provided in this Section 9.2.   Section 9.3  Disposition of Interests.  The sale, assignment, gift, hypothecation, pledge, transfer, or other disposition ("Transfer") of Interests by or in respect of a Member shall be subject to the following conditions and restrictions in addition to any others which are provided for in this Agreement:   (a)  No Member may Transfer any or all of its Interest without the consent of all of the Members.   (b)  No Member may Transfer any or all of its Interest if such Transfer would cause the termination of the Company for Federal income tax purposes.  Any purported Transfer which would cause the termination of the Company for Federal income tax purposes shall be void ab initio.  Counsel for the Company shall give to the Company its opinion, at the expense of the Member seeking to effect such Transfer, as to whether such Transfer would cause the termination of the Company for Federal income tax purposes.   (c)  No Transfer of, or offer to Transfer, any Interest may be made unless the Company shall have received, at the expense of the Member seeking to effect such Transfer an opinion of counsel satisfactory to the Members that such proposed Transfer (i) may be effected without registration of the Interest under the Securities Act of 1933, as amended, and (ii) would not be in violation of any applicable state securities or "Blue Sky" law (including investment suitability standards).   Section 9.4  Admission of Transferee as Additional or Substitute Member.  Any person to whom any Interest or portion thereof is Transferred ("Transferee") shall be entitled to be admitted as a Member hereunder and to have all of the rights herein conferred upon a Member only if   (a)  such transferee's admission as a Member will not violate, nor cause the Company to violate, any applicable laws, rules, or regulations, including federal and state securities laws, and either such transferee shall have delivered an opinion of counsel satisfactory to the Members, or counsel for the Company shall have delivered an opinion, to such effect;   (b)  the consent of all of the Members shall have been given, which consent may be evidenced by the execution by all of the Members of a Certificate evidencing the admission of such transferee as a Member;   (c)  the transferee shall have accepted and agreed to be bound by the terms and provisions of this Agreement by executing a counterpart thereof and such other documents or instruments as the Members may require in order to effect the admission of such transferee as a Member;   (d)  such transferee qualifies and becomes a Member within the meaning of the Act by the procedures set forth in the Act;   (e)  such transferee shall have delivered to the Members a letter containing a representation and an agreement in the form set forth in Section 9.2 of this Agreement;   (f)  if the transferee is not an individual, the transferee shall have provided the Members with evidence satisfactory to counsel for the Company of its authority to become a Member under the terms and provisions of this Agreement;   (g)  such transferee pays to the Company a sum which is sufficient to cover all expenses (including legal fees) connected with the admission of the transferee as a Member pursuant to this Agreement and the Act, including without limitation the cost of any opinion of counsel referred to above.   Section 9.5  Execution of Documents, Etc.  Each Member hereby consents to the execution and recordation on its behalf by the Company of any amendment hereto required for the purpose of admitting as a Member the transferee of any or all of the Interest of a Member in the Company in this Article IX and to the execution and recordation on its behalf of any other instruments required in connection therewith, and the Company is hereby granted the right to admit any such transferee upon all of the terms set forth above.  In addition, each Member agrees to execute at the request of the Company any and all documents required to be executed by such Member to effect the admission as a Member of the transferee of any or all of the Interest of a Member in the Company pursuant to this Article IX.   Section 9.6  Filings By Company.  The Company shall cooperate with any transferee seeking to become a Member by preparing the documentation required by this Article IX and making all official filings and publications.   Section 9.7  Pledges.  No Member shall mortgage, pledge, or otherwise encumber all or any part of such Member's Interest in the Company at any time.   Section 9.8  No Withdrawal Rights Prior to Dissolution.  Prior to the dissolution of the Company, no Member may withdraw from the Company or receive any return of capital or other distribution of Company assets in respect of any withdrawal or attempted withdrawal.   ARTICLE X Amendment of Agreement   Section 10.1  Amendment.  Any amendment or supplement to this Agreement shall only be effective if in writing and if the same shall be consented to by all of the Members.   Section 10.2  Procedure for Amendment.  Any Member may propose an amendment or supplement to this Agreement, and any such amendment or supplement may be proposed by mailing to all of the Members a written request for consent to such amendment or supplement, accompanied by the text of the proposed amendment or supplement, and a written statement of the reasons for such proposal.  A Member shall be deemed to have voted its Interest in consent to any amendment or supplement hereto if such Member does not respond in writing, sent to all Members, to such written request for consent within thirty days from the date of mailing of the same to such Member.   ARTICLE XI Dissolution   Section 11.1  No Dissolution.  The Company shall not be dissolved by the admission of additional or substitute Members in accordance with the terms of this Agreement or by the death, retirement, resignation, expulsion, bankruptcy or dissolution of a Member or the occurrence of any other event under the Act that terminates the continued membership of a Member in the Company except as expressly provided in the Agreement.   Section 11.2  Term.  The Company shall be in effect for a term beginning on the date the Certificate of Formation of the Company is filed with the Delaware Secretary of State in accordance with the provisions of the Act and shall continue for a minimum of ten (10) years unless sooner dissolved and liquidated in accordance with the provisions of this Article.   Section 11.3  [Confidential Treatment Requested]   Section 11.4  Bankruptcy.  If:   (a)  any Member shall file a voluntary petition in bankruptcy, or shall be adjudicated a bankrupt or insolvent, or shall file any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under the present or any future Federal Bankruptcy Act, or any other present or future applicable Federal, state or other statute or law relative to bankruptcy, insolvency, or other relief for debtors, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver, conservator or liquidator of said Member or of all or any substantial part of its properties or its interest in the Company (the term "acquiesce" includes, but is not limited to, the failure to file a petition or motion to vacate or discharge any order, judgment or decree providing for such appointment within ten (10) days after the appointment); or   (b)  a court of competent jurisdiction shall enter an order, judgment or decree approving a petition filed against any Member seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future Federal Bankruptcy Act, or any other present or future applicable Federal, state or other statute or law relative to bankruptcy, insolvency, or other relief for debtors, and said Member shall acquiesce in the entry of such order judgment or decree (the term "acquiesce" includes, but is not limited to, the failure to file a petition or motion to vacate or discharge any order, judgment or decree within ten (10) days after the entry of the order, judgment or decree), or such order, judgment or decree shall remain unvacated and unstayed for an aggregate of ninety (90) days (whether or not consecutive from the date of entry thereof), or any trustee, receiver, conservator or liquidator of said Member or of all or any substantial part of its property or its interest in the Company shall be appointed without the consent or acquiescence of said Member and such appointment shall remain unvacated and unstayed for an aggregate of sixty (60) days (whether or not consecutive); or   (c)  any Member shall give notice to any governmental body of insolvency or pending insolvency, or suspension or pending suspension of operations.   then, and in any such event such Member shall be deemed, as of the date of occurrence of the respective event, to be the "Electing Member" for purposes of Section 11.8.  The filing date of the  bankruptcy petition shall be the "Section 11.4 Termination Date" and the Company shall be liquidated in accordance with Section 11.7.   SECTION 11.5  AUTOMATIC TERMINATION.   (A)  IN THE EVENT:   (1)  any Member, or its Affiliate, is prohibited by a change of law or regulation or an administrative action or judicial decree subsequent to this Agreement (including the application or interpretation of the change of law or regulation or the subsequent administrative action or judicial decree by opinion of counsel) from participating in the Company substantially upon the material terms and conditions of this Agreement and the prohibition cannot be corrected by amendment of the Agreement to put the Members in substantially the same financial position as prior to the prohibition; or   (2) [Confidential Treatment Requested]   (b) [Confidential Treatment Requested]  In order for Community Member to elect to withdraw pursuant to this Section 11.5(b), Community Member must [Confidential Treatment Requested].  In the event that Community Member elects to withdraw pursuant to this Section 11.5(b), no Member shall be deemed an “Electing Member”, [Confidential Treatment Requested].   (c) [Confidential Treatment Requested]  In order to withdraw pursuant to this Section 11.5(c), the Member not subject [Confidential Treatment Requested].  In the event the Member not subject [Confidential Treatment Requested], no Member shall be deemed an “Electing Member”, the expiration of the thirty day notice period shall be the termination date (“Section 11.5(c) Termination Date”), and the Company shall be liquidated pursuant to Section 11.7.   Section 11.6  Default.   (a)  If any Member fails to perform any of its obligations set forth in this Agreement, any other Member ("Non–defaulting Member") shall have the right within 30 days of the date of the default to give the defaulting party ("Defaulting Member") a written notice of the default ("Notice of Default").  The Notice of Default shall set forth in detail the obligation(s) that the Defaulting Member has not performed.   (b)  If, within a 15–day period following receipt of the Notice of Default, the Defaulting Member cures such default, it shall be deemed that the Notice of Default was not given and the Defaulting Member shall lose no rights hereunder.  If, within such 15–day period, the Defaulting Member does not cure such default, the Non–Defaulting Member hereunder shall have the right within 30 days of the expiration of the 15 day cure period to terminate this Company by giving the Defaulting Member written notice thereof “Termination Notice”).  The Company shall terminate on the date of the Termination Notice ("Section 11.6(b) Termination Date").  The remedy of the Non-Defaulting Member shall be limited to the damages provisions provided for under Section 11.8.   (c)  If a Defaulting Member disputes the basis set forth in the Notice of Default, the Defaulting Member must file for arbitration pursuant to Section 13.9 below within thirty (30) days of the Section 11.6 (b) Termination Date.  If it is ultimately determined by the arbitrator that the Defaulting Member was not in default as specified in the Notice of Default, then the Non–Defaulting Member shall be deemed an "Electing Member" under Section 11.8.  The Company shall be deemed to have terminated on the date of the Termination Notice ("Section 11.6(c) Termination Date").  The Company shall be liquidated pursuant to Section 11.7.  The remedy of the Non-Electing Member shall be limited to the damages provisions provided for under Section 11.8.   Section 11.7 Liquidation.   (a)  In the event the Company is terminated, the Company shall be liquidated as described below.  Upon the earlier of a Section 11.3 Termination Date, a Section 11.4 Termination Date, a Section 11.5(a) Termination Date, a Section 11.5(b) Termination Date, a Section 11.5(c) Termination Date, a Section 11.6(b) Termination Date, or a Section 11.6(c) Termination Date:   (1)  the Company shall not take any additional loan applications;   (2 [Confidential Treatment Requested];   (3) [Confidential Treatment Requested];   (4)  any restrictions on the activities of the Members contained in this Agreement shall cease unless the restriction specifically provides that it shall continue after termination; and   (5)  the Accountants or other third party mutually agreed to between the Members shall be retained to handle the liquidation consistent with the provisions of this Agreement.   (b)  The assets of the Company shall be paid or distributed in the following order of priority, unless otherwise required by applicable law:   (1)  To pay (or make provision for the payment of) all creditors of the Company, including the Members, in the order of priority provided by law; and   (2)  To distribute to the Members in accordance with (or in direct proportion to if less than) their respective Units, as adjusted for item (1) above and all Company operations up to and including such liquidation.   [Confidential Treatment Requested]   Section 11.8  Liquidated Damages.   (a)  It is understood that in the course of operation of the Company, the Members will contribute to the Company significant funds, resources and knowledge, including information, techniques, processes and business clientele, the value of which cannot be calculated.  As a material inducement to enter into this Agreement and to develop and disclose such information, the Members agree to the liquidated damages provisions set forth in this Section 11.8. [Confidential Treatment Requested]   (1) [Confidential Treatment Requested]   (2) [Confidential Treatment Requested].   (b) [Confidential Treatment Requested]   ARTICLE XII REPRESENTATIONS AND WARRANTIES; CLOSING REQUIREMENTS   Section 12.1  Member Representations and Warranties. Community Member represents and warrants as of the Closing Date that:   (a)  Community Member is a corporation duly organized, validly existing and in good standing under the laws of the State of North Dakota and has all requisite power and authority and licenses to own or lease its property and to carry on its business as it is now being conducted.  The execution, delivery and performance of this Agreement by Community Member have been duly authorized by all proper action on the part of Community Member, and are within its powers and will not conflict with or be in violation of Community Member's organizational documents.  This Agreement constitutes the legal, valid and binding obligation of Community Member, enforceable against Community Member in accordance with its terms.   (b)  The performance of this Agreement by Community Member will not violate or result in a breach of, constitute a default under, give rise to any right of acceleration or termination under any law or any contract, agreement, note, bond, license, indenture, mortgage, lease agreement or other instrument or obligation to which Community Member is a party or by which it is bound or affected or violate any rule or regulation of any administrative agency, or order, writ, injunction, judgment or decree of any court, administrative agency or governmental body applicable to it.   (c) Community Member has obtained and kept in force all material governmental licenses and permits necessary to conduct its business as it is now being conducted.   (d)  The balance sheet of Community Member or its affiliate group provided to Wells Fargo Member and the related statements of earnings, stockholders' equity and changes in financial position for the year provided, with notes thereto, reported upon or reviewed by independent certified public accountants, present fairly the financial position of Community Member or its affiliate group as of the date thereof and the results of operations, stockholders' equity and changes in financial position thereof for the year then ended, in accordance with GAAP applied on a consistent basis throughout such period.   (e)  Except as has been disclosed in writing to Wells Fargo Member, Community Member is not a party to any pending or, to the best knowledge of Community Member, threatened, claim, action suit, investigation or proceeding, nor is subject to any order, judgment or decree which may have a materially adverse effect on the Community Member's assets or business as currently conducted.   (f)  There are no claims for brokerage or other commissions or finder's or other similar fees in connection with the transactions covered by this Agreement insofar as such claims shall be based on arrangements or agreements made by or on behalf of Community Member, and Community Member hereby agrees to indemnify and hold harmless Wells Fargo Member from and against all liabilities, costs, damages and expenses from any such claim.   Section 12.2  Wells Fargo Member Representations and Warranties.  Wells Fargo Member represents and warrants as of the Closing Date that:   (a)  Wells Fargo Member is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority and licenses to own or lease its property and to carry on its business as it is now being conducted.  The execution, delivery and performance of this Agreement by Wells Fargo Member have been duly authorized by all proper action on the part of Wells Fargo Member, and are within its powers and will not conflict with, result in the breach or violation of, constitute a default under, give rise to any right of acceleration or termination under Wells Fargo Member's organizational documents or any indenture, mortgage, lease agreement, contract, order, injunction, judgment, decree or other instrument, rule or regulation to which Wells Fargo Member is a party or by which Wells Fargo Member is bound.  This Agreement constitutes the legal, valid and binding obligation of Wells Fargo Member, enforceable against Wells Fargo Member in accordance with its terms.   (b)  The performance of this Agreement by Wells Fargo Member will not violate or result in a breach of any law or any contract, agreement, note, bond, license or other instrument or obligation to which Wells Fargo Member is a party or by which it is bound or affected or violate any rule or regulation of any administrative agency, or order, writ, injunction or decree of any court, administrative agency or governmental body applicable to it.   (c)  Wells Fargo Member has obtained and kept in force all material governmental licenses and permits necessary to conduct its business as it is now being conducted.   (d)  The balance sheet of Wells Fargo Member or its affiliate group provided to Community Member and the related statements of earnings, stockholders' equity and changes in financial position for the year provided, with notes thereto, reported upon or reviewed by independent certified public accountants, present fairly the financial position of Wells Fargo Member or its affiliate group as of the date thereof and the results of operations, stockholders' equity and changes in financial position thereof for the year then ended, in accordance with GAAP applied on a consistent basis throughout such period.   (e)  Except as has been disclosed in writing to Community Member, Wells Fargo Member is not a party to any pending or, to the best knowledge of Wells Fargo Member, threatened, claim, action suit, investigation or proceeding, nor is subject to any order, judgment or decree which may have a materially adverse effect on the Wells Fargo Member's assets or business as currently conducted.   (f)  There are no claims for brokerage or other commissions or finder's or other similar fees in connection with the transactions covered by this Agreement insofar as such claims shall be based on arrangements or agreements made by or on behalf of Wells Fargo Member, and Wells Fargo Member hereby agrees to indemnify and hold harmless Community Member from and against all liabilities, costs, damages and expenses from any such claim.   Section 12.3  Closing Requirements.  On the Closing Date, the Members shall each deliver to the other the following:   (a)  a certified copy of an authorization to enter into this Agreement by the appropriate authority of the other party.   (b)  a certificate, dated as of the Closing Date, signed by the president or any vice president  and by the Secretary of the other party as to the matters set forth in Section 12.1 or 12.2 respectively.   (c)  an opinion of counsel, dated as of the Closing Date, in form and substance satisfactory to counsel for such party, to the effect that:   (1)                The other party is a corporation or limited liability company, duly organized, validly existing and in good standing under the laws of its state of incorporation or organization and has the power and authority to own and operate its properties and to carry on its business as now being conducted.   (2)The other party has the requisite power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated by this Agreement; all necessary action required to be taken under the other Member’s organizational documents has been taken to authorize and approve this Agreement and the transactions contemplated hereby; and this Agreement has been duly executed and delivered.   (3)The execution, delivery and performance of this Agreement by the other party and consummation by the other party of the transactions contemplated by this Agreement will not result in a breach or violation of, or constitute a default under, the organizational documents of the other party or any judgment, decree, order, governmental permit or license, agreement, trust agreement, indenture or instrument actually known to such counsel to which the other is a party or by which it is bound, the breach or violation of which would have a material adverse effect on the other party;   (4)To the best of such counsel's knowledge without independent investigation, there is no legal action or governmental proceeding or investigation pending or threatened against or affecting the other party or which prevents the other party from entering into or being bound by this Agreement or prevents the other party from consummating the transactions contemplated by this Agreement or which questions the validity of this Agreement or the transactions contemplated by this Agreement and there is no bankruptcy or other insolvency proceeding pending against or affecting the other party.   ARTICLE XIII Miscellaneous Provisions   Section 13.1  Notices.  Notices, requests, reports, payments, calls or other communications required to be given or made to any Member hereunder shall be in writing and shall be deemed to be given or made when properly addressed and delivered.  Delivery may be by registered or certified mail, postage prepaid, or by overnight courier to such Member at such Member's last known address.  Addresses shown on the Schedule of Capital Contributions for each Member shall be considered the last known address of such Member unless and until the Company is otherwise notified by such Member in the manner set forth in this Section 13.1.   Section 13.2  Nature of Interest of Members.  The Interest of each Member in the Company is personal property.   Section 13.3  Applicable Law.  Notwithstanding the place where this Agreement may be executed by any of the parties hereto, this Agreement, the rights and obligations of the parties hereto, and any claims and disputes relating thereto, shall be subject to and governed by the Act and the other laws of the State of Delaware as applied to agreements among Delaware residents to be entered into and performed entirely within the State of Delaware, and such laws shall govern the limited liability company aspects of this Agreement.   Section 13.4  Execution in Counterparts.  This Agreement may be executed in one or more counterparts with the effect as if the parties executing the several counterparts had all executed one counterpart, but in such event each such counterpart shall constitute an original and all of such counterparts shall constitute one and the same agreement.   Section 13.5  Successors in Interest.  Each and all of the covenants, agreements, terms, and provisions of this Agreement shall be binding upon and inure to the benefit of each of the Members and, to the extent permitted by this Agreement, their respective heirs, executors, administrators, personal representatives, successors and assigns.   Section 13.6  Severability.  Any provision of this Agreement which is invalid, illegal, or unenforceable in any respect in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality, or unenforceability without in any way affecting the validity, legality, or enforceability of the remaining provisions hereof, and any such invalidity, illegality, or unenforceability in any jurisdiction shall not invalidate or in any way affect the validity, legality, or enforceability of such provisions in any other jurisdiction.   Section 13.7  Headings.  The headings in this Agreement are inserted for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.   Section 13.8  Waiver of Right to Partition.  Each of the Members irrevocably waives during the term of the Company any right that such Member may have to maintain any action for partition with respect to the property and assets of the Company.   Section 13.9  Arbitration.   (a)  The Members agree to take all reasonable steps to resolve disputes between them without resorting to arbitration.  The Members agree to submit to binding arbitration any and all claims, disputes and controversies between or among them which cannot be resolved without arbitration, whether in tort, contract or otherwise (and their respective employees, officers, directors, attorneys, and other agents) arising out of or relating in any way to this Agreement, any related ancillary documents and their negotiation, execution, administration, modification, extension, substitution, formation, inducement, enforcement, default or termination.  However, "Core proceedings" under the United States Bankruptcy Code shall be exempted from arbitration.  Should the need arise for such arbitration, the Members agree that the determination of the arbitrator shall be final and shall not be capable of being appealed to any other court or form of resolution.  Notwithstanding this prohibition, the Members do agree that the decision of any arbitrator shall be capable of being enforced through an action filed in the appropriate court having jurisdiction.   (b)  Arbitration under this Agreement shall be governed by the Federal Arbitration Act (Title 9 of the U.S. Code), and shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA").  When the need for selection of an arbitrator shall arise, the Members shall request AAA to supply them with a list of no less than seven (7) arbitrators having no less than five (5) years experience in arbitrating complex business arrangements.  Upon receipt of that list of potential arbitrators, each Member shall communicate within 7 days to AAA four (4) arbitrators from the list they would agree to use or their right to participate in the selection of the arbitrator shall be forfeited.  As soon as AAA receives the selections from both Members, AAA shall review the selected arbitrators and appoint one of those arbitrators whose name appears on both Members’ lists of acceptable arbitrators.  AAA shall have the discretion to select the arbitrator from those arbitrators approved by both Members based upon availability and experience and AAA’s selection shall be final.  The arbitrator shall give effect to statutes of limitation in determining any claim.  Any controversy concerning whether an issue is arbitrable shall be determined by the arbitrator. Each Member shall each pay its own costs and expenses of the arbitration proceeding and the cost of the arbitrator shall be divided equally between the Members.   Section 13.10 Confidentiality.   (a)  The parties agree that the terms of this Agreement shall be maintained in confidence, and shall not be disclosed to any third party, except (i) as is required by law, (ii) pursuant to court order during the course of litigation after notice to the other Member, (iii) for internal communications purposes, (iv) as necessary for tax, accounting, and other regulatory purposes and, (v) as necessary or desirable to facilitate procurement of insurance protection.  This clause shall not restrict the release of financial statements of the Company by either party to any third party for regulatory requirements.   (b)  Community Member will hold in confidence all documents and information concerning Wells Fargo Member and its Affiliates furnished to it and its representatives in connection with this Agreement.  Community Member will not release or disclose such information to any other person, except as required by law or in connection with any proceedings to enforce or construe this Agreement and except its advisers in connection with this Agreement, with the same undertaking from such advisers.  If the Company shall not commence operation, such confidence shall be maintained and such information shall not be used in competition with Wells Fargo Member, unless Community Member can show that that such information was previously known to Community Member, in the public domain, or later acquired from other legitimate sources.  Upon request, all such documents and any copies thereof and extracts therefrom shall immediately thereafter be returned to Wells Fargo Member.  Upon termination of this Agreement, all confidential documents and information shall be returned upon completion of the liquidation of the Company.   (c)  Wells Fargo Member will hold in confidence all documents and information concerning Community Member and its Affiliates furnished to it and its representatives in connection with this Agreement.  Wells Fargo Member will not release or disclose such information to any other person, except as required by law or in connection with any proceedings to enforce or construe this Agreement and except its advisers in connection with this Agreement, with the same undertaking from such advisers.  If the Company shall not commence operation, such confidence shall be maintained and such information shall not be used in competition with Community Member, unless Wells Fargo Member can show that that such information was previously known to Wells Fargo Member, in the public domain, or later acquired from other legitimate sources.  Upon request, all such documents and any copies thereof and extracts therefrom shall immediately thereafter be returned to Community Member.  Upon termination of this Agreement, all confidential documents and information shall be returned upon completion of the liquidation of the Company.   Section 13.11  Publicity.  The Members shall consult with each other as to the form and substance of any proposed press release or other proposed public disclosure of matters related to this Agreement or any of the transactions contemplated hereby.   Section 13.12 Survival.  The provisions of Sections 13.9 and 13.10 shall continue to bind the Members should either withdraw from or otherwise leave the Company and shall survive any termination of this Agreement.   IN WITNESS WHEREOF, the Members hereto have executed and delivered this Agreement of Limited Liability Company the day and year first above written.   WELLS FARGO VENTURES, LLC COMMUNITY FIRST HOME MORTGAGE, INC.             By:     By:               Printed Name:     Printed Name:               Title:     Title:     SCHEDULE OF CAPITAL CONTRIBUTIONS   Name & Address   Amount of Capital Contribution   Units           Wells Fargo Ventures, LLC   [Confidential Treatment Requested]   50 1 Home Campus, X2406-011         Des Moines, IA 50328-0001                   Community First Home Mortgage, Inc.   [Confidential Treatment Requested]   50 520 Main Avenue         Fargo, ND 58124-0001           SCHEDULE OF INITIAL AND SUCESSOR MANAGING OFFICERS   Exhibit 1   COMPUTER ACCESS AGREEMENT   This Computer Access Agreement ("Agreement") is entered into effective November 1, 2001 (the "Effective Date") by and between Community First Mortgage, LLC  ("Company") and Wells Fargo Home Mortgage, Inc. ("WFHM").   RECITALS   WHEREAS, WFHM is willing to offer and provide Company with access to its residential mortgage origination computer system in operation from time to time, including the programs necessary for its operation (the "System") subject to the terms and limitations of this Agreement.   NOW, therefore, in consideration of the covenants contained herein, WFHM and Company agree as follows:   1.             WFHM Responsibilities. WFHM shall provide Company access to the System under the same terms and conditions which WFHM gives its loan production offices ("Retail Franchisees") access.  The System will be available to Company during the same hours as it is available to Retail Franchisees in the Company's market area.  In the event of any System outage, the Company's access shall be restored on the same basis as the Retail Franchisees in the Company's marketplace.  Access shall consist of allowing the Company to:   (a)                 prequalify applicants; (b)                register residential mortgage loan applications ("Applications") under WFHM's various loan programs in effect from time to time; (c)                 price protect interest rates on registered Applications according to WFHM's price protection guidelines; (d)                process registered Applications; (e)                 prepare documents required to close Applications which have been approved by WFHM's underwriting department; and (f)                  approve funding of closed Applications for which WFHM has provided price protection.   2.                Ownership.  The System is proprietary to WFHM.  Company shall not sell, transfer, publish, disclose, display, or otherwise make access to the System or information regarding the System available to any third parties without the express written consent of WFHM other than disclosure or display through the normal course of the mortgage origination business.  Company agrees to secure and protect the System in a manner consistent with WFHM's rights therein and to take appropriate action by instruction or agreement with its employees or consultants who are permitted access to the System to satisfy its obligations hereunder.  Upon termination of this Agreement, all information regarding the System, including all manuals, shall be returned to WFHM.  Violation of any provision of this section shall be basis for immediate termination of this Agreement.   3.             Fees And Taxes.   3.1                Fees.  For each Company office location provided with access to the System pursuant to this Agreement, the Company shall pay WFHM a fee of [Confidential Treatment Requested] per month.  The fee due under this Agreement shall be adjusted by the amount of any adjustment by WFHM applicable for Retail Franchisees for internal accounting purposes.  All fees due under this Agreement shall be paid on the last day of the month during which the fees accrue.  This monthly fee includes all costs of maintaining the System.   3.2                Taxes.  Where applicable, Company shall be responsible for payment of any applicable taxes, however designated, exclusive of taxes based on the net income.   4.             Term.  Except as otherwise provided herein, this Agreement shall commence on the Effective Date and remain in effect until the agreement which established Company (“Joint Company Agreement”) is terminated including any period necessary to wind down the affairs of the Company.   5.                Confidentiality. WFHM acknowledges that during the term of this Agreement, WFHM will be required to access certain information relating to the Company's customers prior to purchase of the customers' closed loans ("Information"). WFHM recognizes that such Information is of a confidential and proprietary nature to the Company until 30 days after WFHM purchases the closed loans except WFHM may use the Information with respect to its own business in regard to the Loans.  Both parties agree to:  (1) use at least the  same degree of care to maintain the confidentiality of the Information as it uses in maintaining the confidentiality of its own confidential and proprietary information; (2) use the Information only for the origination of residential mortgage loans through the Company; and (3) upon termination of this Agreement, immediately cease using the Information, erase the Information from storage in each computer system in which it has been installed except where retention is required for regulatory purposes, maintain in confidence all knowledge of the Information gained pursuant to the contract and, either return or destroy all physical embodiments of the Information.   6.             Liability.  Each party shall be liable to the other party for any loss or damage proximately caused by the gross negligence or willful misconduct of its officers, employees or agents.  WFHM shall be granted the same level of discretion in operating the System as it exercises in regard to providing similar services to its Retail Franchisees.   7.                Inspection.  All documents and records produced by or stored on the System under this Agreement shall be made available from time to time to and at the reasonable request of (i) regulatory authorities having jurisdiction over either of the parties, (ii) officers, employees and agents of either party and (iii) WFHM & Company’s auditors.   8.             Notices.  All notices and other communications in connection with this Agreement to a party hereto shall be in writing and shall be deemed to have been duly given when delivered by hand or when deposited in the United States mail with first class postage prepaid or when delivered to any nationally recognized overnight courier with delivery charges paid to such party at its address set forth below, or to such other person or address as such other party may specify by similar notice to the other party hereto:   If to WFHM:   If to Company (Both Companies):     Wells Fargo Home Mortgage, Inc.   Wells Fargo Home Mortgage, Inc.   Community First Home Mortgage, Inc. 1 Home Campus, X2401-06T   1 Home Campus, X2401-06T   520 Main Avenue Des Moines, IA 50328-0001   Des Moines, IA 50328-0001   Fargo, ND 58124-0001 Attn:  General Counsel   Attn:  General Counsel   Attn:   9.             General   9.1                Applicable Law.  This Agreement and performance hereunder shall be governed by the laws of the State of Delaware.   9.2                Amendment, Modification, or Waiver.  No amendment, modification, or waiver of any condition, provision, or term of this Agreement shall be valid or of any effect unless made in writing, signed by the party or parties to be bound or its duly authorized representative and specifying with particularity the extent and nature of such amendment, modification, or waiver.  No waiver of any term of condition set forth in this Agreement shall constitute a waiver of any other term or condition; nor shall it affect or impair any right arising from any subsequent default.   9.3                Assignment and Delegation.  No rights or interest in this Agreement may be assigned.  Nor, unless otherwise provided in this Agreement, may any obligations be delegated without the prior written consent of the other party, such consent not to be unreasonably withheld.   9.4                Severability.  Any invalidity, in whole or in part, of any provision of this Agreement, shall not affect the validity of any other provision of this Agreement.   9.5                Paragraph Heading.  Paragraph headings are provided for convenience of reference and do not constitute a part of this Agreement.   9.6                Force Majeure.  The parties shall be excused for delays in performing and failures to perform the obligations of this Agreement to the extent that any such delay or failure results from any cause beyond their reasonable control, including, solely by way of example and without limitation, delays caused by the other party, acts of God, strikes, and other labor disputes, civil disorder, catastrophes of nature, fire, explosion, natural or man–made floods or any severe weather, war, failure of a communications or computer system, nuclear attack, embargoes, actions or inactions of governmental authorities.  Each party agrees to make reasonable efforts to prevent such occurrences from affecting the performance of this Agreement.   9.7                The parties agree to submit to binding arbitration any and all claims, disputes and controversies between or among them which cannot be resolved without arbitration, whether in tort, contract or otherwise (and their respective employees, officers, directors, attorneys, and other agents) arising out of or relating in any way to this Agreement, and its negotiation, execution, administration, modification, extension, substitution, formation, inducement, enforcement, default or termination.  Arbitration under this Agreement shall be governed by the provisions regarding arbitration set forth in the Agreement of Limited Liability Company of Community First Mortgage, LLC as amended from time to time.   IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and do each hereby warrant and represent that their respective signatory, whose signature appears below, has been and is on the date of this Agreement duly authorized by all necessary and appropriate corporate action to execute this Agreement.   AGREED TO AND ACCEPTED BY: AGREED TO AND ACCEPTED BY:         WELLS FARGO HOME MORTGAGE, INC. COMMUNITY FIRST MORTGAGE, LLC (WFHM) (Company)         By:     By:   Printed Name:     Printed Name:           Its:     Its:     Exhibit 2   SERVICE AGREEMENT   This Service Agreement ("Agreement") entered into effective November 1, 2001 (the "Effective Date") by and between Community First Mortgage, LLC ("Venture") and Wells Fargo Home Mortgage, Inc. ("WFHM ").   RECITALS   WHEREAS, WFHM is willing to offer and provide certain support services to Venture; and   WHEREAS, Venture desires to retain WFHM to provide certain support services.   NOW, therefore, WFHM and Venture agree as follows:   1.  RESPONSIBILITIES.   1.1     Scope of Services. WFHM shall perform the services for Venture as set forth in this Agreement and any amendments or addenda that may from time to time be made a part of this Agreement (the "Services"), by mutual agreement.   1.2          Performance of Services. WFHM shall perform the Services for Venture under this Agreement in accordance with reasonable commercial standards; generally accepted accounting principles (GAAP) except as otherwise contemplated by the Joint Venture Agreement which established Venture ("Joint Venture Agreement"); in conformity with regulations or laws governing their activities; and in accordance with Standard Operating Procedures established from time to time pursuant to Section 1.3 below.   1.3     Standard Operating Procedures. WFHM has established (or may from time to time establish) internal policies, rules and procedures ("Standard Operating Procedures"), which will govern how the Services are provided and which do not directly and materially affect the daily operation of the Venture as determined by the Operating Committee.  Any change in Standard Operating Procedures which directly and materially affects the daily operation of the Venture is subject to approval by the Operating Committee.  For example, the elimination of regional underwriting could directly and materially affect the daily operation of the Venture.  If the Operating Committee decides not to adopt such a change, the Venture shall bear the added incremental cost of providing the Services without the change.  Any other changes by WFHM in the Standard Operating Procedures are not subject to review by the Venture.   1.4          Designate Contact Person.  Each party shall designate a person or persons to respond to other party's inquiries regarding activities related to the Services.   1.5          Confidentiality.  The parties acknowledge that during the term of this Agreement, the parties will be required to access certain information relating to the other party's customers ("Information").  The parties recognize that such Information is of a confidential and proprietary nature to the other party.  Both parties agree to: (1) use at least the same degree of care to maintain the confidentiality of the Information as it uses in maintaining the confidentiality of its own confidential and proprietary information; (2) use the Information only for the purpose of performing the Services agreed to in this Agreement; and (3) upon termination of this Agreement, immediately cease using the Information, erase same from storage in each computer system in which same has been installed except where retention is required for regulatory purposes, maintain in confidence all knowledge of same gained pursuant to the contract and, either return or destroy all physical embodiments of such Information.   1.6          Compliance with State and Federal Laws.  Both parties shall take reasonable steps to ensure that the Services performed under this Agreement are performed in compliance with applicable Federal and State laws.  Such steps may include, by way of example and not by way of limitation, ensuring that its employees are properly licensed to perform any Services that require such licensing.   2.  SERVICES.   2.1     Legal. WFHM will provide legal services required by Venture including litigation management, regulatory compliance and general corporate legal advice. The Venture shall be responsible for the expense of outside counsel and adverse judgments.   2.2          Accounting. WFHM will provide all accounting services required by Venture consistent with the Joint Venture Agreement including preparation of complete and accurate books of accounts and records, tax return preparation, regulatory reporting and preparation of income statements, balance sheets and commission reports.  In providing the accounting services required by this paragraph, WFHM may contract with a certified public accountant acceptable to the Venture for the performance of services.  The expense of the certified public accountant for performing any of WFHM’s responsibilities under this Agreement shall be paid by WFHM except that the Venture shall be responsible for the cost of preparing annual audited financial statements.   The books shall be prepared in accordance with generally accepted accounting principles (except as otherwise contemplated in the Joint Venture Agreement), consistently applied, utilizing the accrual method of accounting.  The accrual method of accounting shall also be used by the Venture for income tax purposes.  The Venture's books and records shall at all times be maintained at the principal business office of WFHM, or the Accountants, or such other place agreed upon by the Venturers, and shall be available for inspection by each of the Venturers or their duly authorized representatives during reasonable business hours. WFHM shall use its reasonable best efforts to preserve the books and records for the same period of time that WFHM preserves its own records, and each Venturer shall have the right to copy any and all such books and records at its own expense prior to the destruction thereof. WFHM shall not be liable for the destruction of the books and records resulting from any cause beyond its reasonable control, including, solely by way of example and without limitation, delays caused by the other party, acts of God, strikes, and other labor disputes, civil disorder, catastrophes of nature, fire, explosion, natural or man–made floods or any severe weather, war, failure of a communications or computer system, nuclear attack, embargoes, actions or inactions of governmental authorities.   Within ninety (90) days after the end of each fiscal year, WFHM shall cause to be prepared and furnished to the Venturers at the expense of the Venture, a balance sheet of the Venture (dated as of the end of the fiscal year then ended), a related statement of earnings for the Venture for the same year, a statement of cash flows for the Venture for such year, related footnotes to the financial statements and all other financial information reasonably requested by either Venturer.  Such financial information shall reflect the beginning balance in each Venturer's Capital Account as of the first day of such year, increases due to Capital Contributions or allocations of Profits, decreases due to allocations of Losses or distributions of profit made to each Venturer during the year, and the ending balance in each Venturer's Capital Account as of the last day of such year. WFHM shall also on a monthly basis distribute to the Venturers (i) profit and loss statement showing revenue and expenses of the Venture for the previous calendar month, (ii) report showing the number and loan amount of loan applications and loans closed during the previous calendar month, (iii) a balance sheet for the Venture, and (iv) any other information with respect to the operations of the Venture for the previous calendar month which either Venturer may reasonably request.   2.3     Human Resources. WFHM or a third party vendor will provide employee relations services required by the employees of the Venture including representation at administrative hearings, assistance in handling personnel matters, and administration of the benefits program and payroll for employees of the Venture.  The Venture shall be responsible for the expense of the third party vendor’s services in providing the benefits program and payroll for employees of the Venture and any third party representation at any administration hearings.   2.4     Data Processing and Management Information. WFHM will provide data processing and management information services as agreed between Venture and WFHM.  Such services shall consist of those data processing services currently provided by WFHM to its 100% owned loan production offices ("Retail Offices"), and such additions and modifications as are  provided by WFHM.   2.5          Assignment Processing. WFHM will safeguard Venture's loan files until such time as the loans are purchased by WFHM or other investors and will properly assign and endorse mortgages and notes as directed by Venture.   2.6     Post Closing. WFHM will provide all post closing services on Venture's files purchased by WFHM or other investors as directed by Venture including loan file review, pooling and delivery.   2.7          Underwriting. WFHM will underwrite loans that Venture elects to sell to WFHM. For loans approved by an automated underwriting system without review by an underwriter, there will be no separate charge to the Venture.  For loans which must be reviewed by an underwriter, there shall be a charge to the Venture of [Confidential Treatment Requested] per file (“Underwriting Fee”).  In the event WFHM adjusts the amount of or how the Underwriting Fee is calculated for its Retail Offices, the Underwriting Fee amount or calculation for the Venture shall be similarly adjusted.   2.8     Facilities Management.  To the extent requested by the Operating Committee, WFHM will provide facilities management services for the office locations used by the Venture including supplying office equipment, and arranging long distance service.   2.9     Quality Control. WFHM will provide quality control services for loans that Venture elects to sell to WFHM as part of its normal quality control review.  Any additional quality control services required in order for the Venture to maintain its approval as a HUD Loan Correspondent shall be separately provided and billed.   2.10     Management Consulting. WFHM will provide the part time consulting services of its in market Regional and/or Divisional Manager and Regional Operations Specialist.   2.11  Risk Management. WFHM will establish a risk management program for the Venture with terms, conditions, limits and deductibles as WFHM and the Venture determine to be appropriate from time to time. WFHM shall provide the Venture with a schedule of coverage for the risk management program in effect from time to time.  The Venture shall pay the premiums and deductibles, if any, on any insurance policies obtained by WFHM for the Venture as part of the risk management program.   2.12.  Promotions, Public Relations and Advertising. WFHM shall make available to the Venture all promotional materials, promotions and public relations services which are provided to Retail Offices.  The Venture shall pay any incremental cost of modifying or using the material in excess to the base cost charged to Retail Offices.  Programs involving WFHM trademarks may only be used if the Venture executes a written agreement with WFHM governing use of the trademarks.  The Venture shall be responsible for the cost of any employee of the Venture who qualifies to attend the WFHM sales conference, the WFHM service conference or any similar promotional event held by WFHM.   2.13.  Compliance with Credit Agreements. WFHM shall take all steps within its responsibilities under this Agreement which are necessary to ensure that the Venture complies with all terms of any credit or financing agreements to which it is a party.   2.14.  Loan Processing. WFHM shall process all mortgage loan applications taken by Venture in accordance with the standards set forth in Paragraph 2.15 below and shall comply with the covenants set forth in Paragraph 2.16 below.   2.15     Service Standards. WFHM shall conduct mortgage loan processing activities in accordance with the Standard Operating Procedures in a manner that is no less favorable to Venture customers than those applied by WFHM to customers of WFHM’s Retail Offices. WFHM shall meet the following service standards:   (a)          Establishing non-discriminatory practices consistent with federal, state and local equal opportunity and fair lending laws and regulations pertaining to such practices;   (b)          Periodically assessing and measuring customer satisfaction with the Venture through the use of customer satisfaction surveys and reporting the results to the Operating Committee;   (c)          Applying the same standards and efforts WFHM applies with respect to its own customers.   2.16     Covenants.  In conducting mortgage loan processing activities for Venture, WFHM shall:   (a)     comply in all material respects with all laws, statutes, regulations, orders and/or ordinances, whether federal, state or local or of any governmental agency, applicable to the activities contemplated, the Service Agreement, the Partnership Agreement and any agreements referred to herein or therein, including but not limited to, assuring that all credit practices and all preprinted forms and/or computer generated forms used by the Venture will be in compliance in all material respects with such laws, statutes, regulations, orders and/or ordinances;   (b)          periodically perform the normal and customary audits which WFHM performs for WFHM’s Retail Offices, the results of which shall be reported to the Operating Committee.   2.17  Processing Fee.  The Venture shall pay WFHM a processing fee for each mortgage loan processed by WFHM equal to the processing fee paid by WFHM's Retail Offices which use the same processing center (the “Processing Fee”).  In the event the Processing Fee for WFHM's Retail Offices is adjusted, the Processing Fee for the Venture shall be similarly adjusted.  There shall be added to the Processing Fee any applicable taxes payable by WFHM for providing the processing services, however designated, exclusive of taxes based on net income, required by law to be added to the Processing Fee.  Except as otherwise expressly provided herein or agreed in writing by the Venture, WFHM shall be responsible for all fees, costs, and expenses associated or in connection with the processing of the mortgage loans.  All Processing Fees shall be payable in arrears within 15 days following the end of the calendar month during which such Processing Fees accrue.   3.  TERM. This Agreement shall commence on the Effective Date and remain in effect until the Joint Venture Agreement is terminated subject to such period as required to wind down the affairs of the Venture.   4.  RELATIONSHIP OF THE PARTIES.   4.1     Agency.  Venture does hereby designate WFHM as its agent solely for the purpose of performing the Services.   4.2     Officer of Party.   4.2.1                Designating Officers.  Either party may, with the consent of the other, from time to time designate certain employees or officers of the other party as officers of the designating party with such authority and to perform such duties as set forth in this Agreement or as the designating party shall from time to time designate in writing.   4.2.2                Performance Of Duties As Officer.  When an employee or officer of the other party is performing duties as an officer of the designating party, such employee or officer shall be responsible and accountable directly to the designating party.   5.  FEES AND TAXES.   5.1          Management Fees.  Venture agrees to pay WFHM for its services rendered pursuant to this Agreement a Management Fee pursuant to the same formula used for WFHM’s Retail Offices, except as otherwise agreed in writing between WFHM and the Venture.  In the event WFHM adjusts the Management Fee formula for its Retail Offices, the Management Fee formula for the Venture shall be similarly adjusted, subject to any separate written agreements between WFHM and the Venture.   5.2     Taxes.  Where applicable, there shall be added to the Management Fee amounts equal to any applicable taxes, however designated, exclusive of taxes based on the net income of the Venture.   5.3          Payment.  All Management Fees shall be paid on the last day of the month during which the fees accrue.   5.4     Annual Fee.  The Venture shall pay an annual joint venture administration fee in addition to its Management Fee.  During the first year of operation, the joint venture administration fee shall be [Confidential Treatment Requested].  Subsequent to the first year, WFHM may not increase the amount of the joint venture administration fee by more than [Confidential Treatment Requested].   6.  LIABILITY. Each party shall be liable to the other party for any loss or damage proximately caused by the gross negligence or willful misconduct of its officers, employees or agents. WFHM shall be granted the same level of discretion in providing the Services to the Venture as it exercises in regard to its Retail Offices.   7.  INSPECTION. The documents and records relating to Services performed under this Agreement shall be made available from time to time to and at the reasonable request of (i) regulatory authorities having jurisdiction over either of the parties and (ii) officers, employees and agents of either party and (iii) WFHM & Company’s Auditors.   8.  NOTICES. All notices and other communications in connection with this Agreement to a party hereto shall be in writing and shall be deemed to have been duly given when delivered by hand or when deposited in the United States mail with first class postage prepaid or when delivered to any nationally recognized overnight courier with delivery charges paid to such party at its address set forth below, or to such other person or address as such other party may specify by similar notice to the other party hereto:   If to WFHM: Wells Fargo Home Mortgage, Inc. 1 Home Campus, X2401-06T Des Moines, IA 50328-0001 Attn:  General Counsel   If to Venture: (Both Venturers) Wells Fargo Home Mortgage, Inc.,        Community First Home Mortgage, Inc. 1 Home Campus, X2401-06T             520 Main Avenue Des Moines, IA 50328-0001                        Fargo, ND 58124-0001 Attn:  General Counsel                 Attn: ______________   9.   GENERAL.   9.1  Applicable Law.  This Agreement and performance hereunder shall be governed by the laws of the State of Delaware.   9.2 Amendment, Modification, or Waiver.  No amendment, modification, or waiver of any condition, provision, or term of this Agreement shall be valid or of any effect unless made in writing, signed by the party or parties to be bound or its duly authorized representative and specifying with particularity the extent and nature of such amendment, modification, or waiver.  No waiver of any term or condition set forth in this Agreement shall constitute a waiver of any other term or condition; nor shall it affect or impair any right arising from any subsequent default.   9.3   Assignment and Delegation.  No rights or interest in this Agreement may be assigned.  Nor, unless otherwise provided in this Agreement, may any obligations be delegated without the prior written consent of the other party, such consent not to be unreasonably withheld.   9.4   Severability.  Any invalidity, in whole or in part, of any provision of this Agreement, shall not affect the validity of any other provision of this Agreement.   9.5   Paragraph Heading.  Paragraph headings are provided for convenience of reference and do not constitute a part of this Agreement.   9.6   Force Majeure.  The parties shall be excused for delays in performing and failures to perform their obligations under this Agreement to the extent that any such delay or failure results from any cause beyond their reasonable control, including, solely by way of example and without limitation, delays caused by the other party, acts of God, strikes, and other labor disputes, civil disorder, catastrophes of nature, fire, explosion, natural or man–made floods or any severe weather, war, failure of a communications or computer system, nuclear attack, embargoes, actions or inactions of governmental authorities.  Each party agrees to make reasonable efforts to prevent such occurrences from affecting the performance of this Agreement.   9.7   Arbitration.  The parties agree to submit to binding arbitration any and all claims, disputes and controversies between or among them which cannot be resolved without arbitration, whether in tort, contract or otherwise (and their respective employees, officers, directors, attorneys, and other agents) arising out of or relating in any way to this Agreement, and its negotiation, execution, administration, modification, extension, substitution, formation, inducement, enforcement, default or termination.  Arbitration under this Agreement shall be governed by the provisions regarding arbitration set forth in the Agreement of Limited Liability Company of Community First Mortgage, LLC as amended from time to time.   IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and do each hereby warrant and represent that their respective signatory, whose signature appears below, has been and is on the date of this Agreement duly authorized by all necessary and appropriate corporate action to execute this Agreement.   AGREED TO AND ACCEPTED BY   AGREED TO AND ACCEPTED BY       WELLS FARGO HOME MORTGAGE, INC.   COMMUNITY FIRST MORTGAGE, LLC (WFHM)   (Venture)       By:     By:   Printed Name:     Printed Name:           Its:     Its:     Exhibit 3   LOAN PURCHASE AGREEMENT     THIS AGREEMENT, entered into effective November 1, 2001 between Wells Fargo Home Mortgage, Inc. (hereinafter called "WFHM") and Community First Mortgage, LLC (hereinafter called the "Venture").   1.   Procedures   a)     The Venture will be provided with the same price blast that WFHM's wholly owned retail branches ("Retail Offices") receive, containing information with respect to the types and prices of mortgage loans WFHM will commit to buy and the Venture may register a loan for delivery to WFHM by following WFHM's procedures as set forth below.  Any loan type information provided to the Venture shall be subject to change at any time prior to registration by the Venture.  Notwithstanding anything herein to the contrary, WFHM shall be under no obligation or commitment to approve or buy any Mortgage Loan which does not meet its underwriting criteria.   b)    Interest rates and prices currently offered by WFHM will be made available to the Venture by distribution of the price blast on a daily basis.  Interest rate and prices are subject to change at any time prior to "lock-in" ("lock-in" means to obtain a guaranteed rate and price for a specified period of time).  The Venture may "lock-in" a previously registered loan for an agreed length of time (the "lock-in period") by following the procedure set forth in the WFHM procedures and guidelines for its Retail Offices as amended from time to time by WFHM ("Guidelines").  The terms of the Guidelines are incorporated herein by reference.   c)     If a lock-in expires, the Venture may relock at a renegotiated price and rate as set forth in the Guidelines.   d)    WFHM may, in its sole discretion, reduce or waive any of the fees provided for herein under extraordinary circumstances.   e)     WFHM shall purchase loans at par and the Venture shall receive an interest income credit for the per diem interest which accrues between the date of loan closing and purchase by WFHM.   f)    WFHM will pay the Venture the same service release premiums for delivered loans as WFHM pays its Retail Offices as adjusted from time to time.   2.   General   a)     All loan applications submitted to WFHM will be prepared in accordance with the Guidelines and the Venture will use its best efforts to insure that any loan application registered with WFHM will be sold to WFHM as provided below.   b)    The Venture shall obtain all data necessary to insure the proper and accurate completion of the loan application including signed authorizations for written verification of employment, income, assets and other material information requiring verification.  Appraisals, credit reports and mortgage insurance must be done by WFHM approved vendors.   c)     The Venture shall control closing and funding of each approved loan. WFHM will be paid at funding its required fees and discount as agreed when Venture locked in the loan with WFHM.  Any sums collected in excess of WFHM’s required fees and discount shall be retained by the Venture as income.  The Venture shall not be required to broker loans to WFHM which have not been "locked-in" with WFHM.   d)    WFHM portfolio products which are not deemed high risk products by WFHM may be made available to the Venture, but at different pricing from WFHM’s Retail Offices. WFHM portfolio products which are deemed high risk products by WFHM may be made available to the Venture if WFHM’s partner in the Venture agrees to share equally in any losses incurred by WFHM from high risk products originated by the Venture.   3.   Representations and Indemnities   a)     The Venture, WFHM and their respective officers, agents, employees and representatives will comply with all federal, state and local laws with regard to this Agreement and the duties and obligations imposed and the conduct and activities permitted, authorized or contemplated hereby and use their best efforts to obtain and retain all approvals and licenses required by the Venture, or WFHM by this Agreement.   b)    The Venture will indemnify and hold WFHM, and its affiliates, their officers, agents, representatives and employees harmless from any and all costs, claims, charges, actions, causes of action, losses or liability, including attorney's fees, arising either directly or indirectly by reason of a breach of the terms of this Agreement by the Venture, its officers, agents, employees or representatives or in any way as a result of an inaccurate or incomplete loan application or other documentation prepared by or at the direction of the Venture and submitted to WFHM.  The provisions of this paragraph shall remain effective and inure to the benefit of WFHM, and its affiliates, their officers, agents, employees, affiliates or representatives notwithstanding the expiration, cancellation, termination or completion of this Agreement.   c)     WFHM will indemnify and hold the Venture, its officers, agents, employees and representatives harmless from any and all costs, claims, charges, actions, causes of action, losses or liability including attorneys fees, arising either directly or indirectly by reason of a breach of the terms of this Agreement by WFHM, its affiliates, officers, agents, employees or representatives.  The provisions of this paragraph shall remain effective and inure to the benefit of the Venture, its officers, agents, employees or representatives notwithstanding the expiration, cancellation, termination or completion of this Agreement.   d)    The Venture agrees that it will not participate in or receive any form of compensation from any other lender (including itself) closing a loan that has been "locked-in" with WFHM unless the loan was denied by WFHM or WFHM approved the sale to the other lender.   4.   Transfer and Termination   a)     No sale, transfer or assignment of this Agreement or of any interest herein shall be valid without the prior written consent of WFHM.   b)    This agreement will automatically terminate upon termination or expiration of any approval or license of the Venture or WFHM required by law to perform the services required of the Venture or WFHM by this Agreement.  Any such termination shall not affect applications, if any, which have been registered with WFHM prior to termination except to the extent required by termination or expiration of the approval or license.   c)     This Agreement shall be terminated upon termination of the Joint Venture Agreement.  Any such termination will not affect applications, if any, that have been locked-in with WFHM prior to termination.   5.   Governing Law This Agreement will be governed by and construed in accordance with the laws of the State of Delaware.   6.   Arbitration The parties agree to submit to binding arbitration any and all claims, disputes and controversies between or among them which cannot be resolved without arbitration, whether in tort, contract or otherwise (and their respective employees, officers, directors, attorneys, and other agents) arising out of or relating in any way to this Agreement, and its negotiation, execution, administration, modification, extension, substitution, formation, inducement, enforcement, default or termination.  Arbitration under this Agreement shall be governed by the provisions regarding arbitration set forth in the Agreement of Limited Liability Company of Community First Mortgage, LLC, as amended from time to time.   IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.         WELLS FARGO HOME MORTGAGE, INC.   COMMUNITY FIRST MORTGAGE, LLC (WFHM)   (Venture)       By:     By:   Printed Name:     Printed Name:         Its:     Its:     Exhibit 4   CREDIT AGREEMENT   THIS AGREEMENT, entered into effective November 1, 2001 by and between Community First Mortgage, LLC (the "Borrower"), and Wells Fargo Home Mortgage, Inc., a California Corporation ("WFHM"), provides as follows:   ARTICLE I Definitions   Section 1.1                Definitions.  For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:   "Advance" means an advance by WFHM to the Borrower pursuant to Article II.   "Agreement" means this Credit Agreement, as the same may from time to time be supplemented or amended.   "Business Day" means a day on which banks are generally open for business in the State of Delaware.   "Collateral" has the meaning given to that term in the Pledge and Security Agreement.   "Collateral Account" means the account of the Borrower with Wells Fargo Bank Minnesota, N.A.   "Collateral Account Agreement" means that certain Collateral Account Agreement of even date herewith pursuant to which the Borrower and WFHM establish the Collateral Account with Wells Fargo Bank Minnesota, N.A. attached hereto as Exhibit A.   "Commitment" means WFHM's commitment to make advances under Article II.   "Commitment Amount" means [Confidential Treatment Requested] unless said amount is reduced pursuant to Section 2.5, in which event it means the amount to which said amount is reduced.   "Commitment Termination Date" means the date of termination in whole of the Commitment pursuant to Section 2.5 or 5.2.   "Default" means an event that, with the giving of notice, the passage of time or both, would constitute an Event of Default.   "Eligible Mortgage Loan" has the meaning specified in Section 2.10.   "Event of Default" has the meaning specified in Section 5.1.   "FHA" means the Federal Housing Administration and any successor thereto.   "GAAP" means generally accepted accounting principles.   "GNMA" means the Government National Mortgage Association and any successor thereto.   "Interest Rate" means the interest rate specified in the Mortgage Note.   "Investor" means Wells Fargo Home Mortgage, Inc. and any other investor approved in writing from time to time by WFHM.  Approval of any investor can be withdrawn at any time by WFHM with 10 days written notice.   "Loan Documents" means this Agreement, the Note, the Pledge and Security Agreement and all other agreements, instruments, certificates and other documents executed and delivered pursuant to or in connection therewith, as the same may from time to time be supplemented or amended.   "Mortgage" means a mortgage or deed of trust on real property which has been improved by a completed single family (one to four family units) dwelling unit (i.e., a detached house, townhouse or condominium).   "Mortgage Loan" means a Mortgage Note and the related Mortgage.   "Mortgage Note" means a promissory note which has a term not exceeding 30 years evidencing a loan or advance which is secured by a Mortgage.   "Note" has the meaning specified in Section 2.2.   "Person" means any individual, corporation, partnership, joint venture, association, joint–stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.   "Pledge and Security Agreement" means the pledge and security agreement of the Borrower in the form of Exhibit B.   "System" means WFHM residential mortgage loan origination computer system used by Borrower.   "VA" means the Department of Veterans Affairs and any successor thereto.   ARTICLE II Amount and Terms of the Loans   Section 2.1  Revolving Advances. WFHM agrees, upon the terms and subject to the conditions hereinafter set forth, to make Advances to the Borrower from time to time during the period from the date hereof to and including the Commitment Termination Date in an aggregate outstanding amount not to exceed at any time outstanding the Commitment Amount.  Within the limits of the Commitment Amount, the Borrower may borrow, prepay pursuant to Section 2.6 and reborrow under this Section 2.1.   Section 2.2  The Note.  The Advances made by WFHM shall be evidenced by and repayable with interest in accordance with a single demand note of the Borrower (the "Note") payable to the order of WFHM, substantially in the form of Exhibit C hereto, dated the date hereof.  The Note shall bear interest on the unpaid principal amount thereof from the date thereof until paid as set forth in Section 2.4.   Section 2.3  Making the Revolving Advances.  In order to obtain an Advance, Borrower shall electronically provide WFHM through the System with the following:   (a)                verified personal and credit information regarding the borrower(s);   (b)                loan registration information;   (c)                property and appraisal information;   (d)                underwriting approval information; and   (e)                a request for funding.   Upon fulfillment of the applicable conditions set forth in Article III hereof, WFHM shall disburse the amount of the requested Advance by crediting the same to the Collateral Account or in such other manner as WFHM and the Borrower may from time to time agree.  The Borrower shall be obligated to repay all Advances made based on Borrower's submission of the above–referenced information.  Any request for an Advance, whether written or telephonic, shall be deemed to be a representation that the statements set forth in Section 3.2 are correct to the best of Borrower’s knowledge.   Section 2.4  Interest.  The Borrower shall pay interest on the unpaid principal balance of the Advances from time to time outstanding at the Interest Rate.  Interest accruing on the unpaid principal balance of the Advances during a month shall be payable on the fifteenth day of the month following the date of the Advance.   Section 2.5  Termination or Reduction of the Commitment. WFHM shall have the right at any time upon written notice to the Borrower to permanently terminate the Commitment for new registrations upon ten days written notice and demand payment in full of the outstanding principal balance of the Note and all accrued and unpaid interest thereon, for any reason or for no reason whatsoever, whether or not a Default or Event of Default has occurred.  Nothing contained in this Section 2.5 shall preclude or limit WFHM from terminating the Commitment and demanding payment of the Note upon the occurrence of an Event of Default as provided in Article V.   Section 2.6  Voluntary and Mandatory Prepayments.   (a)                The Borrower may prepay the principal balance of the Note then outstanding in whole or in part, without penalty or premium, at any time and from time to time; provided that any prepayment of the full amount of the Note shall include accrued interest thereon.   (b)                If the outstanding Advances shall on any date exceed the Commitment Amount, the Borrower shall immediately make a principal prepayment of the Note in an amount equal to the amount of such excess.   (c)                Any outstanding Advance must be repaid on the date the sale proceeds for the related Mortgage Loan are received from the Investor.   Section 2.7  Computation of Interest and Fees.  Interest under the Note and the fees hereunder shall be computed on the basis of actual number of days elapsed in a year of 360 days.   Section 2.8  Payment.  All payment of principal and interest under the Note and of the fees hereunder shall be made to WFHM in immediately available funds.  The Borrower agrees that the amount shown on the books and records of WFHM as being the aggregate amount of Advances outstanding shall be prima facie evidence of the principal amount of the Note then outstanding.  Borrower agrees that the Investor will transmit the sale proceeds for each Eligible Mortgage Loan directly to WFHM.   Section 2.9  Payment on Nonbusiness Days.  Whenever any payment to be made hereunder or under the Note shall be stated to be due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in each case be included in the computation of payment of interest on the Note or the fees hereunder, as the case may be.   Section 2.10  Use of Proceeds.  The proceeds of each Advance shall be used by the Borrower only to make, originate or acquire Mortgage Loans which have been registered for sale to any Investor ("Eligible Mortgage Loans").   ARTICLE III Conditions of Lending   Section 3.1  Initial Conditions Precedent.  The obligation of WFHM to make any Advance is subject to the condition precedent that WFHM shall have received on or before the day of the first Advance all of the following, each dated (unless otherwise indicated) as of the date hereof, in form and substance satisfactory to WFHM:   (a)                The Note, properly executed on behalf of the Borrower.   (b)                The Pledge and Security Agreement, properly executed on behalf of the Borrower.   (c)                The Collateral Account Agreement, properly executed on behalf of the Borrower.   (d)                A Certificate of a member of the Borrower, certifying as to (i) the resolutions of the Operating Committee of the Borrower authorizing the execution, delivery and performance of the Loan Documents, (ii) true and correct copies of the Borrower's limited liability company or partnership agreement, and (iii) the signatures of the officers of the Borrowers authorized to execute and deliver such documents and other documents or certificates to be delivered pursuant to this Agreement on behalf of the Borrower, including requests for Advances. WFHM may conclusively rely on any such certificate until it shall receive a further certificate of the Secretary or member of the Borrower canceling or amending the prior certificate and submitting the signature of the officers named in such further certificate.   Section 3.2  Conditions Precedent to All Advances.  The obligation of WFHM to make any advance (including the initial Advance) shall be the subject to the further conditions precedent that on the date of such Advance:   (a)                the representations and warranties contained in Article IV hereof are correct on and as of the date of such Advance as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date;   (b)                no event has occurred and is continuing, or would result from such Advance, which constitutes a Default or an Event of Default; and   (c)                the aggregate outstanding Advances after such Advance is made would not exceed the Commitment Amount as of the date of such Advance.   ARTICLE IV Representations and Warranties   The Borrower represents and warrants to WFHM as follows:   Section 4.1  Existence and Power.  The Borrower is a limited liability company validly organized, existing and in good standing under the laws of the State of Delaware and is duly licensed or qualified to transact business in all jurisdictions where the character of the property owned or leased or the nature of the business transacted by it makes such licensing or qualification necessary. The Borrower has all requisite power and authority, corporate or otherwise, to conduct its business, to own its properties and to execute and deliver, and to perform all of its obligations under, the Loan Documents.   Section 4.2  Authorization of Borrowing; No Conflict as to Law or Agreements.  The execution, delivery and performance by the Borrower of the Loan Documents and the borrowings from time to time hereunder have been duly authorized by all necessary company action and do and will not (i) require any consent or approval of the Borrower's members or any authorization, consent or approval by any governmental authority or regulatory body, (ii) violate any provision of any law, rule or regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System) or of any order, writ, injunction or decree presently in effect having applicability to the Borrower, (iii) result in a breach of or constitute a default under any contract binding on or affecting the Borrower, or (iv) result in, or require, the creation, lien, security interest or other charge or encumbrance of any nature (other than the Pledge and Security Agreement) upon or with respect to any of the properties now owned or hereafter acquired by the Borrower.   Section 4.3  Legal Agreements.  This Agreement constitutes, and the other Loan Documents, when executed and delivered by the Borrower hereunder, will constitute, the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, except to the extent that enforcement thereof may be limited by any applicable bankruptcy, insolvency or similar laws now or hereafter in effect affecting creditor's rights generally (other than fraudulent conveyance laws and preference laws) and by general principles of equity.   Section 4.4  Financial Condition.  The Borrower has heretofore furnished to WFHM its current financial statements. Those financial statements fairly present the financial condition of the Borrower on the dates thereof and the results of its operations for the periods then ended, and were prepared in accordance with GAAP except as otherwise contemplated by Borrower’s operating agreement.   Section 4.5  Adverse Change.  There has been no material adverse change in the business, properties or condition (financial or otherwise) of the Borrower since the date of the latest financial statement referred to in Section 4.4.   Section 4.6  Litigation.  There are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or the properties of the Borrower before any court, governmental agency or regulatory body or arbitrator, which may materially adversely affect the financial condition or operations of the Borrower.   Section 4.7  Licenses and Permits.  The Borrower has all federal, state and local licenses and permits required to be maintained in connection with the operation of its businesses, and all such licenses and permits are valid and fully effective. The Borrower is fully approved to originate FHA, VA and conventional  Mortgage Loans.   ARTICLE V Events of Default, Rights and Remedies     Section 5.1  Events of Default.  "Event of Default", wherever used herein, means any one of the following events:   (a)                Default in the payment of any principal or interest on the Note when it becomes due and payable.   (b)                Default in the payment of any fees required under this Agreement, when the same become due and payable.   (c)                Default in the performance, or breach, of the covenant of the Borrower contained in Section 2.6(b) or (c).   (d)                Default in the performance, or breach, of any material covenant or agreement of the Borrower in this Agreement or in any other Loan Document (other than a covenant or agreement a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and the continuance of such default or breach for a period of 30 days after WFHM has given notice to the Borrower specifying such default or breach and requiring it to be remedied.   (e)                Any representation or warranty made by the Borrower in any Loan Document or by the Borrower (or any of its officers) in any certificate, instrument, or statement contemplated by or made or delivered pursuant to or in connection with any Loan Document, shall prove to have been incorrect in any material respect when made.   (f)                A default under any bond, debenture, note or other evidence of Debt of the Borrower (other than to WFHM) or under any indenture or other instrument under which any such evidence of debt has been issued or by which it is governed and the acceleration of payment of such Debt.   (g)                Default in the payment of any amount owed by the Borrower to WFHM other than hereunder or under the Note.   (h)                The Borrower shall be insolvent, or admit in writing its inability to pay its debts as they mature, or make an assignment for the benefit of creditors; or the Borrower shall apply for or consent to the appointment of any receiver, trustee, or similar officer for it or for all or any substantial part of its property; or such receiver, trustee or similar officer shall be appointed without the application or consent of the Borrower and such appointment shall continue undischarged for a period of 30 days; or the Borrower shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against the Borrower; or any judgment, writ, warrant of attachment or execution or similar process shall be issued or levied against a substantial part of the property of the Borrower and such judgment, writ, or similar process shall not be released, vacated or fully bonded within 30 days after its issue or levy.   (i)A petition shall be filed by or against the Borrower under the United States Bankruptcy Code naming the Borrower as debtor.   (j)                The rendering against the Borrower of a final judgment, decree or order for the payment of money in excess of [Confidential Treatment Requested] and such judgment, decree or order shall remain unsatisfied and in effect for any period of 30 consecutive days without a stay of execution.   (k)                A writ of attachment, garnishment, levy or similar process shall be issued against or served upon WFHM with respect to (i) any property of the Borrower in the possession of WFHM, or (ii) any indebtedness of WFHM to the Borrower.   Section 5.2  Rights and Remedies.  Upon the occurrence of an Event of Default or at any time thereafter until such Event of Default is cured to the written satisfaction of WFHM, WFHM may exercise any or all of the following rights and remedies:   (a)                WFHM may declare the Commitment to be terminated, whereupon the same shall forthwith terminate.   (b)                WFHM may, by notice to the Borrower, declare the entire unpaid principal amount of the Note then outstanding, all interest accrued and unpaid thereon, and all other amounts payable under this Agreement to be forthwith due and payable, whereupon such Note, all such accrued 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.   (c)                WFHM may exercise and enforce its rights and remedies under the Loan Documents.   Notwithstanding the foregoing, upon the occurrence of an Event of Default described in Section 5.1(i) or 5.1(k) hereof, the entire unpaid principal amount of the Note then outstanding, all interest accrued and unpaid thereon, and all other amounts payable under this Agreement shall be immediately due and payable without presentment, demand, protest or notice of any kind. NOTHING CONTAINED IN THIS ARTICLE V OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL PRECLUDE OR LIMIT WFHM FROM TERMINATING ITS COMMITMENT FOR NEW REGISTRATIONS UPON TEN DAYS WRITTEN NOTICE AND DEMANDING PAYMENT OF THE NOTE AT ANY TIME AND FOR ANY REASON OR FOR NO REASON AS PROVIDED IN SECTION 2.5.   ARTICLE VI Miscellaneous   Section 6.1  No Waiver; Cumulative Remedies.  No failure or delay on the part of WFHM in exercising any right, power or remedy under the Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under the Loan Documents.  The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law.   Section 6.2  Amendments, Etc.  No amendment, modification, termination or waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom shall be effective unless the same shall be in writing and signed by WFHM and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.   Section 6.3  Notice.  Except as otherwise expressly provided herein, all notices and other communications hereunder shall be in writing and shall be (i) personally delivered, (ii) sent by certified mail, postage prepaid, (iii) delivery by overnight courier, or (iv) transmitted by telecopy if followed with a hard copy by regular mail, in each case addressed to the party to whom notice is being given at its address as set forth below and, if telecopied, transmitted to that party at its telecopier number set forth below:   If to WFHM: Wells Fargo Home Mortgage, Inc. 1 Home Campus, X2401-06T Des Moines, IA 50328-0001 Attn:  General Counsel   If to the Borrower (Both Members): Wells Fargo Home Mortgage, Inc.,        Community First Home Mortgage, Inc. 1 Home Campus, X2401-06T             520 Main Avenue Des Moines, IA 50328-0001                        Fargo, ND 58124-0001 Attn:  General Counsel                 Attn: ______________   or, as to each party, at such other address or telecopier number as may hereafter be designated in a notice by that party to the other party complying with the terms of this Section.  All such notices or other communications shall be deemed to have been given on (i) the date received if delivered personally, (ii) two Business Days after the date of posting if delivered by mail, (iii) one Business Day after deposit with an overnight courier for next Business Day Delivery, or (iv) the date of transmission if delivered by telecopy, except that notice or requests to WFHM pursuant to any of the provisions of Article II shall not be effective until received by WFHM.   Section 6.4  Costs and Expenses.  Each party agrees to pay to the other party all costs and expenses incurred (including the reasonable fees and out–of–pocket expenses of counsel) in connection with the enforcement during the term hereof or thereafter of any of the rights or remedies under any of the foregoing documents, instruments or agreements or under applicable law, whether or not arbitration is filed with respect, thereto.  All costs and expenses shall be payable on demand.   Section 6.5  Execution in Counterparts.  This Agreement and the Pledge and Security Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts of this Agreement or the Pledge and Security Agreement, as the case may be, taken together, shall constitute but one and the same instrument.   Section 6.6  Binding Effect, Assignment.  This Agreement shall be binding upon and inure to the benefit of the Borrower and WFHM and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of WFHM.   Section 6.7  Governing Law.  The Loan Documents shall be governed by, and construed in accordance with, the substantive laws (other than conflict laws) of the State of Delaware.   Section 6.8  Arbitration. The parties agree to submit to binding arbitration any and all claims, disputes and controversies between or among them which cannot be resolved without arbitration, whether in tort, contract or otherwise (and their respective employees, officers, directors, attorneys, and other agents) arising out of or relating in any way to this Agreement or any exhibits hereto, and their negotiation, execution, administration, modification, extension, substitution, formation, inducement, enforcement, default or termination.  Arbitration under this Agreement and its exhibits shall be governed by the provisions regarding arbitration set forth in the Agreement of Limited Liability Company of Community First Mortgage, LLC, as amended from time to time.   Section 6.9  Severability of Provisions.  Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.   Section 6.10  Entire Agreement.  This Agreement and the other Loan Documents and related documents described herein embody the entire agreement and understanding between the Borrower and WFHM and supersede all prior agreements and understandings, oral or written, between WFHM and the Borrower.   Section 6.11  Acceptable to WFHM.  As used in this Agreement, the phrases "to the satisfaction of WFHM," "acceptable to WFHM," "acceptable to WFHM in WFHM's sole discretion" or any similar phrase shall mean acceptable to WFHM in WFHM's reasonable discretion.   Section 6.12  Headings.  Article and Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.   IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.     WELLS FARGO HOME MORTGAGE, INC.   COMMUNITY FIRST MORTGAGE, LLC (WFHM)   (Borrower)       By:     By:   Printed Name:     Printed Name:         Its:     Its:     Exhibit A   COLLATERAL ACCOUNT AGREEMENT   This Collateral Account Agreement, entered into effective November 1, 2001 is by and between Community First Mortgage, LLC (the "Borrower"), and Wells Fargo Bank Minnesota, National Association (the "Bank") and Wells Fargo Home Mortgage, Inc. ("WFHM").   WFHM and the Borrower have entered into a Credit Agreement dated contemporaneously herewith pursuant to which WFHM has agreed to make revolving advances to the Borrower in an aggregate principal amount not to exceed [Confidential Treatment Requested] (as the same may from time to time be amended, modified or supplemented, the "Credit Agreement").  All terms used herein have the same meanings ascribed to such terms in the Credit Agreement.   The parties desire to establish the Collateral Account into which Advances will be deposited and payments and other proceeds of Collateral (as that term is defined in the Credit Agreement) will be received and held by the Bank.   Accordingly, the parties hereto agree as follows:   1.             There shall be opened and maintained with the Bank a collateral bank account designated " Community First Mortgage, LLC - Collateral Account" or similarly designated to WFHM's and the Bank's satisfaction (the "Collateral Account").   2.             The Collateral Account and all funds at any time on deposit therein shall constitute collateral security for any and all indebtedness now or hereafter at any time owing by the Borrower to WFHM under the Credit Agreement, whether or not then due. WFHM, through its agent the Bank, shall have full and exclusive dominion of and control over the Collateral Account and all funds at any time on deposit therein.   3.             WFHM shall deposit all Advances made under the Credit Agreement into the Collateral Account, which Advances shall be used solely for the origination of Eligible Mortgage Loans by the Borrower.  The Borrower shall deposit into the Collateral Account, or shall direct the Bank to debit its operating account for, any additional funds necessary for the origination or acquisition of the Eligible Mortgage Loans to be funded with the deposited Advances.  Provided the Borrower is in compliance with the applicable conditions set forth in Article III of the Credit Agreement, the Bank shall payout all such Advances and other funds deposited into the Collateral Account pursuant to this paragraph according to the terms of the Credit Agreement.   4.             The Borrower shall direct the Investor to make all payments with respect to Eligible Mortgage Loans, and shall promptly deposit all other proceeds of Collateral, by wire or other acceptable transfer, to the Bank for deposit in the Collateral Account.  To the extent the Borrower is in possession of any proceeds of Collateral, the Borrower will hold such proceeds separately in trust for WFHM until deposited in the Collateral Account.   5.             WFHM may, from time to time, in its sole discretion, instruct the Bank to do any of the following or any combination thereof with respect to funds on deposit in the Collateral Account: (a) charge the Collateral Account and credit WFHM’s account to be applied as a payment of the unpaid principal amount of the outstanding Advances and accrued interest thereon; (b) retain the funds on deposit in the Collateral Account; or (c) release and transfer the funds to the Borrower's operating account with the Bank for the Borrower's general use.   6.             The Borrower shall have no right to withdraw any funds from the Collateral Account at any time and shall have no dominion or control over the funds at any time on deposit in the Collateral Account.   7.             WFHM hereby acknowledges that it is responsible for the payment of all charges relating to the Collateral Account, including but not limited to account maintenance charges, fees for incoming and outgoing wire transfers and for any other credits or debits in accordance with Bank's standard fee schedule.     WELLS FARGO HOME MORTGAGE, INC.   COMMUNITY FIRST MORTGAGE, LLC     (Borrower)       By:     By:   Printed Name:     Printed Name:           Its:     Its:     WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION   By:     Printed Name:       Its:       Exhibit B   PLEDGE AND SECURITY AGREEMENT   This Pledge and Security Agreement (the "Agreement") entered into effective November 1, 2001 by and between Community First Mortgage, LLC, a limited liability company with its principal place of business in Fargo, North Dakota (the "Pledgor"), and Wells Fargo Home Mortgage, Inc. ("WFHM").   RECITALS   The Pledgor and WFHM have entered into a Credit Agreement dated contemporaneously herewith (as amended or modified from time to time, the "Credit Agreement"), pursuant to which WFHM has agreed to extend a revolving credit facility to the Pledgor, on the condition, among others, that the Pledgor execute and deliver this Agreement to WFHM; and   The Pledgor finds it advantageous, desirable and in its best interest to comply with the condition that it execute and deliver this Agreement.   ACCORDINGLY, in consideration of the premises and of the mutual covenants herein contained and in order to induce WFHM to become a party to, and to extend credit under, the Credit Agreement, the parties hereto agree as follows:   Section 1. DEFINITIONS Each capitalized term used herein which is not otherwise defined herein shall have the meaning ascribed to such term in the Credit Agreement.  In addition, the following terms shall have the following respective meanings:   "Collateral" has the meaning specified in Section 2 hereof.   "Investor" means Wells Fargo Home Mortgage, Inc. and any other investor approved in writing from time to time by WFHM.  Approval of any investor can be withdrawn at any time by WFHM with 10 days written notice.   "Obligations" means all obligations of the Pledgor to WFHM now or hereafter existing under any Loan Document.   "Obligor" means a person or other entity who now or hereafter is or becomes liable to the Pledgor with respect to any of the Collateral.   "Pledged Mortgage Loans" means Mortgage Loans deemed to have been delivered to WFHM as provided in Section 4.   Section 2.  PLEDGE As collateral security for the due and punctual payment of the Obligations, and to secure performance of each obligation and the observance of each term and condition by the Pledgor to be performed or observed under the Credit Agreement, this Agreement and the other Loan Documents, the Pledgor does hereby pledge, hypothecate, assign, transfer and convey to WFHM, and assigns and grants to WFHM a security interest in and to the following described property now owned or hereafter acquired by the Pledgor (the "Collateral"):   (a)           all right, title and interest of the Pledgor in and to the Pledged Mortgage Loans and all promissory notes, or other instruments or agreements which evidence the Pledged Mortgage Loans;   (b)           all right, title and interest of the Pledgor in and to all notes, real estate mortgages, deeds of trust, security agreements, chattel mortgages, assignments of rent and other security instruments whether now or hereafter owned, acquired or held by the Pledgor which secure (or constitute collateral for any note, instrument or agreement securing) any of the Pledged Mortgage Loans;   (c)           all right, title and interest of the Pledgor in and to all financing statements perfecting the security interest of any of the Pledged Mortgage Loans or property securing any Pledged Mortgage Loans;   (d)           all right, title and interest of the Pledgor in and to all guaranties and other instruments by which the persons or entities executing the same guarantee, among other things, the payment or performance of the Pledged Mortgage Loans;   (e)           all right, title and interest of the Pledgor in and to all title insurance policies, title insurance binders, commitments or reports insuring or relating to any Pledged Mortgage Loan or property securing any Pledged Mortgage Loan;   (f)            all right, title and interest of the Pledgor in and to all surveys, bonds, hazard and liability insurance, policies, and any other agreement, instrument or document pertaining to, affecting, obtained by the Pledgor in connection with, or arising out of, the Pledged Mortgage Loans;   (g)           all right, title and interest of the Pledgor in and to all agreements to purchase any Pledged Mortgage Loans;   (h)           all right, title and interest of the Pledgor in and to all collections on, and proceeds of or from, any and all of the foregoing (hereinafter collectively called "Collections");   (i)            all right, title and interest of the Pledgor in and to any other asset of the Pledgor which has been or hereafter at any time is delivered to WFHM hereunder;   (j)            all files, surveys, certificates, correspondence, appraisals, tapes, discs, cards, accounting records, and other records, information, and data of the Pledgor relating to the Pledged Mortgage Loans (including all information, data, tapes, discs and cards necessary to administer and service such Pledged Mortgage Loans);   (k)           all balances, credits and deposits of the Pledgor maintained in the Collateral Account; and   (l)            any and all balances, credits, deposits, accounts or moneys of, or in the name of, the Pledgor representing or evidencing the foregoing.   Section 3.  REPORTS CONCERNING EXISTING COLLATERAL AND HEREAFTER ACQUIRED COLLATERAL From time to time hereafter as reasonably requested by WFHM, the Pledgor will promptly give a written report to WFHM describing and listing each document, instrument or other paper which evidences, secures, guarantees, insures or pertains to any item of the Collateral whether now or hereafter owned, acquired or held by the Pledgor that the Pledgor has not theretofore delivered to an Investor.  Such written report shall contain sufficient information to enable WFHM to identify each such document, instrument or other paper.  The Pledgor (a) upon the request of WFHM, shall promptly provide additional information concerning, or a more complete description of, each such document, instrument or other paper and (b) at the request of WFHM, shall promptly deliver the same to WFHM.   Section 4.  DELIVERY OF COLLATERAL DOCUMENTS (a)           A Mortgage Loan closed and funded with the proceeds of an Advance shall be deemed to have been delivered under this Agreement when there shall have been electronically delivered to WFHM the information required by the Credit Agreement.  The Pledgor shall also comply with its obligation under this Pledge and Security Agreement to deliver to WFHM the instruments and documents described in the Transmittal Form.  The documents to be delivered pursuant to this Section 4(a) shall be delivered (including delivery by telecopy, as provided for above) to WFHM no later than 9:00 a.m. (Minneapolis time) on the Business Day on which the Advance is to be made for the purpose of funding such Mortgage Loan.   (b)           Within five Business Days after receiving a written request from WFHM to deliver the same, the Pledgor shall deliver to WFHM the following:   (i)                if any such exist, original guaranties, assignments of rents and other instruments and documents relating to security for and payment of such Mortgage Loan, together with duly executed assignments thereof;   (ii)                a mortgagee's title insurance policy (or commitment therefor) in the form of an American Land Title Association standard policy (revised coverage, most recent form) from a substantial and reputable title insurance company acceptable to FNMA and FHLMC in favor of the Pledgor insuring the lien of the mortgage securing such Mortgage Loan (subject only to such liens and encumbrances as are generally acceptable to reputable lending institutions, mortgage investors and securities dealers) or, if such a mortgagee's title policy (or commitment therefor) is generally not available in the state in which the real property subject to such mortgage is located, an opinion of an attorney reasonably acceptable to WFHM to the effect that the mortgage securing such Mortgage Loan is a valid first lien free and clear of all other liens, encumbrances and restrictions, except such as are generally acceptable to reputable lending institutions, mortgage investors and securities dealers;   (iii)                evidence satisfactory to WFHM that the premises covered by the Mortgage securing such Mortgage Loan is insured against fire and perils of extended coverage for an amount at least equal to the lesser of the full insurable value of such premises and the Collateral Value of such Mortgage Loan;   (iv)                with respect to each Mortgage Loan secured by a Mortgage which is insured by FHA, insured by a private mortgage insurer or guaranteed by the VA, a certificate signed by an officer of the Pledgor that, as of the date of delivery thereof, the Pledgor either has possession of the applicable FHA insurance certificate, private mortgage insurance certificate or VA guarantee covering such Mortgage Loan, or has complied with all requirements and conditions for obtaining possession of such applicable FHA insurance certificate, private mortgage insurance certificate or VA guarantee;   (v)                originals or photocopies, as WFHM may reasonably request, of surveys (or plat maps, if surveys are not available) and all other instruments, documents and other papers pertaining to each such Pledged Mortgage Loan; and   (vi)                the original of each Mortgage referred to in Section 2(b) hereof, together with satisfactory evidence of its recordation.   (c)           All assignments executed and delivered by the Pledgor shall be in form and substance acceptable to and approved by WFHM.   (d)           Any Transmittal Form delivered to WFHM hereunder, together with the documents accompanying any such Transmittal Form, shall conclusively be presumed to have been delivered to WFHM on behalf of the Pledgor notwithstanding that any such Transmittal Form shall not be signed or submitted by a person who has been authorized in writing to do so by the Pledgor through its Operating Committee or otherwise.   (e)           The Pledgor will from time to time whenever an Event of Default exists, upon the request of WFHM, endorse and deliver to WFHM any draft, check, note, assignment or other writing which evidences a right to the payment of money which constitutes Collateral for deposit to the Collateral Account.   Section 5.  REPRESENTATIONS AND WARRANTIES The Pledgor hereby represents and warrants that:   (a)           All of the representations and warranties set forth in the Credit Agreement are true and correct;   (b)           The Pledgor is the legal and equitable owner of the Collateral and its interests therein are free and clear of all liens, security interests, charges and encumbrances of every kind and nature (other than as created hereunder or under commitments to purchase by the Investor);   (c)           No financing statement or other evidence of lien covering any of the Collateral is on file in any public office;   (d)           The Pledgor has good right, power and lawful authority to pledge, assign and deliver the Collateral in the manner hereby done or contemplated;   (e)           No consent or approval (other than any consents which may be incidental to any filing which may be necessary to perfect the security interests in the Collateral) of any governmental body, regulatory authority, person, trust, or entity is or will be (i) necessary to the validity of the rights created hereunder or (ii) required prior to the assignment, transfer and delivery of any of the Collateral to the Investor.   (f)            To the Pledgor's knowledge, no material dispute, right of setoff, counterclaim or defense exists with respect to all or any part of the Collateral;   (g)           This Agreement constitutes the legal, valid and binding obligation of the Pledgor enforceable against the Pledgor and the Collateral in accordance with its terms (subject to limitations as to enforceability which might result from bankruptcy, reorganization, arrangement, insolvency or other similar laws affecting creditors' rights generally) and by general principles of equity;   (h)           In making and closing each Pledged Mortgage Loan, the Pledgor has fully complied with, and all collateral documents delivered with respect to such Pledged Mortgage Loans comply with, all applicable federal, state and local laws, regulations and rules, including, but not limited to, (i) usury laws, (ii) the Real Estate Settlement procedures Act of 1974, (iii) the Equal Credit Opportunity Act, (iv) the Federal Truth in Lending Act, (v) Regulation Z of the Board of Governors of the Federal Reserve System; and (vi) all other consumer protection and truth-in-lending laws which may apply, and in each case with the regulations promulgated in connection therewith, as the same may be amended from time to time; and the Pledgor shall maintain sufficient documentary evidence in its files with respect to such Pledged Mortgage Loans to substantiate such compliance; and   (i)                Immediately upon (A) the execution and delivery of the Credit Agreement, the Note and the other Loan Documents, (B) the delivery of the Collateral to the Investor as contemplated herein and (C) the filing of an appropriate financing statement in the appropriate filing office or offices, WFHM shall have a valid, first priority security interest and lien in the Collateral.   Section 6.  EVENTS OF DEFAULT; REMEDIES If one or more Events of Default shall exist, then WFHM, in addition to any and all other rights and remedies which it may then have hereunder, under the Credit Agreement or any other Loan Document, under the Uniform Commercial Code of the State of Minnesota or of any other pertinent jurisdiction (the "Code"), or under any other instrument, or which WFHM may have at law, in equity or otherwise, may, at its option (a) in the name of the Pledgor, or otherwise, demand, collect, receive and receipt for, compound, compromise, settle and give acquittance for, and prosecute and discontinue any suits or proceedings in respect of any or all of the Collateral; (b) take any action which WFHM may deem necessary or desirable in order to realize on the Collateral, including without limitation, the power to perform any contract, endorse in the name of the Pledgor without recourse to the Pledgor any checks, drafts, notes or other instruments or documents received in payment of or on account of the Collateral; (c) enter upon the premises where any of the Collateral not in the possession of WFHM is located and take possession thereof and remove the same, with or without judicial process; (d) reduce the claims of WFHM to judgment or foreclosure or otherwise enforce the security interests herein granted and assigned, in whole or in part, by any available judicial procedure; (e) after notification, if any, provided for herein, sell, lease, or otherwise dispose of, at the office of WFHM, on the premises of the Pledgor, or elsewhere, all or any part of the Collateral, in its then condition or following any commercially reasonable preparation or processing, and any such sale or other disposition may be as a unit or in parcels, by public or private proceedings, and by way of one of more contracts (it being agreed that the sale of any part of the Collateral shall not exhaust the power of sale granted hereby, but sales may be made from time to time, and at any time, until all the Collateral has been sold or until all Obligations have been fully paid and performed), and at any such sale it shall not be necessary to exhibit any of the Collateral; (f) at its discretion, retain the Collateral in satisfaction of the Obligations whenever the circumstances are such that WFHM is entitled to do so under the Code or otherwise; and (g) exercise any and all other rights, remedies and privileges which WFHM may have under this Agreement, or any of the other promissory notes, assignments, transfers of lien, and any other instruments, documents, and agreements executed and delivered pursuant to the terms hereof or pursuant to the terms of the Credit Agreement.  The Pledgor acknowledges and agrees that a sale of the Collateral to the Investor in accordance with its standard program shall be deemed commercially reasonable and preferable, and the Collateral is intended to be sold and that none of the Collateral is a type or kind intended by the Pledgor to be held for investment or any purpose other than for sale.   Section 7.  NOTICES Reasonable notification of the time and place of any public sale of any Collateral, or reasonable notification of the time after which any private sale or other intended disposition of any of the Collateral is to be made shall be sent to the Pledgor and to any other person entitled under the Code to notice; provided, that if any of the Collateral threatens to decline speedily in value, or is of a type customarily sold on a recognized market, WFHM may sell or otherwise dispose of the Collateral without notification, advertisement, or other notice of any kind.  It is agreed that notice sent or given not less than fifteen (15) calendar days prior to the taking of the action to which the notice relates is reasonable notification and notice of the purposes of this Section 7 and that such notice is sufficient if it states only the number of Pledged Mortgage Loans to be sold and their aggregate outstanding principal balance, average interest rate, and average balance together with the time and place of sale.  All notices and other communications provided for in this Agreement shall be given to the parties at their respective addresses set forth in the Credit Agreement or, as to each such party, at such other address as shall be designated by such party in a written notice to the other parties.  All such notices and other communications shall be given by one or more of the means specified in Section 6.3 of the Credit Agreement, and upon being so given, shall be deemed to have been given as of the earliest time specified in said Section 6.3 for the means so used.   Section 8.  APPLICATION OF PROCEEDS Until all Obligations owed to WFHM have been paid in full, any and all proceeds ever received by WFHM from any sale or other disposition of the Collateral, or any part thereof, or the exercise of any other remedy pursuant to Section 6 hereof, shall be applied by WFHM as follows:   First, to the payment of the out-of-pocket expenses of WFHM and the reasonable fees and out-of-pocket expenses of counsel employed in connection therewith, and to the payment of all costs and expenses reasonably incurred by WFHM in connection with the administration and enforcement of this Agreement (including, without limitation, the sale or other disposition of the Collateral) and to the payment of all advances made by WFHM for the account of the Pledgor hereunder to the extent that such costs and expense have not been reimbursed to WFHM, as the case may be;   Second, to the payment in full of the other Obligations; and   Third, the balance (if any) of such proceeds shall be paid to the Pledgor, its successors or assigns, or as a court of competent jurisdiction may direct, provided, that if such proceeds are not sufficient to satisfy the Obligations in full, the Pledgor shall remain liable to WFHM for any deficiency.   Section 9.  INDEMNIFICATION AND COSTS AND EXPENSES The Pledgor will (a) pay all reasonable out-of-pocket expenses, including, without limitation, any recording or filing fees, fees of title insurance companies in connection with records or filings, costs of mortgage insurance policies and endorsements thereof and mortgage registration taxes (or any similar fees or taxes), incurred by WFHM in connection with the enforcement and administration of this Agreement (whether or not the transactions hereby contemplated shall be consummated), the Credit agreement and the other Loan Documents, and including, without limitation, the reasonable fees and disbursements of outside counsel for WFHM, (b) pay, and hold WFHM harmless from and against, any and all present and future stamp and other similar taxes with respect to the foregoing matters and save WFHM harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay by Borrower such taxes; and (c) indemnify, pay and hold harmless WFHM from and against any and all liabilities, obligations, losses, damages, penalties, judgments, suits, costs, expenses and disbursements of any kind whatsoever (the "Indemnified Liabilities") which may be imposed on, incurred by or asserted against it in any way relating to or arising out of this Agreement, the Credit Agreement, the Loan Documents or any of the transactions contemplated hereby or thereby, unless the same are caused by the gross negligence or willful misconduct of WFHM.  The undertakings of the Pledgor set forth in this Section 9 shall survive the payment in full of the Note and the termination of this Agreement, the Credit Agreement and the other Loan Documents.   Section 10.  TERMINATION This Agreement shall terminate when all the Obligations have been fully paid and performed and WFHM has no further Commitment under the Credit Agreement, at which time WFHM shall reassign and redeliver, without recourse upon, or representation or warranty by, WFHM and at the expense of the Pledgor, to the Pledgor, or to such other person or persons as the Pledgor shall designate, against receipt, such of the Collateral (if any) as shall not have been sold or otherwise disposed of by WFHM pursuant to the terms hereof, of the Credit Agreement or of the other Loan Documents, and shall still be held by WFHM, together with the appropriate instruments of reassignment and release; provided, however, that this Agreement shall continue to be effective or be reinstated, as the case may be, if at any time payment of any of the Obligations is rescinded or must otherwise be returned by WFHM or any other Person upon the insolvency, bankruptcy or reorganization of the Pledgor or otherwise, all as though such payment had not been made.   Section 11.  NON-ASSUMPTION OF LIABILITY; NO FIDUCIARY RESPONSIBILITY Nothing herein contained shall relieve the Pledgor from performing any covenant, agreement or obligation on the part of the Pledgor to be performed under or in respect of any of the Collateral or from any liability to any party or parties having an interest therein or impose any liability on WFHM for the acts or omissions of the Pledgor in connection with any of the Collateral. WFHM shall not assume or become liable for, nor shall it be deemed or construed to have assumed or become liable for, any obligation of the Pledgor with respect to any of the Collateral, or otherwise, by reason of the grant to WFHM of a security interest in the Collateral.  While WFHM shall use reasonable care in the custody and preservation of the Collateral, WFHM shall not have any fiduciary responsibility to the Pledgor with respect to the holding, maintenance or transmittal of the Collateral delivered hereunder.   IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.     WELLS FARGO HOME MORTGAGE, INC.   COMMUNITY FIRST MORTGAGE, LLC (WFHM)   (Venture)       By:     By:   Printed Name:     Printed Name:         Its:     Its:     Exhibit C   DEMAND NOTE   Bloomington, Minnesota November 1, 2001   For value received the undersigned, Community First Mortgage, LLC, a limited liability company with its principal place of business in Fargo, North Dakota hereby promises to pay ON DEMAND to the order of Wells Fargo Home Mortgage, Inc. ("Lender"), at its office in Bloomington, Minnesota or at any other place designated at any time by the holder hereof, in lawful money of the United States of America and in immediately available funds, the principal sum of [Confidential Treatment Requested] or, if less, the aggregate unpaid principal amount of all advances made by Lender to the undersigned hereunder, together with interest on the principal amount of all Advances hereunder remaining unpaid from time to time computed on the basis of the actual number of days elapsed and a 360-day year, from the date hereof until this Note is fully paid at the rate or rates set forth in Section 2.4 of the Credit Agreement referred to below.  Interest accruing each month shall be payable on the first Business Day of the next succeeding month and at maturity or earlier if prepaid in full.  Interest accruing under this Note is subject to any restrictions contained in the Service Agreement between Lender and the undersigned.   This Note may be prepaid in whole at any time or from time to time in part, without penalty or premium, provided that any prepayment of the full amount of the Note shall include accrued interest thereon.   This Note is issued pursuant to, and is subject to, a Credit Agreement of even date herewith, by and between the undersigned and Lender, which, among other things, provides for acceleration of the maturity hereof upon the occurrence of an Event of Default (as defined in that Credit Agreement) and for mandatory prepayment hereof upon the occurrence of certain events.   All outstanding Advances under this Note are secured by a Pledge and Security Agreement of even date herewith from the undersigned to Lender, and may now or hereafter be secured by one or more other security agreements, mortgages, deeds of trust, assignments, or other instruments or agreements.   This Note shall be immediately due and payable (including unpaid interest accrued hereon) without demand or notice thereof upon filing of a petition by or against the undersigned under the United States Bankruptcy Code.   The undersigned hereby agrees to pay all costs of collection, including reasonable attorneys' fees and legal expenses, in the event this Note is not paid when due, whether or not legal proceedings are commenced.   Presentment or other demand for payment, notice of dishonor and protest are expressly waived.     COMMUNITY FIRST MORTGAGE, LLC By:     Printed Name:       Its:      

QuickLinks -- Click here to rapidly navigate through this document EXHIBIT 10.28 WARRANT ISSUANCE AGREEMENT     WARRANT ISSUANCE AGREEMENT (this "Agreement"), dated as of May 18, 2001, by and between YOUBET.COM, INC., a Delaware corporation ("UBET") and ODS TECHNOLOGIES, L.P., a Delaware limited partnership ("TVG"). RECITALS     WHEREAS, UBET and TVG are parties to a License and Content Agreement (the "License Agreement"), dated as of the date hereof, relating to the grant by TVG to UBET of a non-exclusive license to use, subject to the terms thereof, (i) TVG's patented systems, platforms, methods and technologies for the making of pari-mutuel wagers on horse races using telephones and online using personal computers and other devices approved by the TVG in its business judgment, and (ii) certain horsetrack simulcast audio, video and data content for the purpose of streaming such content online and the agreement of each track to accept wagers based on such content;     WHEREAS, UBET and TVG have made the execution and delivery of this Agreement a condition to the execution and delivery of the License Agreement; and     WHEREAS, UBET intends, subject to the terms and conditions set forth in this Agreement, to issue to TVG certain warrants representing the right to purchase shares of common stock, par value $.001 per share, of UBET ("UBET Common Stock").     NOW, THEREFORE, in consideration of the premises and the respective representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows: ARTICLE I ISSUANCE OF WARRANTS     SECTION 1.01.  Issuance of Initial Warrant. UBET, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, shall issue to TVG a warrant (the "Initial Warrant") to purchase an aggregate of 3,884,650 shares of UBET Common Stock (as the same may be adjusted pursuant to the terms of the Initial Warrant, the "Initial Warrant Shares"). The Initial Warrant shall be evidenced by, and have the terms (including adjustment terms) set forth in, the Warrant Certificate attached hereto as Exhibit A.     SECTION 1.02.  Issuance of Additional Warrant. Subject only to (i) the approval of UBET's stockholders of the Warrant Proposal as provided in Section 4.01, and (ii) the License Agreement not having been terminated according to its terms, immediately following the UBET Stockholders Meeting (as hereinafter defined), UBET, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, shall issue to TVG a warrant (the "Additional Warrant") to purchase a number of shares of UBET Common Stock which, when aggregated with the number of Initial Warrant Shares, shall equal 51.0% of the sum of (i) the total number of shares of UBET Common Stock outstanding on the date the Additional Warrant is exercised (the "Additional Warrant Exercise Date"), (ii) the total number of shares of UBET Common Stock issuable upon exercise of the Additional Warrant, and (iii) the total number of Initial Warrant Shares then issuable upon exercise of the Initial Warrant (as the same may be adjusted pursuant to the terms of the Additional Warrant, the "Additional Warrant Shares"). The Additional Warrant shall be evidenced by, and have terms (including adjustment terms) set forth in, the Warrant Certificate attached hereto as Exhibit B. -------------------------------------------------------------------------------- ARTICLE II REPRESENTATIONS AND WARRANTIES OF UBET     UBET hereby represents and warrants to TVG as follows:     SECTION 2.01.  Organization and Qualification. UBET (i) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, (ii) has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted and (iii) is duly qualified or licensed and in good standing to do business in each jurisdiction in which the properties owned, leased or operated by it or the nature of the business conducted by it makes such qualification or license necessary, except in such jurisdictions where the failure to be so duly qualified or licensed or in good standing has not had, either individually or in the aggregate, a material adverse effect on the business, assets, results of operations or financial condition of UBET. UBET has delivered to TVG true and complete copies of its Certificate of Incorporation and By-laws, each as amended through and in effect on the date hereof. UBET has no Subsidiaries.     SECTION 2.02.  Authorization and Validity. Except as set forth on Schedule 2.02, UBET has all requisite corporate power and authority to enter into this Agreement and the License Agreement, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, provided however, that the issuance of the Additional Warrant pursuant to Section 1.02 shall require the adoption of the Warrant Proposal by UBET's stockholders as provided in Section 4.01. The execution, delivery and performance by UBET of this Agreement and the License Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of UBET (the "UBET Board") and by all other necessary corporate action on the part of UBET, subject, in the case of the issuance of the Additional Warrant pursuant to Section 1.02, to the adoption of the Warrant Proposal by UBET's stockholders as provided as in Section 4.01. This Agreement and the License Agreement have been duly executed and delivered by UBET and each is a valid and binding obligation of UBET, enforceable against UBET in accordance with its terms (except insofar as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally, or by principles governing the availability of equitable remedies). 2 --------------------------------------------------------------------------------     SECTION 2.03.  Capitalization.     (a) At the date hereof, the authorized capital stock of UBET consists of (i) 50,000,000 shares of UBET Common Stock and (ii) 1,000,000 shares of Preferred Stock, par value $.001 per share (the "UBET Preferred Stock"). As of the close of business on May 18, 2001: (i) 19,520,850 shares of UBET Common Stock were issued and outstanding, 10,951,416 shares were reserved for issuance upon exercise of outstanding stock options and warrants and no shares were held by UBET in its treasury; and (ii) no shares of UBET Preferred Stock were issued or outstanding or held by UBET in its treasury. All issued and outstanding shares of UBET Common Stock have been validly issued and are fully paid and nonassessable, are not subject to and have not been issued in violation of any preemptive rights and have not been issued in violation of any Federal or state securities laws. Except as set forth in the UBET Commission Filings (as hereinafter defined) or on Schedule 2.03, there are no issued or outstanding bonds, debentures, notes or other indebtedness of UBET which have the right to vote (or which are convertible into other securities having the right to vote) on any matters on which stockholders of UBET may vote ("Voting Debt"). Except as set forth in the UBET Commission Filings or on Schedule 2.03, there are not as of the date hereof any outstanding or authorized subscriptions, options, warrants, calls, rights, commitments or any other agreements of any character to or by which UBET is a party or is bound which, directly or indirectly, obligate UBET to issue, deliver or sell or cause to be issued, delivered or sold any shares of UBET Common Stock or UBET Preferred Stock or any other capital stock, equity interest or Voting Debt of UBET or any securities convertible into, or exercisable or exchangeable for, or evidencing the right to subscribe for any such shares, interests or Voting Debt or obligating UBET to grant, extend or enter into any such subscription, option, warrant, call or right. Except as set forth in the UBET Commission Filings or on Schedule 2.03, UBET has not adopted, authorized or assumed any plans, arrangements or practices for the benefit of its officers, employees or directors which require or permit the issuance, sale, purchase or grant of any capital stock, other equity interests or Voting Debt of UBET or any other securities convertible into, or exercisable or exchangeable for, any such stock, interests or Voting Debt or any phantom shares, phantom equity interests or stock or equity appreciation rights. Except as set forth in the UBET Commission Filings or on Schedule 2.03, there are not as of the date hereof any outstanding or authorized subscriptions, options, warrants, calls, rights, commitments or other agreements of any character that, directly or indirectly, (x) call for or relate to the sale, pledge, transfer or other disposition by UBET of any shares of capital stock or other equity interests or any Voting Debt of UBET or (y) relate to the voting or control of such capital stock or other equity interests or Voting Debt.     (b) The Initial Warrant Shares, as of the date hereof, constitute at least 19.9% of the issued and outstanding shares of UBET Common Stock. The Initial Warrant Shares, upon issuance and delivery against payment of the exercise price therefor in accordance with the terms of the Initial Warrant, will be duly authorized, validly issued, fully paid and non-assessable, will be free of any liens, claims, charges, security interests, pledges, voting or shareholder agreements, encumbrances or equities of any kind whatsoever (except as expressly contemplated hereby or to the extent created by TVG) and will not be issued in violation of any preemptive rights. 3 --------------------------------------------------------------------------------     (c) Upon exercise of the Additional Warrant, the Additional Warrant Shares shall equal not less than 51% of the sum of (x) the total number of shares of UBET Common Stock outstanding on the Additional Warrant Exercise Date, (y) the total number of shares of UBET Common Stock issuable upon exercise of the Additional Warrant, and (z) the Initial Warrant Shares then issuable upon exercise of the Initial Warrant. Subject to approval of the Warrant Proposal, the Additional Warrant Shares, upon issuance and delivery against payment of the exercise price therefor in accordance with the terms of the Additional Warrant, will be duly authorized, validly issued, fully paid and non-assessable, will be free of any liens, claims, charges, security interests, pledges, voting or shareholder agreements, encumbrances or equities of any kind whatsoever (except as expressly contemplated hereby or to the extent created by TVG) and will not be issued in violation of any preemptive rights.     SECTION 2.04.  Reports and Financial Statements. UBET has heretofore made available to TVG true and complete copies of all reports, registration statements, definitive proxy statements and other documents (in each case together with all amendments and supplements thereto) filed by UBET with the Securities and Exchange Commission (the "Commission") since March 30, 2000 (such reports, registration statements, definitive proxy statements and other documents, together with any amendments and supplements thereto, are sometimes collectively referred to as the "UBET Commission Filings"). The UBET Commission Filings constitute all of the documents (other than preliminary material) that UBET was required to file with the Commission since such date. As of their respective dates, each of the UBET Commission Filings complied in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations under each such Act, and none of the UBET Commission Filings contained as of such date 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. When filed with the Commission, the financial statements included in the UBET Commission Filings complied as to form in all material respects with the applicable rules and regulations of the Commission and were prepared in accordance with generally accepted accounting principles (as in effect from time to time) applied on a consistent basis (except as may be indicated therein or in the notes or schedules thereto), and such financial statements fairly present the financial position of UBET as at the dates thereof and the results of its operations and its cash flows for the periods then ended, subject, in the case of the unaudited interim financial statements, to year-end audit adjustments, none of which are expected to be material in nature or amount. Since December 31, 2000, except in the ordinary course of business or as disclosed in the UBET Commission Filings filed with the Commission prior to the date hereof, as of the date hereof, UBET has not incurred any liability or obligation of any kind which, in any case or in the aggregate, would have a material adverse effect on the business, assets, results of operations or financial condition of UBET.     SECTION 2.05.  No Approvals or Notices Required; No Conflict with Instruments. Except as set forth on Schedule 2.05, the execution and delivery by UBET of this Agreement and the License Agreement do not, and the performance by UBET of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby will not:     (i)  conflict with or violate the Certificate of Incorporation, as amended, or By-laws, as amended, of UBET; 4 --------------------------------------------------------------------------------     (ii) require any consent, approval, order or authorization of or other action by any Governmental Entity (as defined in clause (v) of this Section 2.05) (a "Government Consent") or any registration, qualification, declaration or filing with or notice to any Governmental Entity (a "Governmental Filing"), in each case on the part of or with respect to UBET, the absence or omission of which would, either individually or in the aggregate, have a material adverse effect on the transactions contemplated by this Agreement or the License Agreement or on the business, assets, results of operations or financial condition of UBET;     (iii) require, on the part of UBET, any consent by or approval of (a "Contract Consent") or notice to (a "Contract Notice") any other person or entity (other than a Governmental Entity), the absence or omission of which would, either individually or in the aggregate, have a material adverse effect on the transactions contemplated by this Agreement or the License Agreement or on the business, assets, results of operations or financial condition of UBET;     (iv) assuming that the Contract Consents and Contract Notices described on Schedule 2.05 are obtained and given, conflict with, result in any violation or breach of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or the loss of any material benefit under or the creation of any lien, security interest, pledge, charge, claim, option, right to acquire, restriction on transfer, voting restriction or agreement, or any other restriction or encumbrance of any nature whatsoever on any assets pursuant to (any such conflict, violation, breach, default, right of termination, cancellation or acceleration, loss or creation, a "Violation") any contract (which term shall mean and include any note, bond, indenture, mortgage, deed of trust, lease, franchise, permit, authorization, license, contract, instrument, employee benefit plan or practice, or other agreement, obligation, commitment or concession of any nature) to which UBET is a party, by which UBET or its assets or properties is bound or affected or pursuant to which UBET is entitled to any rights or benefits, except for such Violations which would not, either individually or in the aggregate, have a material adverse effect on the transactions contemplated hereby or on the business, assets, results of operations or financial condition of UBET; or     (v) assuming that the Government Consents and Governmental Filings specified in clause (ii) of this Section 2.05 are obtained, made and given, result in a Violation of, under or pursuant to, any law, rule, regulation, order, judgment or decree applicable to UBET or by which any of its properties or assets is bound or affected, except for such Violations which would not, either individually or in the aggregate, have a material adverse effect on the transactions contemplated by this Agreement or the License Agreement or on the business, assets, results of operations or financial condition of UBET. As used herein, the term "Governmental Entity" means and includes any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign.     SECTION 2.06.  Absence of Certain Changes or Events. Except as otherwise disclosed in the UBET Commission Filings filed with the Commission prior to the date hereof or as set forth on Schedule 2.06, during the period commencing on January 1, 2001 and ending on the date of this Agreement, there has not been any material adverse change in, and no event has occurred and no condition exists which, individually or together with other events or conditions (excepting therefrom general market and economic conditions), has had a material adverse effect on, the business, assets, results of operations or financial condition of UBET.     SECTION 2.07.  Legal Proceedings. Except as set forth in the UBET Commission Filings filed with the Commission prior to the date hereof or as set forth on Schedule 2.07, there is no suit, action or proceeding pending or, to the knowledge of UBET, any investigation pending or any suit, action, proceeding or investigation threatened, against, involving or affecting UBET or its properties or rights, 5 -------------------------------------------------------------------------------- nor is there any judgment, decree, injunction, rule or order of any court, governmental department, commission, agency, instrumentality or arbitrator outstanding against UBET, which does or will (i) result in the modification, termination, suspension, impairment or reformation of any material contract to which UBET is a party; (ii) materially adversely affect the manner in which UBET conducts its business; (iii) materially adversely affect the ability of UBET or TVG to consummate any of the transactions contemplated by this Agreement or the License Agreement; or (iv) have a material adverse effect on the business, assets, results of operations or financial condition of UBET.     SECTION 2.08.  Compliance With Regulatory Requirements. Except as set forth in the UBET Commission Filings filed with the Commission prior to the date hereof or as set forth on Schedule 2.08, UBET is in compliance with, and has conducted its business so as to comply with, all applicable laws, rules, regulations, ordinances and codes, domestic or foreign, including laws, rules, regulations, ordinances and codes relating to the protection of the environment, except where the failure so to comply has not had, and may reasonably be expected not to have, either individually or in the aggregate, a material adverse effect on the business, assets, results of operations or financial condition of UBET. The UBET Common Stock is registered pursuant to Section 12(g) of the Exchange Act and is listed on the Nasdaq National Market, and, except as set forth on Schedule 2.08, UBET has taken no action designed to, or which is likely to have the effect of, terminating the registration of the UBET Common Stock under the Exchange Act or delisting the UBET Common Stock from the Nasdaq National Market. Provided that any shares of UBET Common Stock are then listed on the Nasdaq National Market, the Initial Warrant Shares, upon exercise of the Initial Warrant, and the Additional Warrant Shares, upon exercise of the Additional Warrant, will be approved for listing on the Nasdaq National Market.     SECTION 2.09.  Brokers or Finders. No agent, broker, investment banker, financial advisor or other person or entity is or will be entitled, by reason of any agreement, act or statement by UBET or any of its directors, officers, employees or affiliates, to any financial advisory, broker's, finder's or similar fee or commission, to reimbursement of expenses or to indemnification or contribution in connection with any of the transactions contemplated by this Agreement or the License Agreement, and UBET agrees to indemnify and hold TVG harmless from and against any and all claims, liabilities or obligations with respect to any such fees, commissions, expenses or claims for indemnification or contribution asserted by any person on the basis of any act or statement made by UBET or any of its directors, officers, employees or affiliates.     SECTION 2.10.  Intellectual Property.     (a) UBET owns, or has the defensible right to use, all Intellectual Property used in UBET's business, except where the failure to own or have the right to use such Intellectual Property would not, individually or in the aggregate, have a material adverse effect on the business, assets, results of operations or financial condition of UBET.     (b) Except as disclosed in the UBET Commission Filings filed with the Commission prior to the date hereof and except as set forth on Schedule 2.10, no claims have been asserted or, to the knowledge of UBET, threatened by any person or entity (i) challenging the ownership, validity or effectiveness of any Intellectual Property owned or used by UBET, (ii) to the effect that any activity of UBET infringes on any patent or (iii) against the use by UBET of any Intellectual Property necessary for the conduct of its business, except where such claims would not, individually or in the aggregate, have a material adverse effect on the business, assets, results of operations or financial condition of UBET. 6 --------------------------------------------------------------------------------     (c) As used in this Section 2.10, "Intellectual Property" means all industrial and intellectual property rights including Proprietary Technology, patents, patent applications, trademarks, trademark applications and registrations, service marks, service mark applications and registrations, copyrights, know-how, licenses relating to any of the foregoing, trade secrets, proprietary processes and formulae. "Proprietary Technology" means all proprietary processes, formulae, inventions, trade secrets, know-how, development tools and other proprietary rights used by UBET pertaining to any product, software or service manufactured, marketed, licensed or sold by UBET in the conduct of its business or used, employed or exploited in the development, license, sale, marketing, distribution or maintenance thereof, and all documentation and media constituting, describing or relating to the above, including manuals, memoranda, know-how, notebooks, software, records and disclosures.     SECTION 2.11.  Compliance with Charter and Contracts.     (a) UBET is not in violation of any term of its charter or by-laws.     (b) UBET has filed with the Commission copies of all agreements, leases, license agreements and other contracts to which UBET is a party or may be bound that, after consultation with its legal counsel, UBET reasonably believes are required to be filed under the Securities Act and the Exchange Act. Except as set forth on Schedule 2.11, each of such agreements, leases, license agreements and contracts is in full force and effect (other than those which have expired or terminated pursuant to their terms or by mutual agreement of UBET and each other party thereto since the filing thereof), and (i) neither UBET nor, to UBET's knowledge, any other party thereto, has breached or is in default thereunder, (ii) to UBET's knowledge, no event has occurred which, with the passage of time or the giving of notice, would constitute such a breach or default, (iii) no claim of material default thereunder has, to UBET's knowledge, been asserted or threatened and (iv) neither UBET nor, to UBET's knowledge, any other party thereto is seeking the renegotiation thereof or substitute performance thereunder, except where such breach or default, or attempted renegotiation or substitute performance, individually or in the aggregate, would not have a material adverse effect on the business, assets, results of operations or financial condition of UBET.     SECTION 2.12.  Disclosure. Neither this Agreement, nor any other agreement, document, certificate or other written instrument delivered pursuant hereto, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements herein and therein, when taken together, not misleading.     SECTION 2.13.  Section 203 of the DGCL. Prior to the execution of this Agreement, the UBET Board has approved the transactions contemplated by this Agreement and the License Agreement, including the acquisition by TVG of the Initial Warrant Shares and the Additional Warrant Shares upon exercise of the Initial Warrant and the Additional Warrant, respectively, for all purposes, including Section 203 of the Delaware General Corporation Law ("DGCL"), and none of TVG or any "affiliate" or "associate" (as such terms are defined in Section 203 of the DGCL) shall as a result of the execution of this Agreement, the exercise of the Initial Warrant or the Additional Warrant or consummation of the transactions contemplated by this Agreement or the License Agreement, be subject to any restrictions of Section 203 of the DGCL. ARTICLE III REPRESENTATIONS AND WARRANTIES OF TVG     TVG hereby represents and warrants to UBET as follows:     SECTION 3.01.  Organization and Qualification. TVG (i) is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, (ii) has all requisite partnership power and authority to own, lease and operate its properties and to carry on its business as 7 -------------------------------------------------------------------------------- it is now being conducted and (iii) is duly qualified or licensed and in good standing to do business in each jurisdiction in which the properties owned, leased or operated by it or the nature of the business conducted by it makes such qualification or license necessary, except in such jurisdictions where the failure to be so duly qualified or licensed or in good standing has not had, either individually or in the aggregate, a material adverse effect on the business, assets, results of operations or financial condition of TVG.     SECTION 3.02.  Authorization and Validity of Agreement. TVG has all requisite partnership power and authority to enter into this Agreement and the License Agreement and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by TVG of this Agreement and the License Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary partnership action on the part of TVG. This Agreement and the License Agreement have been duly executed and delivered by TVG and each is a valid and binding obligation of TVG, enforceable against TVG in accordance with its terms (except insofar as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally, or by principles governing the availability of equitable remedies).     SECTION 3.03.  No Approvals or Notices Required; No Conflict with Instruments. Except as set forth on Schedule 3.03, the execution and delivery by TVG of this Agreement and the License Agreement do not, and the performance by TVG of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby will not:     (i)  conflict with or violate the Agreement of Limited Partnership of TVG;     (ii) require any Government Consent or Governmental Filing, in each case on the part of or with respect to TVG, the absence or omission of which would, either individually or in the aggregate, have a material adverse effect on the ability of TVG to perform its obligations under this Agreement or the License Agreement, except for the filing with the Commission of such reports under Section 13(d) of the Exchange Act as may be required in connection with the transactions contemplated by this Agreement;     (iii) require, on the part of TVG, any Contract Consent or Contract Notice, the absence or omission of which would, either individually or in the aggregate, have a material adverse effect on the ability of TVG to perform its obligations under this Agreement or the License Agreement;     (iv) conflict with or result in any Violation of any contract to which TVG is a party, by which TVG or any of its assets or properties is bound or affected or pursuant to which TVG is entitled to any rights or benefits, except for such Violations which would not, either individually or in the aggregate, have a material adverse effect on the ability of TVG to perform its obligations under this Agreement or the License Agreement; or     (v) assuming that the Government Consents and Governmental Filings specified in clause (ii) of this Section 3.03 are obtained, made and given, result in a Violation of, under or pursuant to, any law, rule, regulation, order, judgment or decree applicable to TVG or by which any of its properties or assets are bound or affected, except for such Violations which would not, either individually or in the aggregate, have a material adverse effect on the ability of TVG to perform its obligations under this Agreement or the License Agreement.     SECTION 3.04.  Legal Proceedings. There is no suit, action or proceeding pending or, to the knowledge of TVG, any investigation pending or any suit, action, proceeding or investigation threatened, against or involving TVG or any of its properties or rights, nor is there any judgment, decree, injunction, rule or order of any court, governmental department, commission, agency, instrumentality or arbitrator outstanding against TVG, which does or will materially adversely affect the 8 -------------------------------------------------------------------------------- ability of TVG to consummate the transactions contemplated by this Agreement or the License Agreement.     SECTION 3.05.  Compliance With Regulatory Requirements. TVG is in compliance with, and has conducted its business so as to comply with, all applicable laws, rules, regulations, ordinances and codes, domestic or foreign, except where the failure so to comply has not had, and may reasonably be expected not to have, either individually or in the aggregate, a material adverse effect on the ability of TVG to perform its obligations under this Agreement or the License Agreement.     SECTION 3.06.  Brokers or Finders. No agent, broker, investment banker, financial advisor or other person or entity is or will be entitled, by reason of any agreement, act or statement by TVG or any of its directors, officers, employees or affiliates, to any financial advisory, broker's, finder's or similar fee or commission, to reimbursement of expenses or to indemnification or contribution in connection with any of the transactions contemplated by this Agreement or the License Agreement, and TVG agrees to indemnify and hold UBET harmless from and against any and all claims, liabilities or obligations with respect to any such fees, commissions, expenses or claims for indemnification or contribution asserted by any person on the basis of any act or statement made by TVG or any of its directors, officers, employees or affiliates. 9 --------------------------------------------------------------------------------     SECTION 3.07.  Intellectual Property.     (a) TVG owns, or has the defensible right to use, all Intellectual Property used in TVG's business, except where the failure to own or have the right to use such Intellectual Property would not, individually or in the aggregate, have a material adverse effect on the ability of TVG to perform its obligations under this Agreement or the License Agreement.     (b) No claims which, individually or in the aggregate, are reasonably expected to have a material adverse effect on the ability of TVG to consummate the transactions contemplated by this Agreement or the License Agreement, or to perform its obligations hereunder or thereunder, have been asserted or, to the knowledge of TVG, threatened by any person or entity (i) to the effect that any of the Intellectual Property licensed by TVG to UBET pursuant to the License Agreement infringes on any patent, (ii) against the use by TVG of any Intellectual Property necessary for TVG to perform its obligations under the License Agreement, or (iii) challenging the ability of TVG to provide the simulcast audio and visual signals and pari-mutuel wagering as provided in the License Agreement.     (c) As used in this Section 3.07, "Intellectual Property" means all industrial and intellectual property rights including Proprietary Technology, patents, patent applications, trademarks, trademark applications and registrations, service marks, service mark applications and registrations, copyrights, know-how, licenses relating to any of the foregoing, trade secrets, proprietary processes and formulae. "Proprietary Technology" means all proprietary processes, formulae, inventions, trade secrets, know-how, development tools and other proprietary rights used by TVG pertaining to any product, software or service manufactured, marketed, licensed or sold by TVG in the conduct of its business or used, employed or exploited in the development, license, sale, marketing, distribution or maintenance thereof, and all documentation and media constituting, describing or relating to the above, including manuals, memoranda, know-how, notebooks, software, records and disclosures.     SECTION 3.08.  Compliance with Charter. TVG is not in violation of any terms of its certificate of limited partnership or partnership agreement except where such violation would not have a material adverse effect on the ability of TVG to perform its obligations under this Agreement or the License Agreement.     SECTION 3.09.  Investment Purpose. TVG is acquiring the Initial Warrant and, provided the Warrant Proposal is adopted by UBET's Stockholders as provided in Section 4.01, the Additional Warrant, solely for the purpose of investment and not with a view to, or for offer or sale in connection with, any distribution thereof in any transaction which would be in violation of the securities laws of the United States of America or any state thereof. TVG understands that the certificate representing the Initial Warrant Shares and the Additional Warrant Shares will contain a legend stating in substance: "The shares represented by this certificate have not been registered under the Securities Act of 1933 and such shares may not be sold or transferred unless such sale or transfer will be effected in accordance with the registration requirements of the Securities Act of 1933, as at that time amended, or in accordance with any exemption from the registration requirements of such Act, which may then be available thereto."     TVG understands and acknowledges that UBET will deliver unlegended certificates in exchange for the certificate bearing such legend only in the event that (i) TVG transfers shares represented by such certificate pursuant to and in the manner provided for in an effective registration statement covering the transfer or sale of such shares or (ii) TVG shall have delivered to UBET a letter from the staff of the Commission, or an opinion of counsel in form reasonably satisfactory to UBET to the effect that such legend is not required for the purposes of the Securities Act. 10 -------------------------------------------------------------------------------- ARTICLE IV CERTAIN COVENANTS     SECTION 4.01. UBET Stockholder Meeting.       (a) UBET will, either at its 2001 annual meeting of stockholders or, at its option, at a special meeting of its stockholders, in either case to be held on or before October 1, 2001, propose for approval by UBET's stockholders the issuance to TVG of the Additional Warrant (the "Warrant Proposal") and such increases in the authorized number of shares of Common Stock as UBET determines is prudent in light of the number of Additional Warrant Shares. Subject to the fiduciary duties of UBET's directors under applicable law as determined by a majority of such directors with the advice of legal counsel, the UBET Board will recommend that UBET's stockholders vote in favor of approval of the Warrant Proposal at such meeting (the "UBET Stockholders Meeting"), and UBET will use its best efforts to solicit from its stockholders proxies in favor of such approval. To the extent that the Initial Warrant has been exercised on or prior to the record date for the UBET Stockholders Meeting, TVG agrees that any stock received by it as a result of such exercise will not be counted in determining whether the requisite percentage of UBET's stockholders vote in favor of the Warrant Proposal.     (b) UBET shall (i) as soon as reasonably practicable in light of the anticipated date of the UBET Stockholders Meeting file with the Commission a preliminary form (the "UBET Preliminary Proxy Statement") of the definitive proxy statement to be mailed to UBET's stockholders in connection with the UBET Stockholders Meeting (the "UBET Proxy Statement"), (ii) use its best efforts to promptly respond to the comments of the Commission thereon, and (iii) use its best efforts to cause the UBET Proxy Statement to be filed with the Commission as soon as reasonably practicable after the UBET Preliminary Proxy Statement, as it may be amended, is cleared by the Commission. To the extent that the UBET Preliminary Proxy Statement or any amendment thereto includes a description of TVG and/or this Agreement or the License Agreement, UBET will provide TVG with the opportunity to review and comment on such description prior to the filing of the UBET Preliminary Proxy Statement or such amendment, as the case may be, and will consider in good faith such comments as TVG may have with respect thereto.     (c) UBET shall notify TVG promptly after the receipt by UBET of any comments of the Commission on, or of any request by the Commission for amendments or supplements to, the UBET Preliminary Proxy Statement or UBET Proxy Statement and shall provide TVG with copies of all correspondence between UBET or any of its representatives and the Commission with respect to either of the foregoing filings.     SECTION 4.02. Reservation of Shares.  UBET will at all times during the period that the Initial Warrant or the Additional Warrant may be exercised reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued UBET Common Stock, or its authorized and issued UBET Common Stock held in treasury, for the purpose of enabling it to satisfy any obligation to issue Initial Warrant Shares upon exercise of the Initial Warrant and Additional Warrant Shares upon exercise of the Additional Warrant, the full number of Initial Warrant Shares and Additional Warrant Shares deliverable upon the exercise of the Initial Warrant and Additional Warrant, respectively. UBET covenants and agrees that for so long as the Initial Warrant or the Additional Warrant is outstanding and is exercisable, it will not take any action to increase the par value of the UBET Common Stock or issue any shares of UBET Preferred Stock which grants the holders thereof the right to vote on any matters on which the holders of UBET Common Stock may vote. 11 --------------------------------------------------------------------------------     SECTION 4.03. Obtaining of Certain Governmental Approvals.       (a) UBET from time to time will use reasonable efforts to obtain and keep effective any and all permits, consents and approvals of Governmental Entities and to make securities law filings under federal and state laws, or with any securities exchange or association on which the UBET Common Stock is listed, that may be required in connection with the issuance and delivery of the Additional Warrant, the exercise of the Initial Warrant and the Additional Warrant and the issuance and delivery of Initial Warrant Shares and the Additional Warrant Shares.     (b) Without limiting the generality of the foregoing, in the event that TVG reasonably believes that exercise of the Initial Warrant or the Additional Warrant and issuance of Initial Warrant Shares or Additional Warrant Shares acquirable upon such exercise requires prior compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations thereunder (the "HSR Act and Rules"), then any such exercise shall be contingent upon such prior compliance. To effect such compliance, UBET and TVG will, promptly following receipt by UBET of TVG's notice of exercise, use their respective commercially reasonable efforts to make all filings necessary to cause the expiration or termination of any applicable waiting period under the HSR Act and Rules. Each of UBET and TVG shall bear and pay its respective costs or expenses that it incurs in complying with this Section 4.03(b), except that each of UBET and TVG shall each pay one half of any fee payable to the Federal Trade Commission (the "FTC") or the Antitrust Division of the Department of Justice (the "DOJ") or any other governmental body then having jurisdiction with respect to the HSR Act and Rules in connection with the filing of any reports under the HSR Act and Rules. Notwithstanding anything to the contrary contained herein, in the event that any filing under the HSR Act and Rules made by TVG and UBET pursuant to this Section 4.03(b) results in either the FTC or DOJ issuing a written "request for additional information or documentary material" pursuant to Section 7A(e)(i) of the HSR Act and Rules 16 C.F.R. §803.20, then TVG shall have the absolute right to withdraw such filing and its notice of exercise of the Initial Warrant and/or the Additional Warrant, as the case may be.     SECTION 4.04. Reasonable Efforts.  Subject to the terms and conditions of this Agreement and applicable law, each of the parties shall use its reasonable efforts to take, or cause to be taken, all actions, and do, or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement as soon as reasonably practicable.     SECTION 4.05. UBET Board Representation.  Following the exercise of the Initial Warrant and/or the Additional Warrant and for so long as TVG beneficially owns at least 5% of the outstanding shares of UBET common stock (the "Director Designation Period"), UBET agrees to use its best efforts to enable TVG to designate a number of directors to the UBET Board in a ratio based on TVG's overall ownership of UBET Common Stock according to the following formula: Percentage of Outstanding Common Stock Owned by TVG --------------------------------------------------------------------------------   Ratio of TVG's Board Designees to Total Number of Directors -------------------------------------------------------------------------------- 5% to 30%   1/5 more than 30% up to 49.9%   2/5 more than 49.9% up to 60%   3/5 more than 60% up to 79.9%   4/5 more than 79.9%   5/5 12 -------------------------------------------------------------------------------- In furtherance of the foregoing, during the Director Designation Period, at each annual or special meeting of the stockholders of UBET at which members of the UBET Board are to be elected, UBET agrees to use its best efforts to cause the UBET Board (or any authorized committee thereof) to nominate and recommend the election to the UBET Board of a number of directors designated by TVG in the ratio to the fully constituted UBET Board set forth above, based on the percentage of the outstanding shares of UBET Common Stock owned by TVG as of the record date for such meeting of UBET stockholders. During the Director Designation Period, UBET agrees (i) to use its best efforts to fill any vacancy created by the resignation, withdrawal or removal of any director designated by TVG with a new director designated by TVG, and (ii) to not take any action to increase the number of directors constituting the full UBET Board if, as a result of such increase and the filling of vacancies created thereby, the ratio of directors of the UBET Board designated by TVG to the total number of directors shall be a fraction less than the ratio of TVG-designated directors to the total number of directors immediately prior to such increase.     SECTION 4.06. Registration Rights.       (a) Demand Registration Rights.      (i) At any time and from time to time after the date hereof, TVG and any transferee of Registrable Securities (as defined in clause (viii) of this Section 4.06(a)) who becomes a party to this Agreement (each such transferee and TVG, a "Holder, and collectively, the "Holders") shall have the right to request UBET to effect the registration under the Securities Act of all or part of their Registrable Securities. Holders shall exercise such right by giving of a notice stating (A) the number of Registrable Securities to be included in such registration statement and (B) the Holder's intended method of distribution (which may include an underwritten offering). Upon receipt by UBET of any such request, UBET shall promptly give notice of such proposed registration to all Holders who hold Registrable Securities and thereupon shall, as expeditiously as possible, use reasonable efforts to effect the registration under the Securities Act of:     (A) all Registrable Securities that UBET has been requested to register pursuant to clause (i) of this Section 4.06(a); and     (B) all other Registrable Securities that Holders have, within 20 days after UBET has given such notice, requested UBET to register; all to the extent requisite to permit the sale or other disposition by the Holders of the Registrable Securities so to be registered.     (ii) If the managing underwriter, selected pursuant to Section 4.06(g)(i), of the public offering to be effected pursuant to a registration statement filed pursuant to clause (i) of this Section 4.06(a) of any Registrable Securities shall advise UBET in writing (with a copy to each holder of Registrable Securities requesting registration) that, in its opinion, the number of securities requested to be included in such registration (including securities of UBET that are not Registrable Securities) exceeds the number that can be sold in such offering without having an adverse effect on such offering, UBET will include in such registration to the extent of the number that UBET is so advised can be sold in such offering:     (A) first, Registrable Securities requested to be included in such registration by TVG;     (B) second, Registrable Securities requested to be included in such registration by Holders other than TVG pro rata based on the number of such shares to be included; and 13 --------------------------------------------------------------------------------     (C) third, other securities of UBET proposed to be included pursuant to Section 4.06(a)(vii) in such registration, in accordance with the priorities, if any, then existing among UBET and the holders of such other securities.     (iii) The Holders requesting inclusion in a registration statement under this Section 4.06(a) may withdraw from any requested registration pursuant to this Section 4.06(a) by giving written notice to UBET prior to the date an underwriting agreement is executed or such registration statement becomes effective; provided, however, that for a period of six months after such withdrawal, such Holders may not request any registration pursuant to this Section 4.06(a) unless (A) such Holders pay UBET for its out-of-pocket expenses relating to such registration, (B) the registration statement had not been filed within 60 days of the initial request for registration pursuant to Section 4.06(a)(i) or had not become effective within 75 days of its filing or (C) UBET otherwise failed to comply with its obligations under this Section 4.06 with respect to such registration.     (iv) UBET shall not be required to effect more than a total of five effective registrations under this Section 4.06(a). If UBET shall have filed a registration statement and all of the Holders requesting registration thereunder shall have withdrawn from the registration under Section 4.06(a)(iii) prior to such registration statement becoming effective, such registration shall be deemed to have been effective unless (A) such Holders pay UBET for its out-of-pocket expenses relating to such registration, (B) the registration statement had not been filed within 60 days of the initial request for registration pursuant to Section 4.06(a)(i) or had not become effective within 75 days of its filing or (C) UBET otherwise failed to comply with its obligations under this Section 4.06 with respect to such registration. Notwithstanding the foregoing, if the Holders withdraw from an offering after the registration statement for the shares to be offered thereby has become effective due to the occurrence of any of the events set forth in Sections 4.06(c)(vi), (vii) or (viii), in each case unless cured prior to the Holders' withdrawal, then such registration shall not be counted as an effective registration for purposes of this Section 4.06(a)(iv).     (v) UBET shall not be required to effect a registration pursuant to this Section 4.06(a) unless the offering includes Registrable Securities having a fair market value of at least $2 million in the aggregate.     (vi) UBET shall not be required to effect any registration within six (6) months of the effective date of any other registration under this Section 4.06(a).    (vii) If the managing underwriter in an underwritten offering has not limited the number of Registrable Securities to be underwritten, then UBET may include securities for its own account or for the account of others in such registration statement and underwriting if the managing underwriter so agrees and if the number of Registrable Securities held by Holders which would otherwise have been included in such registration statement and underwriting will not thereby be limited. The inclusion of such shares shall be on the same terms as the registration of Registrable Securities held by the Holders. In the event that the managing underwriter excludes some of the securities to be registered, the securities to be sold for the account of UBET and any other holders shall be excluded in their entirety prior to the exclusion of any Registrable Securities of the Holders.    (viii) For purposes of this Agreement, the term "Registrable Securities" shall mean any Initial Warrant Shares or Additional Warrant 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 be freely saleable by the applicable 14 -------------------------------------------------------------------------------- Holder without limits as to volume under Rule 144 (or any successor provision) under the Securities Act, (iii) such securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by UBET and subsequent disposition of them shall not require registration or qualification of them under the Securities Act, or (iv) such securities shall have ceased to be outstanding.     (b) "Piggyback" Registrations. If UBET at any time proposes to register any of its securities under the Securities Act (other than pursuant to Section 4.06(a)) on a registration statement on Form S-1, S-2 or S-3 or on any other form upon which may be registered securities similar to the Registrable Securities for sale to the general public except Form S-4 and Form S-8, UBET will at each such time give prompt notice to the Holders of its intention to do so setting forth the date on which UBET proposes to file such registration statement, which date shall be no earlier than 20 days from the date of such notice, and advising the Holders of their right to have Registrable Securities included therein. Upon the written request of the Holders given to UBET not less than 5 days prior to the proposed filing date of such registration statement set forth in such notice, UBET will use reasonable best efforts to cause each of the Registrable Securities that UBET has been requested to register by the Holders to be registered under the Securities Act. If the securities to be so registered for sale include securities to be sold for the account of UBET and to be distributed by or through a firm of underwriters of recognized standing, then the Registrable Securities shall also be included in such underwriting, provided that if the underwriter shall advise UBET in writing (with a copy to each holder of Registrable Securities requesting registration) that, in its opinion, the number of securities requested to be included in such registration exceeds the number that can be sold in such offering without having an adverse effect on such offering, UBET will include in such registration to the extent of the number that UBET is so advised can be sold in such offering securities determined as follows:      (i) if such registration as initially proposed by UBET was solely a primary registration of its securities:     (A) first, the securities proposed by UBET to be sold for its own account,     (B) second, any Registrable Securities requested to be included in such registration pro rata among the Holders of such Registrable Securities and the holders of such other shares of UBET Common Stock on the basis of the number of Registrable Securities and other shares of UBET Common Stock requested to be included by each such holder, and     (C) third, any other securities of UBET proposed to be included in such registration statement in accordance with the provisions, if any, then existing among the holders of such securities, and     (ii) if such registration as initially proposed by UBET was in whole or in part requested by holders of securities of UBET, other than Holders of Registrable Securities, pursuant to demand registration rights,     (A) first, such securities held by the holders initiating such registration, pro rata among the holders thereof, on the basis agreed upon by such holders and UBET,     (B) second, Registrable Securities requested to be included in such registration pro rata among the Holders of such Registrable Securities and the holders of such other shares of UBET Common Stock on the basis of the number of Registrable Securities and other shares of UBET Common Stock requested to be included by each such holder, and     (C) third, any securities of UBET proposed to be included in such registration statement in accordance with the priorities, if any, then existing among the holders of such securities. 15 -------------------------------------------------------------------------------- The Holders requesting inclusion in a registration statement under this Section 4.06(b) may withdraw from any such requested registration by giving written notice to UBET prior to the date an underwriting agreement is executed or such registration statement becomes effective.     (c) UBET's Obligations in Registration. If and whenever UBET is obligated by the provisions of this Section 4.06 to use reasonable best efforts to effect the registration of any Registrable Securities under the Securities Act, UBET will:      (i) prepare and file with the Commission, as expeditiously as possible but in no event later than 60 days after the initial request from holders to register such Registrable Securities, a registration statement with respect to such Registrable Securities and use reasonable best efforts to cause such registration statement to become effective within 75 days after its filing and to remain effective; provided, however, that UBET shall not be required to keep such registration statement effective, or to prepare and file any amendments or supplements thereto, later than the earlier of (x) such time as all Registrable Securities have been sold and (y) 5:00 P.M., New York City time, on the 120th business day following the date on which such registration statement becomes effective under the Securities Act;     (ii) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement whenever the Holders for whom such Registrable Securities are registered or are to be registered shall desire to dispose of the same, subject, however, to the proviso contained in the immediately preceding clause (i);     (iii) furnish each Holder for whom such Registrable Securities are registered or are to be registered such numbers of copies of each registration statement and printed prospectus, including a preliminary prospectus and any amendments or supplements thereto, in conformity with the requirements of the Securities Act, and such other documents and information as such Holder may reasonably request in order to facilitate the disposition of such Registrable Securities;     (iv) use reasonable best efforts to register or qualify the Registrable Securities covered by such registration statement under such other securities or blue sky laws of such United States jurisdictions as each Holder shall reasonably request, and do any and all other acts and things that may be necessary or advisable to enable such Holder to consummate the disposition in such jurisdictions of such Registrable Securities, except that UBET shall not be required to (A) qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this clause (iv) be obligated to be so qualified, (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction unless UBET is already subject to general service of process in such jurisdiction;     (v) furnish to the Holders for whom such Registrable Securities are registered or are to be registered at the time of the disposition of such Registrable Securities by such Holders a signed copy of an opinion of counsel for UBET reasonably acceptable to such holders as to such matters as such holders may reasonably request and substantially to the effect that, a registration statement covering such Registrable Securities has been filed with the Commission under the Securities Act and has been made effective by order of the Commission; said registration statement and the prospectus contained therein comply as to form in all material respects with the requirements of the Securities Act (except that counsel need not express any opinion as to financial statements contained therein) and, although counsel has not 16 -------------------------------------------------------------------------------- independently verified and is not passing upon the accuracy, completeness or fairness of the statements contained in the registration statement and prospectus included therein, nothing has come to said counsel's attention that would cause it to believe that either said registration statement or said prospectus contains 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 (in the case of said prospectus, in the light of the circumstances under which they were made) not misleading; said counsel knows of no legal or governmental proceedings required to be described in said prospectus that are not described as required, or of any contract or documents of a character required to be described in said registration statement or said prospectus or to be filed as an exhibit to said registration statement or to be incorporated by reference therein that is not described and filed as required; to the best of counsel's knowledge, no stop order has been issued by the Commission suspending the effectiveness of such registration statement and no proceedings for the issuance of such a stop order are threatened or contemplated; it being understood that said counsel may rely, as to all factual matters and financial data treated therein, on certificates of UBET (copies of which shall be delivered to such Holders).     (vi) immediately notify each Holder of Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, 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 any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and at the request of any such Holder promptly prepare and furnish to such Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, 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 in the light of the circumstances under which they were made;    (vii) advise each Holder of Registrable Securities covered by such registration statement, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for that purpose; and use its reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its securities holders as promptly as practicable an earnings statement covering a period of twelve (12) months beginning after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;    (viii) permit any holder holding Registrable Securities covered by such registration statement or prospectus to withdraw their Registrable Securities from such registration statement or prospectus if such Holder has informed UBET that it reasonably believes that such amendment or supplement does not comply in all material respects with the requirements of the Securities Act or the rules and regulations thereunder;     (ix) enter into such customary agreements (including an underwriting agreement in customary form, if applicable) and take all such other actions as holders of a majority of the Registrable Securities being sold or the underwriters retained by such Holders, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities, including customary opinions and indemnification and lock-up agreements; 17 --------------------------------------------------------------------------------     (x) if requested by the managing underwriters or a Holder of Registrable Securities being sold in connection with an underwritten offering, promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriters and the holders of a majority of the Registrable Securities being sold agree should be included therein relating to the plan of distribution with respect to such Registrable Securities including, without limitation, information with respect to the securities being sold to such underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering; and make all required filings of such prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and     (xi) list such Registrable Securities on any securities exchange on which the UBET Common Stock is then listed, if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange.     The period of time that UBET is obligated to keep any registration statement effective, or to prepare and file any amendments or supplements thereto, pursuant to Section 4.06(c)(i) shall be extended by the number of days that any such Holder is unable to sell Registrable Securities due to the matters discussed in Section 4.06(c)(vi) and (vii) above.     (d) Payment of Registration Expenses. In connection with each registration pursuant to this Section 4.06, UBET shall pay all expenses incident to performance of or compliance with this Section 4.06, including without limitation, (i) all Commission and stock exchange or National Association of Securities Dealers, Inc. registration, filing fees and listing expenses, (ii) all fees and expenses of complying with securities or blue sky laws (including reasonable fees and disbursements of counsel for any underwriters in connection with blue sky qualification of any Registrable Securities), (iii) all printing, messenger and delivery expenses, (iv) the fees and disbursements of counsel for UBET and of its independent public accountants, including the expenses of any special audits and/or "cold comfort" letters required by or incident to such performance and compliance, (v) the reasonable fees and disbursements of one counsel retained in connection with such registration by Holders of a majority of the Initial Warrant Shares and Additional Warrant Shares being registered, not to exceed $35,000, and (vi) any fees and disbursements of underwriters customarily paid by issuers or sellers of securities, including the fees and expenses of any special experts retained in connection with the requested registration, but excluding underwriting discounts and sales commissions applicable to the sale of the Registrable Securities.     (e) Indemnification.      (i) Indemnification by UBET. In the event of any registration under the Securities Act of any Registrable Securities pursuant to this Section 4.06, UBET hereby agrees to indemnify and hold harmless the Holders, their respective agents, directors and officers, each other person, if any, who controls (within the meaning of the Securities Act) the Holders and each other person (including underwriters) who participates in the offering of such Registrable Securities, against any losses, claims, damages or liabilities, to the extent that such losses, claims, damages or liabilities (or proceedings 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, in any preliminary prospectus or final prospectus contained therein or in any amendment or supplement to any preliminary prospectus or final prospectus (if used during the period UBET is required to keep such registration statement current in any such case), or arise out of or are based upon the omission or alleged omission to state therein a material 18 -------------------------------------------------------------------------------- fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by UBET of the Securities Act or state securities or blue sky laws and relating to action or inaction required of UBET in connection with the registration or qualification of securities under such laws and will reimburse such Holders, such agents, directors and officers and each such controlling person or participating person (including underwriters) for any legal or any other expenses reasonably incurred by such Holders, such agents, directors and officers or such controlling person or participating person (including underwriters) in connection with investigating or defending any such loss, claim, damage, liability or proceeding, provided, that UBET will not be liable in any such case 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 made in such registration statement, any preliminary or final prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to UBET by such Holder specifically for use in the preparation of such registration statement; and provided, further, that, with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus, UBET will not be liable to any holder to the extent that any loss, claim, damage, liability or expense results from the fact that a current copy of the final prospectus (including any amendment or supplement thereto) was not sent or given to the person asserting any such loss, claim, damage, liability or expense at or prior to the written confirmation of the sale of the Registrable Securities concerned to such person if it is determined that it was the responsibility of such Holder to provide such person with a current copy of the final prospectus (or amendment or supplement thereto) and such current copy of the final prospectus, amendment or supplement was provided to such Holders and would have cured the defect giving rise to such loss, claim, damage, liability or expense.     (ii) Indemnification by the Holders. Each Holder, individually and not jointly, hereby agrees to indemnify and hold harmless UBET, its respective agents, directors and officers, each other person, if any, who controls (within the meaning of the Securities Act) UBET and each other person (including underwriters) who participates in the offering of such Registrable Securities, against all losses, claims, damages and liabilities to which UBET, may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based upon any untrue statement of any material fact contained in any such registration statement under which such Registrable Securities were registered under the Securities Act, in any preliminary prospectus or final prospectus contained therein or in any amendment or supplement to any preliminary prospectus or final prospectus (if used during the period UBET is required to keep such registration statement current in any such case), 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, but only if and to the extent that any such loss, claim, damage or liability arises out of or is based upon any such statement or omission made in such registration statement, any preliminary or final prospectus or any amendment or supplement in reliance upon and in conformity with written information furnished to UBET by such Holder or such underwriter, as the case may be, specifically for use in the preparation of such registration statement.     (iii) Notices of Claims, Etc. Each party entitled to be indemnified pursuant to Section 4.06(e)(i) or (ii) above, promptly but not later than 10 days after its receipt of notice of the commencement of any action against it in respect of which indemnity may be sought from any indemnifying party pursuant to this Section 4.06(e), shall notify such indemnifying party in writing of the commencement thereof. In case any such action shall be brought against any indemnified party and it shall notify such indemnifying party of the commencement thereof, such indemnifying party will be entitled to participate therein and, to 19 -------------------------------------------------------------------------------- the extent that it may wish, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and such indemnified party may participate in such defense, which participation by the indemnified party shall be at its expense unless (i) the employment of counsel by such indemnified party has been authorized by the indemnifying party, (ii) the indemnified party shall have been advised by its counsel in writing that there is a conflict of interest between the indemnifying party and the indemnified party in the conduct of the defense of such action (in which case the indemnifying party shall not have the right to direct the defense of such action on behalf of the indemnified party) or (iii) the indemnifying party shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of the indemnified party's counsel shall be at the expense of the indemnifying party; provided, that the indemnifying party shall not be responsible for the expense of more than one counsel for all indemnified parties in any action. The failure of any such indemnified party to give notice as provided herein shall not relieve such indemnifying party of its obligations under this Section 4.06(e) unless such failure to give notice shall materially adversely affect such indemnifying party in the defense of any such claim or any such litigation. With respect to any claim or litigation the defense of which is being conducted by such indemnifying party, no indemnified party shall, except with the consent of such indemnifying party, consent to entry of any judgment or enter into any settlement of any claim as to which indemnity may be sought. 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.     (iv) Contribution. To the extent that the undertaking to indemnify, pay and hold harmless set forth in paragraphs (i) and (ii) of this Section 4.06(e) may be unenforceable because it is violative of any law or public policy, each party that would have been required to provide the indemnity shall contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all indemnified liabilities incurred by each party entitled to indemnification under this Section 4.06(e); provided that in no event shall a Holder of Registrable Securities be required to contribute an amount greater than the dollar amount of net proceeds received by such Holder upon the sale of such Registrable Securities.     (f)  Obligations of the Holders. The Holders agree:      (i) that upon receipt of any notice from UBET of the happening of any event of the kind described in Section 4.06(c)(vi), the Holders will forthwith discontinue its disposition of Registrable Securities pursuant to the registration statement relating to such Registrable Securities until its receipt of the copies of the supplemented or amended prospectus contemplated by Section 4.06(c)(vi) and, if so directed by UBET, will use its reasonable best efforts to deliver to UBET (at UBET's expense) all copies, other than permanent file copies, then in such Holder's possession of the prospectus relating to such Registrable Securities current at the time of receipt of such notice, and     (ii) that they will immediately notify UBET at any time when a prospectus relating to the registration of such Registrable Securities is required to be delivered under the Securities Act, of the happening of any event as a result of which information previously furnished by such Holder to UBET in writing specifically for inclusion in such prospectus contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made.     (g) Underwritten Registration. 20 --------------------------------------------------------------------------------      (i) If any of the Registrable Securities covered by a registration pursuant to Section 4.06(a) are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering, which shall be of recognized standing, will be selected by the Holders of a majority in fair market value of such Registrable Securities included in such offering, subject to UBET's approval, which shall not be unreasonably withheld. No person may participate in any such underwritten registration hereunder unless such person (a) agrees to sell its Registrable Securities, UBET Common Stock or other securities of UBET on the basis provided in an underwriting agreement provided by the Holders of a majority in fair market value of the Registrable Securities to be sold in such underwritten offering and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.     (ii) If any of the Registrable Securities covered by a registration pursuant to Section 4.06(b) are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by (x) UBET, if the registration as initially proposed by UBET included a primary offering of its securities, or (y) the holders of a majority in fair market value of securities being registered, if the registration as initially proposed was requested by such holders. No Holder may participate in any such underwritten registration hereunder unless such Holder (a) agrees to sell its Registrable Securities on the basis provided in an underwriting agreement approved by UBET or the holders of a majority in fair market value of the securities being registered and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.     (h) Exchange Act Compliance. UBET shall comply in all material respects with all of the reporting requirements of the Exchange Act and shall comply in all material respects with all other public information reporting requirements of the Commission which are conditions to the availability of Rule 144 promulgated under the Securities Act (or any successor rule of the Commission) for the sale of Registrable Securities. UBET shall cooperate with each Holder in supplying such information as may be necessary for such Holder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of Rule 144.     SECTION 4.07. Rights to Additional Shares.       (a) On the Additional Warrant Exercise Date, UBET shall deliver to TVG a schedule, certified by an executive officer of UBET, (i) listing all rights to subscribe for, purchase or otherwise acquire any share or shares of UBET Common Stock which are outstanding on the Additional Warrant Exercise Date ("Qualifying Rights"), and (ii) indicating the number of shares of UBET Common Stock and other securities or property issuable upon payment, exercise, conversion, surrender or exchange of all such Qualifying Rights. 21 --------------------------------------------------------------------------------     (b) If at any time after the Additional Warrant Exercise Date, UBET issues any shares of UBET Common Stock or other securities upon conversion, exercise or exchange of any Qualifying Rights, UBET shall, concurrently with the issuance thereof, issue to TVG an equivalent number of shares of UBET Common Stock or other securities (collectively, "Make-Whole Shares") for no additional consideration (it being understood and agreed that the exercise price of the Additional Warrant shall constitute the aggregate consideration for the Additional Warrant Shares and the Make-Whole Shares). All such Make-Whole Shares issued to TVG pursuant to this Section 4.07 shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, will be free of any liens, claims charges, security interests, pledges, voting or shareholder agreements, encumbrances or equities of any kind whatsoever (except as expressly contemplated hereby or to the extent created by TVG) and will not be issued in violation of any preemptive rights.     SECTION 4.08. Restrictions on Purchases of UBET Common Stock Other than Pursuant to the Warrants.  During the period commencing on the date hereof and ending on the earliest to occur of (i) the date of the UBET Stockholders Meeting, provided that the Warrant Proposal is not approved at such meeting, (ii) the date upon which UBET issues for cash any shares of UBET Common Stock, UBET Preferred Stock, or securities exercisable or exchangeable for, or convertible into (with or without consideration) UBET Common Stock or UBET Preferred Stock (other than (a) shares issuable upon exercise of options or warrants outstanding on the date hereof and (b) options granted to employees and shares issuable upon exercise of such options), or (iii) the Additional Warrant Exercise Date, TVG will not, and will use its best efforts to cause Gemstar-TV Guide International, Inc. ("Gemstar-TV Guide") and each Controlled Affiliate of Gemstar-TV Guide to not, purchase any shares of UBET Common Stock other than pursuant to the exercise of the Initial Warrant or the Additional Warrant. As used in this Section 4.08, a Controlled Affiliate of Gemstar-TV Guide shall mean any corporation, partnership, limited liability company, trust or individual that Gemstar-TV Guide has the power to direct, or cause the direction of, the management and policies of, whether through the ownership of voting securities, by contract, or by membership or involvement in the board of directors, management committee or other management structure of such entity.     SECTION 4.09 Ladbroke Agreement.  For so long as the License Agreement is in effect, UBET agrees that it shall not amend that certain Telecommunications Facilitation System Agreement, dated as of June 23, 1997, with Mount Laurel Racing, Inc. and Washington Trotting Association, Inc., in a manner that would reduce the percentage rate payable to UBET with respect to commissions on account wagers under such agreement. 22 -------------------------------------------------------------------------------- ARTICLE V MISCELLANEOUS     SECTION 5.01.  Further Assurances.  From and after the date hereof, each of TVG and UBET shall, at any time and from time to time, make, execute and deliver, or cause to be made, executed and delivered, such instruments, agreements, consents and assurances and take or cause to be taken all such actions as may reasonably be requested by the other party hereto for the effectual consummation and confirmation of this Agreement and the transactions contemplated hereby.     SECTION 5.02.  Expenses.  Except as otherwise provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.     SECTION 5.03.  Notices.  All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given on (i) the day on which delivered personally or by telecopy (with prompt confirmation by mail) during a business day to the appropriate location listed as the address below, (ii) three business days after the posting thereof by United States registered or certified first class mail, return receipt requested, with postage and fees prepaid or (iii) one business day after deposit thereof for overnight delivery via Federal Express or other nationally recognized overnight delivery service. Such notices, requests, demands, waivers or other communications shall be addressed as follows: (a)if to TVG, to: TVG 12421 West Olympic Boulevard Los Angeles, California 90064 Attn: Mark Wilson, President and CEO Telecopy No.: (310) 689-2501 with a copy to: Lee D. Charles, Esq. Baker Botts L.L.P. 599 Lexington Avenue New York, New York 10022 Telecopy No.: (212) 705-5125 (b)if to UBET, to: Youbet.com, Inc. 5901 De Soto Avenue Woodland Hills, California 91367 Attn: Robert Fell, Chairman and CEO Telecopy No.: (818) 668-2101 23 -------------------------------------------------------------------------------- with a copy to: Christensten, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP 2121 Avenue of the Stars Los Angeles, California 90067 Attn: Stephen D. Silbert, Esq. Telecopy No.: (310) 556-2920 or to such other person or address as any party shall specify by notice in writing to the other party.     SECTION 5.04.  Entire Agreement.  This Agreement and the License Agreement (including the Exhibits, Schedules and other documents referred to herein and therein) constitute the entire agreements between the parties and, except as expressly provided herein, supersede all prior agreements and understandings, oral and written, between the parties with respect to the subject matter hereof.     SECTION 5.05.  Assignment; Binding Effect; Benefit.  Neither this Agreement nor any of the rights, benefits or obligations hereunder may be assigned by any party without the prior written consent of the other party; provided, however, that the rights granted to TVG under Section 4.06 may be assigned in connection with any transfer or assignment of the Initial Warrant, the Additional Warrant, the Initial Warrant Shares or the Additional Warrant Shares, provided such transferee (i) is a permitted transferee under the Initial Warrant or Additional Warrant, as applicable, and (ii) executes a written agreement, in form and substance reasonably satisfactory to UBET, pursuant to which such transferee agrees to be bound by all of the provisions of Section 4.06, as applicable, as if such transferee were a "Holder" thereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.     SECTION 5.06.  Amendment.  This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties.     SECTION 5.07.  Extension; Waiver.  TVG or UBET may, to the extent legally allowed, (i) extend the time specified herein for the performance of any of the obligations of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto, or (iii) waive compliance by the other party with any of the agreements or covenants of such other party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. No such waiver shall constitute a waiver of, or estoppel with respect to, any subsequent or other breach or failure to comply strictly with the provisions of this Agreement. The failure of any party to insist on strict compliance with this Agreement or to assert any of its rights or remedies hereunder or with respect hereto shall not constitute a waiver of such rights or remedies. Whenever this Agreement requires or permits consent or approval by any party, such consent or approval shall be effective if given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 5.07.     SECTION 5.08.  Survival.  The representations and warranties made by UBET in Article II shall survive for a period of two years from the date of this Agreement, except for the representations and warranties contained in Section 2.03(b) and Section 2.03(c) which shall survive for a period of one year following the expiration date of the Additional Warrant. All covenants and agreements of the parties contained in this Agreement shall survive indefinitely (except as may otherwise be expressly provided for by their terms). 24 --------------------------------------------------------------------------------     SECTION 5.09.  Arbitration.  Any dispute or controversy arising out of or relating to this Agreement, the Initial Warrant or the Additional Warrant shall be settled by an expedited arbitration proceeding to be held in the City of Wilmington, Delaware in accordance with the rules then in effect of the American Arbitration Association or any successor thereto. The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator's decision in any court having jurisdiction. The losing party in such arbitration shall pay all the costs and expenses of such arbitration and all the reasonable attorneys' fees and expenses of the other party thereto.     SECTION 5.10.  Interpretation.  When a reference is made in this Agreement to Sections, Articles, Exhibits or Schedules, such reference shall be to a Section, Article, Exhibit or Schedule (as the case may be) of this Agreement unless otherwise indicated. When a reference is made in this Agreement to a "party" or "parties", such reference shall be to a party or parties to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". The use of any gender herein shall be deemed to be or include the other genders and the use of the singular herein shall be deemed to be or include the plural (and vice versa), wherever appropriate. The use of the words "hereof", "herein", "hereunder" and words of similar import shall refer to this entire Agreement, and not to any particular article, section, subsection, clause, paragraph or other subdivision of this Agreement, unless the context clearly indicates otherwise.     SECTION 5.11.  Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument.     SECTION 5.12.         SECTION 5.13.  Applicable Law.  This Agreement and the legal relations between the parties shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflict of laws rules thereof. 25 --------------------------------------------------------------------------------     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.     YOUBET.COM, INC.     By: /s/ PHILLIP HERMANN    -------------------------------------------------------------------------------- Phillip Hermann       Name: Phillip Hermann       Title:  Executive Vice President and Chief Financial Officer     ODS TECHNOLOGIES, L.P.     By: TV GUIDE, INC., a General Partner     By: /s/ MARK D. WILSON    -------------------------------------------------------------------------------- Phillip Hermann       Name: Mark D. Wilson       Title:  Chief Executive Officer—TVG 26 -------------------------------------------------------------------------------- TABLE OF CONTENTS         Page --------------------------------------------------------------------------------     Article I. Issuance of Warrants     Section 1.01.   Issuance Of Initial Warrant   1 Section 1.02.   Issuance Of Additional Warrant   1     Article II. Representations and Warranties of UBET     Section 2.01.   Organization And Qualification   2 Section 2.02.   Authorization And Validity   2 Section 2.03.   Capitalization   3 Section 2.04.   Reports And Financial Statements   4 Section 2.05.   No Approvals Or Notices Required; No Conflict With Instruments   4 Section 2.06.   Absence Of Certain Changes Or Events   5 Section 2.07.   Legal Proceedings   5 Section 2.08.   Compliance With Regulatory Requirements   6 Section 2.09.   Brokers Or Finders   6 Section 2.10.   Intellectual Property   6 Section 2.11.   Compliance With Charter And Contracts   7 Section 2.12.   Disclosure   7 Section 2.13.   Section 203 Of The DGCL   7     Article III. Representations and Warranties of TVG     Section 3.01.   Organization And Qualification   7 Section 3.02.   Authorization And Validity Of Agreement   8 Section 3.03.   No Approvals Or Notices Required; No Conflict With Instruments   8 Section 3.04.   Legal Proceedings   8 Section 3.05.   Compliance With Regulatory Requirements   9 Section 3.06.   Brokers Or Finders   9 Section 3.07.   Intellectual Property   10 Section 3.08   Compliance with Charter   10 Section 3.09.   Investment Purpose   10     Article IV. Certain Covenants     Section 4.01.   UBET Stockholder Meeting   11 Section 4.02.   Reservation Of Shares   11 Section 4.03.   Obtaining Of Certain Governmental Approvals   12 Section 4.04.   Reasonable Efforts   12 Section 4.05.   UBET Board Representation   12 Section 4.06.   Registration Rights.   13 Section 4.07.   Rights To Additional Shares   21 Section 4.08.   Restrictions On Purchases Of UBET Common Stock Other Than Pursuant To The Warrants   22 Section 4.09.   Ladbroke Agreement   22     Article V. Miscellaneous     Section 5.01.   Further Assurances   24 Section 5.02.   Expenses   24 Section 5.03.   Notices   24 27 -------------------------------------------------------------------------------- Section 5.04.   Entire Agreement   25 Section 5.05.   Assignment; Binding Effect; Benefit   25 Section 5.06.   Amendment   25 Section 5.07.   Extension; Waiver   25 Section 5.08.   Survival   25 Section 5.09.   Arbitration   26 Section 5.10.   Interpretation   26 Section 5.11.   Counterparts   26 Section 5.12.   Applicable Law   26 28 -------------------------------------------------------------------------------- WARRANT ISSUANCE AGREEMENT Between YOUBET.COM, INC. and ODS TECHNOLOGIES, L.P. Dated as of May 18, 2001 -------------------------------------------------------------------------------- QuickLinks EXHIBIT 10.28 WARRANT ISSUANCE AGREEMENT RECITALS ARTICLE I ISSUANCE OF WARRANTS ARTICLE II REPRESENTATIONS AND WARRANTIES OF UBET ARTICLE III REPRESENTATIONS AND WARRANTIES OF TVG ARTICLE IV CERTAIN COVENANTS ARTICLE V MISCELLANEOUS TABLE OF CONTENTS

THIS AGREEMENT (the "Agreement") is dated 3rd October, 2001 and made BETWEEN: (1) MARKIZA - SLOVAKIA, S.R.O., a company duly incorporated and organised under the laws of the Slovak Republic, ICO (identification number) 31 444 873, having its registered address at Blatne 334, 900 82 Slovak Republic ("MS"), represented by Mr. Pavol Rusko and Mr. Jan Kovacik, and (2) SLOVENSKA TELEVIZNA SPOLOCNOST;, S.R.O, a company duly incorporated and organised under the laws of the Slovak Republic, ICO (identification number) 34 128 611, having its registered address at Blatne 18, 900 82 Slovak Republic ("STS"), represented by Mr. Pavol Rusko and Mrs. Radka Doehring; (each of the "Party" or together the "Parties") WHEREAS : (A) On 7 th August, 1995, the Council (as defined below) granted MS a licence No. T/41 for television broadcasting according to a decision No. T/41/RUL/95 which entered into force on 13th September, 1995; (B) On 27th November, 1995, MS entered into an agreement No. 35/16/95 (the "Agreement No. 35/16/95") with Slovenské telekomunikácie, státny podnik, under which Slovenské telekomunikácie, státny podnik agreed to provide MS with the transmission of MS' stereophonic or double-channel television programmes (under the Broadcasting Act defined as the Programming Service) and teletext, in particular through a network of television transmitters as specified in the Agreement No. 35/16/95. As of 1st April, 1999, Slovenské telekomunikácie, a.s. assumed the rights and liabilities of Slovenské telekomunikácie, státny podnik, in its capacity as a party to the Agreement No. 35/16/95, as amended, becoming the successor in title of Slovenské telekomunikácie, státny podnik. (C) On 28 th September, 1995, MS and CME MEDIA ENTERPRISES B.V., a corporation organised under the laws of The Netherlands, having its registered address at Hoogoordreef 9, 1101 BA Amsterdam, The Netherlands, ("CME") entered into an agreement under which MS and CME agreed to establish and incorporate STS in accordance with STS' Memorandum and Articles of Association. Subsequently and in compliance with the terms set out in the Licence (as defined below), MS and STS entered into the Exclusive Agreement (as defined below). Upon the establishment of STS, CME made significant investments in STS to enable it to satisfy its obligations under the Exclusive Agreement. (D) On 14 th September, 2000, the Slovak Republic enacted the new Broadcasting Act (as defined below) superseding the existing Slovak media regulations and amending the existing Slovak telecommunications regulations. The new Broadcasting Act came into force on 4 th October, 2000 and according to Section 72(4) of the Broadcasting Act, broadcasters holding a TV licence in the Slovak Republic were required to comply with its new regulations within a period of one year following its entry into force. In order to comply with the new legal requirements and preserve MS' rights as a TV licence holder and a broadcaster in the Slovak Republic, MS, STS and CME have discussed with the Council a number of measures, including the entering into this Agreement, by October 4 th, 2001. It is the intention of the Parties hereto to implement these measures, including this Agreement, only to preserve MS' rights as a TV licence holder and a broadcaster in the Slovak Republic.     IT IS AGREED as follows: 1. Interpretation (1) In this Agreement: "Airtime Rights" means the following rights: (a) the right to use any and all time available to MS for Broadcasting under the Broadcasting Act and the Licence, now or in the future, for the purposes of Advertising and Teleshopping (the "Advertising Rights"); (b) the right to use Sponsorship in connection with all and any components of the Programming Service to the extent such Sponsorship is permitted under applicable law ("Sponsorship Rights"); (c) the right to transfer all Advertising Rights and/or Sponsorship Rights, or any part thereof under any terms and conditions the holder may consider appropriate (including whether for no consideration, cash or any other consideration) to any third party with the right of such third party to further transfer such rights, provided that any further transferees shall exercise or use the transferred Advertising Rights and/or Sponsorship Rights exclusively through STS; (d) the right to negotiate, arrange, agree upon and co-ordinate the placement of Advertising and/or Teleshopping within MS' available airtime for the benefit of any third party under any terms and conditions the holder may consider appropriate (including whether for no consideration, cash or any other consideration); (e) the right to negotiate, arrange, agree upon and co-ordinate, with sponsors, the terms and conditions of Sponsorship in connection with all or any components of the Programming Service to the extent such Sponsorship is permitted under applicable law; (f) the right to any profit, revenue, remuneration and/or consideration from third parties for (i) any transferred Advertising Rights and/or Sponsorship Rights, (ii) the placement of any Advertising and/or Teleshoppping within the airtime of MS as a broadcaster and (iii) the use of any Sponsorship Rights by sponsors under the agreed terms of a Sponsorship; (g) all other rights related to the exercise or performance of the rights as specified in sections (a) to (f) above, and (h) the right to negotiate, waive or enforce any of the foregoing; that can be exercised by the holder thereof at all and any time at such holder's own discretion and during the entire term of the Licence. "Broadcasting Act" means the Act No. 308/2000 Coll. on Broadcasting and Retransmission and the amendments to Act No. 195/2000 Coll. on Telecommunications, as amended and supplemented from time to time and any act that supersedes it in the future. "CME" has the meaning attributed to it in the recitals. "Council" means the Council for Broadcasting and Retransmission or any other authority that may replace it in terms of having the same or substantially similar competence. Where used in relation to the period preceding the effect of the Broadcasting Act , the term "Council" shall relate to the Council of the Slovak Republic for Radio and TV Broadcasting. "Editorial Responsibility" means the editorial responsibility of MS as a broadcaster for the composition and contents of the Programming Service. "Exclusive Agreement" means the agreement between STS and MS dated 30th August, 1996, as amended, concerning the supply of the Programming Service by STS to MS on an exclusive basis and other mutual rights and obligations related to the Broadcasting. "Licence" means the licence No. T/41 dated 7th August, 1995, for the television broadcasting, as may be amended from time to time, granted to MS by the Council and any other television broadcasting licence granted to MS by the Council. "ST" means (a) on and prior to 31st March, 1999, Slovenské telekomunikácie, státny podnik and, (b) on and after 1st April, 1999, Slovenské telekomunikácie, a.s together with any successor to Slovenské telekomunikácie, a.s., which has assumed Slovenské telekomunikácie, a.s.' rights and liabilities under the Agreement No. 35/16/95 and any other party supplying MS as a broadcaster with Transmission Services. "Transmission Services" means the telecommunication services involving the provision of MS Broadcasting via the transmission of MS' Programming Service (particularly via television transmitters operated by ST) which are, or shall be, provided by ST to MS according to the Agreement No. 35/16/95 or any other similar agreement which may be entered into between MS and ST in the future. (2) The terms "Advertising", "Teleshopping", "Sponsorship", "Programming Service", "Programme" and "Broadcasting" shall have the same meanings when used herein as in the Broadcasting Act. or in any other legal regulation governing these terms for the same purposes as the currently applicable Broadcasting Act. (3) The index to and the headings in this Agreement are for convenience only and are to be ignored in construing this Agreement. 2. EXCLUSIVE TRANSFER OF AIRTIME RIGHTS (1) MS hereby irrevocably and unconditionally transfers to STS on an exclusive basis and STS acquires from MS on an exclusive basis all Airtime Rights for the consideration set forth under Clause 3 hereof. Under this Agreement, STS has the exclusive right to exercise, transfer and/or use the Airtime Rights in its sole discretion and in any manner it considers appropriate. (2) MS agrees and undertakes to broadcast all Advertising and Teleshopping supplied to it by STS for Broadcasting, provided that the Advertising and Teleshopping shall be broadcast only to the extent they do not contravene the Broadcasting Act and the Licence. MS shall have the right not to broadcast any part of Advertising and/or Teleshopping violating the Broadcasting Act and/or the Licence provided that MS shall broadcast any other parts of such Advertising and/or Teleshopping which do not contravene the Broadcasting Act and/or the Licence. (3) Under the Exclusive Agreement, STS shall supply to MS all Programmes as well as all other parts of the Programming Service which might be sponsored in accordance with the provisions of the Broadcasting Act. MS hereby agrees and undertakes to broadcast all sponsored components of the Programming Service in accordance with the Sponsorship conditions as notified to MS by STS, including the identification of such Programming Service components as being sponsored in compliance with the Broadcasting Act and the Licence, provided that the same shall be broadcast only to the extent they do not contravene the Broadcasting Act and the Licence. MS shall have the right not to broadcast any part of sponsored components of the Programming Service violating the Broadcasting Act and/or the Licence provided that MS shall broadcast any other parts of such sponsored components of the Programming Service which do not contravene the Broadcasting Act and/or the Licence. (4) MS will not transfer nor solicit offers to transfer Airtime Rights or any part thereof to any party other than STS and will not broadcast any Advertising, Teleshopping nor any sponsored components of the Programming Service supplied to it or attempted to be supplied to it for Broadcasting by any party (including MS itself) other than STS. (5) The Parties hereby agree and acknowledge that none of the provisions hereof can be construed as restricting the Editorial Responsibility of MS for the composition and contents of Advertising (including the promotion of MS), Teleshopping and any sponsored components of the Programming Service. The Parties hereby agree and acknowledge that MS, when exercising its Editorial Responsibility, shall monitor the compliance of all Advertising, Teleshopping and Sponsorship provided to it by STS with the Broadcasting Act and the Licence. (6) The Parties hereby agree that MS shall procure its Editorial Responsibility for Advertising, Teleshopping and sponsored components of the Programming Service through its employees responsible for the exercise of the MS' Editorial Responsibility, the names and salaries of whom have been agreed in a separate agreement between STS and MS who will have timely access to the data and information concerning Advertising (including the promotion of MS), Teleshopping and any sponsored components of the Programming Service. (7) MS hereby represents that it is authorised to enter into this Agreement and that under this Agreement, it validly transfers all Airtime Rights to STS. 3. CONSIDERATION (1) Notwithstanding the amount of revenues generated by STS from the exercise, use and/or transfer of Airtime Rights transferred to it under this Agreement, the Parties hereby agree that in consideration for the transfer of the Airtime Rights under clause 2 above, STS shall make a payment equal to the aggregate of the followingthe following payments: (a) the amount equal to all costs and expenses incurred by STS in connection with its performance of its obligations under the Exclusive Agreement (including all amounts paid or due to third parties); (b) the amount equal to all fees and other payments due and payable to ST by MS for the Transmission Services provided by ST to MS with respect to Broadcasting; (c) the aggregate amount of salaries and other employment benefits arising under law and related health insurance, pension and similar charges due and payable to MS' employees exercising MS' Editorial Responsibility, the names and salaries of whom have been or shall be agreed in a separate agreement between STS and MS; (d) the amount of all penalties imposed on MS by enforceable decisions of the Council with respect to the Broadcasting of the Programming Service by MS, together with all fees and other legal costs incurred by MS in connection with proceedings relating to such penalties; (e) all damages due and payable to third parties arising out of the Broadcasting or in connection therewith, adjudicated by an enforceable judgment together with all court charges and other legal costs incurred by MS in connection with proceedings relating to such third parties' claims; (f) all amounts payable by MS to organisations of collective administration of copyrights and other similar rights pursuant to agreements entered into between MS and such organisations;. (g) a margin of SKK 2,000,000 annually; (h) a margin of SKK 500,000 per month to be at all times equal to the margin invoiced by STS to MS under clause 6(1)(b); and (i) all other amounts as may be agreed by and between MS and STS from time to time in writing; provided that (i) the right to any consideration under sections (a) and (h) above shall be offset against the right of STS to get paid under clause 6(1); (ii) STS shall pay all amounts listed in sections (b) to (i) (except for (h)) above directly to MS; and (iii) the Parties shall settle any resulting VAT in cash or by wire transfer and not by virtue of the set-off. (2) The arrangements hereunder constitute an ongoing relationship between MS and STS and all obligations hereunder shall be performed by the Parties hereto on a monthly basis. The following amounts due and payable by STS to MS shall be invoiced by MS to STS on a monthly basis, on the fifteenth day of each month: (a) an amount calculated by STS in good faith equal to all costs and expenses actually incurred by STS in connection with its performance of its obligations under the Exclusive Agreement as specified in clause 3(1)(a) during the previous month. Such amount shall be notified by STS to MS in writing at least three days prior to the date on which MS issues its invoice pursuant to clause 3(2) above; (b) all amounts as specified in clause 3(1)(b) to 3(1)(f) above paid by MS during the previous month; (c) an amount equal to 1/12 of the amount as specified in clause 3(1)(g) above together with the monthly margin as specified in clause 3(1)(h) and any amount as may be agreed upon in compliance with clause 3(1)(i); and (d) the applicable VAT portion, which shall be stated separately in the invoice. The date of the issue of the invoice is the date when the taxable supply is delivered. (3) At the beginning of each year and no later than15th March, the aggregate amount invoiced by MS pursuant clause 3(2)(a) above for the previous year shall be reconciled and settled against the aggregate amount of all costs and expenses actually incurred by STS in connection with its performance of its obligations under the Exclusive Agreement during the previous year, as specified in clause 3(1)(a) above. (4) STS may agree with MS to pay MS an advance payment for the consideration determined in clause 3(1) so that MS receives the advance payment within the first seven days of each month. The amounts billed under clause 3(2)(a) to (c) shall be due on 20th day of the monththe receipt of the invoice by STS; the VAT being due until the end of the month when invoiced. (5) MS hereby specifically agrees and acknowledges that the arrangements made hereinabove represent a fair consideration for the transfer of the Airtime Rights made under clause 2. of this Agreement and are consistent with its commercial decision on the acceptable level of the own commercial risk of MS related to the Broadcasting and the costs required to continue therewith. 4. NOTICES (a) Any notice to be served under this Agreement shall be in writing and may be delivered personally or by courier or sent by facsimile process to the Party to be served at its or his address appearing in sub-clause (c). (b) Any notice shall be deemed to have been served: if personally delivered or delivered by courier, at the time of delivery to the address determined pursuant to clause (a) above; or if sent by facsimile, upon receipt by the sender of an acknowledgement or transmission report generated by the machine from which the facsimile was sent indicating that the facsimile was sent in its entirety to the recipient's facsimile number. (C) The address and facsimile number for MS are: Markíza - Slovakia, s.r.o. 900 82 Blatné 334 Slovak Republic fax: +421 2 5022 1391 to the attention of: Mr. Pavol Rusko The address and facsimile number for STS are: Slovenska televizna spolocnost;, s.r.o 900 82 Blatné 18 Slovak Republic fax: +421 2 6595 6829 to the attention of Radka Doehring with a copy to CME: CME MEDIA ENTERPRISES B.V. c/o CME Development Corporation 8th Floor, Aldwych House 71-91 Aldwych London WC2B4HN United Kingdom fax: 44 (0) 20 7430 5403 to the attention of Andrea Kozma Office of general Counsel or any other address notified by that Party for this purpose to the other Party by not less than five business days' notice. 5. AMENDMENTS AND MODIFICATIONS (1) This Agreement may be modified, amended or changed in any respect only if such amendment is in writing and duly signed by both Parties to this Agreement. (2) The Parties specifically agree that this Agreement is without prejudice to the Exclusive Agreement which remains in full force and effect save for (a) the matters regulated under the Exclusive Agreement, which are expressly regulated otherwise under this Agreement; (b) clauses 11.1 and 11.2 of the Exclusive Agreement; and (c) clause 10 of the Exclusive Agreement which is substituted by clause 9.3 of this Agreement which is incorporated into the Exclusive Agreement by reference. The Parties acknowledge that in the course of exercising the obligations under clauses 2.1 and 4.2 of the Exclusive Agreement, MS shall bear Editorial Responsibility also for the other components of the Programming Service supplied to it by STS under the Exclusive Agreement, provided that MS shall in the course of exercising its Editorial Responsibility monitor and assure the full compliance of the Programming Service elements with the Broadcasting Act and the Licence. The Parties hereby agree that MS shall procure its Editorial Responsibility for the other components of the Programming Service through its employees responsible for the exercise of the MS' Editorial Responsibility, the names and salaries of whom have been agreed in a separate agreement between STS and MS who will have timely access to the data and information concerning the supplied components of the Programming Service. For the avoidance of doubt, if any of the amounts referred to in paragraphs (b) to (f) of clause 3(1) would be payable under the terms of both this Agreement and the Exclusive Agreement, the payment shall be made only once hereunder. (3) The Parties specifically agree that this Agreement terminates only if and when the Exclusive Agreement terminates in accordance with its terms and may not be terminated due to any other reason or in any other manner. 6. SET-OFF (1) With respect to the obligations of STS under the Exclusive Agreement, MS shall pay to STS the consideration for the provision of the Programmes and the whole Programming Service under the Exclusive Agreement. The consideration shall be equal to the aggregate of the following amounts: (a) the amount equal to all costs and expenses incurred by STS in connection with its performance of its obligations under the Exclusive Agreement (including all amounts paid or due to third parties); and (b) a margin of SKK 500,000 per month. (2) The arrangements under the Exclusive Agreement and hereunder constitute an ongoing relationship between MS and STS and all obligations under the Exclusive Agreement and hereunder shall be performed by the Parties hereto on a monthly basis. The following amounts due and payable by MS to STS shall be invoiced by STS on a monthly basis, on the fifteenth day of each month: (a) an amount calculated by STS in good faith equal to all costs and expenses actually incurred by STS in connection with its performance of its obligations under the Exclusive Agreement during the previous month; (b) the margin in accordance with clause 6(1)(b); and (c) the applicable VAT, which shall be stated separately in the invoice. The date of the issue of the invoice is the date when the taxable supply is delivered. (3) At the beginning of each year and no later than 15th March, the aggregate amount invoiced by MS pursuant clause 6(2)(a) above for the previous year shall be reconciled and settled against the aggregate amount of all costs and expenses actually incurred by STS in connection with its performance of its obligations under the Exclusive Agreement during the previous year, as specified in clause 36(1)(a) above. (4) Notwithstanding anything contrary herein or in the Exclusive Agreement, the Parties shall not pay each to the other any cash in respect of the payments to be made under clauses 3(1)(a) and 3(1)(h) (as far as the payment liability of STS is concerned) and clauses 6(1)(a) and 6(1)(b) (as far as the payment liability of MS is concerned), respectively. (5) The Parties have irrevocably and unconditionally agreed that all rights to all amounts under clauses 3(1)(a) and 3(1)(h) (as far as the payment liability of STS is concerned) and clauses 6(1)(a) and 6(1)(b) (as far as the payment liability of MS is concerned), which shall be in any event equal, shall be set-off or deemed to be set-off as of the day of each invoice. For the avoidance of doubt, the agreement of the Parties hereunder shall be deemed to constitute an irrevocable notice of set-off given by each Party to the other Party. The amounts billed under clause 6(2)(a) and (b) shall be due on 20th day of the monththe receipt of the invoice by MS; the VAT being due until the end of the month when invoiced 7. SEVERABILITY OF PROVISIONS AND FURTHER ASSURANCES (1) If any provision of this Agreement is or becomes invalid or unenforceable, such invalidity or unenforceability shall not invalidate the remaining provisions of this Agreement except where the provisions cannot be severed from the rest of the Agreement due to the nature of the Agreement, its subject matter or the circumstances in which the Agreement was concluded. The Parties agree to do all things necessary to achieve the same result as was intended by any such invalid or unenforceable provisions. (2) MS specifically acknowledges the significant investments made by CME in STS to date in order to enable STS to supply the Programming Service to MS and to enable the Broadcasting by MS and the entitlement of CME, through STS, to the return of those investments through the arrangements made in the Exclusive Agreement, Memorandum of Association and Articles of Association of STS and in this Agreement. In the event that the financial projections of CME and/or STS related to the activity of STS and MS will be affected by any change of law or the interpretation thereof by any authority or court, MS agrees to: (a) abstain from doing anything that might prejudice the interests of CME and/or STS or the protection of the CME's investments in STS or the safety thereof or the achievement of their financial projections; (b) do everything that may be reasonably required by STS in order to achieve the financial position and protection related to the CME's investments in STS and to the financial projections of CME and/or STS equal to that which it would have had should no change of law or the interpretation thereof by any authority or court occurred. 8. GENERAL (1) Assignment Without prejudice to the right of STS to freely transfer or assign any or all of the Airtime Rights in its sole discretion, neither Party may assign this Agreement in whole or in part, whether by operation of law or otherwise, without the prior written consent of the other Party and any such assignment contrary to the terms hereof shall be null and void and of no force or effect. (2) Costs and Expenses Each Party shall pay the costs and expenses incurred by it in connection with the entering into and completion of this Agreement (and any agreements entered into pursuant to this Agreement). 9. GOVERNING LAW AND JURISDICTION (1) This Agreement is governed by and will be construed in accordance with Slovak law. (2) The Parties agree to use their best efforts to resolve by mutual agreement any dispute, controversy or claim arising out of or in relation to this Agreement, including any question as to its existence, interpretation, breach or termination. (3) Should any of the Parties so request, any dispute arising out of or relating to this Agreement or the Exclusive Agreement (including its validity, termination, interpretation or existence) shall be finally resolved by arbitrators; the following rules for the selection of arbitrators shall apply: (a) within 30 days of receipt of the notification by one Party to the other Party that it requests arbitration, the Parties shall agree on the appointment of a single arbitrator; (b) (i) should the Parties fail to agree on the appointment of the arbitrator pursuant to subsection (a) above; or (ii) should the appointed arbitrator fail to accept his appointment within 15 days from the date the appointment was communicated to him, each of the Parties shall appoint one arbitrator within 15 days after the occurrence of either (i) or (ii) above; (c) the arbitrators appointed pursuant to subsection (b) above shall jointly appoint the presiding arbitrator within 15 days from date of the last of them being appointed and accepting his nomination, however, at the latest within 90 days from the date of the notification containing the request for arbitration having been delivered from one Party to the other; (d) should any of the Parties fails to appoint an arbitrator pursuant to subsection (b), or if an arbitrator fail to accept his appointment within 15 days from the date the appointment was communicated to him, or if the appointed arbitrators do not appoint the presiding arbitrator pursuant to subsection (c) or if such presiding arbitrator should fail to accept his appointment within 15 days of his election, the claiming Party shall present the dispute for decision by the Court of Arbitration at the Slovak Chamber of Commerce and Industry pursuant to the Arbitration rules of the Court of Arbitration at the Slovak Chamber of Commerce and Industry (the "Rules"). The Rules shall be deemed an integral part of this clause. The arbitration court shall have three members selected under the Rules and the parties agree to accept so appointed arbitrators as arbitrators appointed by the Parties. (e) The place of arbitration shall be Bratislava and proceedings shall, to the fullest extent permissible by applicable law, take place in the English language and shall be translated into Slovak language. (f) The Parties shall be bound by the arbitration award. 9. LANGUAGE OF THE AGREEMENT This Agreement shall be executed in the English and Slovak languages. In the event of any dispute as to the meaning of any clause or terms of the Agreement, or in the event of any discrepancy between the English and Slovak version of this Agreement, to the fullest extent permissible by applicable law, the binding version shall be the English language version. 10. EFFECTIVENESS The rights and obligations of the parties to this Agreement arise as of the day it has been entered into, save that the Parties hereby agree that notwithstanding the later date of the entry into this Agreement in writing, the same shall govern the invoicing for the entire month of October 2001.   SIGNED by MS and STS on the date set out below.   Bratislava, 3rd October, 2001   MARKÍZA - SLOVAKIA, S.R.O   /s/ Pavol Rusko ___________________________________ By: Pavol Rusko   /s/ Jan Kovacik ___________________________________ By: Jan Kovacik   SLOVENSKA TELEVIZNA SPOLOCNOST;, S.R.O   /s/ Pavol Rusko ___________________________________ By: Pavol Rusko   /s/ Radka Doehring ___________________________________ By: Radka Doehring           EXCLUSIVE RIGHTS TRANSFER AGREEMENT   Dated 3rd October, 2001   BETWEEN   MARKÍZA - SLOVAKIA, S.R.O AND SLOVENSKA TELEVIZNA SPOLOCNOST;, S.R.O     INDEX   Clause   Page 1 INTERPRETATION 2 2 EXCLUSIVE TRANSFER OF AIRTIME RIGHTS 4 3 CONSIDERATION 5 4 NOTICES 6 5 AMENDMENTS AND MODIFICATIONS 7 6 SET-OFF 8 7 SEVERABILITY OF PROVISIONS AND FURTHER ASSURANCES 9 8 GENERAL 10 9 GOVERNING LAW AND JURISDICTION 10 10 LANGUAGE OF THE AGREEMENT 11 11 EFFECTIVENESS 11

Exhibit 10.7 [w52358w5235801.gif]                     High Speed Net Solutions, Inc. To:       John Maxwell Date:   August 9, 2001 Re:       Your Employment with High Speed Net Solutions, Inc. d/b/a Summus John:      I am pleased to offer you the full-time position of VP of Marketing at High Speed Net Solutions, Inc. d/b/a/ or HSNS (the “Company”), in Raleigh, NC reporting to Bjorn Jawerth, Co-Chief Executive Officer.      Here are the details of the offer:           1.   Title:   Vice-President of Marketing 2.   Annual Salary:   $130,000 3.   Semimonthly Payment:   $5,416.66 4.   Car Allowance:   $600 / mo. 5.   Stock Options: As a full time regular employee, you will be eligible to receive 200,000 stock options that vest quarterly over a three (3) year period. The strike price of one-third of the options will be at a 50% discount to market price, the remaining two-thirds will be at a 25% discount to market price. Market price is set at $3.00 / share. Your performance goals will be established within the first two weeks of your employment. All options are subject to the approval of the Board of Directors. The shares -------------------------------------------------------------------------------- 2     issuable upon exercise of the options will be subject to any agreement in effect between you and the Company at the time of exercise.   6.   Location of Employment: Your place of employment will be 434 Fayetteville Street Mall, Suite 600, Raleigh, North Carolina 27601. It is anticipated that you will commute to Raleigh for a period of at least 90 days but no longer than 180 days. Temporary housing will be provided for 180 days and re-evaluated after 120 days for possible extension.   7.   Non-competition, Confidentiality and Assignment of Invention Provisions: You will be required to sign a Non-competition, Confidentiality and Assignment of Inventions Agreement, which is required for all employees of the Company having significant duties.   8.   Benefits: You will be entitled to the other benefits generally available to full-time employees of the Company from time to time. Currently, these benefits include:   a)   Vacation Policy: You will be entitled to three (3) weeks (or fifteen calendar days) of vacation time annually. Your vacation is accrued throughout the calendar year but is available to you upon your date of hire (pro-rated portion of annual vacation time) and the start of each calendar year following.     b)   You will be provided six (6) sick/personal days per calendar year. These days can be used for personal or family illness, death of a family member, or to attend to personal business. Sick/personal days cannot be carried forward or used in lieu of vacation time. Absence due to illness extending beyond six (6) days must be supported by a physician’s note.     c)   Health & Dental Insurance: The Company pays 100% of your premium for health insurance and dental insurance for you and your family (qualified dependents). The current insurance plan is with Blue Cross Blue Shield of North Carolina. As a resident of Illinois you will utilize the BCBS network for the state of Illinois.     d)   Vision Insurance: The Company pays 100% of your premium for a vision insurance plan through Vision Service Plan.     e)   Life Insurance: A life insurance policy is provided by the Company for you in the amount of $25,000.     f)   Short-term and Long-term Disability Protection: Beginning on the 16th day of an absence due to injury or sickness, the Company will provide income replacement for 100% of your base salary through 60 days of absence, and then 80% from 60 to 90 days. Following 90 days, a long-term disability insurance plan pays 66-2/3% of your salary. -------------------------------------------------------------------------------- 3   g)   401(k) Retirement Plan: You are eligible to contribute upon employment to the Company 401(k) plan. You may defer from 1% - 15% of your salary, within IRS maximum guidelines. The Company will match 50% of the first 4% of your salary contribution. Company matching contributions vest over four years.     h)   Performance Bonus Program: You will be eligible to receive up to 100% (a target set annually) of your annual salary based on specified Company and individual performance goals jointly defined by you and your supervisor. Your performance goals will be established within the first two weeks of your employment. The bonus will be paid after receipt of the audited fiscal year-end financial statements of the Company certified by its CPAs. Bonus plans and payout are subject to Board approval and may consist of cash, options or a combination of both. Your bonus for the first year will be prorated based on months of service.     i)   Relocation: After a period of 90 days, the Company will evaluate the cost to move you and your family to North Carolina. 9.   This agreement is made with the understanding that this does not constitute a guarantee of employment and is an offer for at-will employment. Conditions of employment are subject to change. Details regarding benefits coverage are available in the plan documents in Human Resources.   10.   Start Date: Your start date is tentatively set for Monday, August 20, 2001. The offer will remain in effect for a period of ten days. Please sign and return this agreement to me, via fax is acceptable at 919-807-5604. Sincerely, Bjorn Jawerth /s/ Bjorn Jawerth Co-Chief Executive Officer ACCEPTED AND AGREED:   /s/ John Maxwell                                                                                       John Maxwell Date:                                8/9/01                                              

      REVOLVING CREDIT AGREEMENT Dated as of October 30, 2000 Among ALLIANCE CAPITAL MANAGEMENT L. P., as Borrower BANK OF AMERICA, N.A., as Administrative Agent, BANC OF AMERICA SECURITIES LLC, as Arranger, THE CHASE MANHATTAN BANK, as Syndication Agent, DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES, as Documentation Agent BANK OF AMERICA, N.A. THE CHASE MANHATTAN BANK and DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES, individually and as Co-Agents, and THE BANKS WHOSE NAMES APPEAR ON THE SIGNATURE PAGES HEREOF   TABLE OF CONTENTS 1. DEFINITIONS AND RULES OF INTERPRETATION   1.1 Definitions   1.2 Rules of Interpretation 2. THE REVOLVING CREDIT FACILITY   2.1 Commitment to Lend   2.2 Facility Fee   2.3 Utilization Fee   2.4 Reduction of Total Commitment   2.5 The Notes   2.6 Interest on Loans     2.6.1     Interest Rates     2.6.2     Interest Payment Dates   2.7 Requests for Loans   2.8 Loans to Cover Reimbursement Obligations   2.9 Conversion Options     2.9.1     Conversion to LIBOR Loan     2.9.2     Continuation of Type of Loan     2.9.3     LIBOR Loans     2.9.4     Conversion Requests   2.10 Funds for Loans     2.10.1     Funding Procedures     2.10.2     Advances by Administrative Agent   2.11 Limit on Number of LIBOR Loans 3. REPAYMENT OF LOANS   3.1 Maturity   3.2 Mandatory Repayments of Loans     3.2.1     Loans in Excess of Commitment     3.2.2     Change of Control   3.3 Optional Repayments of Loans 4. LETTERS OF CREDIT   4.1 Letter of Credit Commitments     4.1.1     Commitment to Issue Letters of Credit     4.1.2     Letter of Credit Applications     4.1.3     Terms of Letters of Credit     4.1.4     Reimbursement Obligations of Banks     4.1.5     Participations of Banks   4.2 Reimbursement Obligation of the Borrower   4.3 Letter of Credit Payments   4.4 Obligations Absolute   4.5 Reliance by Issuer   4.6 Letter of Credit Fee   4.7 Additional Cash Collateral Provisions 5. CERTAIN GENERAL PROVISIONS   5.1 Application of Payments   5.2 Funds for Payments     5.2.1     Payments to Co-Agents, Administrative Agent     5.2.2     No Offset, Etc.     5.2.3     Fees Non-Refundable   5.3 Computations   5.4 Inability to Determine LIBOR Rate Basis   5.5 Illegality   5.6 Additional Costs, Etc.   5.7 Capital Adequacy   5.8 Certificate   5.9 Indemnity   5.10 Interest After Default 6. REPRESENTATIONS AND WARRANTIES   6.1 Corporate Authority     6.1.1     Incorporation; Good Standing     6.1.2     Authorization     6.1.3     Enforceability     6.1.4     Equity Securities   6.2 Governmental Approvals   6.3 Liens; Leases   6.4 Financial Statements   6.5 No Material Changes, Etc.   6.6 Permits   6.7 Litigation   6.8 Material Contracts   6.9 Compliance with Other Instruments. Laws, Etc.   6.10 Tax Status   6.11 No Event of Default   6.12 Holding Company and Investment Company Acts   6.13 Insurance   6.14 Certain Transactions   6.15 Employee Benefit Plans   6.16 Regulations U and X   6.17 Environmental Compliance   6.18 Subsidiaries, Etc.   6.19 Funded Debt   6.20 General 7. AFFIRMATIVE COVENANTS OF THE BORROWER   7.1 Punctual Payment   7.2 Maintenance of Office   7.3 Records and Accounts   7.4 Financial Statements, Certificates, and Information   7.5 Notices     7.5.1     Defaults     7.5.2     Environmental Events     7.5.3     Notice of Proceedings and Judgments     7.5.4     Notice of Change of Control   7.6 Existence; Business; Properties     7.6.1     Legal Existence     7.6.2     Conduct of Business     7.6.3     Maintenance of Properties     7.6.4     Status Under Securities Laws   7.7 Insurance   7.8 Taxes   7.9 Inspection of Properties and Books, Etc.     7.9.1     General     7.9.2     Communication with Accountants   7.10 Compliance with Government Mandates, Contracts, and Permits   7.11 Use of Proceeds   7.12 Restricted Subsidiaries   7.13 Certain Changes in Accounting Principles 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER   8.1 Disposition of Assets   8.2 Mergers and Reorganizations   8.3 Acquisitions   8.4 Restrictions on Liens   8.5 Guaranties   8.6 Restrictions on Investments   8.7 Restrictions on Funded Debt   8.8 Distributions   8.9 Transactions with Affiliates   8.10 Fiscal Year   8.11 Compliance with Environmental Laws   8.12 Employee Benefit Plans   8.13 Amendments to Certain Documents 9. FINANCIAL COVENANTS OF THE BORROWER   9.1 Ratio of Consolidated Adjusted Funded Debt to Consolidated Adjusted Cash Flow   9.2 Minimum Net Worth   9.3 Miscellaneous 10. CLOSING CONDITIONS   10.1 Financial Statements and Material Changes   10.2 Loan Documents   10.3 Certified Copies of Charter Documents   10.4 Partnership and Corporate Action   10.5 Consents   10.6 Opinions of Counsel   10.7 Proceedings   10.8 Incumbency Certificate   10.9 Fees   10.10 Representations and Warranties True; No Defaults 11. CONDITIONS TO ALL BORROWINGS   11.1 No Default   11.2 Representations True   11.3 Loan Request or Letter of Credit Application   11.4 Payment of Fees   11.5 No Legal Impediment 12. EVENTS OF DEFAULT; ACCELERATION; ETC.   12.1 Events of Default and Acceleration   12.2 Termination of Commitments   12.3 Remedies   12.4 Application of Monies 13. SETOFF 14. THE ADMINISTRATIVE AGENT   14.1 Authorization   14.2 Employees and Agents   14.3 No Liability   14.4 No Representations   14.5 Payments     14.5.1    Payments to Administrative Agent     14.5.2    Distribution by Administrative Agent     14.5.3    Delinquent Banks   14.6 Holders of Notes   14.7 Indemnity   14.8 Administrative Agent and Co-Agents as Banks   14.9 Resignation   14.10 Notification of Defaults and Events of Default   14.11 Duties in the Case of Enforcement 15. EXPENSES 16. INDEMNIFICATION 17. SURVIVAL OF COVENANTS, ETC. 18. ASSIGNMENT AND PARTICIPATION   18.1 Conditions to Assignment by Banks   18.2 Certain Representations and Warranties; Limitations; Covenants   18.3 Register   18.4 New Notes   18.5 Participations   18.6 Disclosure   18.7 Assignee or Participant Affiliated with the Borrower   18.8 Miscellaneous Assignment Provisions   18.9 Assignment by Borrower 19 NOTICES, ETC. 20. GOVERNING LAW 21. HEADINGS 22. COUNTERPARTS 23. ENTIRE AGREEMENT, ETC. 24. WAIVER OF JURY TRIAL 25. CONSENTS, AMENDMENTS, WAIVERS, ETC. 26. SEVERABILITY     Schedules Schedule 1 - Banks and Commitments Schedule 6.2 - Governmental Approvals Schedule 6.18 - Subsidiaries Schedule 6.19 - Funded Debt Schedule 8.4 - Certain Permitted Liens Schedule 8.6 - Certain Investments   Exhibits Exhibit A - Form of Assumption Agreement Exhibit B - Form of Note Exhibit C - Form of Loan Request Exhibit D - Form of Confirmation of Loan Request Exhibit E - Form of Conversion Request Exhibit F - Form of Confirmation of Conversion Request Exhibit G - Letter of Credit Application Exhibit H - Form of Compliance Certificate Exhibit I - Opinion Letter Exhibit J - Form of Assignment and Acceptance     REVOLVING CREDIT AGREEMENT           THIS REVOLVING CREDIT AGREEMENT, dated as of October 30, 2000 (this “Credit Agreement”), by and among ALLIANCE CAPITAL MANAGEMENT L.P., a Delaware limited partnership (together with its permitted successors, the “Borrower”), and the lending institutions listed on Schedule 1 (collectively, the “Banks”), and BANK OF AMERICA, N.A., THE CHASE MANHATTAN BANK and DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES, as co-agents for the Banks (as defined hereinbelow) (in such capacity, the “Co-Agents”), BANK OF AMERICA, N.A., as administrative agent for the Banks (in such capacity, the “Administrative Agent”), THE CHASE MANHATTAN BANK, as syndication agent (in such capacity, the “Syndication Agent”), and DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES, as documentation agent for the Banks (in such capacity, the “Documentation Agent”); W I T N E S S E T H:           WHEREAS, the Borrower desires to obtain from the Banks certain credit facilities as described in this Credit Agreement for working capital and for other purposes as provided below;           WHEREAS, the Banks are willing to provide such credit facilities to the Borrower upon the terms and conditions set forth in this Credit Agreement; and           WHEREAS, the Co-Agents are willing to act as co-agents, and the Administrative Agent is willing to act as administrative agent, for the Banks in connection with such credit facilities as provided in this Credit Agreement;           NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements set forth hereinbelow, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties hereto do hereby agree as follows: 1.       DEFINITIONS AND RULES OF INTERPRETATION.           1.1     Definitions .  The following terms shall have the meanings set forth in this Section 1.1 or elsewhere in the provisions of this Credit Agreement referred to below:           Acquisition.  As defined in Section 8.3.           Administrative Agent.  Bank of America, acting as administrative agent for the Banks.           Administrative Agent’s Head Office.  The Administrative Agent’s head office located at 101 North Tryon Street, Charlotte, North Carolina 28255, or at such other location as the Administrative Agent may designate in a written notice to the other parties hereto from time to time.           Administrative Agent’s Overnight Investment Rate.  The annual rate of interest in effect from time to time that is equal to the interest rate received by the Administrative Agent from time to time with respect to funds invested in overnight repurchase agreements.           Affiliate.  As defined under Rule 144 (a) under the Securities Act of 1933, as amended, but not including any Restricted Subsidiary or any investment fund which is managed or advised by the Borrower.           Alliance Distributors.  Alliance Fund Distributors, Inc., a Delaware corporation.           Applicable Margin.  An annual percentage rate determined by the Administrative Agent, as of any date of determination, in accordance with the Borrower’s S&P Rating and Moody’s Rating in effect as of any date of determination as follows:   Borrower’s S&P Rating/Moody’s Rating Applicable Margin A-1+/P-1 0.170% A-1/P-1 0.210% A-1/P-2 or A-2/P-1 0.225% A-2/P-2 0.350% Less than A-2/P-2 0.550% Notwithstanding the foregoing, if the Borrower loses both its Moody’s Rating and its S&P Rating at any time, the Applicable Margin shall be 0.550%, in any such case subject, as applicable, to the provisions of Section 5.10 hereof.  If, subsequent to losing such ratings, the Borrower is able to again obtain such ratings, the above table shall, from and after the date of such occurrence (until such time, if any, that the Borrower again loses such ratings), govern the Applicable Margin.           Assignment and Acceptance.  As defined in Section 18.1.           Assumption Agreement.  An Assumption Agreement in the form of Exhibit A hereto with appropriate completions and insertions and with such non–substantive changes as may be required to reflect the specific nature of the transaction giving rise to the execution and delivery of such Assumption Agreement.           AXA Group.  AXA, a societe anonyme organized under the laws of France, and its Subsidiaries.           Bank of America.  Bank of America, N.A., a national banking association.           Banks.  Bank of America, N.A., The Chase Manhattan Bank and Deutsche Bank AG, New York and/or Cayman Islands Branches, as listed on Schedule 1 hereto and any other Person who becomes an assignee of any rights and obligations of a Bank pursuant to Section 18.1.           Borrower.  As defined in the preamble hereto.           Borrower Partnership Agreement. The Amended and Restated Agreement of Limited Partnership of the Borrower, dated as of October 29, 1999, by and among the General Partner and those other Persons who became partners of the Borrower as provided therein, as such agreement has been amended and exists at the date of this Credit Agreement and may be amended or modified from time to time in compliance with the provisions of this Credit Agreement.           Business.  With respect to any Person, the assets, properties, business, operations and condition (financial and otherwise) of such Person.           Business Day.  Any day on which banking institutions in Charlotte, North Carolina and New York, New York, are open for the transaction of banking business and, in the case of LIBOR Loans, also a day which is a LIBOR Business Day.           Capital Assets.  Fixed assets, both tangible (such as land, buildings, fixtures, machinery and equipment) and intangible (such as Permits, deferred sales commissions and good will); provided that Capital Assets shall not include any item customarily charged directly to expense or depreciated over a useful life of twelve (12) months or less in accordance with GAAP.           Capital Expenditures.  Amounts paid or indebtedness incurred by the Borrower or any of its Consolidated Subsidiaries in connection with the purchase or lease by the Borrower or any of such Subsidiaries of Capital Assets that would be required to be capitalized and shown on the balance sheet of such Person in accordance with GAAP.           Capitalized Leases.  Leases under which the Borrower or any of its Consolidated Subsidiaries is the lessee or obligor, the discounted future rental payment obligations under which are required to be capitalized on the balance sheet of the lessee or obligor in accordance with GAAP.           CERCLA.  As defined in Section 6.17.           Change of Control.  Each and every (a) issue, sale, or other disposition of Voting Equity Securities of the Borrower that results in any Person or group of Persons acting in concert (other than any of AXA Financial, Inc. and its Subsidiaries, and any member of the AXA Group) beneficially owning or controlling, directly or indirectly, more than eighty percent (80%) (by number of votes) of the Voting Equity Securities of the Borrower or (b) issue, sale, or other disposition of Voting Equity Securities of the General Partner which results in any Person or group of Persons acting in concert (other than any of AXA Financial, Inc. and its Subsidiaries, and any member of the AXA Group) beneficially owning or controlling, directly or indirectly, more than fifty percent (50%) (by number of votes) of the Voting Equity Securities of the General Partner.           Change of Control Date.  Any date upon which a Change of Control occurs.           Closing Date.  The date, not later than November 20, 2000, on which each of the conditions set forth in Section 10 is satisfied or waived.           Co-Agents.   Bank of America, The Chase Manhattan Bank and Deutsche Bank AG, New York and/or Cayman Islands Branches, acting as co-agents for the Banks.           Co-Agents Head Office.  In the case of Bank of America, 101 Tryon Street, Charlotte, North Carolina 28225, in the case of The Chase Manhattan Bank, 270 Park Avenue, 36th Floor, New York, New York 10017, and in the case of Deutsche Bank AG, New York and/or Cayman Islands Branches, 31 West 52nd Street, New York, New York 10019, or at such other location as any Co-Agent may designate in a written notice to the other parties hereto from time to time.           Code.  The Internal Revenue Code of 1986, as amended.           Commitment.  With respect to each Bank, the amount set forth on Schedule 1 hereto as the amount of such Bank’s obligation to make Loans to the Borrower and to participate in the issuance, extension, and renewal of Letters of Credit for the account of the Borrower, as the same may be reduced from time to time; or if such commitment is terminated pursuant to the provisions hereof, zero.           Commitment Percentage.  With respect to each Bank, the percentage set forth on Schedule 1 hereto as such Bank’s percentage of the aggregate Commitments of all of the Banks.           Consolidated or consolidated.  With reference to any term defined herein, shall mean that term as applied to the accounts of the Borrower and the Consolidated Subsidiaries, consolidated in accordance with GAAP.           Consolidated Adjusted Cash Flow.  As defined in Section 9.1.           Consolidated Adjusted Funded Debt.  As defined in Section 9.1.           Consolidated Net Income (or Loss).  The consolidated net income (or loss) of the Borrower, determined in accordance with GAAP, but excluding in any event:                               (a)      to the extent provided by Section 8.8, any portion of the net earnings of any Restricted Subsidiary that, by virtue of a restriction or Lien binding on such Restricted Subsidiary under a Contract or Government Mandate, is unavailable for payment of dividends to the Borrower or any other Restricted Subsidiary;                               (b)      earnings resulting from any reappraisal, revaluation, or write-up of assets; and                               (c)      any reversal of any contingency reserve, except to the extent that such provision for such contingency reserve shall have been made from income arising during the period subsequent to December 31, 1999, through the end of the period for which Consolidated Net Income (or Loss) is then being determined, taken as one accounting period.           Consolidated Net Worth.  The excess of Consolidated Total Assets over Consolidated Total Liabilities, less, to the extent otherwise includable in the computations of Consolidated Net Worth, any subscriptions receivable with respect to Equity Securities of the Borrower or its Consolidated Subsidiaries (with such adjustments as may be appropriate so as not to double count intercompany items).           Consolidated Subsidiaries.  At any point in time, the Subsidiaries of the Borrower that are consolidated with the Borrower for financial reporting purposes with respect to the fiscal period of the Borrower in which such point in time occurs.           Consolidated Total Assets.  All assets of the Borrower determined on a consolidated basis in accordance with GAAP.           Consolidated Total Liabilities.  All liabilities of the Borrower determined on a consolidated basis in accordance with GAAP.           Contracts.  Contracts, agreements, mortgages, leases, bonds, promissory notes, debentures, guaranties, Capitalized Leases, indentures, pledges, powers of attorney, proxies, trusts, franchises, or other instruments or obligations.           Conversion Request.  A notice given by the Borrower to the Administrative Agent of the Borrower’s election to convert or continue a Loan in accordance with Section 2.9.           Credit Agreement.  This Revolving Credit Agreement, including the Schedules and Exhibits hereto.           Default.  As defined in Section 12.           Distribution.  With respect to any Entity, the declaration or payment (without duplication) of any dividend or distribution on or in respect of any Equity Securities of such Entity, other than dividends payable solely in Equity Securities of such Entity that are not required to be classified as liabilities on the balance sheet of such Entity under GAAP; the purchase, redemption, or other retirement of any Equity Securities of such Entity, directly or indirectly through a Subsidiary of such Entity or otherwise; or the return of capital by such Entity to the holders of its Equity Securities as such.           Documentation Agent.  Deutsche Bank AG, New York and/or Cayman Islands Branches, acting as documentation agent.           Dollars or $.  Dollars in lawful currency of the United States of America.           Domestic Lending Office.  Initially, the office of each Bank designated as such in Schedule 1 hereto; thereafter, such other office of such Bank, if any, located within the United States that will be making or maintaining Federal Funds Rate Loans.           Drawdown Date.  The date on which any Loan is made or is to be made, and the date on which any Loan is converted or continued in accordance with Section 2.9.           EBITDA.  The Consolidated Net Income (or Loss) for any period, plus provision for any income taxes, interest (whether paid or accrued, but without duplication of interest accrued for previous periods), depreciation, or amortization for such period, in each case to the extent deducted in determining such Consolidated Net Income (or Loss).           Eligible Assignee.  Any of (a) a commercial bank or finance company organized under the laws of the United States, any State thereof, or the District of Columbia, and having total assets in excess of One Billion Dollars ($1,000,000,000); (b) a commercial bank organized under the laws of any other country that is a member of the Organization for Economic Cooperation and Development (the “OECD”), or a political subdivision of any such country, and having total assets in excess of One Billion Dollars ($1,000,000,000), provided that such bank is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD; and (c) the central bank of any country which is a member of the OECD.           Employee Benefit Plan.  Any employee benefit plan within the meaning of §3(2) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate, other than a Multiemployer Plan.           Entity.  Any corporation, partnership, trust, unincorporated association, joint venture, limited liability company, or other legal or business entity.           Environmental Laws.  As defined in Section 6.17(a).           Equity Securities.  With respect to any Entity, all equity securities of such Entity, including any (a) common or preferred stock, (b) limited or general partnership interests, (c) limited liability company member interests, (d) options, warrants, or other rights to purchase or acquire any equity security, or (e) securities convertible into any equity security.           ERISA.  The Employee Retirement Income Security Act of 1974, as amended.           ERISA Affiliate.  Any Person that is treated as a single employer together with the Borrower under §414 of the Code.           ERISA Reportable Event.  A reportable event with respect to a Guaranteed Pension Plan within the meaning of §4043 of ERISA and the regulations promulgated thereunder as to which the requirement of notice has not been waived.           Event of Default.  As defined in Section 12.           Federal Funds Rate. A simple interest rate equal to the sum of the Federal Funds Rate Basis plus the Applicable Margin.  The Federal Funds Rate shall be adjusted automatically as of the opening of business of the effective date of each change in the Federal Funds Rate Basis to account for such change.           Federal Funds Rate Basis. For any day, 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, as published for such day (or if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three funds brokers of recognized standing selected by the Administrative Agent.           Federal Funds Rate Loan.  A Loan which bears interest at the Federal Funds Rate.           Fully Effective.  With respect to any Contract, that (a) such Contract is the legal, valid, and binding obligation of the Borrower or its Subsidiary, as the case may be, enforceable against such party according to its terms, and (b) if such Contract exists on or before the date of this Credit Agreement, such Contract shall remain in full force and effect notwithstanding the execution and delivery of the Loan Documents and the consummation of the transactions contemplated by the Loan Documents.           Funded Debt.  With respect to the Borrower or any Consolidated Subsidiary, (a) all indebtedness for money borrowed of such Person, (b) every obligation of such Person in respect of Capitalized Leases, (c) all reimbursement obligations of such Person with respect to letters of credit, bankers’ acceptances, or similar facilities issued for the account of such Person, (d) Indebtedness that constitutes Funded Debt as provided in Section 8.1(d), and (e) all guarantees, endorsements, acceptances, and other contingent obligations of such Person, whether direct or indirect, in respect of indebtedness for borrowed money of others, including any obligation to supply funds to or in any manner to invest in, directly or indirectly, the debtor, to purchase indebtedness for borrowed money, or to assure the owner of indebtedness for borrowed money against loss, through an agreement to purchase goods, supplies, or services for the purpose of enabling the debtor to make payment of the indebtedness held by such owner or otherwise, provided, however, that each guaranty of Indebtedness of, keepwell obligation for, or obligation to make funds available for, any Consolidated Subsidiary that acts as general partner of one or more partnerships sponsored or established by the Borrower or any of its Subsidiaries shall constitute Funded Debt from and after such time as such guaranty, keepwell, or other obligation is no longer contingent, whereupon such guaranty, keepwell, or other obligation will constitute Funded Debt in an amount equal to the liability of such Person in respect of such guaranty, keepwell, or other obligation to the extent such guaranty, keepwell or other obligation is non–contingent.           General Partner.  (a) Alliance Capital Management Corporation, a Delaware corporation, in its capacity as general partner of the Borrower and (b) any other Persons who satisfy the requirements for admitting general partners without causing a Default or an Event of Default as set forth in Section 12.1(n) and who are so admitted, each in its capacity as a general partner of the Borrower, and their respective successors.           GAAP.  Subject to Section 7.13, (a) when used in Section 9, whether directly or indirectly through reference to a capitalized term used therein, means (i) principles that are consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, in effect for the fiscal year ended on December 31, 1999, and (ii) to the extent consistent with such principles, the accounting practices of the Borrower reflected in its consolidated financial statements for the year ended on December 31, 1999, and (b) when used in general, other than as provided above, means principles that are (i) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, as in effect from time to time and (ii) consistently applied with past financial statements of the Borrower adopting the same principles, provided that in each case referred to in this definition of “GAAP” a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in GAAP) as to financial statements in which such principles have been properly applied.           Government Authority.  The United States of America or any state, district, territory, or possession thereof, any local government within the United States of America or any of its territories and possessions, any foreign government having appropriate jurisdiction or any province, territory, or possession thereof, or any court, tribunal, administrative or regulatory agency, taxing or revenue authority, central bank or banking regulatory agency, commission, or body of any of the foregoing.           Government Mandate.  With respect to (a) any Person, any statute, law, rule, regulation, code, or ordinance duly adopted by any Government Authority, any treaty or compact between two (2) or more Government Authorities, and any judgment, order, decree, ruling, finding, determination, or injunction of any Government Authority, in each such case that is, pursuant to appropriate jurisdiction, legally binding on such Person, any of its Subsidiaries or any of their respective properties, and (b) the Administrative Agent, any Co-Agent or any Bank, in addition to subsection (a) hereof, any policy, guideline, directive, or standard duly adopted by any Government Authority with respect to the regulation of banks, monetary policy, lending, investments, or other financial matters.           Guaranteed Pension Plan.  Any employee pension benefit plan within the meaning of §3(2) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate the benefits of which are guaranteed on termination in full or in part by the PBGC pursuant to Title IV of ERISA, other than a -Multiemployer Plan.           Hazardous Substances.  As defined in Section 6.17(b).           Indebtedness.  All obligations, contingent and otherwise, that in accordance with GAAP should be classified upon the obligor’s balance sheet as liabilities, or to which reference should be made by footnotes thereto in accordance with GAAP, including: (a) all debt and similar monetary obligations, whether direct or indirect; (b) all liabilities secured by any Lien existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed; (c) all obligations in respect of hedging contracts, including, without limitation, interest rate and currency swaps, caps, collars and other financial derivative products; and (d) all guarantees, endorsements, and other contingent obligations whether direct or indirect in respect of indebtedness of others, including any obligation to supply funds to or in any manner to invest in, directly or indirectly, the debtor, to purchase indebtedness, or to assure the owner of indebtedness against loss, through an agreement to purchase goods, supplies, or services for the purpose of enabling the debtor to make payment of the indebtedness held by such owner or otherwise, and the obligations to reimburse the issuer in respect of any letters of credit.           Interest Payment Date.  (a) As to any Federal Funds Rate Loan, the last day of each calendar quarter during all or a portion of which such Federal Funds Rate Loan is outstanding and the maturity of such Federal Funds Rate Loan; (b) as to any LIBOR Loan, the last day of each Interest Period with respect to such LIBOR Loan, the maturity of such LIBOR Loan, and, if the Interest Period of such LIBOR Loan is longer than three (3) months, the date that is three (3) months from the first day of such Interest Period and the last day of each successive three (3) month period during such Interest Period.           Interest Period. With respect to any LIBOR Loan, (a) initially, the period commencing on the Drawdown Date of such Loan and ending on the last day of, as selected by the Borrower in a Loan Request, one (1), two (2), or three (3) weeks, or one (1), two (2), three (3), four (4), five (5), or six (6) months, if available in readily ascertainable markets; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Loan and ending on the last day of one of the periods set forth above, as selected by the Borrower in a Conversion Request; provided that all of the foregoing provisions relating to Interest Periods are subject to the following:                     (i)       if any Interest Period for a LIBOR Loan would otherwise end on a day that is not a LIBOR Business Day, that Interest Period shall be extended to the next succeeding LIBOR 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 LIBOR Business Day; and                     (ii)      any Interest Period commencing prior to the Maturity Date that would otherwise extend beyond the Maturity Date shall end on the Maturity Date.           Investments.  All expenditures made and all liabilities incurred (contingently or otherwise) for the acquisition of Equity Securities or Funded Debt of, or for loans, advances, or capital contributions, or in respect of any guaranties (or other commitments as described under Indebtedness) of, any Person.  In determining the aggregate amount of Investments outstanding at any particular time: (a) the amount of any Investment represented by a guaranty shall be taken at not less than the principal amount of the obligations guaranteed and still outstanding and the amount of Indebtedness represented by a keepwell obligation shall be taken at not less than the maximum amount of the keepwell obligation, as the case may be; (b) there shall be deducted in respect of each such Investment any amount received as a return of capital; (c) there shall not be deducted in respect of any Investment any amounts received as earnings on such Investment, whether as dividends, interest, or otherwise; and (d) there shall not be added to or deducted from the aggregate amount of Investments any increase or decrease in the value thereof.  For purposes of determining the amount of Investments by the Borrower and the Consolidated Subsidiaries outstanding at any time, investments (defined as aforesaid) by an Unrestricted Subsidiary in an Entity that is not a Subsidiary of the Borrower shall not be counted as Investments hereunder to the extent that they do not exceed the aggregate amount of Investments by the Borrower and the Consolidated Subsidiaries in such Unrestricted Subsidiary.           Letter of Credit.  As defined in Section 4.1.1.                     Letter of Credit Application.  As defined in Section 4.1.1.                     Letter of Credit Commitment.  As defined in Section 4.1.1.                     Letter of Credit Fee.  As defined in Section 4.6.                     Letter of Credit Participation.  As defined in Section 4.1.1.           LIBOR Business Day.  Any day on which commercial banks are open for international business (including dealings in Dollar deposits) in London, England.           LIBOR Lending Office.  Initially, the office of each Bank designated as such in Schedule 1 hereto; thereafter, such other office of such Bank, if any, that shall be making or maintaining LIBOR Loans.           LIBOR Loan.  A Loan which bears interest at the LIBOR Rate.           LIBOR Rate. A simple per annum interest rate equal to the sum of (a) the quotient of (i) the LIBOR Rate Basis divided by (ii) one minus the LIBOR Reserve Percentage, stated as a decimal, plus (b) the Applicable Margin.  The LIBOR Rate shall be rounded upward to four decimal places and shall apply to the applicable Interest Period, and, once determined, shall be subject to the provisions of this Credit Agreement and shall remain unchanged during the applicable Interest Period, except for changes to reflect adjustments in the LIBOR Reserve Percentage.           LIBOR Rate Basis.  For any Interest Period, the interest rate per annum equal to the offered rate for deposits in United States dollars (rounded to four decimal places) in amounts comparable to the principal amount of, and for a length of time comparable to and commencing on the first day of the Interest Period for, the LIBOR Loan to be made by the Banks, which interest rate appears on Telerate Page 3750 as of 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period; provided, however, that (i) if more than one such offered rate appears on Telerate Page 3750, the LIBOR Rate Basis shall be the arithmetic average (rounded to four decimal places) of such offered rates, or (ii) if no such offered rates appear on such page, the LIBOR Rate Basis shall be the interest rate per annum (rounded to four decimal places) at which United States dollar deposits are offered to the Administrative Agent in the London interbank borrowing market at approximately 9:00 a.m. (Charlotte, North Carolina time) on the date two (2) Business Days prior to the first day of such Interest Period in an amount comparable to and commencing on the first day of the principal amount of, and for a length of time comparable to the Interest Period for, the LIBOR Loan to be made by the Banks.           LIBOR Reserve Percentage.  The percentage which is in effect from time to time under Regulation D of the Board of Governors of the Federal Reserve System, as such regulation may be amended from time to time, as the actual reserve requirement applicable with respect to Eurocurrency Liabilities (as that term is defined in Regulation D), to the extent that any Lender has any Eurocurrency Liabilities subject to such reserve requirement at that time. The LIBOR Rate for any LIBOR Loan shall be adjusted as of the effective date of any change in the LIBOR Reserve Percentage.           Lien.  Any lien, mortgage, security interest, pledge, charge, beneficial or equitable interest or right, hypothecation, collateral assignment, easement, or other encumbrance.           Loan Documents.  This Credit Agreement, the Notes, the Letter of Credit Applications, the Letters of Credit, any Assumption Agreements and any instrument or document designated by the parties thereto as a “Loan Document” for purposes hereof.           Loan Request.  As defined in Section 2.7.           Loans.  Revolving credit loans made or to be made by the Banks to the Borrower pursuant to Section 2.           Majority Banks.  The Banks whose aggregate Commitments constitute at least sixty-six and two thirds percent (66-2/3%) of the Total Commitment.           Mandatory Borrowing.  As defined in Section 2.12.           Material Effect.  A material adverse effect on (a) the ability of the Borrower or any Other Obligor to enter into and to perform and observe its Obligations under the Loan Documents, or (b) the Business of the Borrower and its Consolidated Subsidiaries taken as a whole.           Material Subsidiary.  Any Subsidiary of the Borrower, any Other Obligor, or Alliance Distributors that, singly or together with any other such Subsidiaries then subject to one or more of the conditions described in Section 12.1(h), Section 12.1(i), or Section 12.1(m), either (a) at the date of determination owns Significant Assets, or (b) has total assets as of the date of determination equal to not less than five percent (5%) of the Consolidated Total Assets of the Borrower as set forth in the consolidated balance sheet of the Borrower included in the most recent available annual or quarterly report of the Borrower.           Maturity Date.  October 30, 2002.           Maximum Drawing Amount.  The maximum aggregate amount from time to time that the beneficiaries may draw under outstanding Letters of Credit, as such aggregate amount may be reduced from time to time pursuant to the terms of the Letters of Credit.           Moody’s Rating.  With respect to any Entity which is the issuer or obligor with respect to commercial paper, the rating assigned to such entity by Moody’s Investors Service, Inc. from time to time in effect.           Multiemployer Plan.  Any multiemployer plan within the meaning of §3(37) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate.           1940 Act.  The Investment Company Act of 1940, as amended.           Notes.  The Notes of the Borrower to the Banks in respect of the Borrower’s Obligations under this Credit Agreement of even date herewith, substantially in the form of Exhibit B, as amended, modified and renewed from time to time.           Obligations.  All indebtedness, obligations, and liabilities of any of the Borrower, its Subsidiaries, and Other Obligors to any of the Banks, any Co-Agent and the Administrative Agent, individually or collectively, existing on the date of this Credit Agreement or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising or incurred under this Credit Agreement or any of the other Loan Documents or in respect of any of the Loans made or Reimbursement Obligations incurred or any of the Notes, Letter of Credit Applications, Letters of Credit or other instruments at any time evidencing any thereof.           Other Obligor.  As defined in the Assumption Agreements.           Outstanding.  With respect to the Loans, the aggregate unpaid principal thereof as of any date of determination.           PBGC.  The Pension Benefit Guaranty Corporation created by §4002 of ERISA and any successor entity or entities having similar responsibilities.           Permits.  Permits, licenses, franchises, patents, copyrights, trademarks, trade names, approvals, clearances, and applications for or rights in respect of the foregoing of any Government Authority.           Permitted Acquisitions.  Acquisitions permitted under clauses (a) through (f) of Section 8.3.           Permitted Liens.  Liens permitted by Section 8.4.           Person.  Any individual, Entity, or Government Authority.           Proceedings.  Any (a) actions at law, (b) suits in equity, (c) bankruptcy, insolvency, receivership, dissolution, or reorganization cases or proceedings, (d) administrative or regulatory hearings or other proceedings, (e) arbitration and mediation proceedings, (f) criminal prosecutions, (g) judgment levies, foreclosure proceedings, pre-judgment security procedures, or other enforcement actions, and (h) other litigation, actions, suits, and proceedings conducted by, before, or on behalf of any Government Authority.           Readily Marketable Securities.  Equity Securities or Indebtedness for which an established public or private trading market exists, such that they may reasonably be expected to be liquidated within five (5) Business Days.           Real Estate.  All real property at any time owned or leased (as lessee or sublessee) by the Borrower or any of its Subsidiaries.           Record.  The grid attached to a Note, or the continuation of such grid, or any other similar record, including computer records, maintained by any Bank with respect to any Loan referred to in such Note.           Reimbursement Obligation.  The Borrower’s obligation to reimburse the Co-Agents and the Banks on account of any drawing under any Letter of Credit as provided in Section 4.2.           Reorganization and Reorganize.  As defined in Section 8.2.           Restricted Subsidiary.  Each (a) Subsidiary of the Borrower designated as a “Restricted Subsidiary” on Schedule 6.18 (and by such designation the Borrower represents and warrants to the Administrative Agent, the Co-Agents and the Banks that such Subsidiary meets the qualifications of a Restricted Subsidiary as specified in this definition), and (b) other Subsidiary of the Borrower that the principal financial or accounting officer or treasurer of the Borrower may after the date of this Credit Agreement certify to the Administrative Agent, the Co-Agents and the Banks meets the qualifications of a Restricted Subsidiary as specified in this definition (and at the time of any such certification the Borrower shall provide the Administrative Agent and the Banks with a current list of all Restricted Subsidiaries).  The qualifications of a Restricted Subsidiary are as follows: (a) at least fifty-one percent (51%) of the issued and outstanding Equity Securities of a Restricted Subsidiary shall be owned of record and beneficially by the Borrower or one or more other Restricted Subsidiaries free of Liens other than Permitted Liens, and (b) no Restricted Subsidiary shall be a general partner of any partnership, be a party to any joint venture in respect of which liability is not limited to the amount of such Restricted Subsidiary’s capital contribution or other equity investment, or have any contingent obligations established by Contract in respect of Funded Debt that are not by their terms limited to a specific dollar amount; provided, however, that, notwithstanding the foregoing, a Restricted Subsidiary may be a general partner in a partnership which is wholly owned by the Borrower or one or more other Restricted Subsidiaries.           Significant Assets.  At the date of any sale, transfer, assignment, or other disposition of assets of the Borrower or any of its Subsidiaries (or as of the date of any Default or Event of Default), assets of the Borrower or any of its Subsidiaries (including Equity Securities of Subsidiaries of the Borrower) which generated thirty-three and one-third percent (33 1/3%) or more of the consolidated revenues of the Borrower during the four (4) fiscal quarters of the Borrower most recently ended (the “Measuring Period”), provided that assets of the Borrower or any of its Subsidiaries (including Equity Securities of Subsidiaries of the Borrower) which do not meet the definition of Significant Assets in the first part of this sentence shall nonetheless be deemed to be Significant Assets if such assets generated revenues for the Measuring Period that if subtracted from the consolidated revenues of the Borrower for the Measuring Period would result in consolidated revenues of the Borrower for the Measuring Period of less than $400,000,000.           S&P Rating.  With respect to any Entity which is the issuer or obligor with respect to commercial paper, the rating assigned to such entity by Standard & Poor’s Ratings Group from time to time in effect.           Subsidiary.  Any Entity of which the designated parent shall at any time own directly or indirectly through a Subsidiary or Subsidiaries at least a majority (by number of votes) of the outstanding Voting Equity Securities.           Syndication Agent.  The Chase Manhattan Bank, acting as syndication agent.           Total Commitment.  The sum of the Commitments of the Banks, as in effect from time to time.  As of the Closing Date the Total Commitment is $250,000,000.           12b-1 Fees.  All or any portion of (a) the compensation or fees paid, payable, or expected to be payable to the Borrower or any of its Subsidiaries for acting as the distributor of securities as permitted under Rule 12b-l under the 1940 Act, (b) the contingent deferred sales charges or redemption fees paid, payable, or expected to be paid to the Borrower or any of its Subsidiaries, and (c) any right, title, or interest in or to any such compensation or fees.           Type.  As to any Loan, its nature as a Federal Funds Rate Loan or LIBOR Loan, as the case may be.           Uniform Customs.  With respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, or any successor version thereof adopted by any of the Co-Agents in the ordinary course of its business as a letter of credit issuer, upon notice to the Borrower, and in effect at the time of issuance of such Letter of Credit.           Units.  Units representing assignments of beneficial ownership of limited partnership interests in the Borrower.           Unpaid Reimbursement Obligation.  Any Reimbursement Obligation for which the Borrower does not reimburse the Co-Agents and the Banks on the date specified in, and in accordance with, Section 4.2 and that is not covered by a Loan as provided in Section 2.8.           Unrestricted Subsidiary.  A Subsidiary that is not a Restricted Subsidiary.           Voting Equity Securities.  Equity Securities of any class or classes (however designated), the holders of which are at the time entitled, as such holders, to vote for the election of a majority of the directors (or persons performing similar functions) of the Entity that issued such Equity Securities.           1.2     Rules of Interpretation.                     (a)      A reference to any Contract or other document shall include such Contract or other document as amended, modified, or supplemented from time to time in accordance with its terms and the terms of this Credit Agreement.                     (b)      The singular includes the plural and the plural includes the singular.                     (c)      A reference to any Government Mandate includes any amendment or modification to such Government Mandate or any successor Government Mandate.                     (d)      A reference to any Person includes its permitted successors and permitted assigns.  Without limiting the generality of the foregoing, a reference to any Bank shall include any Person that succeeds generally to its assets and liabilities.                     (e)      Accounting terms not otherwise defined herein have the meanings assigned to them by GAAP.                     (f)       The words “include”, “includes”, and “including” are not limiting.                     (g)      All terms not specifically defined herein or by GAAP, which terms are defined in the Uniform Commercial Code as in effect in The State of New York, have the meanings assigned to them therein.                     (h)      Reference to a particular “§”, Section, Schedule, or Exhibit refers to that Section, Schedule, or Exhibit of this Credit Agreement unless otherwise indicated.                     (i)       The words “herein”, “hereof”, and “hereunder” and words of like import shall refer to this Credit Agreement as a whole and not to any particular section or subdivision of this Credit Agreement. 2.       THE REVOLVING CREDIT FACILITY           2.1     Commitment to Lend                     (a)      Subject to the terms and conditions set forth in Section 11 hereof, each of the Banks severally shall lend to the Borrower, and the Borrower may borrow, repay, and reborrow from time to time between the Closing Date and the Maturity Date upon notice by the Borrower to the Administrative Agent given in accordance with Section 2.7, such sums as are requested by the Borrower up to a maximum aggregate principal amount outstanding (after giving effect to all amounts requested) at any one time equal to such Bank’s Commitment minus an amount equal to such Bank’s Commitment Percentage multiplied by the sum of the Maximum Drawing Amount and all Unpaid Reimbursement Obligations, provided that the sum of (i) the outstanding amount of the Loans (after giving effect to all amounts requested) plus (ii) the Maximum Drawing Amount plus (iii) all Unpaid Reimbursement Obligations shall not at any time exceed the Total Commitment.  The Loans shall be made pro rata in accordance with each Bank’s Commitment Percentage; provided that the failure of any Bank to lend in accordance with this Credit Agreement shall not release any other Bank or the Administrative Agent from their obligations hereunder, nor shall any Bank have any responsibility or liability in respect of a failure of any other Bank to lend in accordance with this Credit Agreement.  Each request for a Loan and each borrowing hereunder shall constitute a representation and warranty by the Borrower that the conditions set forth in Section 11 have been satisfied on the date of such request.                     (b)      In the event that, at any time when the conditions precedent for any Loan have been satisfied, a Bank or the Administrative Agent, as the case may be, fails or refuses to fund its portion of such Loan, then, until such time as such Bank or the Administrative Agent, as the case may be, has funded its portion of such Loan, or all of the other Banks and/or the Administrative Agent, as the case may be, have received payment in full of the principal and interest due in respect of such Loan, such non-funding Bank or Administrative Agent, as the case may be, shall not have the right to receive payment of any principal, interest or fees from the Borrower in respect of its Loans.           2.2     Facility Fee.  The Borrower shall pay to the Administrative Agent for the accounts of the Banks in accordance with their respective Commitment Percentages a facility fee on the daily average amount of the Total Commitment as of the most recently completed calendar quarter calculated at the rate per annum, on the basis of a 360-day year for the actual number of days elapsed, as determined in accordance with the chart below with respect to the Borrower’s commercial paper rating as of the last Business Day of each calendar quarter.  The facility fee shall be payable quarterly in arrears on the first Business Day of each calendar quarter for the immediately preceding calendar quarter commencing on the first such date following the date hereof, with a final payment on the Maturity Date or any earlier date on which the Total Commitment shall terminate.  In no case shall any portion of the facility fee be refundable.           The facility fee shall be calculated based upon the Borrower’s S&P Rating and Moody’s Rating in effect as of any date of determination as follows:   Borrower’s S&P Rating/Moody’s Rating Facility Fee A-1+/P-1 0.080% A-1/P-1 0.090% A-1/P-2 or A-2/P-1 0.125% A-2/P-2 0.150% Less than A-2/P-2 0.200% Notwithstanding the foregoing, if the Borrower loses both its Moody’s Rating, and its S&P Rating at any time, the facility fee shall be 0.200%.  If, subsequent to losing such ratings, the Borrower is able to again obtain such ratings, the above table shall, from and after the date of such occurrence (until such time, if any, that the Borrower again loses such ratings), govern the facility fee.           2.3     Utilization Fee.  For any calendar quarter in which the sum of (i) the average aggregate daily outstanding balance of the Loans plus (ii) the average aggregate Maximum Drawing Amount of all Letters of Credit outstanding plus (iii) the average aggregate daily outstanding balance of Unpaid Reimbursement Obligations (to the extent not included under (i) or (ii)) is greater than 33 1/3% but less than 66 2/3% of the daily average amount of the Total Commitment for such quarter, the Borrower shall pay to the Administrative Agent for the accounts of the Banks in accordance with their respective Commitment Percentages, a utilization fee calculated at a rate per annum equal to 0.100% of the sum of (i) the average aggregate outstanding amount of the Loans during such calendar quarter plus (ii) the average aggregate Maximum Drawing Amount of all Letters of Credit outstanding during such quarter plus (iii) the average aggregate daily outstanding balance of Unpaid Reimbursement Obligations during such quarter (to the extent not included under (i) or (ii)).  For any calendar quarter in which the sum of (i) the average aggregate daily outstanding balance of the Loans plus (ii) the average aggregate Maximum Drawing Amount of all Letters of Credit outstanding plus (iii) the average aggregate daily outstanding balance of Unpaid Reimbursement Obligations (to the extent not included under (i) or (ii)) is greater than or equal to 66 2/3% of the daily average amount of the Total Commitment for such quarter, the Borrower shall pay to the Administrative Agent for the accounts of the Banks in accordance with their respective Commitment Percentages, a utilization fee calculated at a rate per annum equal to 0.200% of the sum of (i) the average aggregate outstanding amount of the Loans during such calendar quarter plus (ii) the average aggregate Maximum Drawing Amount of all Letters of Credit outstanding plus (iii) the average aggregate daily outstanding balance of Unpaid Reimbursement Obligations (to the extent not included under (i) or (ii)).  The utilization fee shall be payable on the earlier of five (5) Business Days after the end of any calendar quarter in which such fee shall be due and owing in accordance with this Section 2.3 or the Maturity Date or any earlier date on which the Total Commitment shall terminate.  In no case shall any portion of the utilization fee be refundable.           2.4     Reduction of Total Commitment .  The Borrower shall have the right at any time and from time to time upon three (3) Business Days’ prior written notice to the Administrative Agent to reduce by at least $1,000,000 or integral multiples of $1,000,000 in excess thereof, or to terminate entirely, the unborrowed portion of the Total Commitment, whereupon the Commitments of the Banks shall be reduced pro rata in accordance with their respective Commitment Percentages of the amount specified in such notice or, as the case may be, terminated.  Promptly after receiving any notice of the Borrower delivered pursuant to this Section 2.4, the Administrative Agent will notify the Banks of the substance thereof.  Upon the effective date of any such reduction or termination, the Borrower shall pay to the Administrative Agent for the respective accounts of the Banks the full amount of any facility fee then accrued on the amount of the reduction.  No reduction or termination of the Commitments may be reinstated.           2.5     The Notes.  The Loans shall be evidenced by separate promissory notes of the Borrower in substantially the form of Exhibit B hereto (each a “Note”), dated as of the Closing Date and completed with appropriate insertions. One Note shall be payable to the order of each Bank in a principal amount equal to such Bank’s Commitment or, if less, the outstanding amount of all Loans made by such Bank, plus interest accrued thereon, as set forth below.  The Borrower irrevocably authorizes each Bank to make or cause to be made, at or about the time of the Drawdown Date of any Loan or at the time of receipt of any payment of principal on such Bank’s Note, an appropriate notation on such Bank’s Record reflecting the making of such Loan or (as the case may be) the receipt of such payment.  The outstanding amount of the Loans set forth on such Bank’s Record shall be prima facie evidence of the principal amount thereof owing and unpaid to such Bank, but the failure to record, or any error in so recording, any such amount on such Bank’s Record shall not limit or otherwise affect the obligations of the Borrower hereunder or under any Note to make payments of principal of or interest on any Note when due.           2.6     Interest on Loans.                     2.6.1  Interest Rates.  Except as otherwise provided in Section 5.10, the Loans shall bear interest as follows:                     (a)      Each Federal Funds Rate Loan shall bear interest at an annual rate equal to the Federal Funds Rate as in effect from time to time while such Federal Funds Rate Loan is outstanding.                     (b)      Each LIBOR Loan shall bear interest for each Interest Period at an annual rate equal to the LIBOR Rate for such Interest Period in effect from time to time during such Interest Period.                     2.6.2  Interest Payment Dates.  The Borrower shall pay all accrued interest on each Loan in arrears on each Interest Payment Date with respect thereto.           2.7     Requests for Loans.  The Borrower shall give to the Administrative Agent written notice in the form of Exhibit C hereto (or telephonic notice confirmed in a writing in the form of Exhibit D hereto) of each Loan requested hereunder (a “Loan Request”) no later than (a) 11:00 a.m. (Charlotte, North Carolina time) on the proposed Drawdown Date of any Federal Funds Rate Loan and (b) two (2) LIBOR Business Days prior to the proposed Drawdown Date of any LIBOR Loan.  Each such notice shall specify (i) the principal amount of the Loan requested, (ii) the proposed Drawdown Date of such Loan, (iii) the Type of such Loan, and (iv) the Interest Period for such Loan if such Loan is a LIBOR Loan.  Promptly upon receipt of any such Loan Request, the Administrative Agent shall notify each of the Banks thereof.  Each Loan Request shall be irrevocable and binding on the Borrower and shall obligate the Borrower to accept the Loan requested from the Banks on the proposed Drawdown Date.  Each Loan Request shall be in a minimum aggregate amount of $1,000,000 or in an integral multiple of $1,000,000 in excess thereof.           2.8     Loans to Cover Reimbursement Obligations .  Notwithstanding the notice and minimum amount requirements set forth in Section 2.7, the Banks shall, according to their Commitment Percentages and subject to the satisfaction of the conditions set forth herein, make Loans to the Borrower as provided in Section 2.10.1 on the date that any draft presented under any Letter of Credit is honored by any Co-Agent, or any date on which any Co-Agent otherwise makes a payment with respect thereto, in an amount sufficient to pay in full the obligations of the Borrower under Section 4.2 in respect of the honor of such draft or the making of such payment.  The Borrower hereby requests and authorizes the Banks to make from time to time such Loans.  The Borrower acknowledges and agrees that the making of such Loans shall, in each case, be subject in all respects to the provisions of this Credit Agreement as if they were Loans covered by a Loan Request, including the limitations set forth in Section 2.1 and the requirement that the applicable provisions of Sections 10 and 11 be satisfied.  Each Co-Agent may (but shall not be required to) assume that each Bank will make available to it on a timely basis funds for any Loan under this Section 2.8 and each Bank shall reimburse such Co-Agent for any such amounts so advanced on its behalf, all on the terms and conditions set forth in Section 2.10.2.  Absent manifest error on the part of such Co-Agent or the Banks, all actions taken by such Co-Agent or the Banks pursuant to the provisions of this Section 2.8 shall be conclusive and binding on the Borrower.  Loans made pursuant to this Section 2.8 shall be Federal Funds Rate Loans until converted in accordance with the provisions of this Credit Agreement.           2.9     Conversion Options.                     2.9.1  Conversion to LIBOR Loan.  The Borrower may elect from time to time, subject to Section 2.11, to convert any outstanding Federal Funds Rate Loan to a LIBOR Loan, provided that (a) the Borrower shall give the Administrative Agent at least two (2) LIBOR Business Days’ prior written notice of such election; and (b) no Federal Funds Rate Loan may be converted into a LIBOR Loan when any Default or Event of Default has occurred and is continuing.  Each notice of election of such conversion, and each acceptance by the Borrower of such conversion, shall be deemed to be a representation and warranty by the Borrower that no Default or Event of Default has occurred and is continuing.  The Administrative Agent shall notify the Banks promptly of any such notice.  On the date on which such conversion is being made, each Bank shall take such action as is necessary to transfer its Commitment Percentage of such Loans to its LIBOR Lending Office.  All or any part of outstanding Federal Funds Rate Loans may be converted into a LIBOR Loan as provided herein, provided that any partial conversion shall be in an aggregate principal amount of $1,000,000 or an integral multiple of $1,000,000 in excess thereof.                     2.9.2  Continuation of Type of Loan.                     (a)      All Federal Funds Rate Loans shall continue as Federal Funds Rate Loans until converted into LIBOR Loans as provided in Section 2.9.1.                     (b)      Any LIBOR Loan may, subject to Section 2.11, be continued, in whole or in part, as a LIBOR Loan upon the expiration of the Interest Period with respect thereto, provided that (i) the Borrower shall give the Administrative Agent at least two (2) LIBOR Business Days’ prior written notice of such election; (ii) no LIBOR Loan may be continued as such when any Default or Event of Default has occurred and is continuing, but shall be automatically converted to a Federal Funds Rate Loan on the last day of the first Interest Period relating thereto ending during the continuance of any Default or Event of Default; and (iii) any partial continuation of a LIBOR Loan shall be in an aggregate principal amount of $1,000,000 or an integral multiple of $1,000,000 in excess thereof.  Each notice of election of such continuance of a LIBOR Loan, and each acceptance by the Borrower of such continuance, shall be deemed to be a representation and warranty by the Borrower that no Default or Event of Default has occurred and is continuing.                     (c)      If the Borrower shall fail to give any notice of continuation of a LIBOR Loan as provided under this Section 2.9.2, the Borrower shall be deemed to have requested a conversion of the affected LIBOR Loan to a Federal Funds Rate Loan on the last day of the then current Interest Period with respect thereto.                     (d)      The Administrative Agent shall notify the Banks promptly when any such continuation or conversion contemplated by this Section 2.9.2 is scheduled to occur.  On the date on which any such continuation or conversion is to occur, each Bank shall take such action as is necessary to transfer its Commitment Percentage of such Loans to its Domestic Lending Office or its LIBOR Lending Office as appropriate.                     2.9.3  LIBOR Loans.  Any conversion to or from LIBOR Loans shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of all LIBOR Loans having the same Interest Period shall not be less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof.                     2.9.4  Conversion Requests.  All notices of the conversion or continuation of a Loan provided for in this Section 2.9 shall be in writing in the form of Exhibit E hereto (or shall be given by telephone and confirmed by a writing in the form of Exhibit F hereto).  Each such notice shall specify (a) the principal amount and Type of the Loan subject thereto, (b) the date on which the current Interest Period of such Loan ends if such Loan is a LIBOR Loan, and (c) the new Interest Period for such Loan if such Loan is a LIBOR Loan. Promptly upon receipt of any such notice, the Administrative Agent shall notify each of the Banks thereof.  Each such notice shall be irrevocable and binding on the Borrower.           2.10   Funds for Loans.                     2.10.1           Funding Procedures.  Not later than 1:00 p.m. (Charlotte, North Carolina time) on the proposed Drawdown Date of any Loan or the Drawdown Date of any Loan under Section 2.8, each of the Banks will make available to the Administrative Agent, at the Administrative Agent’s Head Office, in immediately available funds, the amount of such Bank’s Commitment Percentage of the amount of the requested Loan.  Upon receipt from each Bank of such amount, and upon receipt of the documents required by Section 11 and the satisfaction of the other conditions set forth therein, to the extent applicable, the Administrative Agent will make available to the Borrower the aggregate amount of such Loan made available to the Administrative Agent by the Banks.  The failure or refusal of any Bank to make available to the Administrative Agent at the aforesaid time and place on any Drawdown Date the amount of its Commitment Percentage of the requested Loan shall not relieve any other Bank from its several obligation hereunder to make available to the Administrative Agent the amount of such other Bank’s Commitment Percentage of any requested Loan, but no other Bank shall be liable in respect of the failure of such Bank to make available such amount.                     2.10.2           Advances by Administrative Agent.  The Administrative Agent may, unless notified to the contrary by any Bank prior to a Drawdown Date, assume that such Bank has made available to the Administrative Agent on such Drawdown Date the amount of such Bank’s Commitment Percentage of the Loans to be made on such Drawdown Date, and the Administrative Agent may (but it shall not be required to), in reliance upon such assumption, make available to the Borrower a corresponding amount.  If any Bank makes available to the Administrative Agent such amount on a date after such Drawdown Date, such Bank shall pay to the Administrative Agent on demand an amount equal to the weighted average interest rate paid by the Administrative Agent for federal funds acquired by the Administrative Agent during each day included in such period, times the amount of such Bank’s Commitment Percentage of such Loans calculated on the basis of a 360-day year for the actual number of days elapsed.  A statement of the Administrative Agent submitted to such Bank with respect to any amounts owing under this paragraph shall be prima facie evidence of the amount due and owing to the Administrative Agent by such Bank.  If the amount of such Bank’s Commitment Percentage of such Loans is not made available to the Administrative Agent by such Bank within three (3) Business Days following such Drawdown Date, the Administrative Agent shall be entitled to recover such amount from the Borrower within one (1) Business Day after demand therefor, with interest thereon at the rate per annum applicable to the Loans made on such Drawdown Date.           2.11   Limit on Number of LIBOR Loans.   At no time shall there be outstanding LIBOR Loans having more than twenty-five (25) different Interest Periods. 3.       REPAYMENT OF LOANS.           3.1     Maturity.  The Borrower shall pay on the Maturity Date, and there shall become absolutely due and payable on the Maturity Date, all of the Loans outstanding on such date, together with any and all accrued and unpaid interest thereon. The Commitment shall terminate on the Maturity Date.           3.2     Mandatory Repayments of Loans.                     3.2.1  Loans in Excess of Commitment.  If at any time the sum of the outstanding amount of the Loans, the Maximum Drawing Amount and all Unpaid Reimbursement Obligations exceeds the Total Commitment, then the Borrower shall immediately pay the amount of such excess to the Administrative Agent for application first, to any Unpaid Reimbursement Obligations; second, to the Loans; and third, to provide the Administrative Agent cash collateral for Reimbursement Obligations as contemplated by Sections 4.2(b) and (c).  Each payment of any Unpaid Reimbursement Obligations or prepayment of Loans shall be allocated among the Banks in proportion, as nearly as practicable, to each Reimbursement Obligation or (as the case may be) the respective unpaid principal amount of each Bank’s Note, with adjustments to the extent practicable to equalize any prior payments or repayments not exactly in proportion.                     3.2.2  Change of Control.  Upon the occurrence of a Change of Control or impending Change of Control:                     (a)      the Borrower shall notify the Administrative Agent and each Bank of such Change of Control or impending Change of Control as provided in Section 7.5.4;                     (b)      the Commitments (but not the right of the Borrower to convert and continue Types of Loans under Section 2.9) shall be suspended for the period from the date of such notice (or any Change of Control Notice given by the Administrative Agent or a Bank as provided in Section 7.5.4) through the later to occur of (i) the Change of Control Date or (ii) the date forty (40) days after the date of such notice from the Borrower (the “Suspension Period”) and neither the Banks nor the Administrative Agent shall have any obligations to make Loans to the Borrower;                     (c)      each Bank shall have the right within fifteen (15) days after the date of such Bank’s receipt of a Change of Control Notice under clause (a) above to demand payment in full of its pro rata share of the outstanding principal of all Loans, Unpaid Reimbursement Obligations, all accrued and unpaid interest thereon, and any other amounts owing under the Loan Documents, as well as payment of cash collateral for such Bank’s Letter of Credit Participation, as more particularly described in clause (e) below;                     (d)      in the event that any Bank shall have made a demand under clause (c) above the Borrower shall promptly, but in no event later than five (5) Business Days after such demand, deliver notice to each Bank (which notice shall identify the Bank making such demand) and, notwithstanding the provisions of clause (c) above, the right of each Bank to demand repayment shall remain in effect through the fifteenth (15th) day next succeeding receipt by such Bank of any notice required to be given pursuant to this clause (d), provided that the provisions of this clause (d) shall only apply with respect to demands given by Banks prior to the expiration of the period specified in clause (c); and                     (e)      in the event any Bank makes a demand under clause (c) or clause (d) above, the Borrower shall on the last day of the Suspension Period pay to the Administrative Agent for the credit of such Bank its pro rata share of the outstanding principal of all Loans, all accrued and unpaid interest thereon, any Unpaid Reimbursement Obligations and any other amounts owing under the Loan Documents, (provided that (i) any Bank may require the Borrower to postpone prepayment of a LIBOR Loan until the last day of the Interest Period with respect to such LIBOR Loan, and (ii) if any Bank elects to require prepayment of a LIBOR Loan that has an Interest Period ending less than sixty (60) days after the date of such demand on a date that is not the last day of the Interest Period for such LIBOR Loan, such Bank shall not be entitled to receive any amounts payable under Section 5.9 in respect of the prepayment of such LIBOR Loan) and the Borrower shall on the last day of the Suspension Period pay to the Administrative Agent an amount equal to such Bank’s pro rata share of the then Maximum Drawing Amount on all Letters of Credit, which amount shall be held by the Administrative Agent as cash collateral for the benefit of such Bank for its share of all Reimbursement Obligations.  Notwithstanding the immediately preceding sentence, so long as no Event of Default has occurred and is continuing, if at any time (whether before or after the date at which the Borrower provides cash collateral for any Letters of Credit) any Bank, or any other financial institution reasonably satisfactory to the Administrative Agent which meets the requirements of an Eligible Assignee, agrees to purchase the Letter of Credit Participation of one or more Banks that have made demand pursuant to clause (c) or clause (d) above, and such Person has executed the documentation necessary to consummate such purchase, (x) the Borrower shall be relieved of the obligation to provide cash collateral with respect to Letters of Credit and (y) such selling Bank shall be relieved of the obligation to fund an advance with respect to Letters of Credit, but only to the extent in each case that such purchasing Bank or other financial institution has purchased such Letter of Credit Participation.  If the Borrower has provided such cash collateral prior to such purchase, the Administrative Agent shall refund to the Borrower a portion of such cash collateral equal to the amount of Letter of Credit Participation so purchased.           Upon any demand for payment by any Bank under this Section 3.2.2, the Commitment hereunder provided by such Bank shall terminate, and such Bank shall be relieved of all further obligations to make Loans to the Borrower or participate in the risk of Letters of Credit issued, extended, or renewed after the date of such demand.  At the end of the Suspension Period referred to above, the Commitments shall be restored from all Banks that have not made a demand for payment under this Section 3.2.2, and this Credit Agreement and the other Loan Documents shall remain in full force and effect among the Borrower, such Banks, the Co-Agents and the Administrative Agent, with such changes as may be necessary to reflect the termination of the credit provided by the Banks that made a demand for payment under this Section 3.2.2.           3.3     Optional Repayments of Loans . The Borrower shall have the right, at its election, to repay the outstanding amount of the Loans, as a whole or in part, at any time without penalty or premium, provided that any full or partial repayment of the outstanding amount of any LIBOR Loans pursuant to this Section 3.3 made on a date other than the last day of the Interest Period relating thereto shall be subject to customary breakage charges as provided in Section 5.9.  The Borrower shall give the Administrative Agent, no later than 10:00 a.m., Charlotte, North Carolina time, at least one (1) Business Day’s prior written notice, of any proposed repayment pursuant to this Section 3.3 of Federal Funds Rate Loans, and two (2) LIBOR Business Days’ notice of any proposed repayment pursuant to this Section 3.3 of LIBOR Loans, in each case, specifying the proposed date of payment of Loans and the principal amount to be paid.  Each such partial repayment of the Loans shall be in an amount of $1,000,000 or an integral multiple of $1,000,000 in excess thereof, shall be accompanied by the payment of accrued interest on the principal repaid to the date of payment, and shall be applied, in the absence of instruction by the Borrower, first to the principal of Federal Funds Rate Loans and then to the principal of LIBOR Loans (in inverse order of the last days of their respective Interest Periods).  Each partial repayment shall be allocated among the Banks, in proportion, as nearly as practicable, to the respective unpaid principal amount of each Bank’s Loans, with adjustments to the extent practicable to equalize any prior repayments not exactly in proportion.  Any amounts repaid under this Section 3.3 may be reborrowed prior to the Maturity Date as provided in Section 2.7, subject to the conditions of Section 11. 4.       LETTERS OF CREDIT           4.1     Letter of Credit Commitments.                     4.1.1  Commitment to Issue Letters of Credit.  Subject to the terms and conditions hereof and the execution and delivery by the Borrower of a letter of credit application on the Co-Agent’s customary form attached hereto as Exhibit G, or such other form as may be reasonably acceptable to the Borrower and the Co-Agent issuing such Letter of Credit (a “Letter of Credit Application”), the Co-Agent receiving such Letter of Credit Application on behalf of the Banks and in reliance upon the agreement of the Banks set forth in Section 4.1.4 and upon the representations and warranties of the Borrower contained herein, each Bank agrees, in its individual capacity, to issue, extend, and renew for the account of the Borrower one or more standby letters of credit (individually, a “Letter of Credit”), in such form as may be requested from time to time by the Borrower and agreed to by either of the Co-Agents; provided, however, that, after giving effect to such request, (i) the Maximum Drawing Amount on all Letters of Credit shall not exceed $80,000,000 (the “Letter of Credit Commitment”), and (ii) the sum of (A) the Maximum Drawing Amount on all Letters of Credit, (B) all Unpaid Reimbursement Obligations, and (C) the amount of all Loans outstanding shall not exceed the Total Commitment.                     4.1.2  Letter of Credit Applications.  Each Letter of Credit Application shall be completed to the reasonable satisfaction of the Borrower and the Co-Agent to which it is delivered.  In the event that any provision of any Letter of Credit Application shall be inconsistent with any provision of this Credit Agreement, then the provisions of this Credit Agreement shall, to the extent of any such inconsistency, govern.                     4.1.3  Terms of Letters of Credit.  Each Letter of Credit issued, extended, or renewed hereunder shall, among other things, (a) provide for the payment of sight drafts for honor thereunder when presented in accordance with the terms thereof and when accompanied by the documents described therein, and (b) have an expiry date no later than the date which is fourteen (14) days prior to the Maturity Date.  Each Letter of Credit so issued, extended, or renewed shall be subject to the Uniform Customs.                     4.1.4  Reimbursement Obligations of Banks.  Each Bank severally agrees that it shall be absolutely liable, without regard to the occurrence of any Default or Event of Default or any other condition precedent whatsoever, to the extent of such Bank’s Commitment Percentage, to reimburse the Co-Agent issuing any Letter of Credit on demand for the amount of each draft paid by such Co-Agent under each such Letter of Credit to the extent that such amount is not reimbursed by the Borrower pursuant to Section 4.2 (such agreement for a Bank being called herein the “Letter of Credit Participation” of such Bank); provided, however, that no Bank shall be required to reimburse the Co-Agent issuing such Letter of Credit, if at the time that such Co-Agent issued such Letter of Credit, such Co-Agent had actual knowledge of the existence of a Default.                     4.1.5  Participations of Banks.  Each such payment under this Section 4.1 made by a Bank shall be treated as the purchase by such Bank, to the extent of such Bank’s Commitment Percentage, of a participating interest in the Borrower’s Reimbursement Obligation under Section 4.2 in an amount equal to such payment.  Each Bank shall share in accordance with its participating interest in any interest which accrues pursuant to Section 4.2.           4.2     Reimbursement Obligation of the Borrower.  In order to induce the Co-Agents to issue, extend, and renew each Letter of Credit and the Banks to participate therein, the Borrower hereby agrees to reimburse or pay to the Co-Agent issuing such Letter of Credit, for the account of such Co-Agent or (as the case may be) the Banks, with respect to each Letter of Credit issued, extended, or renewed by such Co-Agent hereunder,                     (a)      except as otherwise expressly provided in Section 4.2(b) and (c), on each date that any draft presented under such Letter of Credit is honored by either Co-Agent, or either Co-Agent otherwise makes a payment under or pursuant to such Letter of Credit, the amount paid by such Co-Agent under or with respect to such Letter of Credit;                     (b)      upon the reduction (but not termination) of the Total Commitment or the Letter of Credit Commitment to an amount less than the Maximum Drawing Amount, an amount equal to such difference, which amount shall be held by the Administrative Agent for the benefit of the Banks and the Co-Agents as cash collateral for all Reimbursement Obligations, subject to the provisions of Section 3.2.2; and                     (c)      upon the termination of the Total Commitment or the Letter of Credit Commitment or the acceleration of the Reimbursement Obligations with respect to all Letters of Credit in accordance with Section 12, an amount equal to one hundred percent (100%) of the then Maximum Drawing Amount on all such Letters of Credit plus projected Letter of Credit Fees, based upon the Borrower’s then effective commercial paper rating, which amount shall be held by the Administrative Agent for the benefit of the Banks and the Co-Agents as cash collateral for all Reimbursement Obligations.           Each such payment shall be made to the Administrative Agent at the Administrative Agent’s Head Office or to the relevant Co-Agent at such Co-Agent’s Head Office, as the case may be, in immediately available funds or from the direct application of the proceeds of a Loan made pursuant to Section 2.8.  To the extent not paid pursuant to Section 2.8, interest on any and all amounts remaining unpaid by the Borrower under this Section 4.2 at any time from the date such amounts become due and payable (whether as stated in this Section 4.2, by acceleration, or otherwise) until payment in full (whether before or after judgment) shall be payable to the relevant Co-Agent on demand at the rate specified in Section 5.10 for overdue principal of the Federal Funds Rate Loans.           4.3     Letter of Credit Payments.  If any draft shall be presented or other demand for payment shall be made under any Letter of Credit, the Co-Agent receiving such draft or demand shall notify the Borrower and the Banks of the date and amount of the draft presented or demand for payment and of the date and time when it expects to pay such draft or honor such demand for payment.  If the Borrower fails to reimburse the relevant Co-Agent as provided in Section 4.2 on or before the date that such draft is paid or other payment is made by such Co-Agent (and the draft or other payment is not covered by a Loan as provided in Section 2.8), such Co-Agent shall promptly thereafter, but not later than 1:00 p.m. (Dallas, Texas time) on the date such draft is paid or other payment is made by such Co-Agent, notify the Banks of the amount of any such Unpaid Reimbursement Obligation.  As soon as possible following such notice, but in no event later than 3:00 p.m. (Dallas, Texas time) on the date of such notice, each Bank shall make available to such Co-Agent, at its Head Office, in immediately available funds, an amount equal to the product of such Bank’s Commitment Percentage and such Bank’s Unpaid Reimbursement Obligation, together with an amount equal to the product of (a) the average, computed for the period referred to in clause (c) below, of the weighted average interest rate paid by such Co-Agent for federal funds acquired by such Co-Agent during each day included in such period, times (b) the amount equal to such Bank’s Commitment Percentage multiplied by such Bank’s Unpaid Reimbursement Obligation, times (c) a fraction, the numerator of which is the number of days that elapse from and including the date such Co-Agent paid the draft presented for honor or otherwise made payment to the date on which such Bank’s Commitment Percentage of such Unpaid Reimbursement Obligation shall become immediately available to such Co-Agent, and the denominator of which is 360.  The responsibility of such Co-Agent to the Borrower and the Banks shall be only to determine that the documents (including each draft) delivered under each Letter of Credit in connection with such presentment shall be in conformity in all material respects with such Letter of Credit.           4.4     Obligations Absolute.  The Borrower’s obligations under this Section 4 shall be absolute and unconditional under any and all circumstances and irrespective of the occurrence of any Default or Event of Default or any condition precedent whatsoever or any setoff, counterclaim, or defense to payment which the Borrower may have or have had against the Administrative Agent, any Co-Agent, any Bank, or any beneficiary of a Letter of Credit.  The Borrower further agrees with the Administrative Agent, each Co-Agent and the Banks that the Administrative Agent, each Co-Agent and the Banks shall not be responsible for, and the Borrower’s Reimbursement Obligations under Section 4.2 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent, or forged, or any dispute between or among the Borrower, the beneficiary of any Letter of Credit, or any financing institution or other party to which any Letter of Credit may be transferred or any claims or defenses whatsoever of the Borrower against the beneficiary of any Letter of Credit or any such transferee.  The Administrative Agent, each Co-Agent and the Banks shall not be liable for any error, omission, interruption, or delay in transmission, dispatch, or delivery of any message or advice, however transmitted, in connection with any Letter of Credit.  The Borrower agrees that any action taken or omitted by the Administrative Agent, any Co-Agent or any Bank under or in connection with each Letter of Credit and the related drafts and documents, if done in good faith, shall be binding upon the Borrower and shall not result in any liability on the part of the Administrative Agent, any Co-Agent or any Bank to the Borrower.           4.5     Reliance by Issuer.  To the extent not inconsistent with Section 4.4, each Co-Agent shall be entitled to rely, and shall be fully protected in relying upon, any Letter of Credit, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex, or teletype message, statement, order, or other document believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person and upon advice and statements of legal counsel, independent accountants, and other experts selected by such Co-Agent. Each of the Banks hereby indemnifies and holds each of the Co-Agents harmless from and against any and all claims, liability, damages, costs and expenses incurred by such Co-Agent in connection with any and all actions taken with respect to any Letter of Credit or any draft presented pursuant to any such Letter of Credit, so long as such action is taken in good faith.  Each Co-Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Credit Agreement in accordance with a request of the Majority Banks, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Banks and all future holders of the Notes or of a Letter of Credit Participation.           4.6     Letter of Credit Fee.  The Borrower shall, on the date of issuance of any Letter of Credit and each anniversary thereof, pay in advance a fee (in each case, collectively with the fee described below in this Section 4.6, a “Letter of Credit Fee”) to the Co-Agent issuing such Letter of Credit, for the account of the Banks (including Bank of America, the Chase Manhattan Bank and Deutsche Bank AG, New York and/or Cayman Islands Branches, in their capacity as a Bank) on a pro rata basis, in respect of such Letter of Credit equal to the Applicable Margin. In addition to the foregoing fee, the Borrower shall pay in advance to the Co-Agent issuing such Letter of Credit, at the times specified above in this Section 4.6, for such Co-Agent’s own account, an additional fee equal to one-eighth of one percent (1/8%) per annum on the Maximum Drawing Amount of such Letter of Credit. In the event that any Letter of Credit shall be terminated or cancelled prior to the anniversary of the issuance thereof, the Letter of Credit Fees for such period shall be recalculated, and, to the extent any excess Letter of Credit Fees were paid as a result of such termination or cancellation, the Borrower shall receive a credit (to be applied in such manner as the Borrower and the applicable Co-Agent may agree) in the amount of such excess.           4.7     Additional Cash Collateral Provisions.  A pro rata portion of any cash collateral securing Letters of Credit not otherwise refunded or applied in accordance with this Credit Agreement shall in any event be refunded to the Borrower upon cancellation, or fourteen (14) days following expiration, of any Letter of Credit secured by such cash collateral.  In the event of refunding of any cash collateral, or any portion thereof, to the Borrower as provided in or pursuant to this Credit Agreement, the Administrative Agent shall refund to the Borrower an amount equal to the full amount of such cash collateral provided by the Borrower, or the applicable portion thereof, as the case may be, plus accrued interest thereon for the period from the most recent date on which such interest has been paid to, but not including, the date of such refund.  Interest on cash collateral shall accrue to the benefit of the Borrower, at a rate equal to the Administrative Agent’s Overnight Investment Rate, and shall be paid to the Borrower quarterly in arrears five (5) Business Days following the end of each calendar quarter and, in any case, on the date of refund as to any portion of cash collateral being refunded, as set forth above. 5.       CERTAIN GENERAL PROVISIONS.           5.1     Application of Payments .  Except as otherwise provided in this Credit Agreement, all payments in respect of any Loan shall be applied first to accrued and unpaid interest on such Loan and second to the outstanding principal of such Loan.           5.2     Funds for Payments.                     5.2.1  Payments to Co-Agents, Administrative Agent.  All payments of principal, interest, commitment fees, Reimbursement Obligations, Letter of Credit Fees and any other amounts due hereunder or under any of the other Loan Documents shall be made to any of the Co-Agents or Administrative Agent, for the respective accounts of the Banks, the Co-Agents and the Administrative Agent, at the Co-Agent’s Head Office or the Administrative Agent’s Head Office, as the same may be, or at such other location that the Co-Agents or the Administrative Agent may from time to time designate, in each case in immediately available funds or directly from the proceeds of Loans.                     5.2.2  No Offset, Etc.  All payments by the Borrower hereunder and under any of the other Loan Documents shall be made without setoff or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions, or conditions of any nature now or hereafter imposed or levied by any Government Authority unless the Borrower is compelled by Government Mandate to make such deduction or withholding.  If any such obligation is imposed upon the Borrower with respect to any amount payable by it hereunder or under any of the other Loan Documents (other than with respect to taxes on the income or profits of any Bank, the Co-Agents or the Administrative Agent), the Borrower will pay to the Administrative Agent, for the account of the Banks or (as the case may be) the Co-Agents or the Administrative Agent, on the date on which such amount is due and payable hereunder or under such other Loan Document, such additional amount in Dollars as shall be necessary to enable the Banks, the Co-Agent or the Administrative Agent to receive the same net amount which the Banks, the Co-Agent or the Administrative Agent would have received on such due date had no such obligation been imposed upon the Borrower.  The Borrower will deliver promptly to the Administrative Agent certificates or other valid vouchers for all taxes or other charges deducted from or paid with respect to payments made by the Borrower hereunder or under such other Loan Document.  If a refund is received (either in cash or by means of a credit against future tax obligations) by any of the Co-Agents, the Administrative Agent or any Bank in respect of an amount previously paid by the Borrower pursuant to the immediately preceding sentence, such refund shall be promptly paid over to the Borrower.           5.2.3  Fees Non-Refundable.  Except as expressly set forth herein, all fees payable hereunder are non-refundable, provided that (a) if any of the Banks is finally adjudicated or is found in final arbitration proceedings to have been grossly negligent or to have committed willful misconduct with respect to the transactions contemplated hereby, then no facility fee shall be payable to such Bank after the date of such final adjudication or arbitration (and such Bank shall refund any facility fee paid to it and attributable to the period from and after the date on which such grossly negligent conduct or willful misconduct occurred), and (b) if the Administrative Agent is finally adjudicated or is found in final arbitration proceedings to have been grossly negligent or to have committed willful misconduct with respect to the transactions contemplated hereby, then no administrative agent’s fee will be due and payable after the date of such final adjudication or arbitration.  If the Administrative Agent is finally found to have been grossly negligent or to have committed willful misconduct, the amount of any administrative agent’s fee paid or prepaid by the Borrower and attributable to the period from and after the date on which such grossly negligent conduct or willful misconduct occurred shall be refunded.           5.3     Computations.  All computations of interest with respect to both Federal Funds Rate Loans and LIBOR Loans (including, without limitation, interest computations with respect to any Letter of Credit Fees) shall be based on a year of 360 days and paid for the actual number of days elapsed. Except as otherwise provided in the definition of the term “Interest Period” with respect to LIBOR Loans, whenever a payment hereunder or under any of the other Loan Documents becomes due on a day that is not a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and interest shall accrue during such extension.           5.4     Inability to Determine LIBOR Rate Basis .  In the event, prior to the commencement of any Interest Period relating to any LIBOR Loan, the Administrative Agent shall determine that adequate and reasonable methods do not exist for ascertaining the LIBOR Rate Basis that would otherwise determine the rate of interest to be applicable to any LIBOR Loan during any Interest Period, the Administrative Agent shall forthwith give notice of such determination (which shall be conclusive and binding on the Borrower and the Banks) to the Borrower and the Banks.  In such event (a) any Loan Request or Conversion Request with respect to LIBOR Loans shall be automatically withdrawn and shall be deemed a request for Federal Funds Rate Loans, (b) each LIBOR Loan will automatically, on the last day of the then current Interest Period relating thereto, become a Federal Funds Rate Loan, and (c) the obligations of the Banks to make LIBOR Loans shall be suspended until the Administrative Agent determines that the circumstances giving rise to such suspension no longer exist, whereupon the Administrative Agent shall so notify the Borrower and the Banks.           5.5     Illegality.  Notwithstanding any other provisions herein, if any present or future Government Mandate shall make it unlawful for any Bank to make or maintain LIBOR Loans, such Bank shall forthwith give notice of such circumstances to the Borrower and the other Banks and thereupon (a) the commitment of such Bank to make LIBOR Loans or convert Federal Funds Rate Loans to LIBOR Loans shall forthwith be suspended, and (b) such Bank’s Loans then outstanding as LIBOR Loans, if any, shall be converted automatically to Federal Funds Rate Loans on the last day of each then existing Interest Period applicable to such LIBOR Loans or within such earlier period after the occurrence of such circumstances as may be required by Government Mandate.  The Borrower shall promptly pay the Administrative Agent for the account of such Bank, upon demand by such Bank, any additional amounts necessary to compensate such Bank for any costs incurred by such Bank in making any conversion in accordance with this Section 5.5 other than on the last day of an Interest Period, including any interest or fees payable by such Bank to lenders of funds obtained by it in order to make or maintain its LIBOR Loans hereunder.           5.6     Additional Costs, Etc.    If any present or future applicable Government Mandate (whether or not having the force of law), shall:                     (a)      subject any Bank, any of the Co-Agents or the Administrative Agent to any tax, levy, impost, duty, charge, fee, deduction, or withholding of any nature with respect to this Credit Agreement, the other Loan Documents, and Letters of Credit, such Bank’s Commitment, or the Loans (other than taxes based upon or measured by the income or profits of such Bank, such Co-Agent or the Administrative Agent), or                     (b)      materially change the basis of taxation (except for changes in taxes on income or profits) of payments to any Bank of the principal of or the interest on any Loans or any other amounts payable to any Bank, any of the Co-Agents or the Administrative Agent under this Credit Agreement or the other Loan Documents, or                     (c)      impose, increase, or render applicable (other than to the extent specifically provided for elsewhere in this Credit Agreement) any special deposit, reserve, assessment, liquidity, capital adequacy, or other similar requirements (whether or not having the force of law) against assets held by, or deposits in or for the account of, or loans by, or commitments of an office of any Bank, or                     (d)      impose on any Bank, any of the Co-Agents or the Administrative Agent any other conditions or requirements with respect to this Credit Agreement, the other Loan Documents, any Letters of Credit, the Loans, such Bank’s Commitment, or any class of loans or commitments of which any of the Loans or such Bank’s Commitment forms a part, and the result of any of the foregoing is:           (i)       to increase by an amount deemed by such Bank to be material with respect to the cost to any Bank of making, funding, issuing, renewing, extending, or maintaining any of the Loans or such Bank’s Commitment or any Letter of Credit, or           (ii)      to reduce, by an amount deemed by such Bank, such Co-Agent or the Administrative Agent, as the case may be, to be material, the amount of principal, interest, or other amount payable to such Bank, such Co-Agent or the Administrative Agent hereunder on account of such Bank’s Commitment, any Letter of Credit or any of the Loans, or           (iii)     to require such Bank, such Co-Agent or the Administrative Agent to make any payment that, but for such conditions or requirements described in clauses (a) through (d), would not be payable hereunder, or forego any interest, Reimbursement Obligations or other sum that, but for such conditions or requirements described in clauses (a) through (d), would be payable to such Bank, such Co-Agent or the Administrative Agent hereunder, in any case the amount of which payment or foregone interest, Reimbursement Obligation or other sum is deemed by such Bank, such Co-Agent or the Administrative Agent, as the case may be, to be material and is calculated by reference to the gross amount of any sum receivable or deemed received by such Bank, such Co-Agent or (as the case may be) the Administrative Agent from the Borrower hereunder, then, and in each such case, (aa) the Borrower will, upon demand made by such Bank, such Co-Agent or (as the case may be) the Administrative Agent at any time and from time to time (such demand to be made in any case not later than the first to occur of (I) the date one year after such event described in clause (i), (ii), or (iii) giving rise to such demand, and (II) the date ninety (90) days after both the payment in full of all outstanding Loans and Unpaid Reimbursement Obligations, and the termination of any Letters of Credit and the Commitments) and as often as the occasion therefor may arise, pay to such Bank, such Co-Agent or the Administrative Agent such additional amounts as will be sufficient to compensate such Bank, such Co-Agent or the Administrative Agent for such additional cost, reduction, payment, foregone interest, Reimbursement Obligation or other sum, (bb) the Borrower shall be entitled, upon notice to the Administrative Agent, each Co-Agent and each Bank given within ninety (90) days of any demand by a Bank under clause (aa), to repay in cash in full all, but not less than all, of the Loans and Unpaid Reimbursement Obligations of such Bank, together with all accrued and unpaid interest on such Loans and any other amounts owing to such Bank under the Loan Documents and terminate (in full and not in part) such Bank’s Commitment and pay to the Administrative Agent an amount equal to, but not less than such Bank’s pro rata share of the then Maximum Drawing Amount on all Letters of Credit, which amount shall be held by the Administrative Agent as cash collateral for the benefit of such Bank and the relevant Co-Agent for its share of all Reimbursement Obligations, and, (cc) in the event the Borrower elects to repay the Loans of any Bank under clause (bb), each other Bank shall be entitled, by notice to the Administrative Agent and the Borrower given within thirty (30) days after receipt of the notice referred to in clause (bb), to require the Borrower to repay in cash in full, within thirty (30) days of such notice under this clause (cc), all, but not less than all, of the Loans and Unpaid Reimbursement Obligations of such other Bank, together with all accrued and unpaid interest thereon and any other amounts owing to such other Bank under the Loan Documents, and require the Borrower to pay to the Administrative Agent an amount equal to, but not less than, such Bank’s pro rata share of the then Maximum Drawing Amount on all Letters of Credit, which amount shall be held by the Administrative Agent as cash collateral for the benefit of such Bank and the relevant Co-Agent for its share of all Reimbursement Obligations.  Subject to the terms specified above in this Section 5.6, the obligations of the Borrower under this Section 5.6 shall survive repayment of the Loans and all Unpaid Reimbursement Obligations and termination of any Letters of Credit and the Commitments.           5.7     Capital Adequacy.  If after the date hereof any Bank, any Co-Agent or the Administrative Agent determines that (a) the adoption of or change in any Government Mandate (whether or not having the force of law) regarding capital requirements for banks or bank holding companies or any change in the interpretation or application thereof by any Government Authority with appropriate jurisdiction, or (b) compliance by such Bank, such Co-Agent, or the Administrative Agent, or any corporation controlling such Bank, such Co-Agent or the Administrative Agent, with any Government Mandate (whether or not having the force of law) has the effect of reducing the return on such Bank’s, such Co-Agent’s or the Administrative Agent’s commitment with respect to any Loans to a level below that which such Bank , such Co-Agent or (as the case may be) the Administrative Agent could have achieved but for such adoption, change, or compliance (taking into consideration such Bank’s, such Co-Agent’s or the Administrative Agent’s then existing policies with respect to capital adequacy and assuming full utilization of such Entity’s capital) by any amount reasonably deemed by such Bank, such Co-Agent or (as the case may be) the Administrative Agent to be material, then such Bank, such Co-Agent or the Administrative Agent may notify the Borrower of such fact.  To the extent that the amount of such reduction in the return on capital is not reflected in the Federal Funds Rate, (aa) the Borrower shall pay such Bank, such Co-Agent or (as the case may be) the Administrative Agent for the amount of such reduction in the return on capital as and when such reduction is determined upon presentation by such Bank, such Co-Agent or (as the case may be) the Administrative Agent of a certificate in accordance with Section 5.8 hereof (but in any case not later than the first to occur of (I) the date one year after such adoption, change, or compliance causing such reduction, and (II) as to adoptions of or changes in Government Mandates occurring prior to the repayment of the Loans and the termination of the Commitments the date ninety (90) days after both the payment in full of all outstanding Loans and termination of the Commitments), (bb) the Borrower shall be entitled, upon notice to the Administrative Agent, each Co-Agent and each Bank given within ninety (90) days of any notice by such Bank under the next preceding sentence, to repay in cash in full all, but not less than all, of the Loans of such Bank and/or such Co-Agent, together with all accrued and unpaid interest on such Loans and any other amounts owing to such Bank and/or such Co-Agent under the Loan Documents and terminate (in full and not in part) such Bank’s Commitment, and, (cc) in the event the Borrower elects to repay the Loans of any Bank and/or any Co-Agent under clause (bb), each other Bank and Co-Agent shall be entitled, by notice to the Administrative Agent and the Borrower given within thirty (30) days after receipt of the notice referred to in clause (bb), to require the Borrower to repay in cash in full, within thirty (30) days of the notice under this clause (cc), all, but not less than all, of the Loans of such other Bank and Co-Agent, together with all accrued and unpaid interest on such Loans and any other amounts owing to such other Bank or Co-Agent under the Loan Documents.  Each Bank and each Co-Agent shall allocate such cost increases among its customers in good faith and on an equitable basis.  Subject to the terms specified above in this Section 5.7, the obligations of the Borrower under this Section 5.7 shall survive repayment of the Loans and termination of the Commitments.           5.8     Certificate.  A certificate setting forth any additional amounts payable pursuant to Section 5.6 or Section 5.7 and a brief explanation of such amounts which are due and in reasonable detail the basis of the calculation and allocation thereof, submitted by any Bank, any of the Co-Agents or the Administrative Agent to the Borrower, shall be conclusive evidence, absent manifest error, that such amounts are due and owing.           5.9     Indemnity.  The Borrower shall indemnify and hold harmless each Bank from and against any loss, cost, or expense (excluding loss of anticipated profits) that such Bank may sustain or incur as a consequence of (a) default by the Borrower in payment of the principal amount of or any interest on any LIBOR Loans as and when due and payable, including any such loss or expense arising from interest or fees payable by such Bank to lenders of funds obtained by it in order to maintain its LIBOR Loans, (b) default by the Borrower in making a borrowing or conversion after the Borrower has given (or is deemed to have given) a Loan Request or a Conversion Request; or (c) except as otherwise expressly provided in Section 3.2.2, the making of any payment of a LIBOR Loan or the making of any conversion of any such Loan to a Federal Funds Rate Loan on a day that is not the last day of the applicable Interest Period with respect thereto, including interest or fees payable by such Bank to lenders of funds obtained by it in order to maintain any such Loans.  The obligations of the Borrower under this Section 5.9 shall survive repayment of the Loans and termination of the Commitments.           5.10   Interest After Default.  All amounts outstanding under the Loan Documents that are not paid when due, including all overdue principal, Unpaid Reimbursement Obligations and (to the extent permitted by applicable Government Mandate) interest and all other overdue amounts (after giving effect to any applicable grace period), shall to the extent permitted by applicable Government Mandate bear interest until such amount shall be paid in full (after as well as before judgment) at a rate per annum equal to two percent (2%) above the interest rate otherwise applicable to such amounts.  Any interest accruing under this section on overdue principal or interest shall be due and payable upon demand. 6.       REPRESENTATIONS AND WARRANTIES.           The Borrower represents and warrants to the Banks, the Co-Agents and the Administrative Agent as follows:           6.1     Corporate Authority.                     6.1.1  Incorporation ; Good Standing.  Each of the Borrower, its Subsidiaries, and the General Partner (a) is a corporation, limited partnership or general partnership, as the case may be, duly organized, validly existing, and in good standing under the laws of its state of organization, (b) has all requisite corporate or partnership power to own its material property and conduct its material business as now conducted and as presently contemplated, and (c) is in good standing as a foreign corporation, limited partnership or general partnership, as the case may be, and is duly authorized to do business in each jurisdiction where it owns or leases properties or conducts any business so as to require such qualification except where a failure to be so qualified would not be likely to have a Material Effect.                     6.1.2  Authorization .  The execution, delivery, and performance of this Credit Agreement and the other Loan Documents to which the Borrower, any of its Subsidiaries, or the General Partner is or is to become a party and the transactions contemplated hereby and thereby (a) are within the corporate or partnership power of each such Entity, (b) have been duly authorized by all necessary corporate or partnership proceedings on behalf of each such Entity, (c) do not conflict with or result in any breach or contravention of any Government Mandate to which any such Entity is subject, (d) do not conflict with or violate any provision of the corporate charter or bylaws, or the limited partnership certificate or agreement, or its governing documents in the case of any general partnership, as the case may be, of any such Entity, and (e) do not violate, conflict with, constitute a default or event of default under, or result in any rights to accelerate or modify any obligations under any Contract to which any such Entity is party or subject, or to which any of its respective assets are subject, except, as to the foregoing clauses (c) and (e) only, where the same would not be likely to have a Material Effect.                     6.1.3  Enforceabilit y.  The execution and delivery of this Credit Agreement and the other Loan Documents to which the Borrower, any of its Subsidiaries, or the General Partner is or is to become a party will result in valid and legally binding obligations of such Person enforceable against it in accordance with the respective terms and provisions hereof and thereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or affecting generally the enforcement of creditors’ rights and by general principles of equity, regardless of whether enforcement is sought in a Proceeding in equity or at law.                     6.1.4  Equity Securities.  The General Partner is the only general partner of the Borrower.  All of the outstanding Equity Securities of the Borrower are validly issued, fully paid, and non-assessable.           6.2     Governmental Approvals.  The execution, delivery, and performance by the Borrower, its Subsidiaries, and the General Partner of this Credit Agreement and the other Loan Documents to which the Borrower, any of its Subsidiaries, or the General Partner is or is to become a party and the transactions contemplated hereby and thereby do not require the approval or consent of, or filing with, any Government Authority other than those already obtained and set forth on Schedule 6.2.           6.3     Liens; Leases.  The assets reflected in the consolidated balance sheet of the Borrower dated as of December 31, 1999, and delivered to the Administrative Agent and the Banks under Section 6.4 are subject to no Liens except Permitted Liens.  Each of the Borrower and its Subsidiaries enjoys quiet possession under all leases relating to Real Estate or personal property to which it is party as a lessee, and each such lease is Fully Effective.           6.4     Financial Statements.    There has been furnished to the Administrative Agent and each of the Banks (a) a consolidated balance sheet of the Borrower as at December 31, 1999, and a consolidated statement of income and cash flow of the Borrower for the fiscal year then ended, certified by the Borrower’s independent certified public accountants, and (b) unaudited interim condensed consolidated balance sheets of the Borrower and the Consolidated Subsidiaries as at June 30, 2000, and interim condensed consolidated statements of income and of cash flow of the Borrower and the Consolidated Subsidiaries for the respective fiscal periods then ended and as set forth in the Borrower’s Quarterly Reports on Form 10-Q for such fiscal quarters.  With respect to the financial statement prepared in accordance with clause (a) above, such balance sheet and statement of income have been prepared in accordance with GAAP and present fairly in all material respects the financial position of the Borrower and the Consolidated Subsidiaries as at the close of business on the respective dates thereof and the results of operations of the Borrower and the Consolidated Subsidiaries for the fiscal periods then ended; or, in the case of the financial statements referred to in clause (b), have been prepared in accordance with Rule 10-01 of Regulation S-X of the Securities and Exchange Commission, and contain all adjustments necessary for a fair presentation of (A) the results of operations of the Borrower for the periods covered thereby, (B) the financial position of the Borrower at the date thereof, and (C) the cash flows of the Borrower for periods covered thereby (subject to year-end adjustments).  There are no contingent liabilities of the Borrower or the Consolidated Subsidiaries as of such dates involving material amounts, known to the executive management of the Borrower that (aa) should have been disclosed in said balance sheets or the related notes thereto in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission, and (bb) were not so disclosed.           6.5     No Material Changes, Etc .   No change in the Business of the Borrower and its Consolidated Subsidiaries, taken as a whole, has occurred since June 30, 2000 that has resulted in a Material Effect.           6.6     Permits.   The Borrower and its Subsidiaries have all Permits necessary or appropriate for them to conduct their Business, except where the failure to have such Permits would not be likely to have a Material Effect.  All of such Permits are in full force and effect.  Without limiting the foregoing, the Borrower is duly registered as an “investment adviser” under the Investment Advisers Act of 1940 and under the applicable laws of each state in which such registration is required in connection with the investment advisory business of the Borrower and in which the failure to obtain such registration would be likely to have a Material Effect; Alliance Distributors is duly registered as a “broker/dealer” under the Securities Exchange Act of 1934 and under the securities or blue sky laws of each state in which such registration is required in connection with the business conducted by Alliance Distributors and where a failure to obtain such registration would be likely to have a Material Effect, and is a member in good standing of the National Association of Securities Dealers, Inc.; no Proceeding is pending or threatened with respect to the suspension, revocation, or termination of any such registration or membership, and the termination or withdrawal of any such registration or membership is not contemplated by the Borrower or Alliance Distributors, except, only with respect to registrations by the Borrower and Alliance Distributors required under state law, as would not be likely to have a Material Effect.           6.7     Litigation.   There is no Proceeding of any kind pending or threatened, in writing, against the Borrower, any of its Subsidiaries, or the General Partner that questions the validity of this Credit Agreement or any of the other Loan Documents, or any action taken or to be taken pursuant hereto or thereto.  There is no Proceeding of any kind pending or threatened, in writing, against the Borrower, any of its Subsidiaries, or the General Partner that is reasonably likely to, either in any case or in the aggregate, impair or prevent the Borrower’s performance and observance of its obligations under this Credit Agreement or the other Loan Documents.           6.8     Material Contracts.    Except as would not be likely to have a Material Effect, each Contract to which any of the Borrower and its Subsidiaries is party or subject, or by which any of their respective assets are bound (including investment advisory contracts and investment company distribution plans) (a) is Fully Effective, (b) is not subject to any default or event of default with respect to the Borrower, any of its Subsidiaries or, to the best knowledge of the executive management of the Borrower, any other party, (c) is not subject to any notice of termination given or received by the Borrower or any of its Subsidiaries, and (d) is, to the best knowledge of the executive management of the Borrower, the legal, valid, and binding obligation of each party thereto other than the Borrower and its Subsidiaries enforceable against such parties according to its terms.           6.9     Compliance with Other Instruments. Laws, Etc .  None of the Borrower, its Subsidiaries, and the General Partner is, in any respect material to the Borrower and its Consolidated Subsidiaries taken as a whole, in violation of or default under (a) any provision of its certificate of incorporation or by-laws, or its certificate of limited partnership or agreement of limited partnership, or its governing documents in the case of any general partnership, as the case may be, (b) any Contract to which it is or may be subject or by which it or any of its properties are or may be bound, or (c) any Government Mandate, including Government Mandates relating to occupational safety and employment matters.           6.10   Tax Status.   The Borrower and its Subsidiaries (a) have made or filed all federal and state income and all other tax returns, reports, and declarations required by any Government Authority to which any of them is subject, except where the failure to make or file the same would not be likely to have a Material Effect, (b) have paid all taxes and other governmental assessments and charges due, except those being contested in good faith and by appropriate Proceedings or those where a failure to pay is not reasonably likely to have a Material Effect, and (c) have set aside on their books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports, or declarations apply.  There are no unpaid taxes in any material amount claimed to be due from the Borrower or any of its Subsidiaries by any Government Authority, and the executive management of the Borrower knows of no basis for any such claim.           6.11   No Event of Default.   No Default or Event of Default has occurred and is continuing.           6.12   Holding Company and Investment Company Acts.   Neither the Borrower nor any of its Subsidiaries is a “holding company”, or a “subsidiary company” of a “holding company”, as such terms are defined in the Public Utility Holding Company Act of 1935.  Neither the Borrower nor any of its Subsidiaries (excluding investment companies in which the Borrower or a Consolidated Subsidiary has made “seed money” investments permitted by Section 8.6(b)) is an “investment company”, as such term is defined in the 1940 Act.           6.13   Insurance.   The Borrower and its Subsidiaries maintain insurance with financially sound and reputable insurers in such coverage amounts, against such risks, with such deductibles and upon such other terms, or are self-insured in respect of such risks (with appropriate reserves to the extent required by GAAP), as is reasonable and customary for firms engaged in businesses similar to those of the Borrower and its Subsidiaries.  All policies of insurance maintained by the Borrower or its Subsidiaries are Fully Effective.  All premiums due on such policies have been paid or accrued on the books of the Borrower or its Subsidiaries, as appropriate.           6.14   Certain Transactions.   Except in connection with transactions occurring in the ordinary course of business, and, taking into account the totality of the relationships involved, with respect to transactions occurring on fair and reasonable terms no less favorable to the Borrower and its Consolidated Subsidiaries taken as a whole than would be obtained in comparable arms’ length transactions with Persons that are not Affiliates of the Borrower or its Subsidiaries, none of the officers, directors, partners, or employees of the Borrower or any of its Subsidiaries, or, to the knowledge of the executive management of the Borrower, any Entity (other than a Subsidiary) in which any such officer, director, partner, or employee has a substantial interest or is an officer, director, trustee, or partner, is at present a party to any transaction with the Borrower or any of its Subsidiaries (other than for or in connection with services as officers, directors, partners, or employees, as the case may be), including any Contract providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director, partner, employee, or Entity.           6.15   Employee Benefit Plans.  Each contribution required to be made to a Guaranteed Pension Plan, whether required to be made to avoid the incurrence of an accumulated funding deficiency, the notice or lien provisions of §302(f) of ERISA, or otherwise, has been timely made.  No waiver of an accumulated funding deficiency or extension of amortization periods has been received with respect to any Guaranteed Pension Plan.  No liability to the PBGC (other than required insurance premiums, all of which have been paid) has been incurred by the Borrower or any ERISA Affiliate with respect to any Guaranteed Pension Plan and there has not been any ERISA Reportable Event, or any other event or condition which presents a material risk of termination of any Guaranteed Pension Plan by the PBGC.  Based on the latest valuation of each Guaranteed Pension Plan (which in each case occurred within fifteen (15) months of the date of the representation), and on the actuarial methods and assumptions employed for that valuation, the aggregate benefit liabilities of all such Guaranteed Pension Plans within the meaning of §4001 of ERISA did not exceed the aggregate value of the assets of all such Guaranteed Pension Plans by more than $20,000,000, disregarding for this purpose the benefit liabilities and assets of any Guaranteed Pension Plan with assets in excess of benefit liabilities.           6.16   Regulations U and X.  The proceeds of the Loans shall be used by the Borrower (i) to finance the payment by the Borrower of certain commissions to brokers in connection with the sale of “B” shares of investment companies and mutual funds managed or advised by the Borrower or one of its subsidiaries, (ii) for general partnership purposes and working capital purposes, including, without limitation, acquisitions and (iii) capital expenditures. The Borrower will obtain Letters of Credit solely for the purposes set forth in the immediately preceding clauses (i) through (iii). No portion of any Loan is to be used, and no portion of any Letter of Credit is to be obtained, for the purpose of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.           6.17   Environmental Compliance.   To the best of the Borrower’s knowledge:                     (a)      none of the Borrower, its Subsidiaries, the General Partner, and any operator of the Real Estate or any operations thereon is in violation, or alleged violation, of any Government Mandate or Permit pertaining to environmental, safety or public health matters, including the Resource Conservation and Recovery Act (“RCRA”), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986 (“SARA”), the Federal Clean Water Act, the Federal Clean Air Act, and the Toxic Substances Control Act (hereinafter “Environmental Laws”), which violation would be likely to have a material adverse effect on the environment or a Material Effect;                     (b)      neither the Borrower nor any of its Subsidiaries has received notice from any third party, including any Government Authority, (i) that any one of them has been identified by the United States Environmental Protection Agency (“EPA”) as a potentially responsible party under CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any hazardous waste, as defined by 42 U.S.C. §9601(5), any hazardous substances as defined by 42 U.S.C. §9601(14), any pollutant or contaminant as defined by 42 U.S.C. §9601(33) and any toxic substances, oil, hazardous materials, or other chemicals or substances regulated by any Environmental Laws (“Hazardous Substances”) that any one of them has generated, transported, or disposed of has been found at any site at which a Government Authority or other third party has conducted, or has ordered that other parties conduct, a remedial investigation, removal, or other response action pursuant to any Environmental Law; or (iii) that it is or shall be a named party to any Proceeding (in each case, contingent or otherwise) arising out of any third party’s incurrence of costs, expenses, losses, or damages of any kind whatsoever in connection with the release of Hazardous Substances; and                     (i)       no portion of the Real Estate has been used for the handling, processing, storage, or disposal of Hazardous Substances except in accordance with applicable Environmental Laws;                     (ii)      no underground tank or other underground storage receptacle for Hazardous Substances is located on any portion of the Real Estate;                     (iii)     in the course of any activities conducted by any of the Borrower, its Subsidiaries, the General Partner, and operators of any Real Estate, no Hazardous Substances have been generated or are being used on the Real Estate except in accordance with applicable Environmental Laws;                     (iv)     there have been no releases (i.e. any past or present releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing, or dumping) or threatened releases of Hazardous Substances on, upon, into, or from the Real Estate that would have a material adverse effect on the value of the Real Estate or the environment;                     (v)      there have been no releases of Hazardous Substances on, upon, from, or into any real property in the vicinity of any of the Real Estate that (A) may have come to be located on the Real Estate through soil or groundwater contamination, and, (B) if so located, would have a material adverse effect on the value of the Real Estate or the environment; and                     (vi)     any Hazardous Substances that have been generated by any of the Borrower and its Subsidiaries, or on the Real Estate by any other Person, have been transported offsite only by carriers having an identification number issued by the EPA, treated or disposed of only by treatment or disposal facilities maintaining valid Permits as required under applicable Environmental Laws, which transporters and facilities have been and are, to the best of the Borrower’s knowledge, operating in compliance with such Permits and applicable Environmental Laws.           6.18   Subsidiaries, Etc.  Schedule 6.18 sets forth a list of (a) each Subsidiary of the Borrower (in which each Restricted Subsidiary at the date hereof is specifically identified as such), (b) the number of authorized and outstanding Equity Securities of each class of each Subsidiary of the Borrower and the number and percentage thereof owned, directly or indirectly, by the Borrower, and (c) any partnership or joint venture in which the Borrower or any of its Subsidiaries is engaged with any other Person.  Those Equity Securities of each Subsidiary of the Borrower which are owned directly or indirectly by the Borrower are validly issued, fully paid, and non-assessable.           6.19   Funded Debt.   Schedule 6.19 sets forth as of the end of the calendar month immediately preceding the Closing Date all outstanding Funded Debt of the Borrower and its Subsidiaries.           6.20   General.  The Borrower’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999, and Quarterly Reports on Form 10-Q referred to in Section 6.4 (a) conform in all material respects to the requirements of the Securities Exchange Act of 1934, as amended, and to all applicable rules and regulations of the Securities and Exchange Commission, and (b) as amended by interim filings, do not contain an untrue statement of any material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they are made, not misleading. 7.       AFFIRMATIVE COVENANTS OF THE BORROWER.           The Borrower covenants and agrees that, so long as any Loan, Unpaid Reimbursement Obligation, Letter of Credit, or Note is outstanding or any Bank or Co-Agent has any obligation to make any Loans or any Co-Agent has any obligation to issue, extend, or renew any Letters of Credit:           7.1     Punctual Payment.  The Borrower will duly and punctually pay or cause to be paid the principal and interest on the Loans, all Reimbursement Obligations, the Letter of Credit Fees, the facility fee, the utilization fee, and all other amounts provided for in this Credit Agreement and the other Loan Documents to which the Borrower is party, all in accordance with the terms of this Credit Agreement and such other Loan Documents.           7.2     Maintenance of Office.  The Borrower will maintain its chief executive office in New York, New York, or at such other place in the United States of America as the Borrower shall designate upon prior written notice to the Administrative Agent, where notices, presentations, and demands to or upon the Borrower in respect of the Loan Documents may be given or made.           7.3     Records and Accounts.  The Borrower will, and will cause each of its Subsidiaries to, keep complete and accurate records and books of account.           7.4     Financial Statements, Certificates, and Information .  The Borrower will deliver to each of the Banks:                     (a)      as soon as practicable, but in any event not later than ninety-five (95) days after the end of each fiscal year of the Borrower:                               (i)       the consolidated balance sheet of the Borrower as at the end of such fiscal year;                               (ii)      the consolidating balance sheet of the Borrower as at the end of such fiscal year;                               (iii)     the consolidated statement of income and consolidated statement of cash flows of the Borrower for such fiscal year; and                               (iv)     the consolidating statement of income and consolidating statement of cash flows of the Borrower for such fiscal year. Each of the balance sheets and statements delivered under this Section 7.4(a) shall (i) set forth in comparative form the figures for the previous fiscal year; (ii) be in reasonable detail and prepared in accordance with GAAP based on the records and books of account maintained as provided in Section 7.3; (iii) as to items (i) and (iii) above, be accompanied by a certification by the principal financial or accounting officer of the Borrower that the information contained in such financial statements presents fairly in all material respects the financial position of the Borrower and the Consolidated Subsidiaries on the date thereof and results of operations and cash flows of the Borrower and the Consolidated Subsidiaries for the periods covered thereby; and (iv) as to items (i) and (iii) above, be certified, without limitation as to scope, by KPMG Peat Marwick LLP or another firm of independent certified public accountants reasonably satisfactory to the Administrative Agent, and shall be accompanied by a written statement from such accountants to the effect that in connection with their audit of such financial statements nothing has come to their attention that caused them to believe that the Borrower has failed to comply with the terms, covenants, provisions or conditions of Section 7.3, Section 8, and Section 9 of this Credit Agreement as to accounting matters (provided that such accountants may also state that the audit was not directed primarily toward obtaining knowledge of such noncompliance), or, if such accountants shall have obtained knowledge of any such noncompliance, they shall disclose in such statement any such noncompliance; provided that such accountants shall not be liable to the Banks for failure to obtain knowledge of any such noncompliance;                     (b)      as soon as practicable, but in any event not later than fifty (50) days after the end of the first three fiscal quarters of each fiscal year of the Borrower, (i) the unaudited interim condensed consolidated balance sheet of the Borrower as at the end of such fiscal quarter, and (ii) the unaudited interim condensed consolidated statement of income and unaudited interim condensed consolidated statement of cash flow of the Borrower for such fiscal quarter and for the portion of the Borrower’s fiscal year then elapsed, all in reasonable detail and prepared in accordance with Rule 10-01 of Regulation S-X of the Securities and Exchange Commission, together with a certification by the principal financial or accounting officer of the Borrower that, in the opinion of management of the Borrower, all adjustments necessary for a fair presentation of (A) the results of operations of the Borrower for the periods covered thereby, (B) the financial position of the Borrower at the date thereof, and (C) the cash flows of the Borrower for periods covered thereby have been made (subject to year-end adjustments);                     (c)      simultaneously with the delivery of the financial statements referred to in subsections (a) and (b) above, a statement certified by the principal financial officer, treasurer or general counsel of the Borrower in substantially the form of Exhibit H hereto and setting forth in reasonable detail computations evidencing compliance with the covenants contained in Section 9 and (if applicable) reconciliations to reflect changes in GAAP since December 31, 1999;                     (d)      promptly after the filing or mailing thereof, copies of all material filed with the Securities and Exchange Commission or sent to the holders of the Equity Securities of the Borrower; and                     (e)      from time to time such other financial data and information (including accountants’ management letters) as the Administrative Agent (having been requested to do so by any Bank) may reasonably request; provided, however, that each of the Administrative Agent, the Co-Agents and the Banks agrees that with respect to any data and information obtained by it as a result of any request pursuant to this clause (e) (and with respect to any other data and information that is by the terms of this Credit Agreement to be held subject to this Section 7.4(e)), to the extent that such data and information has not theretofore otherwise been disclosed in such a manner as to render such data and information no longer confidential, each of the Administrative Agent, the Co-Agents and the Banks will use its reasonable efforts (consistent with its established procedures) to reasonably maintain (and cause its employees and officers to maintain) the confidential nature of the data and information therein contained; provided, however, that anything herein contained to the contrary notwithstanding, each of the Administrative Agent, the Co-Agents and the Banks may, to the extent necessary, disclose or disseminate such data and information to: (i) its employees, Affiliates, directors, agents, attorneys, accountants, auditors, and other professional advisers who would ordinarily have access to such data and information in the normal course of the performance of their duties in accordance with the Administrative Agent’s, such Co-Agent’s or such Bank’s customary procedures relating to confidential information; (ii) such third parties as it may, in its discretion, deem reasonably necessary or desirable (A) in connection with or in response to any Government Mandate or request of any Government Authority, or (B) in connection with any Proceeding pending (or on its face purported to be pending) before any Government Authority (including Proceedings involving the Borrower); (iii) any prospective purchaser, participant or investment banker in connection with the resale or proposed resale of any portion of the Loans, or of a participation therein, who shall agree in writing to accept such information subject to the provisions of this clause (e); (iv) any Person holding the Equity Securities or Funded Debt of the Administrative Agent, such Co-Agent or such Bank who, subject to the provisions of this clause (e), shall have requested to inspect such information; and (v) any Entity utilizing such information to rate or classify the Equity Securities or Funded Debt of the Administrative Agent, such Co-Agent or such Bank or to report to the public concerning the industry of which the Administrative Agent or such Bank is a part; provided, however, that none of the Administrative Agent, the Co-Agents and the Banks shall be liable to the Borrower or any other Person for damages arising hereunder from the disclosure of non-public information despite its reasonable efforts in accordance with the provisions of this clause (e) or from a failure by any other party to perform and observe its covenants in this clause (e).           7.5     Notices.                     7.5.1  Defaults .  The Borrower will promptly after the executive management of the Borrower (which for purposes of this covenant shall mean the chairman of the board, president, principal financial officer, treasurer or general counsel of the Borrower) becomes aware thereof (and in any case within three (3) Business Days after the executive management becomes aware thereof) notify the Administrative Agent and each of the Banks in writing of the occurrence of any Default or Event of Default.  If any Person shall give any notice in writing of a claimed default (whether or not constituting an Event of Default) under the Loan Documents or any other Contract relating to Funded Debt equal to or in excess of $50,000,000 to which or with respect to which the Borrower or any of its Subsidiaries is a party or obligor, whether as principal, guarantor, surety, or otherwise, the Borrower shall forthwith give written notice thereof to the Administrative Agent and each of the Banks, describing the notice or action and the nature of the claimed default.                     7.5.2  Environmental Events.  The Borrower will promptly give notice to the Administrative Agent and each of the Banks (a) of any violation of any Environmental Law that the Borrower or any of its Subsidiaries reports in writing, or that is reportable by any such Person in writing (or for which any written report supplemental to any oral report is made) to any Government Authority, and (b) upon becoming aware thereof, of any Proceeding, including a notice from any Government Authority of potential environmental liability, that has the potential, in the Borrower’s reasonable judgment, to have a Material Effect.                     7.5.3  Notice of Proceedings and Judgments.   The Borrower will give notice to the Administrative Agent and each of the Banks in writing within ten (10) Business Days of the executive management of the Borrower (as defined in Section 7.5.1) becoming aware of any Proceedings pending affecting the Borrower or any of its Subsidiaries or to which the Borrower or any of its Subsidiaries is or becomes a party that could reasonably be expected by the Borrower to have a Material Effect (or of any material adverse change in any such Proceedings of which the Borrower has previously given notice).  Any such notice will state the nature and status of such Proceedings.  The Borrower will give notice to the Administrative Agent and each of the Banks, in writing, in form and detail satisfactory to the Administrative Agent, within ten (10) Business Days of any settlement or any judgment, final or otherwise, against the Borrower or any of its Subsidiaries where the amount payable by the Borrower or any of its Subsidiaries, after giving effect to insurance, is in excess of the lesser of $30,000,000 or 10% of Consolidated Net Worth as at the end of the most recent fiscal quarter.                     7.5.4  Notice of Change of Control.  In the event the Borrower obtains knowledge of a Change of Control or an impending Change of Control, the Borrower will promptly give written notice (a “Borrower Control Change Notice”) of such fact to the Administrative Agent and the Banks at least forty (40) days prior to the proposed Change of Control Date; provided, however, that in no event shall such a Borrower Control Change Notice be delivered to the Administrative Agent and the Banks more than three (3) Business Days after the Change of Control Date.  Without limiting the foregoing, upon obtaining actual knowledge of any Change of Control or impending Change of Control, any of the Administrative Agent and the Banks may (but in no case shall any of them be obligated to) deliver written notice to the Borrower of such event, indicating that such event requires the Borrower to prepay the Loans pursuant to Section 3.2.2 (and in any such notice a Bank may make demand for payment of its Loans under Section 3.2.2).  Promptly upon receipt of such notice, but in no event later than five (5) Business Days after actual receipt thereof, the Borrower will give written notice (such notice, together with a Borrower Control Change Notice, a “Control Change Notice”) of such fact to the Administrative Agent and the Banks (including the Bank that has so notified the Borrower).  Any Control Change Notice shall (a) describe the principal facts and circumstances of such Change of Control known to the Borrower in reasonable detail (including the Change of Control Date or, if the Borrower does not have knowledge of the Change of Control Date, the Borrower’s best estimate of such Change of Control Date), (b) make reference to Section 3.2.2 and the rights of the Banks to require the Borrower to prepay the Loans on the terms and conditions provided for therein, and (c) state that each Bank may make a demand for payment of its Loans by providing written notice to the Borrower within fifteen (15) days after the effective date of such Control Change Notice.  In the event the Borrower shall not have designated the Change of Control Date in its Control Change Notice, the Borrower shall keep the Administrative Agent and the Banks informed as to any changes in the estimated Change of Control Date and shall provide written notice to the Administrative Agent and the Banks specifying the Change of Control Date promptly upon obtaining knowledge thereof.           7.6     Existence; Business; Properties.                     7.6.1  Legal Existence.  The Borrower will, and will cause each of its Consolidated Subsidiaries to do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights and franchises as a limited partnership, general partnership or corporation, as the case may be, except, with respect to rights and franchises, where the failure to preserve and keep in full force and effect such rights and franchises would not be likely to have a Material Effect, provided, however, this section shall not prohibit any merger, consolidation, or reorganization of the Borrower or any of its Subsidiaries permitted pursuant to Section 8.2.                     7.6.2  Conduct of Business.  Except as otherwise disclosed to the Administrative Agent and the Banks in the Borrower’s Form 8-Ks for the period prior to the Closing Date, the Borrower will, and will cause each of its Consolidated Subsidiaries to, engage in business related to investment management.                     7.6.3  Maintenance of Properties.  The Borrower will, and will cause each of its Consolidated Subsidiaries to, cause its properties used or useful in the conduct of its business and which are material to the Business of the Borrower and its Consolidated Subsidiaries taken as a whole to be maintained and kept in good condition, repair, and working order and supplied with all necessary equipment, ordinary wear and tear excepted; provided that nothing in this Section 7.6.3 shall prevent the Borrower or any of its Consolidated Subsidiaries from discontinuing the operation and maintenance of any properties if such discontinuance (i) is, in the judgment of the Borrower or such Subsidiary, desirable in the conduct of its business, and (ii) does not have a Material Effect.                     7.6.4  Status Under Securities Laws.  The Borrower shall maintain its status as a registered “investment adviser”, under (a) the Investment Advisers Act of 1940 and (b) under the laws of each state in which such registration is required in connection with the investment advisory business of the Borrower and, as to (b) only, where a failure to obtain such registration would be likely to have a Material Effect.  The Borrower shall cause Alliance Distributors to maintain its status as a registered “broker/dealer” under the Securities Exchange Act of 1934 and under the laws of each state in which such registration is required in connection with the business of Alliance Distributors and where a failure to obtain such registration would be likely to have a Material Effect, and to maintain its membership in the National Association of Securities Dealers, Inc.           7.7     Insurance.  The Borrower will, and will cause each of its Consolidated Subsidiaries to, maintain with financially sound and reputable insurers insurance with respect to its properties and business against such casualties and contingencies, in such amounts, containing such terms, in such forms, and for such periods, or shall be self-insured in respect of such risks (with appropriate reserves to the extent required by GAAP), as shall be customary in the industry for companies engaged in similar activities in similar geographic areas.           7.8     Taxes.  The Borrower will, and will cause each of its Consolidated Subsidiaries to, duly pay and discharge, or cause to be paid and discharged, before the same shall become overdue, all taxes, assessments, and other governmental charges imposed upon it or its real property, sales, and activities, or any part thereof, or upon the income or profits therefrom, as well as all claims for labor, materials, or supplies that if unpaid (a) might by law become a Lien upon any of its property and (b) would be reasonably likely to result in a Material Effect; provided that any such tax, assessment, charge, levy, or claim need not be paid if the validity or amount thereof shall currently be contested in good faith by appropriate proceedings and if the Borrower or such Subsidiary shall have set aside on its books, if and to the extent permitted by GAAP, adequate accruals with respect thereto.           7.9     Inspection of Properties and Books, Etc.                     7.9.1  General .  The Borrower shall, and shall cause each of its Subsidiaries to, permit the Banks, through the Administrative Agent or any of the Banks’ other designated representatives, to visit and inspect any of the properties of the Borrower or any of its Subsidiaries, to examine the books of account of the Borrower and its Subsidiaries (and to make copies thereof and extracts therefrom), and to discuss the affairs, finances, and accounts of the Borrower and its Subsidiaries with, and to be advised as to the same by, its and their officers, all at such reasonable times and intervals as the Administrative Agent or any Bank may request.  The costs incurred by the Administrative Agent and the Banks in connection with any such inspection shall be borne by the Banks making or requesting the inspection (or, if the Administrative Agent makes an inspection on its own initiative after notice to the Banks, by the Banks jointly, on a pro rata basis according to their outstanding Loans and Letter of Credit Participations or, if no Loans or Letters of Credit are outstanding, their respective Commitments), except as otherwise provided by Section 15(f).  Any data and information that is obtained by the Administrative Agent or any Bank pursuant to this Section 7.9.1 shall be held subject to Section 7.4(e).                     7.9.2  Communication with Accountants.  The Borrower authorizes the Administrative Agent and, if accompanied by the Administrative Agent, the Banks to communicate directly with the Borrower’s independent certified public accountants and authorizes such accountants to disclose to the Administrative Agent and the Banks any and all financial statements and other supporting financial documents and schedules, including copies of any management letter with respect to the Business of the Borrower or any of its Subsidiaries.  The Borrower shall be entitled to reasonable prior notice of any such meeting with its independent certified public accountants and shall have the opportunity to have its representatives present at any such meeting.  At the request of the Administrative Agent, the Borrower shall deliver a letter addressed to such accountants instructing them to comply with the provisions of this Section 7.9.2.  Any data and information that is obtained by the Administrative Agent or any Bank pursuant to this Section 7.9.2 shall be held subject to Section 7.4(e).           7.10   Compliance with Government Mandates, Contracts, and Permits.  The Borrower will and will cause each of its Consolidated Subsidiaries to, comply (if and to the extent that a failure to comply would be likely to have a Material Effect) with (a) all applicable Government Mandates wherever the business of the Borrower or any such Subsidiary is conducted, including all Environmental Laws and all Government Mandates relating to occupational safety and employment matters; (b) the provisions of the certificate of incorporation and by-laws, or the agreement of limited partnership and certificate of limited partnership, or its governing documents in the case of any general partnership, as the case may be, of the Borrower and such Subsidiary; (c) all Contracts to which the Borrower or any such Subsidiary is party, by which the Borrower or any such Subsidiary is or may be bound, or to which any of their respective properties are or may be subject; and (d) the terms and conditions of any Permit used in the Business of the Borrower or any such Subsidiary.  If any Permit shall become necessary or required in order that the Borrower may fulfill any of its obligations hereunder or under any of the other Loan Documents to which the Borrower is a party, the Borrower will immediately take or cause its Subsidiaries to take all reasonable steps within the power of the Borrower and its Subsidiaries to obtain and maintain in full force and effect such Permit and furnish the Administrative Agent and the Banks with evidence thereof.           7.11   Use of Proceeds.  The Borrower will use the proceeds of the Loans solely as provided in Section 6.16.  The Borrower will obtain Letters of Credit solely for the purposes set forth in Section 6.16.           7.12   Restricted Subsidiaries.  The Borrower shall cause each Restricted Subsidiary to continue at all times to satisfy the qualifications of a Restricted Subsidiary as set forth in the definition of “Restricted Subsidiary” in Section 1.1.           7.13   Certain Changes in Accounting Principles.  In the event of a change after the date of this Credit Agreement in (a) GAAP (as in effect from time to time, rather than as defined in Section 1.1) or (b) any regulation issued by the Securities and Exchange Commission (either such event being referred to herein as an “Accounting Change”), that results in a material change in the calculations as to compliance with any financial covenant contained in Section 9 or in the calculation of any item to be taken into account in the calculations as to compliance with any such covenant (the “Affected Computation”) in such a manner and to such an extent that, in the good faith judgment of the Chief Financial Officer of the Borrower or the Majority Banks, as evidenced by notice from such Majority Banks to the Borrower and the Administrative Agent (the “Accounting Notice”), the application of the Accounting Change to the Affected Computation would no longer reflect the intention of the parties to this Credit Agreement, then and in any such event:                     (a)      the Borrower shall, promptly after either a determination by its Chief Financial Officer as provided above or receipt of an Accounting Notice, give written notice thereof to the Administrative Agent and each Bank, which notice shall be accompanied by a copy of any Accounting Notice and a certificate of the Chief Financial Officer of the Borrower:                     (i)       describing the Accounting Change in question and the particular covenant or covenants that will be affected by such Accounting Change;                     (ii)      setting forth in reasonable detail (including detailed calculations) the manner and extent to which the covenant or covenants listed in such certificate are affected by such Accounting Change; and                     (iii)     setting forth in reasonable detail (including detailed calculations) the information required in order to establish that the Borrower would be in compliance with the requirements of the covenant or covenants listed in such certificate if such Accounting Change was not effective (or, if the Borrower would not be so in compliance, setting forth in reasonable detail calculations of the extent of such non-compliance);                     (b)      the Borrower and the Banks will enter into good faith negotiations with each other for an equitable amendment of such covenant or covenants, and the definition of GAAP set forth in Section 1.1, pursuant to Section 25 so as to place the parties, insofar as possible, in the same relative position as if such Accounting Change had not occurred;                     (c)      for the period from the date on which such Accounting Change becomes effective (the “Effective Date”) to the effective date of an amendment to this Credit Agreement pursuant to Section 25, the Borrower shall be deemed to be in compliance with the covenant or covenants listed in such certificate if and so long as (but only if and so long as) the Borrower would be in compliance with such covenant or covenants if such Accounting Change had not occurred; and                     (d)      if no amendment to this Credit Agreement has become effective within ninety (90) days after the Effective Date of such Accounting Change, then all accounting computations required to be made for purposes of this Credit Agreement thereafter shall be made in accordance with GAAP as in effect immediately prior to such Effective Date. 8.       CERTAIN NEGATIVE COVENANTS OF THE BORROWER.           The Borrower covenants and agrees that, so long as any Loan, Unpaid Reimbursement Obligation, Letter of Credit, or Note is outstanding or any Bank or Co-Agent has any obligation to make any Loans or any Co-Agent has any obligation to issue, extend, or renew any Letters of Credit:           8.1     Disposition of Assets.  The Borrower will not, and will not cause, permit, or suffer any of its Consolidated Subsidiaries to, in any single transaction or in multiple transactions within any fiscal year of the Borrower, sell, transfer, assign, or otherwise dispose of all of the business or assets of the Borrower and its Consolidated Subsidiaries, any Significant Assets, or any 12b-1 Fees, or enter into any Contract for any such sale, transfer, assignment, or disposition, provided, however:                     (a)      Subsidiaries of the Borrower may sell, transfer, assign, or dispose of assets (including 12b-1 Fees) to the Borrower;                     (b)      Subsidiaries of the Borrower may sell, transfer, assign, or dispose of assets (including 12b-1 Fees) to any Restricted Subsidiary;                     (c)      the Borrower may sell, transfer, assign, or dispose of assets (including 12b-1 Fees) to any Restricted Subsidiary, provided such Restricted Subsidiary shall have prior to the effective date of such sale, transfer, assignment, or disposition executed and delivered to the Administrative Agent an Assumption Agreement (and all of the conditions set forth in such Assumption Agreement shall have been satisfied and such Assumption Agreement (A) shall not be subject to any default or event of default with respect to any party, (B) shall not be subject to any notice of termination given or received by the Borrower or any of its Subsidiaries, and (C) shall be the legal, valid, and binding obligation of each party thereto enforceable against such party according to its terms);                     (d)      the Borrower and any Subsidiary of the Borrower may sell, transfer or assign, or dispose of 12b-1 Fees to Persons other than the Borrower and Restricted Subsidiaries.  Any Indebtedness in respect of obligations of the Borrower and its Subsidiaries arising out of such transactions shall constitute “Funded Debt”; and                     (e)      the sale, transfer, assignment or other disposition of all or substantially all of the business or assets of the Borrower and its Consolidated Subsidiaries in connection with a transaction permitted under Section 8.2 shall not be subject to the provisions of this Section 8.1.           This covenant is not intended to restrict the conversion of a short-term investment of the Borrower into cash or into another investment which remains an asset of the Borrower.           8.2     Mergers and Reorganizations .  The Borrower will not, and will not cause, permit, or suffer any of its Consolidated Subsidiaries to, become a party to any merger, consolidation, or reorganization (any such transaction, a “Reorganization” and the term “Reorganize”shall have a correlative meaning) or enter into any Contract providing for any Reorganization, provided, however:                     (a)      the Borrower may Reorganize solely with any Restricted Subsidiary, and any Restricted Subsidiary may Reorganize solely with the Borrower or any other Restricted Subsidiary, provided (i) if the Borrower is party to such Reorganization, it is the sole surviving Entity, and (ii) if a Restricted Subsidiary that has previously executed and delivered to the Administrative Agent an Assumption Agreement is party to such Reorganization, each Entity (other than the Borrower or a Restricted Subsidiary that has previously executed and delivered to the Administrative Agent an Assumption Agreement) surviving such Reorganization shall execute and deliver to the Administrative Agent an Assumption Agreement (and all of the conditions set forth in such Assumption Agreement shall have been satisfied and such Assumption Agreement (x) shall not be subject to any default or event of default with respect to any party, (y) shall not be subject to any notice of termination given or received by the Borrower or any of its Subsidiaries, and (z) shall be the legal, valid, and binding obligation of each party thereto enforceable against such party according to its terms);                     (b)      the Borrower may Reorganize with other Entities in connection with any Permitted Acquisition, provided (i) the Borrower is the sole surviving Entity of such Reorganization; (ii) no Default or Event of Default, or breach by the Borrower of any of its covenants in the Loan Documents, shall have occurred and be continuing at the time of such Reorganization; (iii) no Default or Event of Default, or breach by the Borrower of any of its covenants in the Loan Documents, shall occur as a result of, or after giving effect to, such Reorganization; and (iv) such Reorganization does not result in a Change of Control; and                     (c)      the Borrower may Reorganize with any other Entity (including Reorganizations in connection with a conversion of the Borrower to corporate form and other transactions permitted under Section 2.05 of the Borrower Partnership Agreement), provided:                     (i)       no Default or Event of Default shall have occurred and be continuing at the time of such Reorganization;                     (ii)      no Default or Event of Default shall occur as a result of, or after giving effect to, such Reorganization;                     (iii)     each surviving Entity (other than the Borrower if it survives), and each Person that in connection with such Reorganization acquires or succeeds to any of the business or assets of the Borrower shall, as a condition of the effectiveness of such Reorganization, execute and deliver to the Administrative Agent an Assumption Agreement (and all of the conditions set forth in such Assumption Agreement shall have been satisfied and such Assumption Agreement (A) shall not be subject to any default or event of default with respect to any party, (B) shall not be subject to any notice of termination given or received by the Borrower or any of its Subsidiaries, and (C) shall be the legal, valid, and binding obligation of each party thereto enforceable against such party according to its terms).  Notwithstanding the foregoing, Persons that in connection with such Reorganization in the aggregate acquire or succeed to assets generating less than twenty percent (20%) of the consolidated revenues of the Borrower and the Consolidated Subsidiaries during the four (4) fiscal quarters of the Borrower most recently ended shall not be required to enter into an Assumption Agreement as provided above in this clause (iii) in connection with such Reorganization so long as each surviving Entity (other than the Borrower if it survives) and Persons that in connection with such Reorganization in the aggregate acquire or succeed to assets generating not less than $400,000,000 of consolidated revenues of the Borrower and the Consolidated Subsidiaries during the four (4) fiscal quarters of the Borrower most recently ended shall, as a condition to the effectiveness of such Reorganization, execute and deliver to the Administrative Agent an Assumption Agreement and the other conditions specified above with respect to such Assumption Agreement shall be satisfied;                     (iv)     such Reorganization does not result in a Change of Control;                     (v)      after giving effect to such Reorganization, investment management contracts, together with agreements associated with distribution revenues and shareholder servicing fees, with respect to at least seventy-five percent (75%) of the consolidated revenues, less “other revenues” (as such term is used in the Borrower’s consolidated statements of income as filed with the Securities and Exchange Commission), of the Borrower and its Consolidated Subsidiaries during the four (4) fiscal quarters most recently ended prior to such Reorganization (A) shall remain in full force and effect, and (B) shall, if held by the Borrower or one or more of its Consolidated Subsidiaries prior to such Reorganization, be held by the Borrower or one or more of its Consolidated Subsidiaries or shall have been duly assigned to or otherwise held by Persons executing and delivering to the Administrative Agent Assumption Agreements pursuant to clause (iii) above or one or more of any such Person’s Consolidated Subsidiaries;                     (vi)     any diminution in the aggregate net worth of the Borrower (if it survives) and any Persons executing and delivering to the Administrative Agent Assumption Agreements pursuant to clause (iii) above and the consolidated Subsidiaries of each thereof (after elimination of intercompany items and without double counting), when compared with the Consolidated Net Worth of the Borrower as of the date of the most recently completed fiscal quarter immediately prior to such Reorganization, is not more than twenty percent (20%) of such Consolidated Net Worth; and                     (vii)    that the Borrower has given the Administrative Agent and the Banks written notice of such Reorganization at least ten (10) business days prior to such Reorganization, which notice shall include current revised projections with respect to the Borrower and its Subsidiaries reflecting such Reorganization.           8.3     Acquisitions.  The Borrower will not, and will not cause, permit, or suffer any of its Subsidiaries to, become a party to, contract for, or effect any purchase, exchange, or acquisition of Equity Securities or assets (any such transaction, an “Acquisition”), other than an Acquisition of assets that do not constitute all or a material part of a business, provided, however, the Borrower or any of its Subsidiaries may become a party to, contract for, or effect an Acquisition if each of the following conditions are satisfied:                     (a)      no Default or Event of Default, or breach by the Borrower of any of its covenants in the Loan Documents, shall have occurred and be continuing at the time of such Acquisition;                     (b)      no Default or Event of Default, or breach by the Borrower of any of its covenants in the Loan Documents, shall occur as a result of, or after giving effect to, such Acquisition;                     (c)      such Acquisition relates solely to (i) Equity Securities in another Person engaged primarily in, or assets of another Person used primarily for, businesses related to investment management, (ii) goods or services that will be used in the business of the Borrower or any of its Subsidiaries, or (iii) additional Equity Securities issued by an Entity, the Equity Securities of which have previously been purchased by the Borrower or one of its Subsidiaries under this Section 8.3;                     (d)      if such Acquisition relates to Equity Securities of another Entity, after giving effect to such Acquisition, at least a majority of the Equity Securities, and at least a majority of the Voting Equity Securities, of such Entity are held directly by the Borrower or indirectly by the Borrower through one or more Restricted Subsidiaries (but not through any Subsidiary that is not a Restricted Subsidiary);                     (e)      any Entity that issued Equity Securities purchased in such Acquisition and any Entity through which the Borrower effected an Acquisition of Equity Securities or assets, becomes, upon the consummation of the Acquisition, a Consolidated Subsidiary subject to the terms and conditions of this Credit Agreement; and                     (f)       except as permitted by Section 8.6, any Entity that issued Equity Securities purchased in such Acquisition and any Entity through which the Borrower effected an Acquisition of Equity Securities or assets is not upon consummation of such Acquisition (and the Borrower will not thereafter cause, permit, or suffer any such Entity to become) a general partner in any partnership, a party to a joint venture, or subject to any contingent obligations established by Contract that are not by their terms limited to a specific dollar amount; provided, however, that any such Entity may be a general partner in a partnership which is wholly owned by the Borrower or its Restricted Subsidiaries.           8.4     Restrictions on Liens.  The Borrower will not, and will not cause, permit, or suffer any of its Consolidated Subsidiaries to, (a) create or incur, or cause, permit, or suffer to be created or incurred or to exist, any Lien upon any of its property or assets of any character whether now owned or hereafter acquired, or upon the income or profits therefrom; (b) transfer any of such property or assets or the income or profits therefrom for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of its general creditors; (c) acquire, or agree or have an option to acquire, any property or assets upon conditional sale or other title retention or purchase money security agreement, device, or arrangement; (d) suffer to exist any Indebtedness or claim or demand for a period of time such that the same by Government Mandate or upon bankruptcy or insolvency, or otherwise, would be given any priority whatsoever over its general creditors; or (e) assign, pledge, or otherwise transfer any accounts, contract rights, general intangibles, chattel paper, or instruments, with or without recourse, other than a transfer or assignment in connection with a sale permitted under Section 8.1 or Reorganization permitted under Section 8.2 or an Investment permitted under Section 8.6; provided that the Borrower and any Subsidiary of the Borrower may create or incur, or cause, permit, or suffer to be created or incurred or to exist:                     (i)       Liens imposed by Government Mandate to secure taxes, assessments, and other government charges in respect of obligations not overdue;                     (ii)      statutory Liens of carriers, warehousemen, mechanics, suppliers, laborers, and materialmen, and other like Liens, in each case in respect of obligations not overdue;                     (iii)     pledges or deposits made in connection with, or to secure payment of, workers’ compensation, unemployment insurance, old age pensions, or other social security obligations;                     (iv)     Liens on Real Estate consisting of easements, rights of way, zoning restrictions, restrictions on the use of real property, defects and irregularities in the title thereto, and other minor Liens, provided, (A) none of such Liens in the reasonable opinion of the Borrower interferes materially with the use of the affected property in the ordinary conduct of the business of the Borrower and its Subsidiaries, and (B) such Liens individually or in the aggregate do not have a Material Effect;                     (v)      the rights and interests of landlords and lessors under leases of Real Estate leased by the Borrower or one of its Subsidiaries, as lessee;                     (vi)     Liens outstanding on the Closing Date and set forth on Schedule 8.4;                     (vii)    Liens in favor of either the Borrower or a Restricted Subsidiary on all or part of the assets of any Subsidiary of the Borrower securing Indebtedness owing by such Subsidiary to the Borrower or such Restricted Subsidiary, as the case may be;                     (viii)    Liens on interests of the Borrower or its Subsidiaries in partnerships or joint ventures consisting of binding rights of first refusal, rights of first offer, take-me-along rights, third-party offer provisions, buy-sell provisions, other transfer restrictions and conditions relating to such partnership or joint venture interests, and Liens granted to other participants in such partnership or joint venture as security for the performance by the Borrower or its Subsidiaries of their obligations in respect of such partnership or joint venture;                     (ix)     UCC notice filings in connection with non-recourse sales of 12b-1 Fees (other than sales constituting a collateral security device); and                     (x)      Liens (in addition to those specified in clauses (i) through (ix) above) securing Indebtedness in an aggregate amount for the Borrower and all of its Consolidated Subsidiaries taken together not in excess of $80,000,000 outstanding at any point in time (but excluding from the amount of any such Indebtedness that portion which is fully covered by insurance and as to which the insurance company has acknowledged to the Administrative Agent its coverage obligation in writing).           8.5     Guaranties.  The Borrower shall not, and shall not cause, permit, or suffer any of its Consolidated Subsidiaries to, either (a) guaranty, endorse, accept, act as surety for, or otherwise become liable in respect of, Indebtedness of (or undertake to maintain working capital or other balance sheet condition of, or otherwise to advance or make funds available for the purchase of Indebtedness of) other Persons unless such obligation of the Borrower or its Subsidiary is expressly limited by the instrument establishing the same to a specified amount, or (b) voluntarily incur, create, assume, or otherwise become liable for any contingent obligations that are not by their terms limited to a specific dollar amount.  For purposes of this Section 8.5 “contingent obligation” means contingent obligations of the Borrower or any of its Consolidated Subsidiaries, whether direct or indirect, in respect of Indebtedness of other Persons. This Section 8.5 shall not apply to (a) contingent obligations of a Subsidiary of the Borrower that is not a Restricted Subsidiary in its capacity as general partner of a partnership, or contingent obligations of a Restricted Subsidiary in its capacity as a general partner of a partnership which is wholly owned by the Borrower or its Restricted Subsidiaries, or (b) guaranties by the Borrower or any Consolidated Subsidiary of obligations of Restricted Subsidiaries (other than obligations in respect of Funded Debt) incurred in the ordinary course of business (including, without limitation, guaranties incurred to comply with conditions and requirements imposed by any applicable law, rule or regulation or otherwise customary and appropriate to operate an investment management business in any jurisdiction outside of the United States).           8.6     Restrictions on Investments .  The Borrower will not, and will not cause, permit, or suffer any of its Consolidated Subsidiaries to, make or permit to exist or to remain outstanding any Investment except:                     (a)      Investments in marketable securities, liquid investments, and other financial instruments that are acquired for investment purposes and that have a value that may be readily established, including any such Investment that may be readily sold or otherwise liquidated in any mutual fund for which the Borrower or one of its Subsidiaries serves as investment manager or adviser;                     (b)      Investments consisting of seed money contributions to open-end and closed-end investment companies for which the Borrower or one of its Subsidiaries serves as investment manager or adviser, provided in each case the amount of such Investment will not exceed the minimum seed money contribution required by the 1940 Act or other applicable law, regulation, or custom (provided that when seed money contributions are made pursuant to “custom”, in no event shall the amount contributed to any single investment company exceed $3,000,000);                     (c)      Investments existing on the Closing Date and set forth on Schedule 8.6;                     (d)      Investments made by the Borrower or any Restricted Subsidiary in the Borrower or any Restricted Subsidiary;                     (e)      Investments made after the Closing Date in Consolidated Subsidiaries that act as general partner of one or more partnerships in an aggregate amount not to exceed $20,000,000 at any point in time;                     (f)       Investments consisting of inter-company advances made in the ordinary course of business by the Borrower or any Subsidiary to any Consolidated Subsidiary, provided each such advance is settled within ninety-two (92) days after it is made (for purposes of this provision, settlement shall mean repayment of an advance in full in cash and without renewal of such advance, and without a substitute advance from the Borrower or another Subsidiary, for at least twenty-four (24) hours after such cash payment);                     (g)      Investments made in connection with a Reorganization permitted under Section 8.2 hereof; and                     (h)      Investments (in addition to those specified in clauses (a) through (f) above) in an aggregate amount for the Borrower and all of its Subsidiaries taken together not in excess of $150,000,000 outstanding at any time.           Notwithstanding any provisions to the contrary in the definition of “Investments” in Section 1.1, the Dollar amount of any Investment for purposes of clauses (e) and (g) above shall be reduced by the amount of any dividend, interest, or other return in respect of such Investment that is actually received in cash by the Borrower or a Restricted Subsidiary.           8.7     Restrictions on Funded Debt .  The Borrower will not cause, permit, or suffer any of the Consolidated Subsidiaries to, create, incur, assume, guarantee, or be or remain liable, contingently or otherwise, with respect to any Funded Debt, provided, however, that (a) this covenant shall not apply to Funded Debt owing solely to the Borrower or another Consolidated Subsidiary of the Borrower, and (b) Consolidated Subsidiaries of the Borrower other than Alliance Capital Management Corporation of Delaware and Alliance Distributors may, subject to the other terms and conditions of the Loan Documents, create, incur, assume, guarantee, or be or remain liable with respect to Funded Debt in an aggregate principal amount (for all such Subsidiaries) that does not exceed fifteen percent (15%) of the Borrower’s Consolidated Net Worth, at any time during any calendar year, as set forth in the most recently delivered annual or quarterly report of the Borrower.           8.8     Distributions.  The Borrower shall not cause, permit, or suffer any restriction or Lien on the ability of any Consolidated Subsidiary to (a) pay, directly or indirectly, any Distributions to the Borrower or any other Subsidiary of the Borrower, (b) make any payments, directly or indirectly, in respect of any Indebtedness or other obligation owed to the Borrower or any of its Subsidiaries, (c) make loans or advances to the Borrower or any other Subsidiary of the Borrower, or (d) sell, transfer, assign, or otherwise dispose of any property or assets to the Borrower or any other Subsidiary of the Borrower, except, in each such case, restrictions or Liens (aa) that exist under or by reason of applicable Government Mandates, including any net capital rules, (bb) that are imposed only, as to Indebtedness of the Borrower or any Consolidated Subsidiary incurred prior to the date hereof, upon a failure to pay when due any of such Indebtedness, or, as to Indebtedness of the Borrower or any Consolidated Subsidiary incurred on or after the date hereof, upon an acceleration of such Indebtedness or a failure to pay the full amount of such Indebtedness at maturity, or (cc) that arise by reason of the maintenance by any Subsidiary that is not a Restricted Subsidiary of a level of net worth for the purpose of ensuring that limited partnerships for which it serves as general partner will be treated as partnerships for federal income tax purposes.  Notwithstanding the foregoing, any portion of net earnings of any Restricted Subsidiary that is unavailable for payment of dividends to the Borrower or any other Restricted Subsidiary by reason of a restriction or Lien permitted under any of clauses (aa), (bb), and (cc) shall be excluded from the calculation of Consolidated Net Income (or Loss).           8.9     Transactions with Affiliates .  The Borrower will not, and will not cause, permit, or suffer any of its Subsidiaries to, directly or indirectly, enter into any Contract or other transaction with any Affiliate of the Borrower or any of its Subsidiaries that is material to the Borrower and the Consolidated Subsidiaries taken as a whole, unless either: (a) such Contract or transaction relates solely to compensation arrangements with directors, officers, or employees of the Borrower, the General Partner, or the Consolidated Subsidiaries, or (b) such transaction is in the ordinary course of business and is, taking into account the totality of the relationships involved, on fair and reasonable terms no less favorable to the Borrower and the Consolidated Subsidiaries taken as a whole than would be obtained in comparable arm’s length transactions with Persons that are not Affiliates of the Borrower or its Subsidiaries or (c) the Contract or other transaction is in connection with a Reorganization permitted under Section 8.2 hereof.           8.10   Fiscal Year.  The Borrower shall not change its fiscal year unless the parties to the Loan Documents shall first enter into amendments to the Loan Documents such that the rights of the parties to the Loan Documents will not be affected by the change in the fiscal year of the Borrower, and the parties shall enter into such amendments as may be required in connection with a change of the Borrower’s fiscal year.           8.11   Compliance with Environmental Laws.  The Borrower will not, and will not cause, permit, or suffer any of its Subsidiaries to, (a) use any of the Real Estate or any portion thereof for the handling, processing, storage, or disposal of Hazardous Substances, (b) cause, permit, or suffer to be located on any of the Real Estate any underground tank or other underground storage receptacle for Hazardous Substances, (c) generate any Hazardous Substances on any of the Real Estate, (d) conduct any activity at any Real Estate or use any Real Estate in any manner so as to cause a release (i.e., releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing, or dumping) or threatened release of Hazardous Substances on, upon, or into the Real Estate, or (e) otherwise conduct any activity at any Real Estate or use any Real Estate in any manner that would violate any Environmental Law or bring such Real Estate in violation of any Environmental Law, in each case, so as would be likely to have a Material Effect.           8.12   Employee Benefit Plans .  The Borrower will not, and will not cause, permit, or suffer any ERISA Affiliate to:                     (a)      engage in any “prohibited transaction” within the meaning of §406 of ERISA or §4975 of the Code that could result in a material liability for the Borrower and its Consolidated Subsidiaries taken as a whole;                     (b)      permit any Guaranteed Pension Plan to incur an “accumulated funding deficiency”, as such term is defined in §302 of ERISA, whether or not such deficiency is or may be waived;                     (c)      fail to contribute to any Guaranteed Pension Plan to an extent that, or terminate any Guaranteed Pension Plan in a manner that, could result in the imposition of a Lien on the assets of the Borrower or any of its Subsidiaries pursuant to §302(f) or §4068 of ERISA; or                     (d)      permit or take any action that would result in the aggregate benefit liabilities (within the meaning of §4001 of ERISA) of all Guaranteed Pension Plans exceeding the value of the aggregate assets of such Plans by more than $20,000,000, disregarding for this purpose the benefit liabilities and assets of any such Plan with assets in excess of benefit liabilities.           8.13   Amendments to Certain Documents.  The Borrower shall not, without the prior written consent of the Administrative Agent in each instance, permit or suffer any material amendments, modifications, supplements, or restatements of its certificate of limited partnership or the Borrower Partnership Agreement (or, following any conversion of the Borrower to a corporation, its certificate of incorporation or by-laws) that (i) relate to the determination of Available Cash Flow or Operating Cash Flow under the Borrower Partnership Agreement, or (ii) could reasonably be expected to materially adversely affect the ability of the Borrower to perform and observe its obligations under the Loan Documents or the legal rights and remedies of the Banks, the Co-Agents and the Administrative Agent under any of the Loan Documents. 9.       FINANCIAL COVENANTS OF THE BORROWER.           The Borrower covenants and agrees that, so long as any Loan, Unpaid Reimbursement Obligation, Letter of Credit, or Note is outstanding or any Bank or Co-Agent has any obligation to make any Loans or any Co-Agent has any obligation to issue, extend, or renew any Letters of Credit:           9.1     Ratio of Consolidated Adjusted Funded Debt to Consolidated Adjusted Cash Flow.                     (a)      The Borrower will not at any time permit the ratio of (i) the aggregate principal amount of Consolidated Adjusted Funded Debt at such time to (ii) Consolidated Adjusted Cash Flow for the period of four (4) consecutive fiscal quarters then (or most recently) ended to exceed 3.00 to 1.00.                     (b)      Consolidated Adjusted Funded Debt shall mean at any time the sum of:                     (i)       the aggregate outstanding principal amount of Funded Debt of the Borrower and the Consolidated Subsidiaries (whether owed by more than one of them jointly or by any of them singly) at such time determined on a consolidated basis in accordance with GAAP; and                     (ii)      without duplication, the aggregate outstanding principal amount of Funded Debt owed by the Borrower and the Consolidated Subsidiaries (whether owed by more than one of them jointly or by any of them singly) at such time to any Consolidated Subsidiary that is not a Restricted Subsidiary.                     (c)      Consolidated Adjusted Cash Flow shall mean, with respect to any fiscal period, the difference of:                     (i)       the sum of (A) EBITDA of the Borrower and the Consolidated Subsidiaries for such fiscal period, plus (B) non-cash charges of the Borrower and the Consolidated Subsidiaries (other than charges for depreciation and amortization) for such fiscal period to the extent deducted in determining Consolidated Net Income (or Loss) for such period;           minus                     (ii)      brokerage commissions paid in connection with sales of “B” shares of investment companies and mutual funds managed or advised by the Borrower or one of its Subsidiaries (net of contingent deferred sales charges received in conjunction with redemptions of such “B” shares).           9.2     Minimum Net Worth.  As of the last day of each calendar quarter, the Borrower shall not permit its Consolidated Net Worth to be less than $700,000,000.           9.3     Miscellaneous .                     (a)      All capitalized terms that are used in this Section 9 without definition in this Agreement shall refer to the corresponding items in the financial statements of the Borrower (as such items were determined for purposes of the financial statements referred to in this Section 9.3).                     (b)      For purposes of this Section 9, demand obligations shall be deemed to be due and payable during any fiscal year during which such obligations are outstanding. 10.     CLOSING CONDITIONS.           The obligations of the Banks to enter into this Credit Agreement shall be subject to the satisfaction of the following conditions precedent at or before the Closing Date:           10.1   Financial Statements and Material Changes.  The Banks shall be reasonably satisfied that (a) the financial statements of the Borrower and the Consolidated Subsidiaries referred to in Section 6.4 fairly present in all material respects the business and financial condition and the results of operations of the Borrower and the Consolidated Subsidiaries as of the dates and for the periods to which such financial statements relate, and (b) there shall have been no material adverse change in the Business of the Borrower and the Consolidated Subsidiaries taken as a whole since the dates of such financial statements.           10.2   Loan Documents.  Each of the Loan Documents shall have been duly executed and delivered by the respective parties thereto and shall be in full force and effect.  Each Bank, each Co-Agent and the Administrative Agent shall have received a fully executed copy of each such document.           10.3   Certified Copies of Charter Documents.  Each of the Banks, the Co-Agents and the Administrative Agent shall have received from the Borrower and the General Partner (a) a copy of its certificate of incorporation, certificate of limited partnership, or other charter document duly certified as of a recent date by the Secretary of State of Delaware, (b) a copy, certified by a duly authorized officer of such Entity to be true and complete on the Closing Date, of its by-laws, agreement of limited partnership, or equivalent document as in effect on such date, and (c) a certificate of the Secretary of State of Delaware as to the due organization, legal existence, and good standing of such Entity. The certificate of incorporation and by-laws or partnership agreement and certificate of limited partnership, as the case may be, of the Borrower, each of its Subsidiaries, and the General Partner shall be in all respects satisfactory in form and substance to the Banks, the Co-Agents and the Administrative Agent.           10.4   Partnership and Corporate Action.  All partnership action necessary for the valid execution, delivery, and performance by the Borrower of this Credit Agreement and the other Loan Documents to which it is or is to become a party, and all corporate action necessary for the General Partner to cause the Borrower to execute, deliver, and perform this Credit Agreement and the other Loan Documents to which the Borrower is or is to become a party, shall have been duly and effectively taken, evidence thereof reasonably satisfactory to the Banks, the Co-Agents and the Administrative Agent shall have been provided to each of the Banks, and such action shall be in full force and effect at the Closing Date.           10.5   Consents.  Each party hereto shall have duly obtained all consents and approvals of Government Authorities and other third parties, and shall have effected all notices, filings, and registrations with Government Authorities and other third parties, as may be required in connection with the execution, delivery, performance, and observance of the Loan Documents; all of such consents, approvals, notices, filings, and registrations shall be in full force and effect; and the Banks, the Co-Agents and the Administrative Agent shall have each received evidence thereof satisfactory to them.           10.6   Opinions of Counsel.  Each of the Banks, the Co-Agents and the Administrative Agent shall have received a favorable opinion addressed to the Banks, the Co-Agents and the Administrative Agent, dated as of the Closing Date, from Brown & Wood LLP, counsel to the Borrower, in the form of Exhibit I hereto.           10.7   Proceedings .  There shall be no Proceedings pending or threatened the result of which is reasonably likely to impair or prevent the Borrower’s performance and observance of its obligations under this Credit Agreement and the other Loan Documents.           10.8   Incumbency Certificate.  Each of the Banks, the Co-Agents and the Administrative Agent shall have received from the Borrower an incumbency certificate, dated as of the Closing Date, signed by a duly authorized officer of the Borrower and giving the name and bearing a specimen signature of each individual who shall be authorized: (a) to sign, in the name and on behalf of the Borrower, each of the Loan Documents to which the Borrower is or is to become a party; (b) to make Loan Requests, Conversion Requests and to apply for Letters of Credit; and (c) to give notices and to take other action on behalf of the Borrower under the Loan Documents.           10.9   Fees.  The Borrower shall have paid to the Administrative Agent for the accounts of the Banks all fees then payable.           10.10 Representations and Warranties True; No Defaults.  The Co-Agents, the Administrative Agent and the Banks shall have received a certificate of an officer of the General Partner, in form and substance satisfactory to the Administrative Agent, the Co-Agents, and the Banks, to the effect that (i) each of the representations and warranties set forth herein and each of the other Loan Documents is true and correct in all material respects on and as of the Closing Date, and (ii) no material defaults exist under any material contract or agreement of the Borrower, including, without limitation, this Credit Agreement and the other Loan Documents. 11.     CONDITIONS TO ALL BORROWINGS.           The obligations of the Banks to make any Loan, and the obligations of any Co-Agent to issue, extend or renew any Letter of Credit whether on or after the Closing Date, shall also be subject to the satisfaction of the conditions precedent set forth below.  Each of the submission of a Loan Request or a Letter of Credit Application by the Borrower and the acceptance by the Borrower of any Loan shall constitute a representation and warranty by the Borrower that the conditions set forth below have been satisfied.           11.1   No Default.  No Default or Event of Default shall have occurred and be continuing.           11.2   Representations True.  Each of the representations and warranties of the Borrower and its Subsidiaries contained in this Credit Agreement (other than the Borrower’s representation and warranty set forth in Section 6.5), the other Loan Documents, or in any document or instrument delivered pursuant to or in connection with this Credit Agreement shall be true and correct in all material respects as of the time of the making of such Loan or the issuance, extension or renewal of such Letter of Credit, with the same effect as if made at and as of that time (except (a) to the extent that such representations and warranties expressly relate to a prior date, in which case they shall be true and correct in all material respects as of such earlier date, and (b) to the extent of changes resulting from transactions contemplated or permitted by this Credit Agreement and the other Loan Documents and changes occurring in the ordinary course of business that singly or in the aggregate are not materially adverse to the Borrower and its Consolidated Subsidiaries taken as a whole).           11.3   Loan Request or Letter of Credit Application.  In the case of a Loan (other than a Loan made under Section 2.8), the Administrative Agent shall have received a Loan Request as provided in Section 2.7.  In the case of a Letter of Credit, any of the Co-Agents shall have received a Letter of Credit Application as provided in Section 4.1.           11.4   Payment of Fees .  Without limiting any other condition, the Borrower shall have paid to the Administrative Agent, for the account of the Banks, the Co-Agents and the Administrative Agent as appropriate, all fees and other amounts due and payable under the Loan Documents at or prior to the time of the making of such Loan or the issuance, extension or renewal of such Letter of Credit.           11.5   No Legal Impediment.  No change shall have occurred in any Government Mandate that in the reasonable opinion of any Bank would make it illegal for such Bank to make such Loan (it being understood that this section shall be a condition only for the Bank or Banks affected by such Government Mandate) or that in the reasonable opinion of any of the Co-Agents would make it illegal for such Co-Agent to issue, extend or renew any Letter of Credit. 12.     EVENTS OF DEFAULT; ACCELERATION; ETC.           12.1   Events of Default and Acceleration.  If any of the following events (“Events of Default” or, if the giving of notice or the lapse of time or both is required, then, prior to such notice or lapse of time, “Defaults”) shall occur:                     (a)      the Borrower or any Other Obligor shall fail to pay any principal of the Loans or any Reimbursement Obligation (for which a Loan is not made as provided in Section 2.8) when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment;                     (b)      the Borrower or any Other Obligor shall fail to pay any interest on the Loans when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment, and such failure shall continue for five (5) days after written notice of such failure has been given to the Borrower (or if the Borrower no longer exists, such other Obligor) by the Administrative Agent;                     (c)      the Borrower or any Other Obligor shall fail to perform or observe any of its covenants contained in Sections 7.5.1, 7.6.1, 8.1, 8.2, 8.3, 8.4(x), 8.13, 9, or, if such failure relates to a Lien securing Funded Debt, 8.4;                     (d)      the Borrower, any Other Obligor, or any of their respective Subsidiaries shall fail to perform or observe any term, covenant, or agreement contained herein or in any of the other Loan Documents (other than those specified elsewhere in this Section 12) for thirty (30) days after written notice of such failure has been given to the Borrower (or if the Borrower no longer exists, such Other Obligor) by the Administrative Agent, provided, that a failure to perform or observe the terms, covenants and agreements set forth in Section 7.4 or Section 7.5.3 that continues for more than ten (10) days (regardless of whether notice of such failure is given to the Borrower) shall constitute an Event of Default hereunder;                     (e)      any representation or warranty of the Borrower, any Other Obligor, or any of their respective Subsidiaries in this Credit Agreement, any of the other Loan Documents, or in any other document or instrument delivered pursuant to or in connection with this Credit Agreement shall prove to have been incorrect in any material respect upon the date when made or deemed to have been made or repeated;                     (f)       failure to make a payment of principal or interest, or a default, event of default, or other event permitting (with or without the passage of time or the giving of notice) acceleration or exercise of remedies shall occur with respect to (i) any Indebtedness for money borrowed, (ii) any Indebtedness in respect of the deferred purchase price of goods or services, or (iii) any Capitalized Lease, of the Borrower, any Other Obligor, or any of their respective Subsidiaries, having a principal amount (or, in the case of a Capitalized Lease, scheduled rental payments with a discounted present value from the last day of the initial term to the date of determination as determined in accordance with generally accepted accounting principles), (A) in any one case, of  $50,000,000 or more, or (B) in the aggregate, of $150,000,000 or more, and such failure to make a payment of principal or interest, or a default, event of default, or other event shall continue for such period of time as would entitle the holder of such Indebtedness or Capitalized Lease (with or without notice) to accelerate such Indebtedness or terminate such Capitalized Lease;                     (g)      any of the Loan Documents shall be cancelled, terminated, revoked, or rescinded otherwise than in accordance with the terms thereof or with the express prior written agreement, consent, or approval of the Banks, or any Proceeding to cancel, revoke, or rescind any of the Loan Documents shall be commenced by or on behalf of the Borrower, any Other Obligor, or any of their respective Subsidiaries party thereto, or any Government Authority of competent jurisdiction shall make a determination that, or issue a Government Mandate to the effect that, any material provision of one or more of the Loan Documents is illegal, invalid, or unenforceable in accordance with the terms thereof;                     (h)      the Borrower, any Other Obligor, Alliance Distributors, the General Partner, or any Material Subsidiary shall make an assignment for the benefit of creditors, or admit in writing its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator, or receiver of the Borrower, any Other Obligor, Alliance Distributors, the General Partner or any Material Subsidiary or of any substantial part of the assets of the Borrower, any Other Obligor, Alliance Distributors, the General Partner, or any Material Subsidiary, or shall commence any Proceeding relating to the Borrower, any Other Obligor, Alliance Distributors, the General Partner, or any Material Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution, liquidation, or similar law of any jurisdiction, now or hereafter in effect, or shall take any action to authorize or in furtherance of any of the foregoing, or if any such petition or application shall be filed or any such Proceeding shall be commenced against the Borrower, any Other Obligor, Alliance Distributors, the General Partner, or any Material Subsidiary and any of such parties shall indicate its approval thereof, consent thereto, or acquiescence therein;                     (i)       either (i) an involuntary Proceeding relating to the Borrower, any Other Obligor, Alliance Distributors, the General Partner, or any Material Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution, liquidation, or similar law of any jurisdiction, now or hereafter in effect is commenced and not dismissed or vacated within sixty (60) days following entry thereof, or (ii) a decree or order is entered appointing any trustee, custodian, liquidator, or receiver described in (h) or adjudicating the Borrower, any Other Obligor, Alliance Distributors, the General Partner, or any Material Subsidiary bankrupt or insolvent, or approving a petition in any such Proceeding, or a decree or order for relief is entered in respect of the Borrower, any Other Obligor, Alliance Distributors, the General Partner, or any Material Subsidiary in an involuntary Proceeding under federal bankruptcy laws as now or hereafter constituted;                     (j)       there shall remain in force, undischarged, unsatisfied, and unstayed, for more than forty-five (45) days, any final judgment or order against the Borrower, any Other Obligor, or any of their respective Subsidiaries, that, with any other such outstanding final judgments or orders, undischarged, against the Borrower, any Other Obligors, and their respective Subsidiaries taken together exceeds in the aggregate $20,000,000;                     (k)      with respect to any Guaranteed Pension Plan, an ERISA Reportable Event shall have occurred and the Majority Banks shall have determined in their reasonable discretion that such event reasonably could be expected to result in liability of the Borrower, any Other Obligor, or any of their respective Subsidiaries to the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding $20,000,000 and such event in the circumstances occurring reasonably could constitute grounds for the termination of such Guaranteed Pension Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Guaranteed Pension Plan; or a trustee shall have been appointed by the United States District Court to administer such Guaranteed Pension Plan; or the PBGC shall have instituted proceedings to terminate such Guaranteed Pension Plan;                     (l)       any of the following: (i) the Borrower or (if required to be so registered) any Other Obligor shall fail to be duly registered as an “investment adviser” under the Investment Advisers Act of 1940; or (ii) Alliance Distributors shall cease to be duly registered as a “broker/dealer” under the Securities Exchange Act of 1934 or shall cease to be a member in good standing of the National Association of Securities Dealers, Inc.;                     (m)     the Borrower, any Other Obligor, Alliance Distributors, the General Partner, or any Material Subsidiary shall either (i) be indicted for a federal or state crime and, in connection with such indictment, Government Authorities shall seek to seize or attach, or seek a civil forfeiture of, property of the Borrower, any Other Obligor, Alliance Distributors, the General Partner, or one or more of such Material Subsidiary having a fair market value in excess of $20,000,000, or (ii) be found guilty of, or shall plead guilty, no contest, or nolo contendere to, any federal or state crime, a punishment for which could include a fine, penalty, or forfeiture of any assets of the Borrower, such Other Obligor, Alliance Distributors, the General Partner, or such Material Subsidiary having in any such case a fair market value in excess of $20,000,000; or                     (n)      Alliance Capital Management Corporation shall cease to be the sole general partner of the Borrower, and such circumstance shall continue for thirty (30) days after written notice of such circumstance has been given to the Borrower (or, if the Borrower no longer exists, any Other Obligor), provided,thatthe admission of additional Persons as (a) general partner of the Borrower shall not constitute an Event of Default if, prior to the admission of any such general partner, the Borrower delivers to the Banks (i) the documentation with respect to such general partner that would be required under Section 10.3 if such Person were a General Partner on the Closing Date, (ii) an incumbency certificate for such general partner as required for the Borrower pursuant to Section 10.8, and (c) an opinion from counsel reasonably acceptable to the Banks, in form and substance reasonably satisfactory to the Banks, as to such general partner’s power and authority to act on behalf of the Borrower as a general partner of the Borrower, and provided, further, that a Reorganization of the Borrower pursuant to Section 8.2(c) as permitted under Section 2.05 of the Borrower Partnership Agreement shall not constitute a Default or an Event of Default under this clause(n);           then, and in any such event, so long as the same may be continuing, the Administrative Agent, upon the request of the Majority Banks, shall by notice in writing to the Borrower declare all amounts owing with respect to this Credit Agreement, the Notes, and the other Loan Documents and all Reimbursement Obligations (including with respect to outstanding undrawn Letters of Credit) to be, and they shall thereupon forthwith become, immediately due and payable without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived by the Borrower; provided that in the event of any Event of Default specified in Section 12.1(h) or Section 12.1(i), all such amounts shall become immediately due and payable automatically and without any requirement of notice from the Administrative Agent, any Co-Agent or any Bank; and provided, further, that any such declaration may be rescinded by the Majority Banks after the Events of Default leading to such declaration are cured or waived.           12.2   Termination of Commitments .  If any one or more of the Events of Default specified in Section 12.1(h) or Section 12.1(i) shall occur, any unused portion of the Total Commitment hereunder shall forthwith terminate and each of the Banks shall be relieved of all obligations to make Loans to the Borrower and the Co-Agents shall be relieved of all further obligations to issue, extend or renew Letters of Credit.  If any other Event of Default shall have occurred and be continuing, or if on any Drawdown Date the conditions precedent to the making of the Loans to be made on such Drawdown Date are not satisfied, or if on any date for issuing, extending, or renewing any Letter of Credit the conditions precedent to issuing, extending, or renewing such Letter of Credit on such date are not satisfied, the Administrative Agent may with the consent of the Majority Banks and, upon the request of the Majority Banks, shall, by notice to the Borrower, terminate the unused portion of the Total Commitment hereunder, and upon such notice being given such unused portion of the Total Commitment hereunder shall terminate immediately and each of the Banks shall be relieved of all further obligations to make Loans and the Co-Agents shall be relieved of all further obligations to issue, extend or renew Letters of Credit.  If any such notice is given to the Borrower, the Administrative Agent will forthwith furnish a copy thereof to each of the Banks. No termination of the Total Commitment hereunder shall relieve the Borrower of any of the Obligations or any of its existing obligations to any of the Banks arising under other agreements or instruments.           12.3   Remedies                     (a)      In case any one or more of the Events of Default shall have occurred and be continuing, and whether or not the Administrative Agent shall have accelerated the maturity of the Loans pursuant to Section 12.1, each Bank, if owed any amount with respect to the Loans or the Reimbursement Obligations, may with the consent of the Majority Banks but not otherwise, proceed to protect and enforce its rights by any appropriate Proceeding, whether for the specific performance of any covenant or agreement contained in this Credit Agreement and the other Loan Documents or any instrument pursuant to which the Obligations to such Bank are evidenced, including as permitted by applicable Government Mandate the obtaining of the ex parte appointment of a receiver, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of such Bank.                     (b)      No remedy herein conferred upon any Bank, any Co-Agent or the Administrative Agent or the holder of any Note or purchaser of any Letter of Credit Participation is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by any Government Mandate.           12.4   Application of Monies.  In the event that, during the continuance of any Default or Event of Default, the Administrative Agent, any Co-Agent or any Bank, as the case may be, receives any monies in connection with the enforcement of rights under the Loan Documents, such monies shall be distributed for application as follows:                     (a)      First, to the payment of, or (as the case may be) the reimbursement of the Administrative Agent for or in respect of all costs, expenses, disbursements, and losses that shall have been incurred or sustained by the Administrative Agent in connection with the collection of such monies by the Administrative Agent, for the exercise, protection, or enforcement by the Administrative Agent of all or any of the rights, remedies, powers, and privileges of the Administrative Agent under this Credit Agreement or any of the other Loan Documents, or in support of any provision of adequate indemnity to the Administrative Agent against any taxes or Liens that by Government Mandate shall have, or may have, priority over the rights of the Administrative Agent to such monies;                     (b)      Second, to all other Obligations in such order or preference as the Majority Banks may determine; provided, however, that distributions among Obligations owing to the Banks, the Co-Agents and the Administrative Agent with respect to each type of Obligation such as interest, principal, fees, and expenses, shall be made among the Banks, the Co-Agents and the Administrative Agent pro rata according to the respective amounts thereof; and provided, further, that the Administrative Agent may in its discretion make proper allowance to take into account any Obligations not then due and payable; and                     (c)      Third, the excess, if any, shall be returned to the Borrower or to such other Persons as are entitled thereto. 13.     SETOFF.           Regardless of the adequacy of any collateral, during the continuance of any Event of Default, any deposits or other sums credited by or due from any of the Banks to the Borrower and any securities or other property of the Borrower in the possession of such Bank may be applied to or set off by such Bank against the payment of Obligations and any and all other liabilities, direct, or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the Borrower to such Bank.  Each of the Banks agrees with each other Bank that (a) if an amount to be set off is to be applied to Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by the Notes held by such Bank or constituting Reimbursement Obligations owed to such Bank, such amount shall be applied ratably to such other Indebtedness and to the Indebtedness evidenced by all such Notes held by such Bank or constituting Reimbursement Obligations owed to such Bank, and (b) if such Bank shall receive from the Borrower, whether by voluntary payment, exercise of the right of setoff, counterclaim, cross action, enforcement of the claim evidenced by the Notes held by, or constituting Reimbursement Obligations owed to, such Bank by Proceedings against the Borrower, by proof thereof in bankruptcy, reorganization, liquidation, receivership, or similar Proceedings, or otherwise, and shall retain and apply to the payment of the Notes held by, or Reimbursement Obligations owed to, such Bank, any amount in excess of its ratable portion of the payments received by all of the Banks with respect to the Notes held by, and Reimbursement Obligations owed to, all of the Banks (exclusive of payments to be made for the account of less than all of the Banks as provided in Sections 3.2.2, 5.8, and 5.9), such Bank will make such disposition and arrangements with the other Banks with respect to such excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise as shall result in each Bank receiving in respect of the Notes held by it, or Reimbursement Obligations owed to it, its proportionate payment as contemplated by this Credit Agreement; provided that if all or any part of such excess payment is thereafter recovered from such Bank, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest. 14.     THE ADMINISTRATIVE AGENT.           14.1   Authorization.  The Administrative Agent is authorized to take such action on behalf of each of the Banks and to exercise all such powers as are hereunder and under any of the other Loan Documents and any related documents delegated to the Administrative Agent, together with such powers as are reasonably incident thereto, provided that no duties or responsibilities not expressly assumed herein or therein shall be implied to have been assumed by the Administrative Agent.  The relationship between the Administrative Agent and the Banks is and shall be that of agent and principal only, and nothing contained in this Credit Agreement, the Letters of Credit or any of the other Loan Documents shall be construed to constitute the Administrative Agent as a trustee for any Bank.           14.2   Employees and Agents.  The Administrative Agent may exercise its powers and execute its duties by or through employees or agents and shall be entitled to take, and to rely on, advice of legal counsel concerning all matters pertaining to its rights and duties under this Credit Agreement and the other Loan Documents. The Administrative Agent may utilize the services of such Persons as the Administrative Agent in its sole discretion may reasonably determine.           14.3   No Liability.  Neither the Administrative Agent nor any of its shareholders, directors, officers or employees nor any other Person assisting them in their duties nor any agent or employee thereof, shall be liable for any waiver, consent or approval given or any action taken, or omitted to be taken, in good faith by it or them hereunder or under any of the other Loan Documents, or in connection herewith or therewith, or be responsible for the consequences of any oversight or error of judgment whatsoever, except that the Administrative Agent or such other Person, as the case may be, may be liable for losses due to its willful misconduct or gross negligence.           14.4   No Representations.  The Administrative Agent shall not be responsible for the execution or validity or enforceability of this Credit Agreement, the Notes, the Letters of Credit, any of the other Loan Documents or any instrument at any time constituting, or intended to constitute, collateral security for the Notes, or for the value of any such collateral security or for the validity, enforceability, or collectability of any such amounts owing with respect to the Notes, or for any recitals or statements, warranties, or representations made herein or in any of the other Loan Documents or in any certificate or instrument hereafter furnished to it by or on behalf of the Borrower, or be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants, or agreements herein or in any instrument at any time constituting, or intended to constitute, collateral security for the Notes or to inspect any of the properties, books, or records of the Borrower or any of its Subsidiaries.  The Administrative Agent shall not be bound to ascertain whether any notice, consent, waiver, or request delivered to it by the Borrower or any holder of any of the Notes shall have been duly authorized or is true, accurate, and complete.  The Administrative Agent has not made nor does it now make any representations or warranties, express or implied, nor does it assume any liability to the Banks, with respect to the credit worthiness or financial conditions of the Borrower or any of its Subsidiaries.  Each Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Bank, and based upon such information and documents as it has deemed appropriate, made its own credit analysis and decision to enter into this Credit Agreement.           14.5   Payments.                     14.5.1           Payments to Administrative Agent.  A payment by the Borrower to the Administrative Agent hereunder or under any of the other Loan Documents for the account of any Bank or Co-Agent shall constitute a payment to such Bank or Co-Agent.  The Administrative Agent shall promptly distribute to each Bank and Co-Agent such Bank’s or, as the case may be, Co-Agent, pro rata share of payments received by the Administrative Agent for the account of the Banks and the Co-Agents except as otherwise expressly provided herein or in any of the other Loan Documents.                     14.5.2           Distribution by Administrative Agent.  If in the reasonable opinion of the Administrative Agent the distribution of any amount received by it in such capacity hereunder, under the Notes, or under any of the other Loan Documents might involve it in liability, it may refrain from making distribution until its right to make the same shall have been adjudicated by a court of competent jurisdiction.  If any Government Authority shall adjudge that any amount received and distributed by the Administrative Agent is to be repaid, each Person to whom any such distribution shall have been made shall either repay to the Administrative Agent its proportionate share of the amount so adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be determined by such Government Authority.                     14.5.3           Delinquent Banks.  Notwithstanding anything to the contrary contained in this Credit Agreement or any of the other Loan Documents, any Bank that fails (a) to make available to the Administrative Agent its pro rata share of any Loan, (b) to purchase any Letter of Credit Participation as, when, and to the full extent required by the provisions of this Credit Agreement, or (c) to comply with the provisions of Section 13 with respect to making dispositions and arrangements with the other Banks, where such Bank’s share of any payment received, whether by setoff or otherwise, is in excess of its pro rata share of such payments due and payable to all of the Banks, in each case as, when, and to the full extent required by the provisions of this Credit Agreement, shall be deemed delinquent (a “Delinquent Bank”) and shall be deemed a Delinquent Bank until such time as such delinquency is satisfied.  A Delinquent Bank shall be deemed to have assigned any and all payments due to it from the Borrower, whether on account of outstanding Loans, Unpaid Reimbursement Obligations, interest, fees, or otherwise, to the remaining nondelinquent Banks for application to, and reduction of, their respective pro rata shares of all outstanding Loans and Unpaid Reimbursement Obligations.  The Delinquent Bank hereby authorizes the Administrative Agent to distribute such payments to the nondelinquent Banks in proportion to their respective pro rata shares of all outstanding Loans and Unpaid Reimbursement Obligations.  A Delinquent Bank shall be deemed to have satisfied in full a delinquency when and if, as a result of application of the assigned payments to all outstanding Loans and Unpaid Reimbursement Obligations of the non-delinquent Banks, the Banks’ respective pro rata shares of all outstanding Loans and Unpaid Reimbursement Obligations have returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency.           14.6   Holders of Notes.  Subject to Section 18, the Administrative Agent may deem and treat the payee of any Note or purchaser of any Letter of Credit Participation as the absolute owner thereof for all purposes hereof until it shall have been furnished in writing with a different name by such payee or by a subsequent holder, assignee, or transferee.           14.7   Indemnity.  The Banks ratably shall indemnify and hold harmless the Administrative Agent from and against any and all Proceedings (whether groundless or otherwise), losses, damages, costs, expenses (including any expenses for which the Administrative Agent has not been reimbursed by the Borrower as required by Section 15), and liabilities of every nature and character arising out of or related to this Credit Agreement, the Notes, any of the other Loan Documents, or the transactions contemplated or evidenced hereby or thereby, or the Administrative Agent’s actions taken hereunder or thereunder, except to the extent that any of the same shall be directly caused by the Administrative Agent’s willful misconduct or gross negligence.           14.8   Administrative Agent and Co-Agents as Banks.  In its individual capacity, Bank of America, N.A., The Chase Manhattan Bank and Deutsche Bank AG, New York and/or Cayman Islands Branches shall have the same obligations and the same rights, powers, and privileges in respect to its Commitment and the Loans made by it, and as the holder of any of the Notes and as the purchase of any Letter of Credit Participations, as it would have were it not also the Administrative Agent and/or a Co-Agent.           14.9   Resignation.  The Administrative Agent and/or any Co-Agent may resign at any time by giving sixty (60) days’ prior written notice thereof to the Banks and the Borrower.  Upon any such resignation, the Majority Banks shall have the right to appoint a successor Administrative Agent and/or Co-Agent, as the case may be.  Unless an Event of Default shall have occurred and be continuing, such successor Administrative Agent and/or Co-Agent shall be reasonably acceptable to the Borrower.  If no successor Administrative Agent and/or Co-Agent shall have been so appointed by the Majority Banks and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent’s and/or Co-Agent’s giving of notice of resignation, then the retiring Administrative Agent and/or Co-Agent may, on behalf of the Banks, appoint a successor, which shall be a financial institution having a rating of not less than A or its equivalent by Standard & Poor’s Ratings Services.  Upon the acceptance of any appointment as Administrative Agent and/or Co-Agent hereunder by a successor, such successor shall thereupon succeed to and become vested with all the rights, powers, privileges, and duties of the retiring Administrative Agent and/or Co-Agent, and the retiring Administrative Agent and/or Co-Agent shall be discharged from its duties and obligations hereunder.  After any retiring Administrative Agent’s and/or Co-Agent’s resignation, the provisions of this Credit Agreement and the other Loan Documents 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 Administrative Agent.           14.10 Notification of Defaults and Events of Default. Upon learning of the existence of a Default or an Event of Default, a Bank or Co-Agent shall promptly notify the Administrative Agent thereof.  Upon receipt of any notice under this Section 14.10, the Administrative Agent shall promptly notify the other Banks of the existence of such Default or Event of Default.           14.11 Duties in the Case of Enforcement.  In case one or more Events of Default shall have occurred and be continuing, and whether or not acceleration of the Obligations shall have occurred, the Administrative Agent shall, if (a) so requested by the Majority Banks and (b) the Banks have provided to the Administrative Agent such additional indemnities and assurances against expenses and liabilities as the Administrative Agent may reasonably request, proceed to enforce the provisions of the Loan Documents and exercise all or any such other legal, equitable, and other rights or remedies as it may have under the Loan Documents.  The Majority Banks may direct the Administrative Agent in writing as to the method and the extent of any such action, the Banks hereby agreeing to indemnify and hold the Administrative Agent harmless from all liabilities incurred in respect of all actions taken or omitted in accordance with such directions, provided that the Administrative Agent need not comply with any such direction to the extent that the Administrative Agent reasonably believes the Administrative Agent’s compliance with such direction to be unlawful or commercially unreasonable in any applicable jurisdiction. 15.     EXPENSES.           The Borrower shall upon demand either, as the Banks, the Co-Agents or the Administrative Agent may require and regardless of whether any Loans are made hereunder, pay in the first instance or reimburse the Banks, the Co-Agents and the Administrative Agent (to the extent that payments for the following items are not made under the other provisions hereof) for (a) the reasonable out-of-pocket costs of producing and reproducing this Credit Agreement, the other Loan Documents, and the other agreements and instruments mentioned herein, (b) reasonable out-of-pocket expenses incurred in connection with the syndication of this facility, (c) any taxes (including any interest and penalties in respect thereto) payable by the Administrative Agent, any of the Co-Agents or any of the Banks (other than taxes based upon the Administrative Agent’s, any Co-Agent’s or any Bank’s income or profits) on or with respect to the transactions contemplated by this Credit Agreement, (d) the reasonable fees, expenses, and disbursements of the Co-Agent’s special counsel incurred in connection with the preparation, the administration, or interpretation of the Loan Documents, the other instruments mentioned herein, and the term sheet for the transactions contemplated by this Credit Agreement, each closing hereunder, and amendments, modifications, approvals, consents or waivers hereto or hereunder, (e) the reasonable fees, expenses, and disbursements of the Administrative Agent incurred by the Administrative Agent in connection with the preparation, administration, or interpretation of the Loan Documents and other instruments mentioned herein, (f) all reasonable out-of-pocket expenses (including reasonable attorneys’ fees and costs, which attorneys may be employees of any Bank, any Co-Agent or the Administrative Agent, and reasonable consulting, accounting, appraisal, investment banking, and similar professional fees and charges) incurred by any Bank, any Co-Agent or the Administrative Agent in connection with (i) the enforcement of or preservation of rights under any of the Loan Documents against the Borrower or any of its Subsidiaries or the administration thereof after the occurrence of a Default or Event of Default and (ii) any Proceeding or dispute whether arising hereunder or otherwise, in any way related to any Bank’s, any Co-Agent’s or the Administrative Agent’s relationship with the Borrower or any of its Subsidiaries.  The Borrower shall not be responsible under clause (f) above for the fees and costs of more than one law firm in any one jurisdiction with respect to any one Proceeding or set of related Proceedings for the Administrative Agent, the Co-Agents and the Banks, unless any of the Administrative Agent, the Co-Agents and the Banks shall have reasonably concluded that there are legal defenses available to it that are different from or additional to those available to the Borrower or there are other circumstances that in the reasonable judgment of the Administrative Agent, the Co-Agents and the Banks make separate counsel advisable.  The covenants of this Section 15 shall survive payment or satisfaction of all other Obligations. 16.     INDEMNIFICATION.           The Borrower shall, regardless of whether any Loans are made hereunder, indemnify and hold harmless the Administrative Agent, the Co-Agents and the Banks, together with their respective shareholders, directors, agents, officers, Subsidiaries, and Affiliates, from and against any and all damages, losses, settlement payments, obligations, liabilities, claims, causes of action, and Proceedings, and reasonable costs and expenses in connection therewith, incurred, suffered, sustained, or required to be paid by an indemnified party by reason of or resulting, directly or indirectly, from the transactions contemplated by the Loan Documents, including (a) any actual or proposed use by the Borrower or any of its Subsidiaries of the proceeds of any of the Loans or Letters of Credit, (b) the Borrower or any of its Subsidiaries entering into or performing this Credit Agreement or any of the other Loan Documents, or (c) with respect to the Borrower and its Subsidiaries and their respective properties and assets, the violation of any Environmental Law, the presence, disposal, escape, seepage, leakage, spillage, discharge, emission, release, or threatened release of any Hazardous Substances or any Proceeding brought or threatened with respect to any Hazardous Substances (including claims with respect to wrongful death, personal injury, or damage to property), in each case including the reasonable fees and disbursements of legal counsel and reasonable allocated costs of internal legal counsel incurred in connection with any such Proceeding, provided, however, the Borrower shall not be obligated to indemnify any party for any damages, losses, settlement payments, obligations, liabilities, claims, causes of action, Proceedings, costs, and expenses that were caused directly by (i) the gross negligence or willful misconduct of the indemnified party or (ii) any breach by any Bank of its obligation to fund a Loan pursuant to this Credit Agreement, provided that the Borrower is not then in Default.  In Proceedings, or the preparation therefor, the indemnified parties shall be entitled to select their legal counsel and, in addition to the foregoing indemnity, the Borrower shall, promptly upon demand, pay in the first instance, or reimburse the indemnified parties for, the reasonable fees and expenses of such legal counsel.  The Borrower shall not be responsible under this section for the fees and costs of more than one law firm in any one jurisdiction for the Borrower and the indemnified parties with respect to any one Proceeding or set of related Proceedings, unless any indemnified party shall have reasonably concluded that there are legal defenses available to it that are different from or additional to those available to the Borrower or there are other circumstances that in the reasonable judgment of the indemnified parties make separate counsel advisable.  If, and to the extent that the obligations of the Borrower under this Section 16 are unenforceable for any reason, the Borrower shall make the maximum contribution to the payment in satisfaction of such obligations that is permissible under applicable law.  The covenants contained in this Section 16 shall survive payment or satisfaction in full of all other Obligations. 17.     SURVIVAL OF COVENANTS, ETC.           All covenants, agreements, representations, and warranties made herein, in the Notes, in any of the other Loan Documents, or in any documents or other papers delivered by or on behalf of the Borrower or any of its Subsidiaries pursuant hereto shall be deemed to have been relied upon by the Banks, the Co-Agent and the Administrative Agent, notwithstanding any investigation heretofore or hereafter made by any of them, and shall survive the making by the Banks of the Loans and the issuance, extension or renewal of any Letters of Credit, as herein contemplated, and shall continue in full force and effect so long as any Letter of Credit or amount due under this Credit Agreement or the Notes or any of the other Loan Documents remains outstanding or any Bank has any obligation to make any Loans or any of the Co-Agents has any obligation to issue, extend, or renew any Letter of Credit, and for such further time as may be otherwise expressly specified in this Credit Agreement.  All statements contained in any certificate or other paper delivered to any Bank, any Co-Agent or the Administrative Agent at any time by or on behalf of the Borrower or any of its Subsidiaries pursuant hereto or in connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrower or such Subsidiary hereunder. 18.     ASSIGNMENT AND PARTICIPATION.           18.1   Conditions to Assignment by Banks.  Except as provided herein, each Bank may assign to one or more Eligible Assignees all or a portion of its interests, rights, and obligations under this Credit Agreement (including all or a portion of its Commitment Percentage and Commitment and the same portion of the Loans at the time owing to it and its participating interest in the risk relating to any Letters of Credit) and the Notes held by it; provided that (a) the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower shall have given its prior written consent to such assignment, which consent, in the case of the Borrower, will not be unreasonably withheld, provided that, if no Event of Default has occurred and is continuing, no Bank may assign its rights and obligations hereunder if such assignment would result in a reduction of or a withdrawal of the then current rating of the commercial paper notes of the Borrower (b) each such assignment shall be of a constant, and not a varying, percentage of all the assigning Bank’s rights and obligations under this Credit Agreement, (c) each assignment of less than all of the assigning Bank’s rights and obligations under this Credit Agreement, shall be in an amount equal to $10,000,000 or in integral multiples of $1,000,000 in excess thereof, and (d) the parties to such assignment shall execute and deliver to the Administrative Agent, for recording in the Register (as hereinafter defined), an Assignment and Acceptance, substantially in the form of Exhibit J hereto (an “Assignment and Acceptance”), together with any Notes subject to such assignment.  Upon such execution, delivery, acceptance, and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five (5) Business Days after the execution thereof, (i) the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Bank hereunder, and (ii) the assigning Bank shall, to the extent provided in such assignment and upon payment to the Administrative Agent of the registration fee referred to in Section 18.3, be released from its obligations under this Credit Agreement.           18.2   Certain Representations and Warranties; Limitations; Covenants.  By executing and delivering an Assignment and Acceptance, the parties to the assignment thereunder confirm to and agree with each other and the other parties hereto as follows: (a) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim, the assigning Bank makes no representation or warranty, express or implied, and assumes no responsibility with respect to any statements, warranties, or representations made in or in connection with this Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency, or value of this Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto; (b) the assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower and its Subsidiaries or any other Person primarily or secondarily liable in respect of any of the Obligations, or the performance or observance by the Borrower and its Subsidiaries or any other Person primarily or secondarily liable in respect of any of the Obligations or any of their obligations under this Credit Agreement or any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (c) such assignee confirms that it has received a copy of this Credit Agreement, together with copies of the most recent financial statements referred to in Section 6.4 and Section 7.4 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (d) such assignee will, independently and without reliance upon the assigning Bank, 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 decisions in taking or not taking action under this Credit Agreement; (e) such assignee represents and warrants that it is an Eligible Assignee; (f) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Credit Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; (g) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Credit Agreement are required to be performed by it as a Bank; (h) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance; and (i) such assignee acknowledges that it has made arrangements with the assigning Bank satisfactory to such assignee with respect to its pro rata share of Letter of Credit Fees in respect of outstanding Letters of Credit.           18.3   Register.  The Administrative Agent shall maintain a copy of each Assignment and Acceptance delivered to it and a register or similar list (the “Register”) for the recordation of the names and addresses of the Banks and the Commitment Percentage of, and principal amount of the Loans owing to, and Letter of Credit Participations purchased by the Banks from time to time.  The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent, and the Banks may treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes of this Credit Agreement.  The Register shall be available for inspection by the Borrower and the Banks at any reasonable time and from time to time upon reasonable prior notice.  Upon each such recordation, the assigning Bank agrees to pay to the Administrative Agent a registration fee in the sum of $3,500.           18.4   New Notes.  Upon its receipt of an Assignment and Acceptance executed by the parties to such assignment, together with each Note subject to such assignment, the Administrative Agent shall (a) record the information contained therein in the Register, and (b) give prompt notice thereof to the Borrower and the Banks (other than the assigning Bank).  Within five (5) Business Days after receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Administrative Agent, in exchange for each surrendered Note, a new Note to the order of such Eligible Assignee in an amount equal to the amount assumed by such Eligible Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank has retained some portion of its obligations hereunder, a new Note to the order of the assigning Bank in an amount equal to the amount retained by it hereunder. Such new Notes shall provide that they are replacements for the surrendered Notes, shall be in an aggregate principal amount equal to the aggregate principal amount of the surrendered Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of the assigned Notes.  The surrendered Notes shall be cancelled and returned to the Borrower.           18.5   Participations.  Each Bank may sell participations to one or more banks or other entities in all or a portion of such Bank’s rights and obligations under this Credit Agreement and the other Loan Documents; provided that (a) any such sale or participation shall not affect the rights and duties of the selling Bank hereunder to the Borrower, (b) the only rights granted to the participant pursuant to such participation arrangements with respect to waivers, amendments, or modifications of the Loan Documents shall be the rights to approve waivers, amendments or modifications that require the unanimous consent of the Banks pursuant to Section 25 and (c) such participation shall be in a minimum amount of $1,000,000 or in integral multiples of $1,000,000 in excess thereof.  Each Bank shall, promptly upon request of the Borrower in each instance, disclose to the Borrower the parties to which such Bank has granted participations under this section unless such Bank is subject to a contractual restriction not to do so.           18.6   Disclosure.  Any Bank may disclose information obtained by such Bank pursuant to this Credit Agreement to assignees or participants and potential assignees or participants hereunder subject to Section 7.4(e).           18.7   Assignee or Participant Affiliated with the Borrower.  If any assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall have no right to vote as a Bank hereunder or under any of the other Loan Documents for purposes of granting consents or waivers or for purposes of agreeing to amendments or other modifications to any of the Loan Documents or for purposes of making requests to the Administrative Agent pursuant to Section 12, and the determination of the Majority Banks shall for all purposes of this Agreement and the other Loan Documents be made without regard to such assignee Bank’s interest in any of the Loans.  If any Bank sells a participating interest in any of the Loans or Reimbursement Obligations to a participant, and such participant is the Borrower or an Affiliate of the Borrower, then such transferor Bank shall promptly notify the Administrative Agent of the sale of such participation.  A transferor Bank shall have no right to vote as a Bank hereunder or under any of the other Loan Documents for purposes of granting consents or waivers or for purposes of agreeing to amendments or modifications to any of the Loan Documents or for purposes of making requests to the Administrative Agent pursuant to Section 12 to the extent that such participation is beneficially owned by the Borrower or any Affiliate of the Borrower, and the determination of the Majority Banks shall for all purposes of this Agreement and the other Loan Documents be made without regard to the interest of such transferor Bank in the Loans to the extent of such participation.           18.8   Miscellaneous Assignment Provisions.  Any assigning Bank shall retain its rights to be indemnified pursuant to Sections 5.8, 5.9, 15, and 16 with respect to any claims or actions arising prior to the date of the assignment.  If any assignee Bank is not incorporated under the laws of the United States of America or any state thereof, it shall, prior to the date on which any interest or fees are payable hereunder or under any of the other Loan Documents for its account, deliver to the Borrower and the Administrative Agent certification as to its exemption from deduction or withholding of any United States federal income taxes.  Anything contained in this Section 18 to the contrary notwithstanding, any Bank may at any time pledge all or any portion of its interest and rights under this Credit Agreement (including all or any portion of its Notes) to any of the twelve Federal Reserve Banks organized under §4 of the Federal Reserve Act, 12 U.S.C. §341.  No such pledge or the enforcement thereof shall release the pledgor Bank from its obligations hereunder or under any of the other Loan Documents.           18.9   Assignment by Borrower.  The Borrower shall not assign or transfer any of its rights or obligations under any of the Loan Documents without the prior written consent of each of the Banks. 19.     NOTICES, ETC.           Except as otherwise expressly provided in this Credit Agreement, all notices and other communications made or required to be given pursuant to this Credit Agreement or the Notes or any Letter of Credit Applications shall be in writing and shall be delivered in hand, mailed by United States registered or certified first class mail, postage prepaid, sent by overnight courier, or sent by telegraph, telecopy, telefax or telex and confirmed by delivery via courier or postal service, addressed as follows:                     (a)      if to the Borrower, at 1345 Avenue of the Americas, New York, New York 10105 (Telecopy Number (212) 969-6260), Attention:  Treasurer, with a copy sent via the same means to General Counsel of the Borrower at 1345 Avenue of the Americas, New York, New York 10105 (Telecopy Number (212) 969-1334), or at such other address for notice as any of such Persons shall last have furnished in writing to the Person giving the notice;                     (b)      if to Bank of America, whether individually or as Administrative Agent or Co-Agent,                     (i)       at 101 North Tryon Street, Charlotte, North Carolina 28255, Agency Services – Independence Center NC1-001-1504 (Telecopy Number (704) 409–0002), Attention: Herbert Boyd, Ref: Alliance Capital Management L.P.,                     (ii)      all financial information at Credit Compliance, 231 South LaSalle Street, Chicago, Illinois 60697 (Telecopy Number (312) 987-0889), Attention: Lizet Flores, Mehul Mehta and Allison Ryan,                     (iii)     with a copy sent via the same means to Paul, Hastings, Janofsky & Walker LLP, 600 Peachtree Street, N.E., Suite 2400, Atlanta, Georgia 30308-2222 (Telecopy Number:  (404) 815-2424), Attention: Chris D. Molen, Esq.,                     or such other address for notice as such Person shall last have furnished in writing to the Person giving the notice;                     (c)      if to any Bank, at such Bank’s address set forth on Schedule 1 hereto, or such other address for notice as such Bank shall have last furnished in writing to the Person giving the notice. Any such notice or demand shall be deemed to have been duly given or made and to have become effective (i) if delivered by hand, overnight courier or telecopy to a responsible officer of the party to which it is directed, at the time of the receipt thereof by such officer or the sending of such telecopy, or when delivery (if other than by telecopy) is duly attempted and refused, and (ii) if sent by registered or certified first-class mail, postage prepaid, on the third Business Day following the mailing thereof. 20.     GOVERNING LAW.           THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.  EACH OF THE ADMINISTRATIVE AGENT, THE CO-AGENTS, THE BANKS, AND THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 19.  EACH OF THE ADMINISTRATIVE AGENT, THE CO-AGENTS, THE BANKS, AND THE BORROWER 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 COURT. 21.     HEADINGS.           The captions in this Credit Agreement are for convenience of reference only and shall not define or limit the provisions hereof. 22.     COUNTERPARTS.           This Credit Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument.  In proving this Credit Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought.  Any signatures delivered after the Closing Date by a party by facsimile transmission shall be deemed an original signature hereto. 23.     ENTIRE AGREEMENT, ETC.           The Loan Documents and any other documents executed in connection herewith or therewith express the entire understanding of the parties with respect to the transactions contemplated hereby.  Neither this Credit Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided in Section 25. 24.     WAIVER OF JURY TRIAL.           EACH OF THE ADMINISTRATIVE AGENT, THE CO-AGENTS, THE BANKS, AND THE BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS CREDIT AGREEMENT, THE NOTES, OR ANY OF THE OTHER LOAN DOCUMENTS, AND RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.  EXCEPT AS PROHIBITED BY LAW, EACH OF THE ADMINISTRATIVE AGENT, THE BANKS, THE CO-AGENTS AND THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY PROCEEDING REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  THE BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY BANK, ANY CO-AGENT OR THE ADMINISTRATIVE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH BANK, SUCH CO-AGENT OR THE ADMINISTRATIVE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT EACH OF THE ADMINISTRATIVE AGENT, THE CO-AGENTS AND THE BANKS HAS BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN. 25.     CONSENTS, AMENDMENTS, WAIVERS, ETC.           Except as otherwise expressly provided in this Credit Agreement, any term of this Credit Agreement, the other Loan Documents, or any other instrument related hereto or mentioned herein may be amended with, but only with, the written consent of the Borrower and the Majority Banks.  Any consent or approval required or permitted by this Credit Agreement to be given by the Banks may be given, any acceleration of amounts owing under the Loan Documents may be rescinded, and the performance or observance by the Borrower of any terms of this Credit Agreement, the other Loan Documents, or any other instrument related hereto or mentioned herein or the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Majority Banks. Notwithstanding the foregoing, the rate of interest on the Notes (other than interest accruing pursuant to Section 5.10 following the effective date of any waiver by the Majority Banks of the Default or Event of Default relating thereto), the term of the Notes, the definition of Maturity Date, the amount of the Commitments of the Banks, and the amount of facility fees hereunder or Letter of Credit Fees may not be changed without the written consent of the Borrower and the written consent of Banks holding one hundred percent (100%) of the outstanding principal amount of the Notes (or, if no Notes are outstanding, Commitments representing one hundred percent (100%) of the Total Commitment); neither this Section 25 nor the definition of Majority Banks may be amended without the written consent of all of the Banks; and the amount of the Administrative Agent’s fee or Letter of Credit Fees and Section 14 may not be amended without the written consent of the Administrative Agent.  No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon.  No course of dealing or delay or omission on the part of any Bank in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto.  No notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances.  Neither the Administrative Agent nor any Bank has any fiduciary relationship with or fiduciary duty to the Borrower arising out of or in connection with this Credit Agreement or any of the other Loan Documents, and the relationship between the Administrative Agent and the Banks, on the one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor. 26.     SEVERABILITY.           The provisions of this Credit Agreement are severable and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Credit Agreement in any jurisdiction.     THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK             IN WITNESS WHEREOF, the undersigned have duly executed this Credit Agreement as a sealed instrument as of the date first set forth above. BORROWER: ALLIANCE CAPITAL MANAGEMENT L.P.   By: Alliance Capital Management     Corporation, its General Partner   By: /s/ Robert H. Joseph, Jr. --------------------------------------------------------------------------------   Name: Robert H. Joseph, Jr.   Title: Senior Vice President and Chief Financial Officer ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A.   By: /s/ Mehul Mehta --------------------------------------------------------------------------------   Name: Mehul Mehta   Title: Vice President SYNDICATION AGENT: THE CHASE MANHATTAN BANK   By: /s/ Peter Platten --------------------------------------------------------------------------------   Name: Peter Platten   Title: Vice President DOCUMENTATION AGENT: DEUTCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES   By: /s/ Alan Krouck --------------------------------------------------------------------------------   Name: Alan Krouck   Title: Vice President   By: /s/ Suzanne Kissling --------------------------------------------------------------------------------   Name: Suzanne Kissling   Title: Managing Director BANKS: BANK OF AMERICA, N.A.   By: /s/ Mehul Mehta --------------------------------------------------------------------------------   Name: Mehul Mehta   Title: Vice President   THE CHASE MANHATTAN BANK   By: /s/ Peter Platten --------------------------------------------------------------------------------   Name: Peter Platten   Title: Vice President   DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES         By: /s/ Alan Krouck --------------------------------------------------------------------------------     Name:  Alan Krouck   Title: Vice President   By: /s/ Suzanne Kissling --------------------------------------------------------------------------------     Name:  Suzanne Kissling   Title: Managing Director        

EXECUTION COPY EXHIBIT 10.45 WAIVER NO. 7                WAIVER NO. 7 (this "Waiver"), dated as of January 25, 2001, among Scott Technologies, Inc., a Delaware corporation ("Borrower"), the Lenders party to the Credit Agreement referred to below ("Lenders") and General Electric Capital Corporation, a New York corporation, as agent for said Lenders ("Agent"), to the Credit Agreement referred to below. W I T N E S S E T H                WHEREAS, Borrower, Agent and Lenders have entered into an Amended and Restated Credit Agreement, dated as of December 31, 1998 (as heretofore amended, the "Credit Agreement"; the terms defined in Credit Agreement being used herein as therein defined, unless otherwise defined herein);                WHEREAS, Section 1.2(b)(iv) of the Credit Agreement provides for, among other things, the mandatory prepayment by Borrower of the Obligations on the earlier of the date which is ten (10) days after (A) the date on which Borrower's annual audited Financials for the immediately preceding Fiscal Year are delivered pursuant to Annex D to the Credit Agreement or (B) the date on which such annual audited Financials were required to be delivered pursuant to Annex D to the Credit Agreement in an amount equal to twenty-five percent (25%) of Excess Cash Flow for the immediately preceding Fiscal Year; and                WHEREAS, Agent and Lenders party hereto agree to waive the mandatory prepayment of the Obligations otherwise required pursuant to Section 1.2(b)(iv) of the Credit Agreement from the Excess Cash Flow for the Fiscal Year ending December 31, 2000, subject to the terms and conditions hereinafter set forth.                NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereby agree as follows:                SECTION 1.      Waiver. Subject to the satisfaction of each of the conditions set forth in Section 4 hereof, Agent and each Lender party hereto hereby waive the provisions of Section 1.2(b)(iv) of the Credit Agreement in respect of, and only in respect of, the mandatory prepayment of the Obligations otherwise required from the Excess Cash Flow for the Fiscal Year ending December 31, 2000.                SECTION 2.       Representations and Warranties. Borrower represents and warrants to Agent and Lenders as follows:                (a)   All of the representations and warranties of Borrower contained in the Credit Agreement and in the other Loan Documents are true and correct on the date hereof as though made on such date, except to the extent that any such representation or warranty expressly relates to an earlier date, for changes permitted or contemplated by the Credit Agreement or this Waiver or as otherwise disclosed in writing to Agent and Lenders. No Default or Event of Default has occurred and is continuing or would result from the transactions contemplated hereby.                (b)  The execution, delivery and performance by Borrower of this Waiver have been duly authorized by all necessary or proper corporate action and do not require the consent or approval of any Person which has not been obtained.                (c)   This Waiver has been duly executed and delivered by Borrower and each of this Waiver and the Credit Agreement as amended hereby constitutes a legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles.                SECTION 3.     Effect on the Loan Documents. (a) Upon the effectiveness of this Waiver, each reference in any Loan Document to "this Agreement", "hereunder", "herein", or words of like import, and each reference in any other Loan Document to such Loan Document, shall mean and be a reference to such Loan Document as amended hereby.                (b)   Except as certain provisions are specifically amended or waived herein, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.                (c)   The execution, delivery and effectiveness of this Waiver shall not, except as expressly provided herein, operate as a modification of any right, power, or remedy of the Agent or the Lenders under any of the Loan Documents, nor constitute a modification of any provision of any of the Loan Documents.                SECTION 4.      Effectiveness. This Waiver shall become effective as of the date first set forth above, provided that each of the following conditions has been satisfied on the date hereof, including the delivery to Agent of each of the documents set forth below in form and substance satisfactory to Agent:                (a)   Counterparts of this Waiver duly executed by Borrower, the Required Lenders and Agent; and                (b)   All of the representations and warranties of Borrower contained in Section 2 hereof shall be true and correct and certified by a certificate of an officer of Borrower.                SECTION 5.      Expenses. Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses of Agent in connection with the preparation, execution and delivery of this Waiver, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for Agent with respect thereto.                SECTION 6.      Governing Law. This Waiver shall be governed by, construed and enforced in accordance with the laws of the State of New York, without regard to conflict of laws principles thereof.                SECTION 7.      Counterparts. This Waiver may be executed in any number of counterparts, which shall, collectively and separately, constitute one agreement.                IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be duly executed as of the date first above written.     SCOTT TECHNOLOGIES, INC.                 By:_________________________ Name: Title:                 GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and Lender                 By:___________________________ Name: Title:                 BANK OF AMERICA, N.A. (formerly NationsBank, N.A.), as Lender                 By:___________________________ Name: Title:                 BANK ONE, MICHIGAN (formerly, NBD Bank), as Lender                 By:___________________________ Name: Title:         ABN AMRO BANK, N.V., as Lender           By:___________________________ Name: Title:           NATIONAL CITY BANK, as Lender           By:___________________________ Name: Title:           THE HUNTINGTON NATIONAL BANK, as Lender           By:___________________________ Name: Title:           PNC BANK, NATIONAL ASSOCIATION, as Lender           By:___________________________ Name: Title:   AMSOUTH BANK, as Lender           By:___________________________ Name: Title:       THE PROVIDENT BANK, as Lender           By:___________________________ Name: Title:           FIRSTAR BANK, N.A. (formerly, Star Bank, N.A.), as Lender           By:___________________________ Name: Title:      

QuickLinks -- Click here to rapidly navigate through this document Exhibit 10.14 FIRST AMENDMENT TO RIGHT OF FIRST REFUSAL AGREEMENT     This First Amendment to Right of First Refusal Agreement (this "Agreement") is made and entered into as of August 3, 2001, by and among Perceptronics, Inc., a Delaware corporation (the "Company"), Global Alpha Corporation, a British Virgin Islands company ("Purchaser"), and those certain stockholders of the Company whose names appear on the signature page hereto (each hereinafter individually referred to as a "Stockholder") and collectively referred to as the "Stockholders"). R E C I T A L S     WHEREAS, the Company and Purchaser are parties to that certain Right of First Refusal Agreement dated April 5, 2001, a true copy of which is attached hereto as Exhibit "A" and incorporated herein by reference; and     WHEREAS, the Company, the Stockholders and Purchaser are desirous of amending the Right of First Refusal Agreement,     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual benefits to be derived hereunder, the parties hereto agree as follows:     1.  Subparagraph 5.2 of the Right of First Refusal Agreement is hereby amended to read as follows: " 5.1. Termination. Following the twelve-month period beginning April 5, 2001, this Agreement and the Rights of First Refusal provided for herein will terminate at any time that the Purchaser and its affiliates do not own shares of Common Stock, warrants or other securities of the Company which on an as-converted or as-exercised basis (as applicable) in the aggregate represent more than ten percent (20%) of the number of shares of Common Stock of the Company outstanding at such time."     2.  Except as expressly provided for herein, all other provisions of the Right of First Refusal Agreement dated April 5, 2001, between the parties hereto shall remain in full force and effect. --------------------------------------------------------------------------------     IN WITNESS WHEREOF,  the parties hereto have executed this First Amendment to Right of First Refusal Agreement as of the date first written above. "COMPANY"   PERCEPTRONICS, INC., a Delaware corporation     By:   /s/ RICHARD MOSKOWITZ    -------------------------------------------------------------------------------- Name: Richard Moskowitz Title: Chairman and Chief Executive Officer         Address:   10345 West Olympic Boulevard, Suite 102 Los Angeles, CA 90064 "PURCHASER"   GLOBAL ALPHA CORPORATION, a British Virgin Islands company     By:   /s/ BARRY DIDATO    -------------------------------------------------------------------------------- Name: Barry Didato Authorized Signatory         Address:   Craigmuir Chambers P.O. Box 71 Road Town, Tortola, British Virgin Islands "STOCKHOLDERS"   /s/ RICHARD MOSKOWITZ    -------------------------------------------------------------------------------- Richard Moskowitz     /s/ GERSHON WELTMAN    -------------------------------------------------------------------------------- Dr. Gershon Weltman     -------------------------------------------------------------------------------- Dr. John Lyman     -------------------------------------------------------------------------------- Stanley Schneider     -------------------------------------------------------------------------------- Robert Parker     -------------------------------------------------------------------------------- Dr. Amos Freedy -------------------------------------------------------------------------------- QuickLinks Exhibit 10.14 FIRST AMENDMENT TO RIGHT OF FIRST REFUSAL AGREEMENT R E C I T A L S

QuickLinks -- Click here to rapidly navigate through this document Exhibit 10H Form for Change of Control Agreement Executive's Name Job Title Company Address City, State, Postal Code Dear            :     Precision Castparts Corp. (the "Company") considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel. In this connection, the Board of Directors of the Company (the "Board") recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and it stockholders.     The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including yourself, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company.     In order to induce you to remain in the employ of the Company, the Company agrees that you shall receive the severance benefits set forth in this letter agreement (the "Agreement") in the event your employment with the Company is terminated under the circumstances described below subsequent to a "change in control of the Company" (as defined in Section 2).     1.  Term of Agreement.  This Agreement shall commence on the date you agree to its terms (as indicated on the signature page of this Agreement), and shall continue in effect through December 31, 2001; provided, however, that commencing on January 1, 2002, and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless, not later than September 30 of the preceding year, the Company shall have given notice that it does not wish to extend this Agreement (provided that no such notice may be given during the pendency of a potential change in control of the Company, as defined in Section 2); and provided, further, that if a change in control of the Company, as defined in Section 2, shall have occurred during the original or extended term of this Agreement, this Agreement shall continue in effect for a period of twenty-four (24) months beyond the month in which such change in control occurred.     2.  Change in Control; Potential Change in Control.  (i) No benefits shall be payable hereunder unless there shall have been a change in control of the Company, as set forth below. For purposes of this Agreement, a "change in control of the Company" shall be deemed to have occurred if:     (a) 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 the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), 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 20% or more of the combined voting power of the Company's then outstanding securities;     (b) during any period of two consecutive years, individuals who at the beginning of such period constituted a majority of the Board of Directors cease for any reason to constitute a majority thereof unless the nomination or election of such new directors was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period; --------------------------------------------------------------------------------     (c) the stockholders of the Company approve a merger or consolidation of the Company with any other company or statutory plan of exchange involving the Company ("Merger"), other than (1) a Merger 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 combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after the Merger or (2) a Merger effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 20% of the combined voting power of the Company's then outstanding securities; or     (d) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale, lease, exchange or other transfer (in one transaction or a series of related transactions) or disposition by the Company of all or substantially all of the Company's assets.     Notwithstanding the foregoing, unless otherwise determined by the Board, no change in control of the Company shall be deemed to have occurred if (i) you are a member of a management group which first announces a proposal which constitutes a potential change in control (as defined in this Section 2) which proposal (including any modifications thereof) is ultimately successful or (ii) you acquire an equity interest in the entity which ultimately acquires the Company pursuant to the transaction described in (i) of this paragraph.     (ii) For purposes of this Agreement, a "potential change in control" of the Company shall be deemed to have occurred if:     (a) the Company enters into an agreement, the consummation of which would result in the occurrence of a change in the control of the Company;     (b) any person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a change in control of the Company;     (c) any person, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company (or a company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), who is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 9.5% or more of the combined voting power of the Company's then outstanding securities, increases his beneficial ownership of such securities by 3 percentage points or more over the percentage so owned by such person on the date hereof; or     (d) the Board adopts a resolution to the effect that, for purposes of this Agreement, a potential change in control of the Company has occurred.     (iii) You agree that, subject to the terms and conditions of this Agreement, in the event of a potential change in control of the Company, you will remain in the employ of the Company until the earliest of (a) a date which is 270 days from the occurrence of such potential change in control of the Company, (b) the termination by you of your employment by reason of Disability as defined in Section 3(ii), or (c) the date on which you first become entitled under this Agreement to receive the benefits provided in Section 4(iii) below.     3.  Termination Following Change in Control.  (i)  General. If any of the events described in Section 2 constituting a change in control of the Company shall have occurred, you shall be entitled to the benefits provided in Section 4(iii) upon the subsequent termination of your employment within 24 months following the change in control, unless such termination is (a) because of your death or Disability, (b) by the Company for Cause, or (c) by you other than for Good Reason. In the event your -------------------------------------------------------------------------------- employment with the Company is terminated for any reason and subsequently a change in control of the Company occurs, you shall not be entitled to any benefits hereunder.     (ii) Disability. If, as a result of your incapacity due to physical or mental illness, you shall have been absent from the full-time performance of your duties with the Company for six (6) consecutive months, and within thirty (30) days after written notice of termination is given you shall not have returned to the full-time performance of your duties, your employment may be terminated for "Disability."     (iii) Cause. Termination by the Company of your employment for "Cause" shall mean termination (a) upon the willful and continued failure by you to substantially perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination (as defined in Subsection 3(v)) by you for Good Reason (as defined in Subsection 3(iv)), after a written demand for substantial performance is delivered to you by the Board, which demand specifically identifies the manner in which the Board believes that you have not substantially performed your duties, or (b) the willful engaging by you in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of this Subsection, no act, or failure to act, on your part shall be deemed "willful" unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in or not opposed to the best interest of the Company. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth above in this Subsection and specifying the particulars thereof in detail.     (iv) Good Reason. You shall be entitled to terminate your employment for Good Reason. For purposes of this Agreement, "Good Reason" shall mean, without your express written consent, the occurrence after a change in control of the Company of any of the following circumstances unless, in the case of paragraphs (a), (e), (f), (g) or (h), such circumstances are fully corrected prior to the Date of Termination (as defined in Section 3(vi)) specified in the Notice of Termination (as defined in Section 3(v)) given in respect thereof:     (a) the assignment to you of any duties inconsistent (except in the nature of a promotion) with the position in the Company that you held immediately prior to the change in control of the Company, or an adverse alteration in the nature or status of your position or responsibilities or the conditions of your employment from those in effect immediately prior to such change in control;     (b) a reduction by the Company in your annual base salary as in effect on the date hereof or as the same may be increased from time to time except for across-the-board salary reductions similarly affecting all management personnel of the Company and all management personnel of any person in control of the Company;     (c) the Company's requiring you to be based more than 50 miles from the Company's offices at which you are principally employed immediately prior to the date of the change in control except for required travel on the Company's business to an extent substantially consistent with your present business travel obligations;     (d) the failure by the Company to pay to you any portion of your current compensation or compensation under any deferred compensation program of the Company within seven (7) days of the date such compensation is due;     (e) the failure by the Company to continue in effect any material compensation or benefit plan in which you participate immediately prior to the change in control of the Company, unless an equitable and reasonably comparable arrangement (embodied in an -------------------------------------------------------------------------------- ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue your participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of your participation relative to other participants, than existed at the time of the change in control of the Company;     (f)  the failure by the Company to continue to provide you with benefits substantially similar to those enjoyed by you under any of the Company's life insurance, medical, dental, accident, or disability plans in which you were participating at the time of the change in control of the Company, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits, or the failure by the Company to provide you with the number of paid vacation days to which you are entitled on the basis of your years of service with the Company in accordance with the Company's normal vacation policy in effect at the time of the change in control of the Company;     (g) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 5 hereof; or     (h) any purported termination of your employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Subsection (v) hereof (and, if applicable, the requirements of Subsection (iii) hereof), which purported termination shall not be effective for purposes of this Agreement.     For purposes of this Subsection (iv), a good faith determination of "Good Reason" made by you shall be conclusive. Your right to terminate your employment pursuant to this Subsection shall not be affected by your incapacity due to physical or mental illness until your employment is terminated pursuant to Section 3(ii). Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.     (v) Notice of Termination. Any purported termination of your employment by the Company or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 6. "Notice of Termination" shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.     (vi) Date of Termination, Etc. "Date of Termination" shall mean (a) if your employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the full-time performance of your duties during such thirty (30)-day period), and (b) if your employment is terminated pursuant to Subsection (iii) or (iv) hereof or for any other reason (other than Disability), the date specified in the Notice of Termination (which, in the case of a termination for Cause shall not be less than thirty (30) days from the date such Notice of Termination is given, and in the case of a termination for Good Reason shall not be less than fifteen (15) nor more than sixty (60) days from the date such Notice of Termination is given); provided, however, that if within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this proviso), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, then the Date of Termination shall be the date on which the dispute is finally Determined, either by mutual written agreement of the parties or by a binding arbitration award; and provided, further, that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any dispute, the Company will continue to pay you your full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue you as a participant in all compensation, benefit and insurance plans in which you were participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this Subsection. Amounts paid under this Subsection are in addition to all other amounts due under -------------------------------------------------------------------------------- this Agreement, and shall not be offset against or reduce any other amounts due under this Agreement and shall not be reduced by any compensation earned by you as the result of employment by another employer.     4.  Compensation Upon Termination or During Disability.  Following a change in control of the Company, you shall be entitled to the following benefits during a period of disability, or upon termination of your employment, as the case may be, provided that such period or termination occurs during the term of this Agreement:      (i) During any period that you fail to perform your full-time duties with the Company as a result of incapacity due to physical or mental illness, you shall continue to receive your base salary at the rate in effect at the commencement of any such period, together with all compensation payable to you under the Company's disability plan or program or other similar plan during such period, until this Agreement is terminated pursuant to Section 3(ii) hereof. Thereafter, or in the event your employment shall be terminated by reason of your death, your benefits shall be determined under the Company's retirement, insurance and other compensation programs then in effect in accordance with the terms of such programs.     (ii) If your employment shall be terminated by the Company for Cause or by you other than for Good Reason, the Company shall pay you your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan of the Company at the time such payments are due, and the Company shall have no further obligations to you under this Agreement.     (iii) If your employment by the Company should be terminated by the Company other than for Cause or Disability or if you should terminate your employment for Good Reason, you shall be entitled to the benefits provided below:     (a) the Company shall pay to you your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given plus all other amounts to which you are entitled under any compensation plan of the Company, at the time such payments are due;     (b) in lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Company shall pay as severance pay to you, at the time specified in Subsection (v), a lump sum severance payment (together with the payments provided in paragraphs (d), (e) and (f) below, the "Severance Payments") equal to 3 times the sum of (1) the greater of (i) your annual rate of base salary in effect on the Date of Termination or (ii) your annual rate of base salary in effect immediately prior to the change in control of the Company and (2) the greater of (i) the average of the last three annual bonuses (annualized in the case of any bonus paid with respect to a partial year) paid to you preceding the Date of Termination or (ii) your target bonus under the Company's executive performance compensation plans in which you participate for the year in which such change in control occurs;     (c) the Company shall pay to you all legal fees and expenses incurred by you as a result of such termination, including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement (other than any such fees or expenses incurred in connection with any such claim which is determined to be frivolous) or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"); and     (d) for a thirty-six (36) month period after such termination, the Company shall arrange to provide you with life, accident and health insurance benefits substantially similar to those which you were receiving immediately prior to the change in control of the Company. Notwithstanding the foregoing, the Company shall not provide any benefit otherwise receivable by you pursuant to this paragraph (d) to the extent that a similar benefit is actually -------------------------------------------------------------------------------- received by you from a subsequent employer during such thirty-six (36) month period, and any such benefit actually received by you shall be reported to the Company;     (e) in addition to the retirement benefits to which you are entitled under the Company Pension Plan and any supplemental or excess benefit pension plan maintained by the Company or any of its subsidiaries (collectively, the "Plans"), the Company shall pay you a lump sum, in cash, equal to the actuarial equivalent of the excess of (i) the retirement pension (determined as a straight life annuity commencing at age 65) which you would have accrued under the terms of the Plans (without regard to the limitations imposed by section 401(a)(17) of the Code or any amendment to the Plans made subsequent to a change in control of the Company and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of retirement benefits thereunder), determined as if you were fully vested thereunder and had continued to be employed by the Company (after the Date of Termination) for three additional years and as if you had accumulated three additional calendar years of compensation (for purposes of determining your pension benefits thereunder), each in an amount equal to the amount determined under clause (i) of Section 4(iii)(b) hereof, over (ii) the vested retirement pension (determined as a straight life annuity commencing at age 65), which you had then accrued pursuant to the provisions of the Plans. For purposes of this Subsection, "actuarial equivalent" shall be determined using the same methods and assumptions utilized under the Company Pension Plan immediately prior to the change in control of the Company;     (f)  should you move your residence in order to pursue other business opportunities within one (1) year after the Date of Termination, the Company will pay you, at the time specified in Subsection (v), an amount equal to the expenses incurred by you in connection with such relocation (including expenses incurred in selling your home to the extent such expenses were customarily reimbursed by the Company to transferred Employees prior to the change in control of the Company) and which are not reimbursed by another employer; and     (g) all options to purchase shares of Common Stock of the Company and all stock appreciation rights, in each case granted after the date of this Agreement (or prior to the date of this Agreement if the terms of the option or stock appreciation right provide for acceleration upon a change in control of the Company) and held by you immediately prior to Termination shall become exercisable at any time on and after the Date of Termination, whether or not otherwise exercisable in accordance with the terms of the employee benefit plans pursuant to which such options and stock appreciation rights were granted, and all restrictions on any restricted stock held by you shall lapse.     (iv) Notwithstanding anything in this Agreement to the contrary, whether or not you become entitled to the Severance Payments, if any of the Severance Payments or any other payment or benefit received or to be received by you in connection with a change in control of the Company or the termination of your employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a change in control of the Company or any person affiliated with the Company or such person) (collectively with the Severance Payments, "Total Payments") will be subject to the tax (the "Excise Tax") imposed by section 4999 of the Code (or any similar tax that may hereafter be imposed) the Company shall pay to you at the time specified in Subsection (v), below, an additional amount (the "Gross-Up Payment") such that the net amount retained by you, after deduction of any Excise Tax on the Total Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this subsection, shall be equal to the Total Payments. For purposes of determining whether any amounts will be subject to the Excise Tax and the amount of such Excise Tax, (a) all amounts representing 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 in the opinion of tax counsel selected by the Company's independent auditors and acceptable to you 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 (1) the total amount of the Total Payments or (2) the amount of excess parachute payments within the meaning of section 280G(b)(1) of the Code (after applying clause (a), above), and (c) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, you shall be deemed to pay federal income taxes at the highest marginal rate of federal income 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 the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of your employment, 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 the portion of the Gross-Up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the Gross-Up Payment being repaid by you if such repayment results in a reduction in Excise Tax and/or a federal and state and 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 the termination of your employment (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 in respect of such excess (plus any interest payable with respect to such excess) at the time that the amount of such excess is finally determined.     (v) The payments provided for in Subsections (iii) and (iv) shall be made not later than the eighth day following execution by you of the Release of Claims attached as Exhibit A (the "Release of Claims"); provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to you on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirty-eighth day after the Company's receipt of your signed Release of Claims. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to you payable on the fifth day after demand therefor by the Company (together with interest at the rate provided in section 1274(b)(2)(B) of the Code).     (vi) Except as provided in Subsection (iii)(d) hereof, you shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation earned by you as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by you to the Company, or otherwise.     5.  Release of Claims.  In consideration for and as a condition precedent to receiving the severance benefits stated in Section 4(iii) of this Agreement, you agree to execute the Release of Claims substantially in the form attached as Exhibit A. If your employment is terminated by the Company other than for Cause or Disability or by you for Good Reason, you promise to execute and deliver the Release of Claims to the Company within the later of (a) 45 days after the date you receive the Release of Claims or (b) the last day of your active employment.     6.  Successors; Binding Agreement.  (i) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business -------------------------------------------------------------------------------- and/or assets of the Company to expressly assume and agree to perform this Agreement 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. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to all benefits under Section 4(iii) from the Company in the same amount and on the same terms to which you would be entitled thereunder, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.     (ii) This Agreement shall inure to the benefit of and be enforceable by you and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder had you continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.     7.  Notice.  For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.     8.  Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement 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. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Oregon without regard to its conflicts of law principles. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law. The obligations of the Company under Section 4 shall survive the expiration of the term of this Agreement.     9.  Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect and the invalid or unenforceable provision shall be modified to give effect as nearly as possible to the original intent of the parties.     10.  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.     11.  Arbitration.  (i) Any dispute arising out of or relating to this Agreement or a breach thereof, shall be finally and conclusively resolved by arbitration administered by the American Arbitration Association ("AAA") as modified by this Agreement or the subsequent agreement of the parties. Judgment on the award rendered by the arbitrator may be entered in and enforced by any court having jurisdiction thereof.     (ii) The number of arbitrators shall be one, which person shall be neutral and shall be mutually agreed upon by all parties within 30 days after a written request for arbitration by one party is delivered to all other parties. In the event that the parties cannot agree on an arbitrator, the arbitrator shall be selected within 10 days thereafter by the AAA from a list submitted by the -------------------------------------------------------------------------------- parties, with each party having the right to propose two names. If a qualified arbitrator cannot be appointed from the initial list, the process will be repeated every five days thereafter until a qualified arbitrator is selected.     (iii) The place of arbitration shall be Portland, Oregon. Unless otherwise agreed by the parties, the following procedures will be followed in any arbitration between the parties:     a.  Pre-arbitration investigations and depositions shall be conducted expeditiously and, absent a showing of clear need, shall be completed within 30 days after selection of an arbitrator. Unless ordered by the arbitrator to preserve testimony for the hearing, each party shall have the right to take no more than three depositions, each of which shall last a total of no more than two days.     b.  The arbitration hearing shall begin no more than 60 days after the arbitrator is selected and shall be closed no more than 60 days thereafter. The arbitrator's award shall be issued within 30 days after the hearing is closed.     (iv) Either party may make an application to a court of competent jurisdiction for an order enforcing this arbitration agreement or for injunctive relief to maintain the status quo until such time as the arbitration award is rendered or the controversy is otherwise resolved. Both parties consent to the jurisdiction of the AAA.     12.  Entire Agreement.  This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and during the term of the Agreement supersedes the provisions of all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto with respect to the subject matter hereof.     13.  Effective Date.  This Agreement shall become effective as of the date set forth above. If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which will then constitute our agreement on this subject.     Sincerely,     PRECISION CASTPARTS CORP.     By   -------------------------------------------------------------------------------- Agreed as of the       day of             , 20XX.         --------------------------------------------------------------------------------         -------------------------------------------------------------------------------- EXHIBIT A RELEASE OF CLAIMS 1.PARTIES.     The parties to Release of Claims (hereinafter "Release") are «FirstName» «Initial» «LastName» and Precision Castparts Corp., an Oregon corporation, as hereinafter defined.     1.1  EMPLOYEE.       For the purposes of this Release, "Employee" means «FirstName» «Initial» «LastName», and his or her attorneys, heirs, executors, administrators, assigns, and spouse.     1.2  THE COMPANY.       For purposes of this Release the "Company" means Precision Castparts Corp., an Oregon corporation, its predecessors and successors, corporate affiliates, and all of each corporation's officers, directors, employees, insurers, agents, or assigns, in their individual and representative capacities. 2.BACKGROUND AND PURPOSE.     Employee was employed by the Company. Employee's employment is ending effective «Ending_Effective_Date» following a change in control as defined in Section 2 of the letter agreement between Employee and the Company dated «Letter_Agreement_Date» (the "Agreement"). The purpose of this Release is to settle, and the parties hereby settle, fully and finally, any and all claims Employee may have against the Company. 3.RELEASE.     Employee waives, acquits and forever discharges the Company from any obligations the Company has and all claims Employee may have including but not limited to obligations and/or claims arising from the Agreement or any other document or oral agreement relating to employment compensation, benefits severance or post-employment issues. Employee hereby releases the Company from any and all claims, demands, actions, or causes of action, whether known or unknown, arising from or related in any way to any employment of or past or future failure or refusal to employ Employee by the Company, or any other past or future claim (except as reserved by this Release or where expressly prohibited by law) that relates in any way to Employee's employment, compensation, benefits, reemployment, or application for employment, with the exception of any claim Employee may have against the Company for enforcement of this Release. This release includes any and all claims, direct or indirect, which might otherwise be made under any applicable local, state or federal authority, including but not limited to any claim arising under the Oregon statutes dealing with employment, discrimination in employment, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Family and Medical Leave Act of 1993, the Equal Pay Act of 1963, Employee Order 11246, the Rehabilitation Act of 1973, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Age Discrimination in Employment Act, the Fair Labor Standards Act, Oregon wage and hour statutes, all as amended, any regulations under such authorities and any applicable contract, tort or common law theories.     3.1  RESERVATIONS OF RIGHTS.       This Release shall not affect any rights which Employee may have under any medical insurance, disability plan, workers' compensation, unemployment compensation, applicable company stock incentive plan(s), indemnifications or the retirement plans maintained by the Company.     3.2  NO ADMISSION OF LIABILITY.       It is understood and agreed that the acts done and evidenced hereby and the release granted hereunder is not an admission of liability on the part of Employee or the Company, by whom liability has been and is expressly denied. -------------------------------------------------------------------------------- 4.CONSIDERATION TO EMPLOYEE.     After receipt of this Release fully endorsed by Employee, and the expiration of the seven day revocation period provided by the Older Workers Benefit Protection Act without Employee's revocation, the Company shall pay the applicable benefits to the Employee specified in Section 4(iii) of the Agreement. 5.NO DISPARAGEMENT.     Employee agrees that Employee will not disparage or make false or adverse statements about the Company. The Company should report to Employee any actions or statements that are attributed to Employee that the Company believes are disparaging. The Company may take actions consistent with breach of this Release should it determine that Employee has disparaged or made false or adverse statements about the Company. The Company agrees to follow the applicable policy(ies) regarding release of employment reference information. 6.CONFIDENTIALITY, PROPRIETARY, TRADE SECRET AND RELATED INFORMATION.     Employee acknowledges and agrees not to make unauthorized use or disclosure of any confidential, proprietary or trade secret information learned as an employee about the Company, its products, customers and suppliers and covenants not to breach that duty. Should Employee, Employee's attorney or agents be requested in any judicial, administrative, or other proceeding to disclose confidential, proprietary or trade secret information Employee learned as an employee of the Company, Employee shall promptly notify the Company of such request by the most expeditious means in order to enable the Company to take any reasonable and appropriate action to limit such disclosure. 7.OPPORTUNITY FOR ADVICE OF COUNSEL.     Employee acknowledges that Employee has been encouraged to seek advice of counsel with respect to this Release and has had the opportunity to do so. 8.ENTIRE RELEASE.     This Release and the Agreement signed by Employee contain the entire agreement and understanding between the parties and, except as reserved in paragraph 3, supersede and replace all prior agreements, written or oral, prior negotiations and proposed agreements, written or oral. Employee and the Company acknowledge that no other party, nor agent nor attorney of any other party, has made any promise, representation or warranty, express or implied, not contained in this Release concerning the subject matter of this Release to induce this Release, and Employee and the Company acknowledge that they have not executed this Release in reliance upon any such promise, representation, or warranty not contained in this Release. 9.SEVERABILITY.     Every provision of this Release is intended to be severable. In the event any term or provision of this Release is declared to be illegal or invalid for any reason whatsoever by a court of competent jurisdiction or by final and unappealed order of an administrative agency of competent jurisdiction, such illegality or invalidity should not affect the balance of the terms and provisions of this Release, which terms and provisions shall remain binding and enforceable. 10.REVOCATION.     As provided by the Older Workers Benefit Protection Act, Employee is entitled to have forty-five days to consider this Release. For a period of seven days after execution of this Release, Employee may revoke this Release. Upon receipt of Employee's signed Release and the end of the seven day -------------------------------------------------------------------------------- revocation period, payment by the Company as described in paragraph 4 above will be made in a timely manner as provided herein. -------------------------------------------------------------------------------- «FirstName» «Initial» «LastName»   Dated:             , 2       STATE OF OREGON   )         ) ss.     County of Multnomah   )         Personally appeared the above named «FirstName» «Initial» «LastName» and acknowledged the foregoing instrument to be his or her voluntary act and deed.     Before me:   --------------------------------------------------------------------------------         Notary Public for   --------------------------------------------------------------------------------         My commission expires:   -------------------------------------------------------------------------------- PRECISION CASTPARTS CORP.         By:   --------------------------------------------------------------------------------   Dated:   -------------------------------------------------------------------------------- Its:   -------------------------------------------------------------------------------- On Behalf of the "Company"         -------------------------------------------------------------------------------- QuickLinks Form for Change of Control Agreement EXHIBIT A RELEASE OF CLAIMS

Exhibit 10.2 LIMITED LICENSE AGREEMENT       This Limited License Agreement (the “Agreement”), dated as of October 31, 2000, between KPMG Consulting, Inc., a Delaware corporation, its subsidiaries, successors and assigns (“Licensee”), and KPMG International (formerly KLYNVELD PEAT MARWICK GOERDELER), a verein (association) organised and existing under the laws of Switzerland, its predecessors, successors and assigns (“KPMG International”), to become effective only if there is, and as of the date of, an initial public offering of common stock of Licensee (the “Effective Date”).       WITNESSETH:       WHEREAS, the parties hereto recognise the following DEFINITIONS OF TERMS used in the Agreement:       COMPONENT LICENSE AGREEMENT means the agreement signed by the four founding firms of KPMG International, KPMG International, Peat Marwick International and Klynveld Main Goerdeler governing the ownership and use of the component parts of the names “KPMG”, “KPMG International” and “Klynveld Peat Marwick Goerdeler”, which came into effect on 1 April 1987.       INTERNATIONAL BOARD means the International Board of KPMG International as set forth in the Statutes of Association of KPMG International.       INTERNATIONAL COUNCIL means the International Council of KPMG International as set forth in the Statutes of Association of KPMG International.       INTERNATIONAL HEADQUARTERS means the International Headquarters of KPMG International situated in Amsterdam, The Netherlands as set forth in the Statutes of Association of KPMG International.       LICENSE AGREEMENT means the standard License Agreement between KPMG International and a Member Firm for the purpose of controlling the use of the Service Marks. 1 --------------------------------------------------------------------------------       MEMBER FIRM means any national or regional professional services firm, including all of its Subsidiaries as defined in the Agreement, which has been admitted as a member firm of KPMG International by the International Council and has signed the Statutes of Association of KPMG International (or a Signature Addendum to such Statutes), a License Agreement and a Membership Agreement. Every Member Firm shall be a full scope Member Firm —which means a Member Firm which offers and has the capability to provide and deliver services to national and international clients in all areas of KPMG International’s core services as may be designated as core services from time to time by the International Council, unless otherwise approved by the International Council. With the specific approval of the International Council, a Member Firm or a Subsidiary as defined herein may be a LIMITED SCOPE FIRM, which means a firm which offers and has the capability to provide and deliver services to national and international clients in one or more but not all areas of such core services.       MEMBERSHIP AGREEMENT means the standard Membership Agreement between KPMG International and a Member Firm for the purpose of defining the exclusive relationship of the Member Firm and its Subsidiaries with KPMG International.       OPERATING TERRITORIES means certain agreed-upon territories where Licensee shall be permitted by the Agreement to utilise the KPMG name and logo and other Service Marks, as more fully defined in Section 1d., below.       SERVICE MARKS means the names and marks set out in Exhibit A hereto.       STATUTES or KPMG STATUTES means the Statutes of Association of KPMG International.       SUBSIDIARY means any firm, division, practice, entity or operation which is wholly or dominantly owned, and/or managed and controlled by a Member Firm, and which therefore is not required to sign a separate License Agreement or Membership Agreement.       WHEREAS, KPMG International has the sole authority to license the names “KPMG”, “KPMG International” and “Klynveld Peat Marwick Goerdeler” and the Service Marks set forth in Exhibit A hereto; that is, marks and names which use any one or more of the component names “KLYNVELD”, “PEAT”, “MARWICK” or “GOERDELER”, alone or as initials (i.e., “KPMG”) or in combination with other names or marks set forth in Exhibit A hereto (which names and marks are referred to collectively as the “Service Marks”); 2 --------------------------------------------------------------------------------       WHEREAS, Deutsche Treuhand-Gesellschaft Aktiengesellschaft, Wirtschaftspruefungsgesellschaft (now KPMG Deutsche Treuhand-Gesellschaft AG), KMG Klynveld Kraayenhof & Co. (now KPMG Holding N.V.), Peat Marwick Main & Co. (now KPMG LLP), Peat Marwick McLintock (now KPMG), Klynveld Peat Marwick Goerdeler (now KPMG International), Peat Marwick International, a partnership, and Klynveld Main Goerdeler, an association, have entered into the Component License Agreement, effective as of 1 April 1987;       WHEREAS, Licensee wishes to utilise the KPMG name and logo and other Service Marks owned and/or licensed by KPMG International in the Operating Territories;       WHEREAS, Licensee wishes to use the Service Marks in connection with the providing and advertising of services in the field of management consulting (including, without limitation, systems integration and integrated solutions services), and on products related to such services (which trademark uses are intended to be included within the definition of the Service Marks as used herein) in the Operating Territories;       WHEREAS, Licensee has been the subject of appropriate due diligence procedures by KPMG International and/or Member Firms to determine its suitability as a licensee;       WHEREAS, KPMG International and Licensee wish to ensure the greatest possible protection of the Service Marks and recognise that effective defense of the Service Marks makes it desirable that the Service Marks be subject to uniform policies of protection and quality standards;       WHEREAS, Licensee recognises that the value and goodwill of the Service Marks will be protected and enhanced by the Agreement; and       WHEREAS, the parties recognise that Licensee is not, and does not become by entering into the Agreement, a Member Firm, Limited Scope Firm or Subsidiary, but is and remains an independent professional firm.       NOW, THEREFORE, in consideration of the premises and of the mutual covenants hereinafter set forth, the parties agree as follows: 3 -------------------------------------------------------------------------------- 1. Grant of License       a. Licensee acknowledges that KPMG International has the sole authority to license to Licensee the use of the names “KPMG”, “KPMG International” and “Klynveld Peat Marwick Goerdeler” and the Service Marks set forth in Exhibit A hereto, and that this right to license derives exclusively from the KPMG Statutes and the Component License Agreement. b. Upon the terms and conditions hereinafter set forth, KPMG International hereby grants to Licensee, and Licensee hereby accepts, the right, license and privilege to use the Service Marks in connection with Licensee’s providing and advertising of services in the field of management consulting (including, without limitation, systems integration and integrated solutions services), and on products related to such services, in, and only in, the Operating Territories. Such grant shall not be exclusive to Licensee (except that KPMG International shall not make such a grant to any other person, firm or entity in the Operating Territories, other than a Member Firm in the Operating Territories); provided, however, that Licensee shall have the exclusive, worldwide right to the name “KPMG Consulting, Inc.” and “KPMG Consulting, Incorporated,” subject to the provisions of Section 1(e). The grant of the license to use the Service Marks shall not include any right of Licensee to enter into any sublicense agreements related to the Service Marks without the express written consent of KPMG International, except in the case of a subsidiary or other entity directly or indirectly controlled by Licensee. In addition, Licensee shall only utilise the name “KPMG” in immediate conjunction with “Consulting” or take other necessary steps in order to ensure that Licensee does not represent that it is the same as or is affiliated with KPMG LLP or KPMG International, or is governed by or affiliated with KPMG LLP or KPMG International, including, but not limited to, in Licensee’s advertisements, press releases, name plates or other publications. KPMG International shall use its best efforts to cause each Member Firm that uses the Service Marks to take all necessary steps to distinguish itself from Licensee and avoid representing that it is the same firm as or is affiliated with Licensee. c. The limited license hereby granted shall be effective as of the Effective Date and shall continue for four (4) years unless earlier terminated in accordance with the provisions of Section 4 below. 4 --------------------------------------------------------------------------------       d. The limited license to use the Service Marks hereby granted shall only apply to the Licensee’s Operating Territories. The Operating Territories shall initially be comprised of those territories of Member Firms, Limited Scope Firms and Subsidiaries whose consulting practices have joined or have been acquired by Licensee as of or prior to the Effective Date. If Licensee from time to time acquires consulting practices of other Member Firms, Limited Scope Firms or Subsidiaries at later dates, the territories of those acquired consulting practices shall at such dates become a part of the Operating Territories. e. Licensee shall not compete, directly or indirectly, under any name, with any Member Firm outside of the Licensee’s Operating Territories during the Noncompetition Period without the express written consent of the subject Member Firm(s). For the avoidance of doubt, if Licensee is providing consulting services and products on a project primarily based in the Operating Territories which it services, this paragraph shall not preclude Licensee from engaging any person, firm or entity which is not a Member Firm to deliver such consulting services and products for such portion of the services or products to be provided on the project outside of the Operating Territories. The preceding sentence shall not be used as a means to circumvent the purposes of this paragraph. As used in this Agreement, “Noncompetition Period” means the period which is the later of (i) December 31, 2001 and (ii) six (6) months following the receipt of the termination notice by the Chief Executive Officer of KPMG International as contemplated by Section 4(b) below; provided, however, that in no event shall the Noncompetition Period extend beyond the fourth anniversary of the Effective Date. f. Neither KPMG International (to the extent that it might in the future be permitted by law to conduct operations) nor any of its Member Firms shall compete, directly or indirectly, with Licensee in the Licensee’s Operating Territories during the Noncompetition Period, without the express written consent of Licensee. For the avoidance of doubt, this paragraph shall not preclude KPMG International (to the extent that it might in the future be permitted by law to conduct operations) or its Member Firms from engaging any person, firm or entity which is not a Member Firm to deliver consulting services and products in the Operating Territories, to the extent that such party is providing consulting services and products on a project primarily based in their respective exclusive territories outside of the Operating Territories, if such project also includes services to be provided in the Operating Territories. The preceding sentence shall not be used as a means to circumvent the purposes of this paragraph. 5 --------------------------------------------------------------------------------       g. The parties hereto acknowledge and agree that Licensee and the Member Firms may refer work to one another and may enter into contractor/subcontractor relationships, provided that the Licensee and the Member Firms shall have no legal obligations to do so and that any such referrals or relationships shall be determined on a case by case basis, subject to individual circumstances and based on reasonable commercial terms. In no event shall any referral fees be paid between the Licensee and any Member Firm. h. During the Noncompetition Period, Licensee shall not solicit or hire any partners or employees of any Member Firm, and no Member Firm shall, and KPMG International shall ensure that no Member Firm shall, solicit or hire any employees of Licensee without the express written consent of the current employer. i. Licensee, KPMG International and the Member Firms shall maintain their respective rights to their respective intellectual properties. The license or transfer of any intellectual property between or among Licensee, KPMG International and the Member Firms will be determined on a case by case basis, with the pricing and other terms to be reflected in mutually negotiated contracts based upon reasonable commercial terms. 2. Protection of Title and Registration       a. Licensee agrees that it will not challenge the title or any rights of KPMG International or any Member Firm, Limited Scope Firm, or Subsidiary in and to the names “KPMG”, “KPMG International” and “Klynveld Peat Marwick Goerdeler” and the Service Marks set forth in Exhibit A hereto, or make any claim or take any action adverse to KPMG International’s or any Member Firm’s, Limited Scope Firm’s, or Subsidiary’s rights therein, or challenge the validity of the Agreement. b. Licensee agrees, both during and after the term of the Agreement, to co-operate fully and in good faith with KPMG International and to execute such documents as KPMG International reasonably requests for the purpose of securing, preserving, defending, and protecting KPMG International’s rights in and to the names “KPMG”, “KPMG International” and “Klynveld Peat Marwick Goerdeler” and the Service Marks. c. Licensee shall promptly notify KPMG International in writing of any infringement, imitation, passing off or use of the Service Marks or any confusingly similar marks by any third party which comes to its attention. KPMG International and Licensee shall 6 --------------------------------------------------------------------------------         each have the right to bring a proceeding against any such third parties to enforce their rights hereunder. d. International Headquarters shall obtain and maintain registrations for the Service Marks used by Licensee. This obligation shall apply to any and all Service Marks used by Licensee. Licensee shall obtain and maintain registrations for its intellectual property, including names or marks used in combination with, or variations on, the Service Marks. e. If Licensee uses the Service Marks, Licensee shall use the name “KPMG” and the Service Marks in accordance with the provisions of the KPMG Image System regarding the legal and communicative name of License and the use of the letters “KPMG” and the KPMG logo on its stationery and other documents. 3. Terms of Payment     Licensee has paid to KPMG International the sum of US$10.00 and KPMG International hereby acknowledges receipt thereof as full payment for this limited license. The parties also acknowledge the mutual undertakings made herein as consideration for the Agreement. 4. Term of the Agreement and Termination       a. Unless earlier terminated pursuant to this Section 4, the term of the Agreement shall be for four (4) years from the Effective Date. b. Licensee may terminate the Agreement at any time by six months written notice to the Chief Executive Officer of KPMG International, but in no event can the Licensee change its name before June 30, 2001. The commencement of the period of notice shall be the date of receipt by the Chief Executive Officer of such written notice. c. The International Board may terminate the Agreement at any time if Licensee, in the International Board’s reasonable, good faith judgment, has violated the material terms and conditions of the Agreement; provided, however, that the International Board may exercise this termination right only if it has delivered to the Chief Executive Officer of Licensee a written notice and description of such violation and such violation has not been cured during the ninety (90) day period following such notice. 7 --------------------------------------------------------------------------------       d. Upon the earlier to occur of (i) a Change in Control of Licensee or (ii) the entry by Licensee into a definitive agreement for a Change in Control, Licensee shall provide a written notice to the Chief Executive Officer of KPMG International. Upon the receipt of such notice, KPMG International shall have the right, exercisable for the thirty (30) day period following the receipt of such notice, to terminate this Agreement if in the reasonable, good faith judgment of the International Board the Change in Control of Licensee will have a material detrimental effect on KPMG International and/or any Member Firm. If KPMG International determines to terminate this Agreement, it shall provide a reasonable transition period during which Licensee shall discontinue the use of the Service Marks. KPMG International agrees that neither it nor any Member Firm shall receive any consideration in exchange for waiving any termination right in this Section 4(d). “Change in Control” means:       (i) a sale or transfer to a non-affiliated third party of all or substantially all of the assets of Licensee on a consolidated basis in any transaction or series of related transactions; (ii) any merger, consolidation or reorganisation to which Licensee is a party, except for a merger, consolidation or reorganisation in which Licensee is the surviving corporation and, after giving effect to such merger, consolidation or reorganisation, the holders of Licensee’s outstanding equity (on a fully diluted basis) immediately prior to the merger, consolidation or reorganisation will own in the aggregate immediately following the merger, consolidation or reorganisation Licensee’s outstanding equity (on a fully diluted basis) either (A) having the ordinary voting power to elect a majority of the members of Licensee’s Board of Directors to be elected by the holders of its common stock and any other class which votes together with the common stock as a single class or (B) representing at least 50% of the equity value of Licensee as reasonably determined by the Board of Directors; or (iii) any person other than KPMG LLP or its affiliates acquires beneficial ownership of 50% or more of the outstanding equity of Licensee generally entitled to vote on the election of directors.       e. The Agreement shall terminate immediately in the event that: 8 --------------------------------------------------------------------------------       (i) Licensee dissolves or discontinues its business as a going concern; or (ii) A national government expropriates or nationalises all or substantially all of the assets or business of Licensee.       f. Upon termination of the Agreement:       (i) All rights of Licensee to use the Service Marks granted under the Agreement shall revert and inure to the benefit of KPMG International, subject to a reasonable transition period in the case of a termination pursuant to Section 4(d); (ii) Licensee’s right to continue using the Service Marks, or any marks or names that are likely to cause confusion therewith, shall immediately terminate, and neither Licensee nor any of its partners or shareholders or employees nor any successor firm or entity shall use the Service Marks after the date of termination, nor shall they register or use any names, terms or trademarks constituting Service Marks, without the prior written consent of KPMG International, in each case subject to a reasonable transition period in the case of a termination pursuant to Section 4(d); and (iii) KPMG International may take the necessary steps to cancel any record of Licensee as a licensee of the Service Marks. Licensee hereby agrees to execute any documents which KPMG International may reasonably require for that purpose.       g. For the twelve (12) month period following a termination of this Agreement, KPMG International shall not, and shall use its best efforts to cause the Member Firms not to, use the name “KPMG Consulting” or similar variations in any territory constituting part of the Operating Territories in effect at the time of such termination. h. In the event of a termination of the Agreement by KPMG International in accordance with the terms of this Agreement, Licensee shall have no right to any compensation from KPMG International or any Member Firms, Limited Scope Firms, or Subsidiaries. 9 --------------------------------------------------------------------------------       i. Licensee shall have the right to immediately terminate this Agreement in the event that KPMG International dissolves. The parties agree that, after such dissolution, Licensee may only retain those name and service mark common law rights, registrations, or applications therefor which do not derive from grants received under the Agreement. The parties specifically agree that, in the event of such dissolution, they shall be restored, as nearly as possible, to their positions before execution of the Agreement. j. The agreements, representations, covenants and obligations set forth in Sections l(e), l(f) and l(h) shall survive the termination of this Agreement. 5. Applicable Law     The relationship between the parties to the Agreement shall be governed by the terms and conditions set forth herein. Except to the extent that the laws of Switzerland mandatorily govern this Agreement, this Agreement shall be governed and construed in accordance with the federal laws of the United States of America and the laws of the State of New York; provided, however, that the validity of the Service Marks in any jurisdiction shall be governed by the law of the jurisdiction in which rights relating to the Service Marks are sought to be exercised. 6. Validity       a. The language of the Agreement and all documents, meetings and proceedings relating thereto shall be English. b. No modifications, amendments or supplements to the Agreement shall be effective for any purpose unless duly recorded in writing and signed by authorised representatives of Licensee and KPMG International or their successors or assigns. c. If any provision of the Agreement should be invalid or inoperable, this shall not affect the validity of the remaining provisions of the Agreement. The parties hereto shall in such event use their best efforts to substitute for any invalid or inoperable provision a valid or operable arrangement which achieves results as nearly equivalent as possible to the invalid or inoperable provision. 7. Relationship of Parties 10 --------------------------------------------------------------------------------       a. Nothing contained herein shall be construed to place the parties in the relationship of agents, partners or joint venturers, and Licensee shall have no power to obligate or bind KPMG International or any Member Firm, Limited Scope Firm or Subsidiary in any manner whatsoever. b. No provision of the Agreement shall be interpreted as having the effect of placing the management of Licensee under the control of KPMG International or any Member Firm, Limited Scope Firm or Subsidiary. 8. No Assignment or Mortgage     The Agreement and all rights and duties hereunder are personal to Licensee and shall not, without the written consent of KPMG International, be assigned, mortgaged or otherwise encumbered by Licensee or by operation of law. 9. Limited Rights of Direct Action by Four Member Firms     KPMG Deutsche Treuhand-Gesellschaft AG (Germany), KPMG SpA (Italy), KPMG Holding NV (Netherlands), and KPMG (UK) (collectively, the “four Member Firms”) hereby agree to be fully bound by the terms and conditions of Sections 1.f. and 1.h. above, and are subject to a direct action by the Licensee for any violations thereof. Each of he four Member Firms (in addition to KPMG International) is exclusively granted a direct right of action against the Licensee solely with respect to any violations of Sections 1.e., 1.h. and 1.i. above including, without limitation, on behalf of that Member Firm itself and such other Member Firm(s) in which it holds an equity interest. Such direct actions would be governed by Section 5 above and Section 10 below. In no event shall more than one action be brought with regard to a given violation. 10. Enforcement     Any controversy or claim arising out of or relating to this Agreement shall be settled by arbitration pursuant to the Commercial Rules of the American Arbitration Association and judgment on the award rendered by the arbitration may be entered in any court in the United States having jurisdiction thereof. The arbitration shall take place before a panel of three arbitrators, which shall consist of one person selected by each of the two sides to the dispute and the third person to be jointly selected by the two arbitrators previously selected. The arbitration 11 --------------------------------------------------------------------------------     proceeding shall be conducted in New York City, New York. The arbitration panel shall have the authority to award any remedy or relief that a court of competent jurisdiction could order or grant, including, without limitation, the issuance of an injunction. However, either party may, without inconsistency with this arbitration provision, apply to any court having jurisdiction hereof and seek interim provisional injunctive or other equitable relief until the arbitration award is rendered or the controversy is otherwise resolved. Except as necessary in court proceedings to enforce this arbitration provision or an award rendered hereunder, or to obtain interim relief, neither a party nor an arbitrator may disclose the existence, content or results of any arbitration hereunder without the prior written consent of both parties. The parties acknowledge that this Agreement evidences a transaction involving interstate commerce. Notwithstanding any choice of law provision included in this Agreement, the United States Federal Arbitration Act shall govern the interpretation and enforcement of this arbitration provision. Each of the parties hereto irrevocably and unconditionally waives trial by jury in any legal action or proceeding relating to the Agreement and any counter-claims therein. 12 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties have caused the Agreement to be duly executed as of the day and year first above written.   KPMG CONSULTING, INC.   By: /s/ Randolph C. Blazer Name: Title:   KPMG INTERNATIONAL   By: /s/ Stephen G. Butler    Name: Title: As to Section 9 only: KPMG Deutsche Treuhand-Gesellschaft AG (Germany) -------------------------------------------------------------------------------- KPMG SpA (Italy) -------------------------------------------------------------------------------- KPMG Holding NV (Netherlands) -------------------------------------------------------------------------------- KPMG (UK) -------------------------------------------------------------------------------- 13

EX-10 6 ex1020.htm Exhibit 10.20 CONSULTING AGREEMENT           THIS CONSULTING AGREEMENT ("Agreement") is entered into as of this 24th day of January, 2000, by and between LabOne, Inc., a Missouri corporation (the "Company") and ROBERT D. THOMPSON, an individual (the "Consultant"); W I T N E S S E T H:           WHEREAS, Consultant announced his resignation as Executive Vice President, Chief Operating Officer, Chief Financial Officer and a Director of the Company as of January 21, 2000; and           WHEREAS, in order to provide continuity in the financial and business affairs of the Company (the "Business") during the period that the Company is seeking to recruit, secure and train a new Chief Operating Officer and Chief Financial Officer, the Company wishes to retain Consultant and Consultant and is willing to serve the Company in accordance with the terms and conditions of this Consulting Agreement;           NOW, THEREFORE, the Company and Consultant hereby agree as follows:           1.           Engagement of Consultant. The Company hereby engages Consultant to consult and assist the Company in the Business, and Consultant hereby accepts such engagement from the Company, upon the terms and conditions herein set forth. The Company shall have no control over the methods used by Consultant in performing services hereunder. Consultant shall be treated for all federal and state income and employment tax and other purposes as an independent contractor and not as an employee of the Company. To the extent that Consultant shall be treated as an employee of the Company, and as a consequence the Company incurs additional tax or other costs and liabilities, Consultant shall reimburse the Company for the amount of such additional taxes and other costs and liabilities.           2.           Performance of Services. During the Term (as hereinafter defined) of this Agreement, Consultant shall assist the Company by providing such selected services in connection with the Business as may be reasonably requested by the President and Chief Executive Officer of the Company, including without limitation services and advice in connection with the Company's clinical operations, pending business opportunities and pending acquisitions. Consultant shall also provide such depositions and testimony as may be requested by the President and Chief Executive Officer in connection with any litigation in which the Company may be involved relating to the Business. Consultant shall perform such services faithfully, diligently and competently to the best of his ability, and shall devote a reasonable part of his business time and attention to the affairs of the Company and its affiliates, at times mutually agreed upon; provided, however, that the amount of services to be provided by Consultant shall be consistent with Consultant's activities as President and Chief Executive Officer of Epitope, Inc. and shall in no event exceed ten (10) hours per week .           3.           Term. The term ("Term") of this Agreement shall commence on the date hereof and shall continue through April 23, 2000.           4.           Compensation. In consideration for Consultant's performance of services under this Agreement, the Company shall pay Consultant compensation at the rate of $300 per hour. Consultant shall provide to the Company, not more frequently than bi-weekly, written accountings of his hours expended in performing services for the Company hereunder and the nature of such services. Payment for such services shall be made to Consultant by the Company promptly following the Company's receipt of such accountings.           5.           Reimbursement of Expenses. The Company shall promptly reimburse Consultant for reasonable expenses incurred by him in connection with the performance of his consulting services under this Agreement, subject to the receipt by the Company of acceptable substantiation of such expenses.           6.           Successors and Assigns. The rights and obligations of the parties under this Agreement shall inure to the benefit of and be enforceable by and binding upon them and their respective successors and assigns, except that Consultant shall not delegate his duties under this Agreement.           7.           Miscellaneous.                       (a)           Entire Agreement. This Agreement constitutes the full and complete agreement between the parties with respect to the subject matter hereof and shall not be modified or amended except in a writing executed by each of them.                        (b)           Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Kansas.                        (c)           Counterparts. This Agreement may be executed in two or more counterparts, all of which shall constitute one and the same Agreement, and each of which shall be deemed an original.                        (d)           Waiver. The provisions of this Agreement may be waived only in a writing signed by the party against whom such waiver is sought to be enforced. The failure of either party, at any time or times, to require performance of any provision hereof shall in no manner affect such party's right to enforce the same provision at a later time. No waiver by either party of any condition, or the breach of any term, agreement or covenant in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be construed as a further or continuing waiver of any such condition or breach or waiver of any other condition or breach of any other term, agreement or covenant of this Agreement.                       (e)           Attorney's Fees. In any action at law or in equity between the parties to enforce any of the provisions or rights under this Agreement, the unsuccessful party shall pay to the successful party all of his, its or their, as the case may be, costs, expenses and reasonable attorney's fees incurred therein.           IN WITNESS WHEREOF, the parties have duly executed this Agreement on the day and year first above written.                                                                                "Company"                                                                                 LabOne, Inc.                                                                  By:          /s/ W. Thomas Grant II                                                                                W. Thomas Grant II,                                                                                Chairman, President and                                                                                Chief Executive Officer                                                                                "Consultant"                                                                                /s/ Robert D. Thompson                                                                                 Robert D. Thompson

Exhibit 10.1 FIRST AMENDMENT TO CREDIT AGREEMENT THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is deemed entered into as of April 1, 2001 --------- among UNITED STATES CAN COMPANY, a Delaware corporation (the "Borrower"), U.S. Can Corporation, a Delaware -------- corporation (the "Parent"), the Domestic Subsidiaries of the Parent (together with the Parent, the "Guarantors"), ------ ---------- the Lenders party hereto and BANK OF AMERICA, N.A., as Administrative Agent for the Lenders (the "Administrative --------------- Agent"). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the ----- Credit Agreement (as defined below). RECITALS -------- WHEREAS, the Borrower, the Guarantors, the Lenders, the Administrative Agent, Citicorp North America, Inc., as Syndication Agent and Bank One, NA (Main Office Chicago) as Documentation Agent entered into that certain Credit Agreement, dated as of October 4, 2000 (as amended or modified from time to time, the "Credit ------- Agreement"); --------- WHEREAS, the Borrower has requested that the Required Lenders amend certain provisions of the Credit Agreement; and WHEREAS, the Required Lenders are willing to amend certain provisions of the Credit Agreement, as more fully set forth herein, subject to the terms and conditions specified below. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1 AMENDMENTS TO CREDIT AGREEMENT ------------------------------ 1.1 Definitions. ----------- (a) Applicable Percentage. The definition of "Applicable Percentage" set forth in Section ---------------------- 1.1 of the Credit Agreement is amended and restated in its entirety to read as follows: "Applicable Percentage" means: --------------------- (a) for Revolving Loans, Tranche A Term Loans and Letter of Credit Fees, the appropriate applicable percentages corresponding to the Leverage Ratio in effect as of the most recent Calculation Date as shown below: ------------ --------------------- ------------------------------------------- ------------------- Applicable Percentage for Revolving Loans Applicable and Tranche A Term Loans Percentage for Pricing Leverage Letter of Credit Level Ratio Fees ------------ --------------------- ------------------------------------------- ------------------- ------------ --------------------- --------------------- --------------------- ------------------- Eurocurrency Loans Base Rate Loans ------------ --------------------- --------------------- --------------------- ------------------- ------------ --------------------- --------------------- --------------------- ------------------- I > 5.00 to 1.0 3.50% 2.50% 3.50% - ------------ --------------------- --------------------- --------------------- ------------------- ------------ --------------------- --------------------- --------------------- ------------------- II < 5.00 to 1.0 but 3.25% 2.25% 3.25% => 4.75 to 1.0 ------------ --------------------- --------------------- --------------------- ------------------- ------------ --------------------- --------------------- --------------------- ------------------- III < 4.75 to 1.0 but 3.00% 2.00% 3.00% => 4.50 to 1.0 ------------ --------------------- --------------------- --------------------- ------------------- ------------ --------------------- --------------------- --------------------- ------------------- IV < 4.50 to 1.0 but 2.75% 1.75% 2.75% => 4.0 to 1.0 ------------ --------------------- --------------------- --------------------- ------------------- ------------ --------------------- --------------------- --------------------- ------------------- V < 4.0 to 1.0 but 2.50% 1.50% 2.50% => 3.50 to 1.0 ------------ --------------------- --------------------- --------------------- ------------------- ------------ --------------------- --------------------- --------------------- ------------------- VI < 3.50 to 1.00 2.25% 1.25% 2.25% ------------ --------------------- --------------------- --------------------- ------------------- (b) for Tranche B Term Loans, the appropriate applicable percentages corresponding to the pricing criteria in effect as of the most recent Calculation Date as shown below: -------------------- -------------------- --------------------------------------------------------- Tranche B Applicable Percentage for Tranche B Term Loans Pricing Term Loans Pricing Level Criteria -------------------- -------------------- --------------------------------------------------------- -------------------- -------------------- ---------------------------- ---------------------------- Eurocurrency Loans Base Rate Loans -------------------- -------------------- ---------------------------- ---------------------------- -------------------- -------------------- ---------------------------- ---------------------------- I Leverage Ratio 3.75% 2.75% > 5.00 to 1.0 -------------------- -------------------- ---------------------------- ---------------------------- -------------------- -------------------- ---------------------------- ---------------------------- II Leverage Ratio 3.50% 2.50% < 5.00 to 1.0 -------------------- -------------------- ---------------------------- ---------------------------- -------------------- -------------------- ---------------------------- ---------------------------- III Leverage Ratio 3.25% 2.25% < 5.00 to 1.0 and a Debt Rating of BB or better from S&P and Ba2 or better from Moody's -------------------- -------------------- ---------------------------- ---------------------------- The Applicable Percentage for Revolving Loans, Tranche A Term Loans, Tranche B Term Loans and Letter of Credit Fees shall, in each case, be determined and adjusted quarterly on the date (each a "Calculation Date") (i) five Business Days after the date by which the Borrower is ----------------- required to provide the Officer's Compliance Certificate or (ii) with respect to Tranche B Term Loans, if applicable, one Business Day following a change in the Debt Rating; provided that if the Borrower fails to provide the Officer's Compliance Certificate on or before the most recent Calculation Date, the Applicable Percentage for Revolving Loans, Tranche A Term Loans, Letter of Credit Fees and Tranche B Term Loans (provided that, with respect to Tranche B Term Loans only, the applicable Pricing Level immediately prior to such Calculation Date is Pricing Level I or II) from such Calculation Date shall be based on the applicable Pricing Level I until such time that an appropriate Officer's Compliance Certificate is provided whereupon such Applicable Percentage shall be determined by the then current Leverage Ratio and/or Debt Rating, as applicable. Each such Applicable Percentage shall be effective from one Calculation Date until the next Calculation Date except as set forth above. (b) Fixed Charge Coverage Ratio. The definition of "Fixed Charge Coverage Ratio" set ----------------------------- forth in Section 1.1 of the Credit Agreement is amended by deleting the parenthetical "(other than Base Capital Expenditures)" set forth in clause (a)(ii) of such definition. (c) Permitted Acquisition. Clause (i) of the definition of "Permitted Acquisition" set ---------------------- forth in Section 1.1 of the Credit Agreement is amended and restated in its entirety to read as follows: (i) the aggregate consideration (including cash and non-cash consideration and any assumption of Indebtedness, but excluding consideration consisting of any Capital Stock of the Parent issued to the seller in such Acquisition (or cash funded with the proceeds of the issuance of such Capital Stock)) paid by the Credit Parties for all such Acquisitions occurring after the Closing Date shall not exceed (i) $12,000,000 during 2001, (ii) $10,000,000 during each year subsequent to 2001; provided, that if the Leverage Ratio requirement set forth in -------- Section 7.11(a) (as set forth in the table in Section 7.11(a) or as adjusted by the Borrower pursuant to the terms of Section 7.11(a)), as of December 31 of the immediately preceding year, is less than 4.50 to 1.0 (and the Leverage Ratio is less than 4.5 to 1.0, as of such December 31, as set forth in the Officer's Compliance Certificate delivered pursuant to Section 7.1(d)), then the limit for such year shall be increased from $10,000,000 to $60,000,000, and (iii) in the aggregate, during the term of this Credit Agreement, $100,000,000. Notwithstanding the limitations set forth in clauses (i)(i) and (i)(ii) of this definition of Permitted Acquisitions, the aggregate consideration for Acquisitions during any such year may be increased by $15,000,000 (in excess of the $12,000,000 and $10,000,000 limitations, respectively, set forth therein, but not in excess of the $60,000,000 limitation set forth in the proviso to clause (i)(ii)) if, after giving effect to any such Acquisition, the Borrower provides written proof, reasonably acceptable to the Administrative Agent, that the Leverage Ratio will not increase as a result of such Acquisition. (d) Revolving Committed Amount. The definition of "Revolving Committed Amount" set forth ---------------------------- in Section 1.1 of the Credit Agreement is amended and restated in its entirety to read as follows: "Revolving Committed Amount" means ONE HUNDRED TEN MILLION DOLLARS ($110,000,000) or ---------------------------- such lesser amount as the Revolving Committed Amount may be reduced pursuant to Section 2.1(d) or Section 3.3(c). 1.2 Deleted Definitions. Section 1.1 of the Credit Agreement is amended to delete the definition -------------------- of "Base Capital Expenditures". 1.3 Financial Covenants. Section 7.11 of the Credit Agreement is amended and restated in its -------------------- entirety to read as follows: 7.11 Financial Covenants. ------------------- (a) Leverage Ratio. The Leverage Ratio, as of the end of each fiscal quarter of -------------- the Borrower during the periods set forth below, shall be less than or equal to: ------------------------------------------------------------- ---------------------------------- Period Ratio ------------------------------------------------------------- ---------------------------------- For the fiscal quarters ending April 1, July 1 and 5.60 to 1.0 September 30, 2001 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarters ending December 31, 2001 and March 5.45 to 1.0 31, 2002 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarter ending June 30, 2002 5.25 to 1.0 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarter ending September 29, 2002 5.00 to 1.0 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarter ending December 31, 2002 4.75 to 1.0 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarters ending March 30, June 29, and 4.50 to 1.0 September 28, 2003 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarter ending December 31, 2003 4.40 to 1.0 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarters ending April 4, July 4, and 4.25 to 1.0 October 3, 2004 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarters ending December 31, 2004 and 4.00 to 1.0 April 3, 2005 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarters ending July 3, October 2, and 3.75 to 1.0 December 31, 2005 and April 2, 2006 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarter ending July 2, 2006 and each fiscal 3.50 to 1.0 quarter thereafter ------------------------------------------------------------- ---------------------------------- The Borrower shall have the right during the first fiscal quarter of each fiscal year, upon written notice to the Administrative Agent, to permanently lower (i.e. make the Leverage Ratio more restrictive) the Leverage Ratio requirement (i) for the period ending December 31 of the immediately preceding fiscal year (the "Fiscal Year-End Period") and (ii) for any period subsequent to the Fiscal Year-End Period; ------------------------ provided, if the Leverage Ratio requirement is permanently lowered for any period set forth above -------- pursuant to the foregoing clauses (i) or (ii), the Leverage Ratio requirement for any subsequent period shall be no less restrictive. Upon such written notice, the Administrative Agent shall notify the Lenders of such change(s) in the Leverage Ratio requirements, and this Credit Agreement shall be deemed amended in accordance with such notice. (b) Interest Coverage Ratio. The Interest Coverage Ratio, as of the end of each fiscal ----------------------- quarter of the Borrower during the periods set forth below, shall be greater than or equal to: ------------------------------------------------------------- ---------------------------------- Period Ratio ------------------------------------------------------------- ---------------------------------- For each fiscal quarter ending in 2001 1.65 to 1.0 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarter ending March 31, 2002 1.70 to 1.0 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarter ending June 30, 2002 1.75 to 1.0 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarter ending September 29, 2002 1.80 to 1.0 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarter ending December 31, 2002 1.90 to 1.0 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarters ending March 30, June 29, and 2.00 to 1.0 September 28, 2003 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarter ending December 31, 2003 2.05 to 1.0 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarters ending April 4, July 4, and 2.15 to 1.0 October 3, 2004 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarters ending December 31, 2004 and 2.25 to 1.0 April 3, 2005 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarters ending July 3, October 2, and 2.50 to 1.0 December 31, 2005 and April 2, 2006 ------------------------------------------------------------- ---------------------------------- ------------------------------------------------------------- ---------------------------------- For the fiscal quarter ending July 2, 2006 and for each 2.75 to 1.0 fiscal quarter thereafter ------------------------------------------------------------- ---------------------------------- (c) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as of the end of each --------------------------- fiscal quarter of the Borrower during the periods set forth below, shall be greater than or equal to: ----------------------------------------------------------------------- ---------------------------------- Period Ratio ----------------------------------------------------------------------- ---------------------------------- For each fiscal quarter ending in 2001 and 2002 1.00 to 1.0 ----------------------------------------------------------------------- ---------------------------------- ----------------------------------------------------------------------- ---------------------------------- For each fiscal quarter ending in 2003 and for each fiscal quarter 1.05 to 1.0 thereafter ----------------------------------------------------------------------- ---------------------------------- (d) Minimum EBITDA. EBITDA, as of the end of each fiscal quarter of the Borrower, for the -------------- twelve month period ending on such date, during the periods set forth below, shall be greater than or equal to: ----------------------------------------------------------------------- ---------------------------------- Period Amount ----------------------------------------------------------------------- ---------------------------------- For each fiscal quarter ending in 2001 $ 93,000,000 ----------------------------------------------------------------------- ---------------------------------- ----------------------------------------------------------------------- ---------------------------------- For the fiscal quarter ending March 31, 2002 $ 95,000,000 ----------------------------------------------------------------------- ---------------------------------- ----------------------------------------------------------------------- ---------------------------------- For the fiscal quarters ending June 30, September 29 and December 31, $100,000,000 2002 ----------------------------------------------------------------------- ---------------------------------- ----------------------------------------------------------------------- ---------------------------------- For each fiscal quarter ending in 2003 $105,000,000 ----------------------------------------------------------------------- ---------------------------------- ----------------------------------------------------------------------- ---------------------------------- For each fiscal quarter ending in 2004 $110,000,000 ----------------------------------------------------------------------- ---------------------------------- ----------------------------------------------------------------------- ---------------------------------- For each fiscal quarter ending in 2005 and for each fiscal quarter $115,000,000 thereafter ----------------------------------------------------------------------- ---------------------------------- 1.4 Capital Expenditures. Section 8.14 of the Credit Agreement is amended and restated in its -------------------- entirety to read as follows: 8.14 Capital Expenditures. -------------------- The Credit Parties will not permit Capital Expenditures to exceed, in the aggregate, (a) $25,000,000 during 2001 and (b) $35,000,000 during each year subsequent to 2001; provided, that if the -------- Leverage Ratio requirement set forth in Section 7.11(a) (as set forth in the table in Section 7.11(a) or as adjusted by the Borrower pursuant to the terms of Section 7.11(a)), as of December 31 of the immediately preceding year, is less than 4.50 to 1.0 (and the Leverage Ratio is less than 4.5 to 1.0, as of such December 31, as set forth in the Officer's Compliance Certificate delivered pursuant to Section 7.1(d)), then the limit for such year shall be increased from $35,000,000 to $45,000,000; and provided, further, that the Credit Parties may carry forward, for one year only, up to 33% of any unused -------- ------- portion of the Capital Expenditures limit from the prior year. 1.5 Schedules. Schedule 1.1(a) to the Credit Agreement is amended and restated in its entirety by --------- --------------- Schedule 1.1(a) attached hereto. --------------- SECTION 2 CONDITIONS PRECEDENT -------------------- 2.1 Conditions Precedent. This Amendment shall be deemed effective on April 1, 2001 upon --------------------- satisfaction of the following conditions (or waiver thereof by the Required Lenders): (a) Documentation. Receipt by the Administrative Agent of copies of this Amendment duly ------------- executed by the Credit Parties and the Required Lenders. (b) Authority. Receipt by the Administrative Agent of (i) a certificate of the secretary --------- or assistant secretary of each Credit Party certifying as to resolutions or authorization of the Board of Directors of such Credit Party approving and adopting this Amendment and the transactions contemplated herein and authorizing the execution, delivery and performance hereof and (ii) an incumbency certificate of each Credit Party certified by a secretary or assistant secretary of such Credit Party to be true and correct as of the Closing Date. (c) Good Standing. Certificates of good standing, existence or their equivalent with -------------- respect to each Credit Party certified as of a recent date by the appropriate Governmental Authorities of the jurisdiction of its incorporation and in the jurisdiction of its chief executive office and principal place of business. (d) Opinions. Receipt by the Administrative Agent of an opinion or opinions from counsel -------- to the Credit Parties relating to this Amendment and the transactions contemplated herein, in form and substance satisfactory to the Administrative Agent, addressed to the Administrative Agent on behalf of the Lenders and dated as of the date hereof. (e) Fees. The payment by the Borrower of (i) an amendment fee to each Lender who duly ---- executes and delivers this Amendment on or before Noon, Eastern Daylight Time, on Tuesday, April 24, 2001, of 25 basis points (0.25%) of its aggregate Commitments (after giving effect to this Amendment), (ii) such fees to the Administrative Agent as agreed to between the Borrower and the Administrative Agent and (iii) all expenses of the Administrative Agent in connection with the negotiation, preparation, execution and delivery of this Amendment and the other transactions contemplated herein, including, without limitation, reasonable legal fees and expenses. SECTION 3 MISCELLANEOUS ------------- 3.1 Ratification of Credit Agreement. The term "Credit Agreement" and "Agreement" as used in each ---------------------------------- of the Credit Documents shall hereafter mean the Credit Agreement as amended by this Amendment. Except as herein specifically agreed, the Credit Agreement is hereby ratified and confirmed and shall remain in full force and effect according to its terms. 3.2 Authority/Enforceability. Each of the Credit Parties, the Administrative Agent and the Lenders ------------------------ party hereto represents and warrants as follows: (a) It has taken all necessary action to authorize the execution, delivery and performance of this Amendment. (b) This Amendment has been duly executed and delivered by such Person and constitutes such Person's legal, valid and binding obligations, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). (c) No consent, approval, authorization or order of, or filing, registration or qualification with, any court or Governmental Authority or third party is required in connection with the execution, delivery or performance by such Person of this Amendment. 3.3 Representation and Warranties. The Credit Parties represent and warrant to the Lenders that: ----------------------------- (a) The representations and warranties of the Credit Parties set forth in Section 6 of the Credit Agreement are true and correct in all material respects as of the date hereof except for those that specifically relate to an earlier date. (b) No event has occurred and is continuing which constitutes a Default or an Event of Default. (c) The Collateral Documents continue to create a valid security interest in, and Lien upon, the Collateral, in favor of the Collateral Agent, for the benefit of the Lenders, which security interests and Liens are perfected in accordance with the terms of the Collateral Documents and prior to all Liens other than Permitted Liens. (d) The Credit Party Obligations are not reduced or modified by this Amendment and are not subject to any offsets, defenses or counterclaims. 3.4 Pricing Level. The Credit Parties acknowledge and agree that, as of the effective date of this ------------- Amendment, the pricing for all Loans and Letter of Credit Fees under the Credit Agreement shall be as set forth in Pricing Level I in the definition of Applicable Percentage, as amended by this Amendment. 3.5 Counterparts/Telecopy. This Amendment may be executed in any number of counterparts, each of --------------------- which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of executed counterparts by telecopy shall be effective as an original and shall constitute a representation that an original will be delivered if requested. 3.6 Further Assurances, The Credit Parties agree to promptly take such action, upon the request of ------------------- the Administrative Agent, as is necessary to carry out the intent of this Amendment. 3.7 GENERAL RELEASE. IN CONSIDERATION OF THE REQUIRED LENDERS ENTERING INTO THIS AMENDMENT, THE --------------- CREDIT PARTIES HEREBY RELEASE THE ADMINISTRATIVE AGENT, THE LENDERS, AND THE ADMINISTRATIVE AGENT'S AND THE LENDERS' RESPECTIVE OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, COUNSEL AND DIRECTORS FROM ANY AND ALL ACTIONS, CAUSES OF ACTION, CLAIMS, DEMANDS, DAMAGES AND LIABILITIES OF WHATEVER KIND OR NATURE, IN LAW OR IN EQUITY, NOW KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED TO THE EXTENT THAT ANY OF THE FOREGOING ARISES FROM ANY ACTION OR FAILURE TO ACT UNDER THE CREDIT AGREEMENT OR UNDER THE OTHER CREDIT DOCUMENTS ON OR PRIOR TO THE DATE HEREOF. 3.8 GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE ------------- GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. [remainder of page intentionally left blank] SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT UNITED STATES CAN COMPANY CHAR1\590568_ 4 SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT UNITED STATES CAN COMPANY CHAR1\590568_ 4 The parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. BORROWER: -------- UNITED STATES CAN COMPANY, a Delaware corporation By: /s/ Sandra K. Vollman ----------------------------------------------------------- Name: Sandra K. Vollman --------------------------------------------------------- Title: Vice President -------------------------------------------------------- DOMESTIC --------- GUARANTORS: ---------- U.S. CAN CORPORATION, a Delaware corporation By: /s/ Sandra K. Vollman ----------------------------------------------------------- Name: Sandra K. Vollman ------------------------------------------------ Title: Vice President -------------------------------------------------------- USC MAY VERPACKUNGEN HOLDING INC., a Delaware corporation By: /s/ John Workman -------------------------------------------------- Name: John Workman ------------------------------------------------ Title: VP -------------------------------------------------------- LENDERS: ------- BANK OF AMERICA, N.A., individually in its capacity as Administrative Agent By: /s/ Liliana Claar -------------------------------------------------- Name: Liliana Claar ------------------------------------------------------- Title: Vice President ------------------------------------------------------- BANK OF AMERICA, N.A., in its capacity as a Lender By: /s/ M. Thomas Barnett -------------------------------------------------- Name: M. Thomas Barnett ------------------------------------------------ Title: Managing Director ----------------------------------------------- BANK OF AMERICA, N.A., in its capacity as a Lender By: /s/ M. Thomas Barnett -------------------------------------------------- Name: M. Thomas Barnett ------------------------------------------------ Title: Managing Director ----------------------------------------------- AMMC CDO I LIMITED By: American Money Management Corp. As Collateral Manager By: /s/ David P. Meyer ----------------------------------------------------------- Name: David P. Meyer ------------------------------------------------ Title: Vice President -------------------------------------------------------- AMMC CDO II LIMITED By: American Money Management Corp. As Collateral Manager By: /s/ David P. Meyer ----------------------------------------------------------- Name: David P. Meyer ------------------------------------------------ Title: Vice President -------------------------------------------------------- THE BANK OF NOVA SCOTIA By: /s/ F.C.H Ashby -------------------------------------------------- Name: F.C.H Ashby --------------------------------------------------------- Title: Senior Manager Loan Operations ----------------------------------------------- BANK OF TOKYO-MITSUBISHI TRUST COMPANY By: /s/ Chris Droussious ----------------------------------------------------------- Name: Chris Droussious ------------------------------------------------ Title: Vice President -------------------------------------------------------- BANK ONE, NA (MAIN OFFICE CHICAGO), individually in its capacity as Lender and in its capacity as Document Agent By: /s/ Diane M. Faunda ----------------------------------------------------------- Name: Diane M. Faunda ------------------------------------------------ Title: Director, Capital Markets ----------------------------------------------- BLACK DIAMOND CLO 2000-1 LTD. By: /s/ David Dyer ----------------------------------------------------------- Name: David Dyer --------------------------------------------------------- Title: Director ----------------------------------------------- BLACK DIAMOND INTERNATIONAL FUNDING, LTD. By: /s/ David Dyer ----------------------------------------------------------- Name: David Dyer --------------------------------------------------------- Title: Director ----------------------------------------------- CITADEL HILL 2000 LTD. By: /s/ S. Lockhart ----------------------------------------------------------- Name: S. Lockhart --------------------------------------------------------- Title: Authorized Signatory -------------------------------------------------------- CITIBANK, N.A By: /s/ Paul Zingarini ----------------------------------------------------------- Name: Paul Zingarini --------------------------------------------------------- Title: Director - Global Loan Trading ----------------------------------------------- CITICORP NORTH AMERICA, INC., individually in its capacity as a Lender and in its capacity as Syndication Agent By: /s/ Peter A. Briggs ----------------------------------------------------------- Name: Peter A. Briggs ------------------------------------------------ Title: Vice President -------------------------------------------------------- Columbus Loan Funding, Ltd. By: Travelers Asset Management International Company, LLC By: /s/ Allen R. Cantrell ----------------------------------------------------------- Name: Allen R. Cantrell ------------------------------------------------ Title: Investment Officer -------------------------------------------------------- CREDIT AGRICOLE INDOSUEZ By: /s/ Charles Hiatt -------------------------------------------------- Name: Charles Hiatt --------------------------------------------------------- Title: Vice President Manager ----------------------------------------------- By: /s/ Phillip J. Salter ----------------------------------------------------------- Name: Phillip J. Salter ------------------------------------------------ Title: Vice President Senior Relationship Manager ----------------------------------------------- CREDIT LYONNAIS NEW YORK BRANCH By: /s/ Mischa Zabotin ----------------------------------------------------------- Name: Mischa Zabotin ------------------------------------------------ Title: Managing Director ----------------------------------------------- CYPRESSTREE INSTITUTIONAL FUND, LLC By: CypressTree Investment Management Company, Inc., its Managing Member By: /s/ P. Jeffrey Huth ----------------------------------------------------------- Name: P. Jeffrey Huth ------------------------------------------------ Title: Principal -------------------------------------------------------- CYPRESSTREE INVESTMENT PARTNERS I LTD. By: CypressTree Investment Management Company, Inc., as Portfolio Manager By: /s/ P. Jeffrey Huth ----------------------------------------------------------- Name: P. Jeffrey Huth ------------------------------------------------ Title: Principal -------------------------------------------------------- CYPRESSTREE INVESTMENT PARTNERS II, LTD. By: CypressTree Investment Management Company, Inc., as Portfolio Manager By: /s/ P. Jeffrey Huth ----------------------------------------------------------- Name: P. Jeffrey Huth ------------------------------------------------ Title: Principal -------------------------------------------------------- CYPRESSTREE SENIOR FLOATING RATE FUND By: CypressTree Investment Management Company, Inc., as Portfolio Manager By: /s/ P. Jeffrey Huth ----------------------------------------------------------- Name: P. Jeffrey Huth ------------------------------------------------ Title: Principal -------------------------------------------------------- elf funding trust i By: /s/ Todd Travers -------------------------------------------------- Name: Todd Travers --------------------------------------------------------- Title: Senior Portfolio Manager ----------------------------------------------- fidelity advisor series ii: fidelity advisor floating rate high income fund By: /s/ John H. Costello ----------------------------------------------------------- Name: John H. Costello ------------------------------------------------ Title: Assistant Treasurer -------------------------------------------------------- FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY By: CypressTree Investment Management Company, Inc. as Attorney-in-Fact and Portfolio Manager By: /s/ P. Jeffrey Huth ----------------------------------------------------------- Name: P. Jeffrey Huth ------------------------------------------------ Title: Principal -------------------------------------------------------- FLAGSHIP CLO-2001-1 BY: FLAGSHIP CAPITAL MANAGEMENT, INC. By: /s/ Mark S. Pelletier ----------------------------------------------------------- Name: Mark S. Pelletier ------------------------------------------------ Title: Director ----------------------------------------------- franklin clo I, limited By: /s/ Chauncey Lufkin ----------------------------------------------------------- Name: Chauncey Lufkin ------------------------------------------------ Title: Vice President -------------------------------------------------------- FRANKLIN FLOATING RATE MASTER SERIES By: /s/ Chauncey Lufkin ----------------------------------------------------------- Name: Chauncey Lufkin ------------------------------------------------ Title: Vice President -------------------------------------------------------- State Street Bank & Trust Company as Trustee For General Motors Employees Global Group Pension Trust By: /s/ Andrea Block ----------------------------------------- Name: Andrea Block ------------------------------------------------ Title: Assistant Secretary ----------------------------------------------- HARBOR CDO II, LIMITED By: /s/ Lisa Chaffee -------------------------------------------------- Name: Lisa Chaffee --------------------------------------------------------- Title: Manager ----------------------------------------------- OPPENHEIMER SENIOR FLOATING RATE FUND By: /s/ David Mabry -------------------------------------------------- Name: David Mabry --------------------------------------------------------- Title: Vice President -------------------------------------------------------- KZH CNC LLC By: /s/ Susan Lee ----------------------------------------------------------- Name: Susan Lee --------------------------------------------------------- Title: Authorized Agent ----------------------------------------------- KZH CYPRESSTREE-1 LLC By: /s/ Susan Lee ----------------------------------------------------------- Name: Susan Lee --------------------------------------------------------- Title: Authorized Agent ----------------------------------------------- KZH PONDVIEW LLC By: /s/ Susan Lee ----------------------------------------------------------- Name: Susan Lee --------------------------------------------------------- Title: Authorized Agent ----------------------------------------------- KZH SHOSHONE LLC By: /s/ Susan Lee ----------------------------------------------------------- Name: Susan Lee --------------------------------------------------------- Title: Authorized Agent ----------------------------------------------- KZH SOLEIL-2 LLC By: /s/ Susan Lee ----------------------------------------------------------- Name: Susan Lee --------------------------------------------------------- Title: Authorized Agent ----------------------------------------------- MADISON AVENUE CDO I, LIMITED By: Metropolitan Life Insurance Company, as Collateral Manager By: /s/ James R. Dingler ----------------------------------------------------------- Name: James R. Dingler ------------------------------------------------ Title: Authorized Signatory -------------------------------------------------------- MAGNETITE ASSET INVESTORS III L.L.C By: /s/ not legible ----------------------------------------------------------- Name: not legible --------------------------------------------------------- Title: Director ----------------------------------------------- METROPOLITAN LIFE INSURANCE COMPANY By: /s/ James R. Dingler ----------------------------------------------------------- Name: James R. Dingler ------------------------------------------------ Title: Director ----------------------------------------------- Morgan Stanley Dean Witter PRIME Income Trust By: /s/ Peter Gewirtz -------------------------------------------------- Name: Peter Gewirtz --------------------------------------------------------- Title: Vice President -------------------------------------------------------- Mountain Capital CLO II LTD. By: /s/ Darren P. Riley ----------------------------------------------------------- Name: Darren P. Riley ------------------------------------------------ Title: Director ------------------------------ MUIRFIELD TRADING LLC By: /s/ Ann E. Morris -------------------------------------------------- Name: Ann E. Morris --------------------------------------------------------- Title: Asst. Vice President -------------------------------------------------------- OLYMPIC FUNDING TRUST, SERIES 1999-1 By: /s/ Ann E. Morris -------------------------------------------------- Name: Ann E. Morris --------------------------------------------------------- Title: Authorized Agent ----------------------------------------------- PPM SPYGLASS FUNDING TRUST By: /s/ Ann E. Morris -------------------------------------------------- Name: Ann E. Morris --------------------------------------------------------- Title: Authorized Agent ----------------------------------------------- NEMEAN CLO, LTD. BY: ING Capital Advisors LLC, as Investment Manager By: /s/ Gordon R. Cook ----------------------------------------------------------- Name: Gordon R. Cook ------------------------------------------------ Title: Vice President -------------------------------------------------------- NORSE CBO, LTD. By: Regiment Capital Management, LLC As its Investment Manager By: Regiment Capital Advisors, LLC Its Manager and pursuant to delegated authority By: /s/ Timothy S. Peterson -------------------------------------------------- Name: Timothy S. Peterson --------------------------------------------------------- Title: President -------------------------------------------------------- NORTH AMERICAN SENIOR FLOATING RATE FUND By: Cypress Tree Investment Management Company, Inc., as Portfolio Manager By: /s/ P. Jeffrey Huth ----------------------------------------------------------- Name: P. Jeffrey Huth ------------------------------------------------ Title: Principal -------------------------------------------------------- THE NORTHERN TRUST COMPANY By: /s/ Aimee Geiger -------------------------------------------------- Name: Aimee Geiger --------------------------------------------------------- Title: Second Vice President ----------------------------------------------- NORTHWOODS CAPITAL II, LIMITED By: Angelo, Gordon & Co., L.P. as Collateral Manager By: /s/ John W. Fraser ----------------------------------------------------------- Name: John W, Fraser ------------------------------------------------ Title: Managing Director ----------------------------------------------- NUVEEN SENIOR INCOME FUND By: Nuveen Senior Loan Asset Management, Inc. By: /s/ Lisa M. Mincheski ----------------------------------------------------------- Name: Lisa M. Mincheski ------------------------------------------------ Title: Managing Director ----------------------------------------------- OAK BROOK BANK By: /s/ Henry Wessel -------------------------------------------------- Name: Henry Wessel --------------------------------------------------------- Title: VP -------------------------------------------------------- PPM AMERICA, INC. By: PPM America, Inc., as Attorney-in-fact, on behalf of Jackson National Life Insurance Company By: /s/ David C. Wagner ----------------------------------------------------------- Name: David C. Wagner ------------------------------------------------ Title: Managing Director ----------------------------------------------- PROMETHEUS INVESTMENT FUNDING NO. 1 LTD. By: CPF Asset Advisory, L.P., as Investment Manager By: /s/ Sylvia Cheng -------------------------------------------------- Name: Sylvia Cheng --------------------------------------------------------- Title: Director ----------------------------------------------- By: /s/ Chris Yu ----------------------------------------------------------- Name: Chris Yu ------------------------------------------------ Title: Associate Director -------------------------------------------------------- PUTNAM DIVERSIFIED INCOME TRUST By: /s/ John R. Verani ----------------------------------------------------------- Name: John R. Verani ------------------------------------------------ Title: V.P. -------------------------------------------------------- PUTNAM STRAGIC INCOME FUND By: /s/ John R. Verani ----------------------------------------------------------- Name: John R. Verani ------------------------------------------------ Title: V.P. -------------------------------------------------------- REGIMENT CAPITAL, LTD. By: Regiment Capital Management, LLC As its Investment Advisor By: Regiment Capital Advisors, LLC Its Manager and pursuant to delegated authority By: /s/ Timothy S. Peterson -------------------------------------------------- Name: Timothy S. Peterson --------------------------------------------------------- Title: President -------------------------------------------------------- sierra clo I, ltd By: /s/ John M. Caspadan ----------------------------------------------------------- Name: John M. Caspadan ------------------------------------------------ Title: Chief Operating Officer Centre Pacific LLP ----------------------------------------------- SEQUILS-CUMBERLAND I, LTD. By: Deerfield Capital Management, L.L.C. as its Collateral Manager By: /s/ Dale Burrow -------------------------------------------------- Name: Dale Burrow --------------------------------------------------------- Title: Senior Vice President -------------------------------------------------------- SIMSBURY CLO, LIMITED By: David L. Babson and Company Incorporated, under delegated authority from Massachusetts Mutual Life Insurance Company, its Collateral Manager By: /s/ Lisa J. Yoerg -------------------------------------------------- Name: Lisa J. Yoerg --------------------------------------------------------- Title: Managing Director with David L. Babson ----------------------------------------------- SRF 2000 LLC By: /s/ Ann E. Morris -------------------------------------------------- Name: Ann R. Morris --------------------------------------------------------- Title: Asst. Vice President -------------------------------------------------------- STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY By: /s/ James R. Fellows ----------------------------------------------------------- Name: James R. Fellows ------------------------------------------------ Title: Senior Vice President Stein, Roe & Farnham --------------------------------------------- LIBERTY-STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND By: Stein Roe & Farnham Incorporated, as Advisor By: /s/ James R. Fellows ----------------------------------------------------------- Name: James R. Fellows ------------------------------------------------ Title: Senior Vice President & Portfolio Manager ----------------------------------------------- STEIN ROE &FARNHAM CLO I, LTD. By: Stein Roe & Farnham Incorporated, as Portfolio Manager By: /s/ James R. Fellows ----------------------------------------------------------- Name: James R. Fellows ------------------------------------------------ Title: Senior Vice President & Portfolio Manager ----------------------------------------------- SUFFIELD CLO, LIMITED By: David L. Babson and Company Incorporated as Collateral Manager By: /s/ Lisa J. Yoerg -------------------------------------------------- Name: Lisa J. Yoerg --------------------------------------------------------- Title: Managing Director with David L. Babson and ---------------------------------------------- Company Incorporated -------------------- THE SUMITOMO TRUST AND BANKING CO., LTD. By: /s/ Stephen A. Stratico -------------------------------------------------- Name: Stephen A. Stratico --------------------------------------------------------- Title: Vice President -------------------------------------------------------- TEXTRON FINANCIAL CORP. By: /s/ Matthew J. Colgan ----------------------------------------------------------- Name: Matthew J. Colgan --------------------------------------------------------- Title: Director ----------------------------------------------- TORONTO DOMINION (NEW YORK), INC. By: /s/ Susan K. Strong ----------------------------------------------------------- Name: Susan K. Strong --------------------------------------------------------- Title: Vice President ----------------------------------------------- VAN KAMPEN PRIME RATE INCOME TRUST By: Van Kampen Investment Advisory Corp. By: /s/ Douglas L. Winchell -------------------------------------------------- Name: Douglas L. Winchell --------------------------------------------------------- Title: Vice President ----------------------------------------------- VAN KAMPEN SENIOR INCOME TRUST By: Van Kampen Investment Advisory Corp. By: /s/ Douglas L. Winchell -------------------------------------------------- Name: Douglas L. Winchell --------------------------------------------------------- Title: Vice President ----------------------------------------------- VARIABLE INSURANCE PRODUCTS FUND II: ASSET MANAGER GROWTH PORTFOLIO By: /s/ John H. Costello ----------------------------------------------------------- Name: John H. Costello --------------------------------------------------------- Title: Assistant Treasurer -------------------------------------------------------- VARIABLE INSURANCE PRODUCTS FUND II: ASSET MANAGER PORTFOLIO By: /s/ John H. Costello ----------------------------------------------------------- Name: John H. Costello --------------------------------------------------------- Title: Assistant Treasurer -------------------------------------------------------- WEBSTER BANK By: /s/ John Gilsenan -------------------------------------------------- Name: John Gilsenan ------------------------------------------------ Title: Vice President ----------------------------------------------- WINGED FOOT FUNDING TRUST By: /s/ Ann E. Morris -------------------------------------------------- Name: Ann E. Morris --------------------------------------------------------- Title: Authorized Agent -----------------------------------------------

QuickLinks -- Click here to rapidly navigate through this document EXHIBIT 10.72 AGREEMENT EXTENSION     This Agreement Extension is made effective as of December 1, 2000, by and between Adobe Systems Benelux B.V. ("Adobe") and Sykes Europe Limited ("Sykes").     Whereas, Adobe and Sykes are parties to an Agreement made effective as of December 4, 1999 and executed on behalf of Adobe by Hal Covert and on behalf of Sykes by Scott J. Bendert (the "Agreement"); and     Whereas, the Agreement, by its terms, expired at 12:00 midnight GMT on December 1, 2000; and     Whereas, Adobe and Sykes wish to extend the term of the Agreement and make certain amendments to the Agreement;     Therefore, the parties agree as follows: 1.The Contract Term (as defined in Clause 1.1 of the Agreement) shall be extended to 12:00 midnight GMT on December 1, 2001. 2.The rights and obligations of the parties for the period between December 1, 2000 and the date of execution hereof shall be governed by the terms and conditions of the Agreement as if the Agreement had not expired. 3.Clause 14.7 ("Survival of Terms") of the Agreement shall be removed in its entirety and replaced as follows: Termination or expiry of this Agreement shall not affect the rights and obligations of the parties in terms of Clauses 1, 2.8, 5.2, 5.3, 5.4, 5.5 (for a period of two years after termination or expiration), 5.6, 5.9, 7, 9, 10.1(g), 11, 13, 14.6, 14.7, 14.8, 14.10, 15.2, 16, 18, 19, 20, 21 and 22 of this Agreement which shall continue notwithstanding termination or expiry. 4.A new Clause 22 shall be added as follows: 22.LIMITATION OF LIABILITY EXCEPT WITH RESPECT TO A CLAIM FOR INDEMNIFICATION HEREUNDER RELATING TO A THIRD PARTY CLAIM, IN NO EVENT WILL SYKES OR ADOBE BE LIABLE WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT OR UNDER CONTRACT, NEGLIGENCE, STRICT LIABILITY OR ANY OTHER LEGAL OR EQUITABLE THEORY FOR ANY INDIRECT, INCIDENTAL, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 5.All other terms of the Agreement shall not be affected by this Agreement Extension. --------------------------------------------------------------------------------     The parties have caused this Agreement Extension to be executed by their duly authorized representatives. FOR ADOBE SYSTEMS INCORPORATED   FOR SYKES EUROPE LIMITED /s/ BRUCE R. CHIZEN    -------------------------------------------------------------------------------- Signature   /s/ W. MICHAEL KIPPHUT    -------------------------------------------------------------------------------- Signature Bruce R. Chizen -------------------------------------------------------------------------------- Printed Name   W. Michael Kipphut -------------------------------------------------------------------------------- Printed Name President & CEO -------------------------------------------------------------------------------- Title   Vice President & CFO -------------------------------------------------------------------------------- Title March 6, 2001 -------------------------------------------------------------------------------- Date   February 28, 2001 -------------------------------------------------------------------------------- Date -------------------------------------------------------------------------------- QuickLinks AGREEMENT EXTENSION

Exhibit 10(b) AMENDMENT DATED MAY 11, 2001 TO THE 2000 TRW LONG-TERM INCENTIVE PLAN       TRW Inc., by action of the Compensation Committee of its Board of Directors, hereby adopts this Amendment dated May 11, 2001 to the 2000 TRW Long-Term Incentive Plan (the “Plan”). I.       Effective as of the close of business on May 11, 2001, Section 2(e) of the Plan is amended to read in its entirety as follows:   (e) Fair Market Value. For any particular date, the average of the high and low sales prices of a Share on such date on the New York Stock Exchange Composite Transactions Listing as reported by the New York Stock Exchange or such other source as may be approved by resolution of the Committee (or if there are no sales on such date, then the closing sale price on such Listing on the nearest date before such date).

QuickLinks -- Click here to rapidly navigate through this document REDACTED [**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. BLOOD SCREENING HCV PROBE LICENSE AGREEMENT between CHIRON CORPORATION F. HOFFMANN-LA ROCHE LTD. and ROCHE MOLECULAR SYSTEMS, INC. -------------------------------------------------------------------------------- BLOOD SCREENING HCV PROBE LICENSE AGREEMENT TABLE OF CONTENTS     Page -------------------------------------------------------------------------------- RECITALS   3 ARTICLE 1: DEFINITIONS   3 ARTICLE 2: LICENSE AND OPTION GRANTS   7 ARTICLE 3: PAYMENTS, ROYALTIES   9 ARTICLE 4: RECORDS AND REPORTS   9 ARTICLE 5: OTHER ACTIONS   11 ARTICLE 6: REPRESENTATIONS AND WARRANTIES   12 ARTICLE 7: TERM AND TERMINATION   13 ARTICLE 8: CONFIDENTIALITY   14 ARTICLE 9: INDEMNITY   15 ARTICLE 10: ALTERNATIVE DISPUTE RESOLUTION   16 ARTICLE 11: MISCELLANEOUS   17 ARTICLE 12: FIELD RESTRICTIONS AND OTHER COVENANTS   19 ARTICLE 13: INFRINGEMENT BY THIRD PARTIES   20 ARTICLE 14: EUROPEAN COMMUNITY PROVISIONS   22 EXHIBIT A: COMPENSATION TO CHIRON     EXHIBIT B: CHIRON PATENT LIST     EXHIBIT C: ROCHE PATENT LIST     EXHIBIT D: CHIRON LICENSED PRODUCTS     EXHIBIT E: FORM OF REPORT     EXHIBIT F: EXISTING LICENSES     EXHIBIT G: REGIONS     2 -------------------------------------------------------------------------------- BLOOD SCREENING HCV PROBE LICENSE AGREEMENT     This agreement (hereinafter "Agreement") is made by and between CHIRON CORPORATION, a Delaware corporation, of 4560 Horton Street, Emeryville, California 94608 (hereinafter referred to as "CHIRON"), F. HOFFMANN-LA ROCHE LTD., a Swiss corporation, of Grenzacherstrasse 124, Basel, Switzerland (hereinafter referred to as "ROCHE PARENT"), and ROCHE MOLECULAR SYSTEMS, INC., a Delaware corporation, of 1145 Atlantic Avenue, Suite 100, Alameda, California 94501 (hereinafter referred to as "RMS" and collectively with ROCHE PARENT, "ROCHE"). BACKGROUND     WHEREAS, CHIRON and ROCHE currently own or control certain patent rights relating to the hepatitis C virus ("HCV"), as defined below.     WHEREAS, CHIRON and ROCHE entered into that certain Settlement Agreement dated as of October 10, 2000 (the "Settlement Agreement") pertaining to the settlement of the certain litigation matters described therein.     WHEREAS, in consideration of and subject to the execution and delivery of the Settlement Agreement, CHIRON granted licenses to ROCHE under certain patent rights relating to HCV for use in assays for the detection of nucleic acid sequences for use in Blood Screening, subject to certain geographic and time limitations, under that certain Blood Screening HCV/HIV Probe License Agreement dated as of October 10, 2000 (the "Interim Agreement").     WHEREAS, CHIRON and ROCHE now desire to enter into a long term, worldwide collaboration in Blood Screening, superceding the terms and conditions of the Interim Agreement, all on the terms and conditions set forth herein.     NOW, THEREFORE, in consideration of the above provisions and the mutual covenants contained herein, CHIRON and ROCHE hereby agree as follows: ARTICLE 1 DEFINITIONS     In this Agreement the following words and phrases shall have the following meanings:     1.1 "ADR" means Alternative Dispute Resolution in accordance with Article 10.     1.2 "Affiliate" means an entity that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with, a specified entity. 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 entity, means: (a) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that entity, whether through the ownership of voting securities or by contract or otherwise; or (b) the ownership of at least fifty percent (50%) of the voting securities of that entity. Notwithstanding anything to the contrary contained herein, "Affiliate" shall not include, in the case of CHIRON, Novartis AG or any Affiliate of Novartis AG, unless Novartis shall have acquired direct control of a majority of the Board of Directors of CHIRON. Notwithstanding anything to the contrary contained herein, "Affiliate" shall not include, in the case of ROCHE, Genentech Inc. or any Affiliate of Genentech Inc., nor Laboratory Corporation of America Holdings or any Affiliate of Laboratory Corporation of America Holdings.     1.3 "Authorized Distributor" means a bona fide, unaffiliated distributor, but excluding any entity which is a Major IVD Manufacturer (as defined below) that is not licensed in the Field (as defined below) under one or more of the CHIRON Licensed Patents (as defined below) or is affiliated with, or directly or indirectly controlled by, such a Major IVD Manufacturer, except to the extent that such unlicensed Major IVD Manufacturer or its Affiliates distributes CHIRON Licensed Products for 3 -------------------------------------------------------------------------------- ROCHE or its Affiliates on a local country basis and in the same manner in which it distributes other diagnostic products for ROCHE or its Affiliates and ROCHE and its Affiliates are not otherwise selling CHIRON Licensed Products in such country.     1.4 "Blood Screening" means the commercial use of products that detect nucleic acid sequences(s) for: (a) the screening of blood, plasma or blood components intended for transfusion; and (b) confirmatory or supplemental testing of the same samples otherwise screened for purposes described in Section 1.4(a).     1.5 "Calendar Quarter" means the three (3) month period beginning January 1, April 1, July 1 or October 1.     1.6 "Calendar Year" means January 1 through December 31.     1.7 "CHIRON Future HCV Sequence Patent Rights" means any and all Valid Claims Directed to HCV of United States and foreign patents and patent applications: (a) which are based upon inventions conceived or rights acquired [**] (as defined below); (b) are not CHIRON Licensed Patents (as defined below); (c) which claim HCV nucleic acid sequence(s) or a method to use (other than in the manufacture of peptides) or detect such sequences specifically; (d) which are owned by, licensed to or otherwise controlled by CHIRON or its Affiliates, with rights to license or sublicense; and (e) with respect to which CHIRON has the right to grant the option provided for in Section 2.4 of this Agreement. For purposes of this Agreement, an invention will be deemed to have been conceived if there is a patent, patent application, written invention disclosure statement or other tangible document (whether or not witnessed) describing such invention.     1.8 "CHIRON Licensed Patents" means Valid Claims Directed to HCV which cover the manufacture, use, sale, offer for sale or importation of Products that are contained within any of the following: (a) the patents and applications identified in Exhibit B and any continuation, continuation-in-part and divisional applications therefrom; (b) any reissued or reexamined patents obtained from such patents and applications; (c) all foreign counterparts of such patents and applications; and (d) all future patents and applications which are based on inventions conceived by CHIRON or its Affiliates on or before the Effective Date.     1.9 "CHIRON Licensed Products" means Products which are manufactured, used, offered for sale, imported or sold under circumstances which would, in the absence of the license granted under Section 2.1 constitute an infringement of a Valid Claim of the CHIRON Licensed Patents, including without limitation the Products identified in Exhibit D, as modified from time to time by mutual agreement of the parties or as determined in accordance with Section 5.2.     1.10 "CHIRON Non-HCV/HIV Analyte Patent Rights" means any and all Valid Claims of U.S. and foreign patents and patent applications: (a) which claim any nucleic acid sequence(s) or transmissible disease-causing agent(s), other than HCV or HIV; (b) which is a blood borne, infectious disease or virus to the extent such Valid Claims cover the detection of any nucleic acid sequence(s) or transmissible disease-causing agent(s) of such infectious disease or virus; (c) which are owned by, licensed to or otherwise controlled by CHIRON or its Affiliates, with right to license or sublicense; and (d) with respect to which CHIRON has the right to grant the option provided for in Section 2.4 of this Agreement.     1.11 "CHIRON Optioned Rights" means the CHIRON Future HCV Sequence Patent Rights and the CHIRON Non-HCV/HIV Analyte Patent Rights.     1.12 "Directed to HCV" means that the claim or technology in question is directed to methods, compositions, reagents or kits specifically for use in nucleic acid-based diagnostic assays for the detection of HCV nucleic acid sequence(s), or specifically for use in the manufacture of any compositions or reagents for use in, or manufacture of nucleic acid-based diagnostic assays for 4 -------------------------------------------------------------------------------- detection of HCV nucleic acid sequence(s) (excluding, for example, PCR claims and technology and other methods for detection of nucleic acid sequence(s) generally which involve nucleic acid amplification). The terminology "specifically for use" as used in this Section 1.12, is intended to exclude inventions suitable for use with viruses or analytes other than HCV (including by way of example and not by way of limitation, inventions relating to PCR, or assay formats, improved expression systems, detectable labels, instrumentation, packaging and the like), which shall not be considered "specifically for use" in HCV detection as contemplated by this Section 1.12 and shall therefore not be considered as "Directed to HCV" hereunder.     1.13 "Earned Royalty" and "Earned Royalty Amount" shall have the meanings specified in Paragraph 1 of Exhibit A.     1.14 "Effective Date" means [**].     1.15 "End User" means a person or entity who is a final purchaser of a Product, and whose use of a Product results in the Product's consumption, operation, destruction or loss of activity.     1.16 "Existing End Users" means as of May 1, 2001, those End Users for which ROCHE has been selling and continues to sell a commercially significant volume of the Products required by such End Users for Blood Screening use; provided however, that "Existing End Users" shall not include any End User located in [**] or the [**].     1.17 "Field" means Blood Screening and Plasma Fractionation.     1.18 "Foundational Patents" means the CHIRON Licensed Patents identified in Exhibit B which are stated therein to be Foundational Patents.     1.19 "HCV" means any viral isolate of the hepatitis C virus described in the CHIRON Licensed Patents or classified as HCV by the International Committee on the Taxonomy of Viruses (or any body that replaces such Committee) or any subtype of such isolate and further includes any isolate that is at least forty percent (40%) homologous to any such isolate and of the same genomic type and substantially the same genomic organization, any isolate that has a genome that either hybridizes to or is substantially identical to any such isolate or its compliment, and any defective or modified form of any of the above isolates.     1.20 "HCV Diagnostics Agreement" means that certain HCV Probe License Agreement between CHIRON and ROCHE, dated as of October 10, 2000, as amended from time to time.     1.21 "Infringing Third Party Sales" means (a) as to Blood Screening, sales by a Major IVD Manufacturer of Products for use in Blood Screening, and (b) as to Plasma Fractionation, sales or use by any third party for use in Plasma Fractionation, which in either case: (i) infringe one or more of the CHIRON Licensed Patents, or (b) as to which a license under one or more of the CHIRON Licensed Patents has been granted, but as to which the licensee is not paying royalties thereunder.     1.22 "Interim Agreement" means the Blood Screening HCV/HIV Probe License Agreement by and between CHIRON and ROCHE dated as of October 10, 2000, as amended from time to time.     1.23 "In Vitro Diagnostics" means the commercial use of products that detect nucleic acid sequence(s) of HCV in individual human specimens, including the use of such products for diagnosis, prognosis, monitoring or classification purposes, including without limitation use for Transplantation but specifically excluding use for Blood Screening and Plasma Fractionation.     1.24 "Licensed/Optioned Patents" means the CHIRON Licensed Patents and the ROCHE Optioned Patents.     1.25 "Major IVD Manufacturer" means a commercial entity (and its Affiliates) that manufactures, sells and engages in other commercial activities with respect to In Vitro Diagnostic products and has a 5 -------------------------------------------------------------------------------- significant marketing presence in one or more Regions. Major IVD Manufacturers include Abbott, Bayer, Johnson & Johnson, Pasteur, Sanofi, Dade Behring, Organon Teknika, Becton Dickinson, bioMerieux, BioRad, Fujirebio, Beckman Coulter, Visible Genetics, Innogenetics, and PE Corporation and each of their successors and assigns and any other entity which commands in the future at least an equivalent presence as measured by total product sales as do any of the foregoing entities as of the Effective Date in such Region.     1.26 "PCR" means polymerase chain reaction technology.     1.27 "Plasma Fractionation" means the commercial use of products that detect HCV nucleic acid sequence(s) for the screening of plasma or blood components intended for use in blood products (e.g., without limitation, immunoglobulins).     1.28 "Product(s)" means reagents, compositions or kits suitable for use in the Field.     1.29 "Region" means one of the four (4) regions set forth on Exhibit G, as modified from time to time in accordance with Paragraph 1(e) of Exhibit A.     1.30 "Release Screening" means, as to Plasma Fractionation only, the quality control testing of plasma samples that have previously been screened for the presence of HCV using (a) a CHIRON Licensed Product for which at least the applicable Earned Royalty Amount has been paid, (b) any other Product for the detection of HCV licensed by CHIRON for sale or use in Plasma Fractionation or (c) a Product sold or used by CHIRON for the detection of HCV.     1.31 "ROCHE Future HCV Sequence Patent Rights" means any and all Valid Claims Directed to HCV of United States and foreign patents and patent applications: (a) which are based on inventions conceived or rights acquired [**]; (b) are not ROCHE Optioned Patents (as defined below); (c) which claim HCV nucleic acid sequence(s) or a method to use (other than in the manufacture of peptides) or detect such sequences specifically; (d) which are owned by, licensed to or otherwise controlled by ROCHE or its Affiliate, with rights to license or sublicense; and (e) with respect to which ROCHE has the right to grant the option provided for in Section 2.5 of this Agreement. For purposes of this Agreement, an invention will be deemed to have been conceived if there is a patent, patent application, written invention disclosure statement or other tangible document (whether or not witnessed) describing such invention.     1.32 "ROCHE Non-HCV/HIV Analyte Patent Rights" means any and all Valid Claims of U.S. and foreign patents and patent applications: (a) which claim any nucleic acid sequence(s) or transmissible disease-causing agent(s), other than HCV or HIV; (b) which is a blood borne, infectious disease or virus to the extent such Valid Claims cover the detection of any nucleic acid sequence(s) or transmissible disease-causing agent(s) of such infectious disease or virus; (c) which are owned by, licensed to or otherwise controlled by ROCHE or its Affiliates, with right to license or sublicense; and (d) with respect to which ROCHE has the right to grant the option provided for in Section 2.5 of this Agreement.     1.33 "ROCHE Optioned Patents" means: (a) the patents and applications identified in Exhibit C and any continuation, continuation-in-part and divisional applications therefrom; (b) any reissued or reexamined patents obtained from such patents and applications; (c) all foreign counterparts of such patents and applications; and (d) all future patents and applications which are based on inventions conceived by ROCHE or its Affiliates on or before the Effective Date, to the extent the items described in clauses (a) through (d) of this Section 1.33 contain a Valid Claim Directed to HCV which covers the manufacture, use, sale, offer for sale or importation of a product in the Field or in Transplantation.     1.34 "ROCHE Optioned Product" means a Product which is manufactured, used, offered for sale, imported or sold under circumstances which would, in the absence of the license for which an option is 6 -------------------------------------------------------------------------------- granted under Section 2.3, constitute an infringement of a Valid Claim of the ROCHE Optioned Patents.     1.35 "ROCHE Optioned Rights" means the ROCHE Future HCV Sequence Patent Rights and the ROCHE Non-HCV/HIV Analyte Patent Rights.     1.36 "Transplantation" means the commercial use of products that detect nucleic acid sequences for the screening of any biological materials intended for transfusion or transplantation, in each case from any donor, including autologous donors, other than the transfusion or transplantation of blood or its derivatives, components or replacements.     1.37 "Units" means the number of individual donations of blood, plasma or other blood components that are tested for Blood Screening by End Users through the use of a CHIRON Licensed Product. In the event that ROCHE or its Affiliates perform assays for commercial purposes utilizing CHIRON Licensed Product, Units shall include the number of individual donations of blood, plasma or other blood components that are so tested by ROCHE or its Affiliates. Notwithstanding the foregoing, Units shall not include those CHIRON Licensed Products used by or for End Users at no charge by ROCHE for (A) reasonable quantities of quality control or evaluation testing or (B) replacement of defective goods.     1.38 "Valid Claim" means a claim in any issued, active, unexpired patent which has not been withdrawn, cancelled, lapsed or disclaimed, or held unpatentable, invalid or permanently unenforceable by a non-appealed or nonappealable final decision by a court or other appropriate body of competent jurisdiction. The scope of a Valid Claim shall be limited to its terms as defined by any such court or decision-making body of competent jurisdiction in a nonappealable or non-appealed final decision. ARTICLE 2 LICENSE AND OPTION GRANTS     2.1 CHIRON Grants. Subject to the terms and conditions of this Agreement, CHIRON hereby grants to ROCHE and its Affiliates, so long as they remain Affiliates of ROCHE, a worldwide, nonexclusive license, without the right to sublicense except to have made or to conduct research, under the CHIRON Licensed Patents to research, develop, make, have made, import, use, offer for sale and sell CHIRON Licensed Products for use in the Field. CHIRON covenants not to sue any End User of a CHIRON Licensed Product (with respect to which ROCHE has performed all of its material obligations under this Agreement) to the extent of activities in the Field or otherwise permitted under this Agreement. Conversely no immunity from suit shall apply to End User activities in In Vitro Diagnostics, except as provided in the HCV Diagnostics Agreement, or otherwise outside of the Field. Subject to Paragraph 4 of Exhibit A, CHIRON retains the nonexclusive right to practice and to grant licenses under the CHIRON Licensed Patents to make, have made, use, import, offer for sale and sell any Products in the Field and all rights outside of the Field.     2.2 Exclusion from CHIRON License. ROCHE acknowledges that neither ROCHE nor its Affiliates are licensed under this Agreement to perform research or to develop any product other than a CHIRON Licensed Product.     2.3 ROCHE Optioned Patents. Subject to the terms and conditions of this Agreement, ROCHE hereby grants to CHIRON and its Affiliates, so long as they remain Affiliates of CHIRON, an option to enter into a worldwide, non-exclusive, [**] license, with no right to sublicense except to have made or to conduct research, under ROCHE Optioned Patents to research, develop, make, have made, import, use, offer for sale and sell ROCHE Optioned Products for use in the Field and in Transplantation.     2.4 CHIRON Optioned Rights. CHIRON grants to ROCHE a nonexclusive option to obtain one or more nonexclusive, worldwide licenses, or sublicenses, as the case may be, with a right to sublicense to 7 -------------------------------------------------------------------------------- ROCHE Affiliates only, under the CHIRON Optioned Rights, to make, have made, use, import, offer for sale and sell CHIRON Licensed Products and/or products in the Field and in Transplantation (including as to CHIRON Non-HCV/HIV Analyte Patent Rights products for the detection of other transmissible disease-causing agents). [**]     2.5 ROCHE Optioned Rights. ROCHE grants to CHIRON a nonexclusive option to obtain one or more nonexclusive, worldwide licenses, or sublicenses, as the case may be, with a right to sublicense to CHIRON Affiliates only, under the ROCHE Optioned Rights, to make, have made, use, import, offer for sale and sell products in the Field and in Transplantation (including as to ROCHE Non-HCV/HIV Analyte Patent Rights products for the detection of other transmissible disease-causing agents). [**]     2.6 Option Terms. As to any Valid Claim(s) included within CHIRON Optioned Rights or ROCHE Optioned Rights, the options set forth in Sections 2.4 and 2.5 may be exercised at any time [**] during the life of such patent(s), by written notice from the option grantee to the option grantor identifying the patent(s) under which the grantee wishes to obtain a license; [**] The terms of such license agreement will be subject to the following:     (a) [**];     (b) [**];     (c) [**];     (d) The licensee will be able to terminate the license agreement at any time by giving the licensor prior written notice;     (e) The licensee will not have any right of enforcement, and will not receive from the licensor any warranty of validity or noninfringement; provided, however, the licensor shall disclose to the licensee prior to entering into such license, any knowledge it has of any pending or written threatened claim that is material to any challenge of validity or enforceability, except to the extent that such disclosure is subject to an obligation of confidentiality, protective order or legal privilege; and     (f)  [**].     2.7 Need for Option. CHIRON may, at any time hereunder, provide written notification to ROCHE that certain products being sold or used by ROCHE are believed by CHIRON to be covered by one or more Valid Claims of a patent included within CHIRON Optioned Rights not licensed to ROCHE. In the event ROCHE does not, [**] of receipt of such notification, exercise the relevant option provided for under Section 2.4 to obtain a license under such CHIRON Optioned Right, then CHIRON and ROCHE shall promptly thereafter confer in good faith to discuss their respective positions concerning whether such products being sold or used by ROCHE are covered by a Valid Claim of the patent in question. [**] within ninety (90) days following the above-mentioned notification, [**].     2.8 Option Exercise. [**]     2.9 Effect on Option by Termination. Termination of this Agreement pursuant to Article 7 shall terminate the provisions of Sections 2.3 to 2.9; provided, however, that if at the time of such termination or, if prior notification is required under Section 7.3, then if immediately prior to the effective date of termination set forth in such notification: (a) a license agreement arising out of the options granted under Section 2.3, 2.4 or 2.5 is in effect, such license shall survive such termination under Article 7 and shall remain in effect in accordance with its terms; or (b) a party has properly exercised an option pursuant to Section 2.3, 2.4 or 2.5 and is proceeding in good faith to negotiate a license agreement thereunder, the parties shall complete such negotiations in good faith. 8 --------------------------------------------------------------------------------     2.10 Third Party Patents. Each party shall use reasonable commercial efforts to acquire the right to grant the options provided in Sections 2.4 and 2.5 when it acquires rights under patents of third parties. ARTICLE 3 PAYMENTS, ROYALTIES     With respect to all Units, ROCHE shall make payments to CHIRON as set forth in Exhibit A. ARTICLE 4 RECORDS AND REPORTS     4.1 Units Data. ROCHE shall use commercially reasonable efforts to collect Units data for each Calendar Quarter from End Users in such detail and accuracy so as to enable a determination of the amounts payable by ROCHE to CHIRON hereunder. In the event an End User fails to timely report its Units data for a Calendar Quarter to ROCHE, ROCHE shall include in the report for such Calendar Quarter required under Section 4.2 a reasonable estimate of the number of such Units, subject to a "true up" correction in the subsequent Calendar Quarter. [**]     4.2 Earned Royalty Report. ROCHE shall, within ninety (90) days after the last day of each Calendar Quarter commencing on or after [**], deliver to CHIRON a true and accurate report for the prior Calendar Quarter, substantially in the form attached as Exhibit E to this Agreement, which shall state the amount of monies due hereunder, if any, as Earned Royalties, and shall include all information reasonably necessary to calculate such amount, including, but not limited to, the following information, presented by Region and by Product and Field Category (as defined in Paragraph 1 of Exhibit A):     (a) the number of Units and the applicable Earned Royalty Amounts, together with any "true-up" adjustments to (i) Units from prior Calendar Quarters (e.g., late reporting End Users) or (ii) the estimate of Earned Royalties paid pursuant to Section 4.3; and     (b) a statement of the basis for any deviation from the Earned Royalty rates and Earned Royalty Amounts as expressed in Paragraphs 1, 2 and 5 of Exhibit A. Upon written request by CHIRON, ROCHE will annotate and redeliver to CHIRON any Earned Royalty Report four (4) or more Calendar Quarters old to include Units and Earned Royalty Amounts on a country-by-country basis. Notwithstanding the above, ROCHE shall deliver to CHIRON the Earned Royalty Report for the Calendar Quarter ending [**] not later than [**].     4.3 Payment Dates. Not later than seventy-five (75) days after the last day of each Calendar Quarter commencing on or after [**], ROCHE shall pay to CHIRON a good faith estimate of the Earned Royalty for such Calendar Quarter due under this Agreement. Such good faith estimate shall be based on the most recent Units data available to ROCHE, together with such reasonable growth and seasonality assumptions utilized by ROCHE for external planning purposes. If no Earned Royalties are due, ROCHE shall so report, stating the reasons why no such royalty is due. Not later than the date each Earned Royalty Report required under Section 4.2 is due, ROCHE shall "true-up" its estimated Earned Royalty payment based on the number of Units set forth in the Earned Royalty Report for such Calendar Quarter and, if it is determined that the estimate of Earned Royalties paid was less than the amount actually due for such Calendar Quarter, pay the underpaid amount, plus interest at the rate described in Section 4.9. If it is determined that the estimate of Earned Royalties paid was more than the amount actually due for such Calendar Quarter, such overpaid amount shall be credited against Earned Royalties payable on Units in the subsequent Calendar Quarter, plus interest at the rate described in Section 4.9. 9 --------------------------------------------------------------------------------     4.4 Payment Procedures. ROCHE shall pay royalties and all other payments due hereunder to CHIRON in immediately available funds on the due date by wire transfer to: Bank of America-San Francisco San Francisco, California Account Name: Chiron Corporation Account Number: [**] ABA #: [**] Reference: ROCHE Blood Screening HCV Probe License Agreement or at such place and in such other manner as CHIRON may designate in a notice signed by CHIRON's Treasurer or Controller to ROCHE.     4.5 Taxes on Royalties. ROCHE shall deduct from amounts payable hereunder all taxes assessed or imposed against, or required to be withheld from, royalty payments due and shall pay such amount to the appropriate fiscal or tax authorities on behalf of CHIRON. ROCHE shall forward promptly to CHIRON all tax receipts received by ROCHE evidencing payment of such taxes.     4.6 Audit Rights.     (a) End Users. ROCHE shall use commercially reasonable efforts to include sufficient audit rights in all agreements with End Users of CHIRON Licensed Products to enable ROCHE to confirm the validity of such End Users' periodic Units data. Upon thirty (30) days written notice by CHIRON, not more frequently than once per Calendar Year and either in conjunction with an audit permitted under Section 4.6(c) or not within the same Calendar Year as such an audit, CHIRON may have such End User agreements examined during reasonable business hours by a mutually acceptable independent certified public accountant selected by CHIRON and at CHIRON's expense, whose acceptance shall not unreasonably be withheld by ROCHE, for the purpose of verifying the existence of such audit rights; provided that such independent accountant agrees to provide CHIRON only the information necessary to verify the existence of such audit rights without the disclosure of any End User identity; and provided further, that ROCHE may propose an alternative methodology of confirming to CHIRON the validity of such End Users' periodic Units data, subject to CHIRON's prior written consent, which may not be unreasonably withheld.     (b) Existing End Users. Within thirty (30) days of the Effective Date or as soon as possible thereafter, CHIRON shall have all End User agreements examined during reasonable business hours by a mutually acceptable independent certified public accountant selected by CHIRON and at CHIRON's expense, whose acceptance shall not unreasonably be withheld by ROCHE, for the purpose of preparing and verifying a schedule of Existing End Users sufficient to determine the basis upon which Earned Royalties shall be calculated in accordance with Exhibit A for each of the Calendar Quarters in the Calendar Year ending December 31, 2001; provided that such independent accountant agrees to provide CHIRON only the information necessary to verify the calculation of such Earned Royalties without the disclosure of any End User identity or contractual terms.     (c) Earned Royalties. ROCHE shall keep reasonably detailed and accurate records and books of account, including without limitation retaining all End User Units data and End User audit materials, to enable a determination of the amounts payable by ROCHE and its Affiliates to CHIRON hereunder. Upon thirty (30) days written notice by CHIRON, not more frequently than once per Calendar Year and either in conjunction with an audit permitted under Section 4.6(a) or not within the same Calendar Year as such an audit, CHIRON may have such records and books of account examined during reasonable business hours by a mutually acceptable independent certified public accountant selected by CHIRON and at CHIRON's expense, whose acceptance 10 -------------------------------------------------------------------------------- shall not unreasonably be withheld by ROCHE, for the purpose of verifying the amounts due hereunder; provided that such independent accountant agrees to provide CHIRON only the information necessary to verify the calculation of amounts due hereunder. A copy of any final written report provided by the independent accountant to CHIRON shall be given concurrently to ROCHE. Such examination shall not be permitted unless it is requested within three (3) years following the end of the Calendar Year to which the books and records pertain. Where such examination results in a finding that ROCHE underpaid CHIRON by the greater of [**], ROCHE shall reimburse CHIRON for its reasonable costs and expenses in conducting such examination. ROCHE and CHIRON shall promptly rectify any overpayments or underpayments by repaying such amounts together with interest thereon at an annual rate equal to the lesser of: (a) [**] as published in the Wall Street Journal, or (b) the maximum rates permitted by applicable law, from the time such payment was originally due to the time it is paid.     4.7 Confidentiality of Audit. CHIRON agrees that all audited information shall be confidential to ROCHE and its Affiliates, and that any person or entity conducting an audit on behalf of CHIRON pursuant to Section 4.6 shall be required to protect the confidentiality of such information.     4.8 Payment in United States Currency. All payments shall be made in United States Dollars and shall be made on the dates set forth herein.     4.9 Late Payment Fee. Any payment, including, without limitation, royalty payments, made by ROCHE hereunder after the date such payment is due, as set forth in this Article 4 hereof, shall bear interest at the lesser of: (a) [**] as published in the Wall Street Journal as of the date such payment was due, or (b) the maximum rate permitted by applicable law. ARTICLE 5 OTHER ACTIONS     5.1 Patent Validity; Enforceability. Immediately upon the Effective Date, or as soon as possible thereafter, ROCHE shall discontinue any opposition, challenge, compulsory license application or the like with respect to the CHIRON Licensed Patents.     5.2. Compulsory Licensing. ROCHE covenants and agrees on behalf of itself and its Affiliates to not support any third party in seeking compulsory licensing of the CHIRON Licensed Patents in any jurisdiction. As used in this Section, "support" shall have the same meanings as in Section 7.2(b). 11 -------------------------------------------------------------------------------- ARTICLE 6 REPRESENTATIONS AND WARRANTIES     6.1 Corporate Authority. Each party represents and warrants to the other party that it has the necessary corporate authority to enter into this Agreement.     6.2 Right to Grant. Each party represents and warrants that they have the right to grant the licenses and options granted in Article 2 hereof and that they are the sole owner of their respective Licensed/Optioned Patents, subject to licenses existing as of the Effective Date. CHIRON represents and warrants to ROCHE that, to the best of its knowledge, neither CHIRON nor any of its Affiliates have transferred to [**] or any if its Affiliates (a) before December 1, 1998, title to any patent or patent application Directed to HCV in the Field existing on that date; or (b) on or after that date, title to any patent, patent application or invention Directed to HCV in the Field.     6.3 Current Licenses. CHIRON represents and warrants that: (a) as of the Effective Date the entities set forth in Exhibit F are the only parties to which it has granted any licensed rights or other grants or immunities to one or more of the CHIRON Licensed Patents in the Field; and (b) Exhibit F contains a complete and accurate description of the effective scope, field and territory of such grant as of the Effective Date. CHIRON also represents and warrants that [**] except as disclosed in Exhibit F.     6.4 Complete Patent List. CHIRON represents and warrants to ROCHE that, to the best of its knowledge and belief, Exhibit B contains a complete list, as of the Effective Date, of all patents and patent applications owned by, licensed to (with a right to sublicense), or otherwise controlled by CHIRON or its Affiliates containing claims Directed to HCV in the Field. To the extent that any other patent or patent application owned by, licensed to (with a right to sublicense) or otherwise controlled by CHIRON or its Affiliates and filed on or before the Effective Date contains a claim Directed to HCV in the Field, such patent or patent application shall be automatically added to the CHIRON Licensed Patents. Upon ROCHE's written request, not more frequently than annually, CHIRON shall provide ROCHE with an updated Exhibit B and a report of the prosecution status of applications within CHIRON Licensed Patents. ROCHE represents and warrants to CHIRON that, to the best of its knowledge and belief, Exhibit C contains a complete list, as of the Effective Date, of all patents and patent applications owned by, licensed to (with a right to sublicense), or otherwise controlled by ROCHE or its Affiliates containing claims Directed to HCV in the Field. To the extent that any other patent or patent application owned by, licensed to (with a right to sublicense) or otherwise controlled by ROCHE or its Affiliates and filed on or before the Effective Date contains a claim Directed to HCV in the Field, such patent or patent application shall be automatically added to the ROCHE Optioned Patents. Upon CHIRON's written request, not more frequently than annually, ROCHE shall provide CHIRON with an updated Exhibit C and a report of the prosecution status of applications within ROCHE Optioned Patents.     6.5 Exclusions. Nothing contained in this Agreement shall be construed as:     (a) A representation or warranty by any party hereto as to the validity of any patent rights which are the subject of this Agreement;     (b) A representation or warranty that anything made, used, imported, offered for sale, sold or otherwise disposed of under any of the patent rights which are the subject of this Agreement is or will be free from infringement of patents of third parties or of patents of either party that are not Directed to HCV;     (c) An obligation to bring or prosecute actions or suits against third parties for infringement of any patent rights which are the subject of this Agreement;     (d) A grant of any right to bring or prosecute actions or suits against third parties for infringement of any patent rights which are the subject of this Agreement; or 12 --------------------------------------------------------------------------------     (e) A grant, by implication, estoppel or otherwise, of any license, option, covenant or right other than those which are expressly stated herein, including without limitation (i) any license under any patent or patent application (or claim thereof) not within the Licensed/Optioned Patents, or (ii) any covenant by CHIRON or ROCHE not to sue under any such patent or patent application (or claim thereof).     6.6 Further ROCHE Assurance. ROCHE acknowledges that the inclusion of ROCHE Affiliates within the license and option grants pursuant to Sections 2.1 and 2.4 is intended to enable ROCHE to utilize the manufacturing and sales capabilities of its Affiliates in connection with the manufacture and sale of CHIRON Licensed Products in a manner substantially similar to the involvement of such Affiliates in the manufacture and sale of ROCHE's products generally. ROCHE shall not, directly or indirectly, take any action having or intended to have the effect of sublicensing ROCHE's rights under any of the CHIRON Licensed Patents, other than to a bona fide Affiliate, including, without limitation, by creating Affiliates specifically in connection with CHIRON Licensed Products, or through other third party arrangements such as joint ventures, collaborations, or distribution arrangements with distributors. ROCHE and its Affiliates are licensed hereunder to sell and distribute CHIRON Licensed Products only under the label, name and trademark rights owned by, licensed to or otherwise controlled by ROCHE or its Affiliates, and only through the sales force of ROCHE or its Affiliates, or through Authorized Distributors. ROCHE and its Affiliates are not licensed to perform OEM manufacturing of CHIRON Licensed Products for a third party other than an Authorized Distributor; to supply CHIRON Licensed Products for resale to any third party other than an Authorized Distributor; to permit any Authorized Distributor or other third party to sell any CHIRON Licensed Products under another third party label, name or trademark or to permit any Authorized Distributor or other third party to sell any CHIRON Licensed Products under the Authorized Distributor's or any third party's own label, name or trademark for use on an instrument bearing the label name or trademark of a party other than ROCHE or its Affiliates; provided, however, that nothing in this Section 6.6 shall be construed to limit the rights of ROCHE or its Affiliates to engage in activities with such third parties, to the extent such third parties have obtained rights under the CHIRON Licensed Patents permitting such activities.     6.7 Limitation of Warranty. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, NO PARTY MAKES ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. ARTICLE 7 TERM AND TERMINATION     7.1 Term. This Agreement shall be in effect from the Effective Date until the last to expire of the CHIRON Licensed Patents issued under the authority of the Patent and Trademark Office of the United States (the "Term"), unless earlier terminated pursuant to Sections 7.2 or 7.3 below.     7.2 Voluntary Termination. ROCHE may voluntarily terminate all, but not less than all, licenses granted to ROCHE and its Affiliates under this Agreement on a country-by-country basis, on not less than six (6) months prior written notice to CHIRON.     7.3 Termination by CHIRON. CHIRON may terminate this Agreement only upon any of the following grounds:     (a) ROCHE's or its Affiliate's material breach of this Agreement, including, without limitation, a breach resulting from ROCHE's or its Affiliate's failure to pay any sums due hereunder, where such breach shall not have been remedied within thirty (30) days of the receipt of a written notification from CHIRON identifying the breach and requiring its remedy; 13 -------------------------------------------------------------------------------- whereupon termination under this Section 7.3(a) shall be effective upon the expiration of such thirty (30) day cure period, subject to Section 7.6; or     (b) [**].     7.4 Enforcement After Termination. Upon valid termination of this Agreement under Section 7.2 or 7.3, ROCHE and its Affiliates shall have no further rights under CHIRON Licensed Patents and CHIRON shall not be limited to its remedies under this Agreement, to the extent of such termination.     7.5 Accrued Rights. Termination of this Agreement for whatever reason shall not affect any rights which have accrued prior to termination, including without limitation royalty obligations occurring during the Term, calculated in accordance with Article 3 and Exhibit A.     7.6 ROCHE Challenge to Section 7.3(a) Termination. In the event ROCHE provides written notification to CHIRON prior to expiration of the thirty (30) day notice/cure period referenced in Section 7.3(a) that ROCHE disputes whether the grounds for termination under Section 7.3(a) are present, such dispute shall be submitted to ADR pursuant to Article 10. The thirty (30) day notice/cure period shall be suspended during the pendancy of such ADR, provided that during the pendancy of the ADR, ROCHE shall continue to make any disputed payments to CHIRON, on the condition that CHIRON shall repay ROCHE the amounts of such disputed payments if ROCHE prevails in the ADR, plus interest at the rate described in Section 4.9. Notwithstanding anything in this Section 7.6 to the contrary, ROCHE may submit a dispute concerning a method by which amounts payable by ROCHE and its Affiliates to CHIRON hereunder are calculated only one time, and any resolution from the ADR shall bind the parties as to such calculation method thereafter.     7.7 ROCHE Challenge to Section 7.3(b) Termination. In the event that ROCHE, within thirty (30) days of receiving notice of termination by CHIRON for the grounds set forth in Section 7.3(b) above, provides written notice to CHIRON that ROCHE disputes whether such grounds are present, such dispute shall be submitted to ADR pursuant to Article 10 and termination of this Agreement shall be suspended during the pendancy of the ADR, provided that ROCHE suspends its action, suit or proceeding (other than in an ADR proceeding between the parties as permitted by Section 7.3 (b) and Article 10) [**], and continues to perform all of its material obligations hereunder.     7.8 Audit Results Not Grounds for Termination. CHIRON's request for an audit under Section 4.6 shall not be treated as a notice of breach under Section 7.3(a). In the event such audit determines there has been an underpayment by ROCHE, such underpayment shall not constitute grounds for termination by CHIRON under Section 7.3(a) unless: (a) ROCHE has failed to rectify such underpayment in accordance with Section 4.6; (b) ROCHE has failed to rectify such underpayment after notification and opportunity to cure under Section 7.3(a); and (c) any ADR requested by ROCHE, pursuant to Section 7.6, and directed to any dispute concerning such underpayment, results in a determination favorable to CHIRON and ROCHE has failed to rectify such underpayment. Notwithstanding the foregoing, ROCHE shall continue to make the disputed payments to CHIRON, on the condition that CHIRON shall repay ROCHE the amounts of such disputed payments with respect to which ROCHE prevails in the ADR, plus interest at the rate described in Section 4.9.     7.9 Survival. The following provisions of this Agreement shall survive termination or expiration of this Agreement, in accordance with their respective terms: Article 1; Sections 4.6, 4.7, 4.8, 4.9, 6.7, 7.4, 7.5 and 7.9; Articles 8, 9, and 10; Sections 11.9 through 11.14; and Section 14.1. ARTICLE 8 CONFIDENTIALITY     8.1 Obligation. From time to time during the Term, CHIRON and ROCHE may provide to each other information concerning patents, patent applications, license agreements and other confidential or proprietary information related to this Agreement (the "Information"). Notwithstanding anything in 14 -------------------------------------------------------------------------------- this Agreement to the contrary, following execution of this Agreement, Earned Royalty Amounts payable under this Agreement shall be deemed "Information" as to which both CHIRON and ROCHE shall be deemed to be the party receiving the Information (the "Receiving Party"). Each Receiving Party shall during the Term and for a period of three (3) years after termination hereof: (a) maintain the Information in confidence; (b) not disclose the Information to any third party, other than employees, agents or consultants of the Receiving Party, its Affiliates or permitted sublicensees who have a need to know the Information and who are bound by confidentiality obligations to the Receiving Party no less restrictive than those contained herein; and (c) not use the Information for any purpose not directly related to performance hereunder or otherwise authorized under this Agreement.     8.2 Exclusions. The obligations of this Article 8 shall not apply to any Information which: (a) is or which becomes generally known to the public by publication or by means other than a breach of a duty by the Receiving Party; (b) is otherwise known by the Receiving Party at the time of disclosure by the other party; (c) otherwise becomes available to the Receiving Party from a third party not in breach of confidentiality obligations to the other party; or (d) is developed by or for the Receiving Party independent of any disclosure from the other party. The Receiving Party also shall be permitted to make disclosures of Information which are reasonably necessary in connection with a possible grant of a permitted sublicense by the Receiving Party or in due diligence related to a possible acquisition, merger, consolidation, substantial asset transfer or similar transaction of the Receiving Party, provided that the recipient is bound to the Receiving Party by confidentiality obligations with respect to the Information no less restrictive than those contained herein. Nothing herein shall prevent the Receiving Party from making such disclosures of Information as are reasonably required by law, regulation (including 37 C.F.R. § 1.56), or order of any court or governmental agency; provided that the Receiving Party has provided reasonable advance notice to allow the disclosing party the opportunity to seek a protective order or otherwise contest, prevent or limit such disclosure.     8.3 Return of Information. Upon termination of this Agreement for any reason, the Receiving Party shall return, or at the option of the disclosing party, certify destruction of, all Information and copies thereof; provided that the Receiving Party may retain one copy thereof in its law department files solely for evidentiary and regulatory purposes.     8.4 Disclosure of Agreements and Terms. Each of the parties may issue a press release disclosing the existence of this Agreement. Subject to mutual agreement as to form and substance, the parties may make selected disclosure of the material financial terms in such press releases. Each party may disclose any of the terms of this Agreement to any Affiliate; provided that the recipient of such disclosure is obligated to confidentiality terms no less restrictive than those contained in this Article 8. Each party may disclose any information contained in or regarding this Agreement to the extent required in its respective reasonable judgment by applicable law, regulation or order of any court or governmental agency. Further, each party may determine in its respective discretion to file this Agreement under the Securities and Exchange Act of 1934 or otherwise with any United States or foreign governmental agency, even if that filing may result in this Agreement becoming available to the public generally. The filing party shall seek confidential treatment for at least the essential financial terms hereof in connection with any such filing, subject to applicable law and regulation, and shall notify the other party in advance of any such filing and consider such suggestions as the other party may make as to the terms herein as to which the filing party should seek confidential treatment. ARTICLE 9 INDEMNITY     9.1 ROCHE Indemnity. ROCHE shall indemnify, defend and hold harmless CHIRON and its Affiliates and their officers, directors, shareholders, employees, representatives and agents, against any claim, demand, loss, damage or injury, including reasonable attorneys' fees, asserted by a third party, arising from, relating to, or otherwise in respect of, (a) the manufacture, use or sale of CHIRON 15 -------------------------------------------------------------------------------- Licensed Products, or (b) any breach by ROCHE or its Affiliates of any representation, warranty or covenant under this Agreement; provided, however, that such indemnity shall not extend to damages arising directly from any breach or willful or negligent act of CHIRON or its Affiliates.     9.2 CHIRON Indemnity. CHIRON shall indemnify, defend and hold harmless ROCHE and its Affiliates and their officers, directors, shareholders, employees, representatives and agents, against any claim, demand, loss, damage or injury, including reasonable attorneys' fees, asserted by a third party, arising from, relating to, or otherwise in respect of, (a) the manufacture, use or sale of ROCHE Optioned Products, or (b) any breach by CHIRON or its Affiliates of any representation, warranty or covenant under this Agreement; provided, however, that such indemnity shall not extend to damages arising directly from any breach or willful or negligent act of ROCHE or its Affiliates.     9.3 Indemnification Procedures. In the event either party claims indemnification pursuant to this Article 9, the indemnified party shall promptly notify the indemnifying party in writing upon becoming aware of any claim to which such indemnification may apply. Delay in providing such notice shall constitute a waiver of the indemnifying party's indemnity obligations hereunder only if the indemnifying party's ability to defend such claim is materially impaired thereby. The indemnifying party shall have the right to assume and solely control the defense of the claim at its own expense. If the right to assume and solely control the defense is exercised, the indemnified party shall have the right to participate in, but not to control, such defense at its own expense, and the indemnifying party's indemnity obligations shall be deemed not to include attorneys' fees and litigation expenses incurred by the indemnified party after the assumption of the defense by the indemnifying party. If the indemnifying party does not assume the defense of the claim, the indemnified party may defend the claim at the indemnifying party's expense. The indemnified party shall not settle or compromise the claim without the prior written consent of the indemnifying party, and the indemnifying party shall not settle or compromise the claim in any manner which would have an adverse effect on the indemnified party without the consent of the indemnified party, which consent, in each case, shall not be unreasonably withheld. The indemnified party shall reasonably cooperate with the indemnifying party and shall make available to the indemnifying party all pertinent information under the control of the indemnified party, all at the expense of the indemnifying party.     9.4 Sunset. The provisions of Sections 9.1 and 9.2 shall continue in effect on a claim-by-claim basis, after the termination of this Agreement, only until the expiration of the last to expire statute of limitations applicable to such claim.     9.5 Limitation of Liability. Neither party shall be liable to the other for any consequential, special, indirect or exemplary damages or for the loss of profits arising from the performance or nonperformance of this Agreement or any acts or omissions associated herewith. ARTICLE 10 ALTERNATIVE DISPUTE RESOLUTION     The parties recognize that bona-fide disputes may from time to time arise which relate to any aspect of this Agreement, including, without limitation, any of the parties' rights and/or obligations hereunder, and including, without limitation, disputes relating to the interpretation, form, validity, performance and/or termination of this Agreement or relating to infringement, scope, claims construction, or (without limiting the effect of Section 7.3(b)) validity or enforceability of the CHIRON Licensed Patents. In the event of the occurrence of any dispute, a party may, by notice to the other party, have such dispute referred to their respective employees designated below or their successors, for 16 -------------------------------------------------------------------------------- attempted resolution by good faith negotiations within ninety (90) days after such notice is received. Said designated officers are as follows: For ROCHE: President Roche Molecular Systems, Inc. For CHIRON: President Blood Testing     In the event the designated officers, after such good faith negotiations, are not able to resolve such dispute within such ninety (90) day period, or any agreed extension thereof, a party may invoke the provisions for binding ADR as set forth in Paragraph 9 of the Settlement Agreement. Neither party shall seek recourse against the other hereunder in any court or other forum, except as permitted by Paragraph 9 of the Settlement Agreement or as may be necessary to enforce a determination made in ADR pursuant to this Article 10 and Paragraph 9 of the Settlement Agreement. ARTICLE 11 MISCELLANEOUS     11.1 Assignment.     (a) ROCHE and its Affiliates may not assign or transfer any rights under this Agreement without the prior written consent of CHIRON, except to a ROCHE Affiliate, and then only for so long as the assignee remains a ROCHE Affiliate, or as part of the sale or transfer of all or substantially all of ROCHE's and all of its Affiliates' assets and businesses to which this Agreement relates. In the case of a permitted assignment or transfer, the performance of the assignee shall be guaranteed by ROCHE.     (b) CHIRON and its Affiliates may not assign or transfer any rights under this Agreement without the prior written consent of ROCHE, except to a CHIRON Affiliate, and then only for so long as the assignee remains a CHIRON Affiliate, or as part of the sale or transfer of all or substantially all of CHIRON's and all of its Affiliates' assets and businesses to which this Agreement relates. In the case of a permitted assignment or transfer, the performance of the assignee shall be guaranteed by CHIRON.     11.2 Force Majeure. A party hereto shall not be liable for, nor shall this Agreement be terminable or cancelable by reason of, any delay or default in any such party's performance hereunder, to the extent that such default or delay is caused by events beyond such party's reasonable control including, but not limited to: acts of God; regulation, law or action of any government or agency thereof; war or insurrection; civil commotion; labor disturbances; epidemic; or failure of suppliers, public utilities or common carriers. Each party shall give prompt notice to the other party of such cause, and shall take whatever reasonable steps are necessary to relieve the effect of such cause as rapidly as possible.     11.3 Severability. In the event that any one or more of the provisions of this Agreement should for any reason be held by any court or authority having jurisdiction over this Agreement or over the parties hereto to be invalid, illegal or unenforceable, such provision or provisions shall be reformed to approximate as nearly as possible the intent of the parties, in such jurisdiction; elsewhere, this Agreement shall not be affected.     11.4 Entire Agreement; Termination of Interim Agreement. This Agreement together with the Exhibits, Attachments and Schedules constitutes the entire agreement among the parties relating to the subject matter of this Agreement. Upon execution and delivery of this Agreement, the parties acknowledge and agree that the Interim Agreement shall be terminated and of no further force or 17 -------------------------------------------------------------------------------- effect, except as to those provisions of the Interim Agreement that expressly survive any termination or expiration or as specifically referenced in this Agreement. There are no other understandings, representations or warranties of any kind.     11.5 Amendment. This Agreement shall not be altered, extended or modified except by written agreement of the parties.     11.6 Waiver. Failure by a party hereunder to enforce any right under this Agreement shall not be construed as a waiver of such right or any other rights under this Agreement; nor shall a waiver by a party hereunder in one or more instances be construed as constituting a continuing waiver or as a waiver in other instances.     11.7 Costs. Each of the parties hereto shall be responsible for its respective legal and other costs incurred in relation to the preparation of this Agreement.     11.8 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same instrument. Facsimile copies of signatures for a party shall be deemed to be originals for purposes of execution of the Agreement.     11.9 Notices.     (a) Any notice or other document to be given under this Agreement shall be in writing and shall be deemed to have been duly given if personally delivered or sent by first class mail, or express or air mail or other postal service, or by certified mail, return receipt requested.     (b) Any notice required by this Agreement shall be forwarded to the respective addresses and marked for the attention of the persons set forth below unless such addresses subsequently change by written notice to the other party: ROCHE:   F. Hoffmann-La Roche Ltd. Grenzacherstrasse 124 Basel Bale 4002 Switzerland Attn: Head of Diagnostics Division Copy to:   General Counsel Roche Molecular Systems, Inc. 1145 Atlantic Avenue Alameda, CA 94501 CHIRON:   Chiron Corporation 4560 Horton Street Emeryville, California 94608 Attn.: President, Blood Testing Copy to:   General Counsel Chiron Corporation 4560 Horton Street Emeryville, CA 94608     (c) Any such notice or other document shall be deemed to have been effective when received by the addressee. To prove the giving of a notice or other document it shall be sufficient to show that it was received.     11.10 Governing Law. All matters affecting the interpretation, form, validity, performance and termination of this Agreement shall be decided and interpreted under the laws of the State of New 18 -------------------------------------------------------------------------------- York, excluding any choice of law rules which may direct application of the laws of any other jurisdiction.     11.11 Relationship of the Parties. The relationship of the parties under this Agreement is that of independent contractors. Nothing contained in this Agreement is intended or is to be construed so as to constitute the parties as partners, joint venturers or agents of the other. Neither party or its Affiliates has any express or implied right or authority under this Agreement to assume or create any obligations or make any representations or warranties on behalf of or in the name of the other party or its Affiliates.     11.12 Headings. The headings of the Articles and Sections in this Agreement have been inserted for convenience only and do not constitute part of this Agreement.     11.13 No Trademark Rights. No right, express or implied, is granted by this Agreement to either party to use in any manner the name, trade name or trademark of the other party in connection with the performance of this Agreement.     11.14 No Implied Licenses. No license, express or implied, is granted by this Agreement to either party, other than the licenses or options granted under Sections 2.1, 2.3, 2.4 and 2.5. ARTICLE 12 FIELD RESTRICTIONS AND OTHER COVENANTS     12.1 ROCHE Covenant Regarding In Vitro Diagnostics     (a) ROCHE and its Affiliates shall not label or promote any CHIRON Licensed Product labeled or promoted for use in the Field in any respect for use in In Vitro Diagnostics; and ROCHE shall use commercially reasonable efforts to prevent its Authorized Distributors from labeling or promoting any CHIRON Licensed Products labeled or promoted for use in the Field in any respect for use in In Vitro Diagnostics. Similarly, ROCHE and its Affiliates shall not label or promote any Product licensed under the HCV Diagnostics Agreement and labeled or promoted for use in In Vitro Diagnostics in any respect for use in the Field; and ROCHE shall use commercially reasonable efforts to prevent its Authorized Distributors from labeling or promoting any Products licensed under the HCV Diagnostics Agreement and labeled or promoted for use in In Vitro Diagnostics in any respect for use in the Field.     (b) Further, ROCHE and its Affiliates and Authorized Distributors shall include on or with each CHIRON Licensed Product labeled or promoted for use in the Field a statement to the effect that the CHIRON Licensed Product is not intended for use in In Vitro Diagnostics, using language to be determined by ROCHE and approved in advance in writing by CHIRON, which approval shall not be unreasonably withheld. The location of such notice shall be the product insert of such CHIRON Licensed Products or such other reasonably prominent location to be determined by ROCHE.     (c) In the event that ROCHE or CHIRON becomes aware of any material use in In Vitro Diagnostics of CHIRON Licensed Products labeled or promoted for use in the Field, such party will promptly notify the other in writing of the relevant facts and, if so requested by CHIRON, ROCHE will (i) meet and confer with CHIRON in good faith to determine what steps either or both should take to abate such infringing use and (ii) notify in writing any of its customers that engages in such infringing use that use of the relevant CHIRON Licensed Product in In Vitro Diagnostics may infringe one or more of the CHIRON Licensed Patents. Similarly, in the event that ROCHE or CHIRON becomes aware of any material use in the Field of Products licensed under the HCV Diagnostics Agreement and labeled or promoted for use in In Vitro Diagnostics, such party will promptly notify the other in writing of the relevant facts and, if so requested by CHIRON, ROCHE will (i) meet and confer with CHIRON in good faith to determine what steps 19 -------------------------------------------------------------------------------- either or both should take to abate such infringing use and (ii) notify in writing any of its customers that engages in such infringing use that use of the relevant Product in the Field may infringe one or more of the CHIRON Licensed Patents.     (d) Enforcement of the provisions set forth in this Section 12.1 shall be suspended until [**]; provided however, that following such period of suspension, subject to compliance with all applicable laws and regulations, ROCHE shall not offer for sale or sell to End Users other than Existing End Users for use in Blood Screening Products configured for use primarily in In Vitro Diagnostics, and provided further, that effective [**], ROCHE shall not offer for sale or sell to any End User for use in Blood Screening Products configured for use primarily in In Vitro Diagnostics. Nothing in this Section 12.1(d) shall prohibit ROCHE from offering for sale or selling to End Users Products configured for use primarily in In Vitro Diagnostics to satisfy the bona fide requirements of such End Users for use in In Vitro Diagnostics and any Blood Screening use by such End Users of any such Products configured for use primarily in In Vitro Diagnostics shall not be deemed a breach of this Section 12.1(d).     12.2 Patent Marking. ROCHE and its Affiliates shall include a patent notice on each CHIRON Licensed Product to identify the CHIRON Licensed Patents which such CHIRON Licensed Product, but for the licenses granted herein, would infringe one or more Valid Claims (or for which royalties are being paid); provided, however, identification of CHIRON Licensed Patents on a CHIRON Licensed Product shall in no way be deemed to be an admission by ROCHE or its Affiliates, or raise a presumption, that such CHIRON Licensed Product is in fact covered by such CHIRON Licensed Patent. ARTICLE 13 INFRINGEMENT BY THIRD PARTIES     13.1 Notice of Infringement. Each party shall notify the other if it becomes aware of Infringing Third Party Sales. CHIRON shall have the exclusive right to take action against any infringement of any of the CHIRON Licensed Patents, in its sole discretion, subject to this Article 13.     13.2 Infringement Litigation.     (a) In the event that "substantial" Infringing Third Party Sales are occurring in a country in which ROCHE or its Affiliates or an Authorized Distributor is selling a CHIRON Licensed Product (in each such country, the "Impacted Product"), and ROCHE has notified CHIRON pursuant to Section 13.1 of the existence of such infringement in [**] (an "Infringement Notice"), then the provisions of this Section 13.2 shall apply. For purposes of this Section 13.2, "Major Country" shall mean [**]. 20 --------------------------------------------------------------------------------     (b) For purposes of this Section 13.2, an Infringing Third Party Sale shall be considered substantial in a country if the infringing third party achieves market share, in the case of Blood Screening of at [**], and in the case of Plasma Fractionation of at [**] of the Aggregated Products in such country [**]. For purposes of this Section 13.2, "Aggregated Products" means the number of Units of CHIRON Licensed Products of the applicable Field Category plus the number of Competitive Products sold (or used, in the case of Plasma Fractionation) in a country, and "Competitive Products" means the number of Units of Products which are sold (or used, in the case of Plasma Fractionation) of the applicable Field Category and which compete with a CHIRON Licensed Product sold or used by ROCHE or its Affiliates in a country.     (c) If the Infringement Notice identifies an Impacted Product in a Major Country and CHIRON fails to institute legal action in a Major Country or other country acceptable to ROCHE [**] following receipt by CHIRON of the Infringement Notice and infringement is not otherwise abated, then ROCHE shall be relieved of the obligation to pay the portion of Earned Royalties set forth in Section 13.2(d) with respect to the Impacted Product until such time as CHIRON institutes such legal action as described in this Section 13.2(c); provided, however, that CHIRON need not initiate or continue any such legal action, if, after reasonably diligent effort (including reasonably diligent effort by ROCHE if requested by CHIRON), CHIRON is unable to acquire admissible evidence sufficient to establish a prima facia case of infringement under the law of the applicable country; and provided further, that CHIRON shall not be obligated to institute or maintain more than one such action [**] of this Agreement nor more than three such actions at any time with regard to Impacted Products in Plasma Fractionation.     (d) If CHIRON has not instituted such legal action at the end of such [**], to the extent required under Section 13.2(c), and such infringement is not otherwise abated, the Earned Royalty with respect to an Impacted Product in Blood Screening shall be reduced by [**] from the amount otherwise payable under Paragraph 1 of Exhibit A (excluding the effect of any reduction in Earned Royalty Amounts triggered by operation of Paragraph 2 of Exhibit A) and with respect to an Impacted Product in Plasma Fractionation shall be reduced by [**]. If, at the end of [**] thereafter, CHIRON has not instituted such legal action, to the extent so required, and infringement is not otherwise abated, Earned Royalties on such Impacted Product shall be reduced by an [**] of the original Earned Royalties, such that if legal action required under Section 13.2(c) has not commenced and the infringement is not otherwise abated by, in the case of an Impacted Product in Blood Screening the end of the [**] following receipt by CHIRON of the Infringement Notice and in the case of an Impacted Product in Plasma Fractionation the end of the [**] following receipt by CHIRON of the Infringement Notice, [**] shall be payable hereunder with respect to the Impacted Product.     (e) The obligations to pay Earned Royalties shall be reinstated on a prospective basis at such time as ROCHE receives written notice of the institution of legal action in accordance with Section 13.2(c) or the infringement is otherwise abated, all subject to Section 13.2(f).     (f)  If legal action required under Section 13.2(c) has not been instituted and the infringement is not otherwise abated in the case of an Impacted Product in Blood Screening for more than [**] following receipt by CHIRON of the Infringement Notice and in the case of an Impacted Product in Plasma Fractionation for more than [**] following receipt by CHIRON of the Infringement Notice, and if, as a result of the infringement, sales of the Impacted Product [**] by ROCHE, its Affiliates or an Authorized Distributor have declined by [**] or more during the preceding [**], then upon reinstatement of Earned Royalties pursuant to Section 13.2(e), the parties shall meet and confer regarding possible adjustments to the Earned Royalties for the Impacted Product in view of such degradation of the market. The parties will discuss possible rate reductions, as well as a plan for reinstating the original economic expectations of the parties. It is expected that any agreement for reduction of Earned Royalties will be phased out over time, so as 21 -------------------------------------------------------------------------------- to return to the Earned Royalties set forth in Exhibit A. If the parties fail to reach agreement on any such adjustment, the matter shall be submitted for resolution by ADR, except that in the event of ADR, each party shall submit to the neutral a proposal with respect to adjustments pursuant to this Section 13.2(f). The neutral shall be empowered to choose one proposal or the other, but shall not be empowered to order any such adjustment other than as proposed by one of the parties.     13.3.Cooperation. ROCHE and its Affiliates shall cooperate with CHIRON in connection with any legal action referred to in this Article 13. ARTICLE 14 EUROPEAN COMMUNITY PROVISIONS     14.1 Termination in European Community. Notwithstanding the provisions of Article 7, this Agreement, with respect to the European Community, shall terminate in each member country seventeen (17) years from the Effective Date or on the expiration of the last to expire of the patents within the CHIRON Licensed Patents in such member country based upon a patent existing or a patent application pending as of the Effective Date, whichever is later; provided, however, that prior to the termination of this Agreement in the first member country in which it would otherwise terminate pursuant to the foregoing, ROCHE may, in its discretion, elect by written notice to CHIRON to extend this Agreement as to all such member countries for an additional term which shall expire on a country-by-country basis on the expiration date of the last to expire patent within the CHIRON Licensed Patents existing in such member country as of the date of such extension.     14.2 Competition Notification. If either party (the "Notifying Party") elects to file a notification with respect to this Agreement (a "Notification") with the Competition Directorate of Commission of European Community (the "Commission") in accordance with regulations established by the Commission, the Notifying Party shall provide a non-confidential version of the final draft to the other party for comment at least thirty (30) days before making the filing and shall consider in good faith the modification thereto, if any, that the other party may propose. The other party shall execute all documents reasonably required by the Notifying Party and shall otherwise reasonably cooperate in connection with the Notification. The Notifying Party shall bear all costs incurred by it relating to the Notification.     14.3 Reformation. If, at any time during the Term, either party receives a request or other communication from the Commission with respect to the Notification (a "Request"), such party shall promptly inform the other of the nature of the Request. In the event that the Commission indicates in a Statement of Objection(s) that this Agreement will violate the provisions of Article 81 or 82 of the Treaty of Rome, then the parties shall amend this Agreement by making those minimal modifications necessary to satisfy the concerns of the Commission as set forth in the Statement of Objection(s). Notwithstanding the foregoing, the parties agree that ROCHE shall retain substantially the same license rights at substantially the same royalties as specified under this Agreement. 22 -------------------------------------------------------------------------------- IN WITNESS WHEREOF this Agreement has been executed by duly authorized officers of CHIRON and ROCHE as of the Effective Date. CHIRON CORPORATION     By:   /s/ SEÁN P. LANCE    -------------------------------------------------------------------------------- Seán P. Lance     Title:   Chairman and Chief Executive Officer     Date:   May 22, 2001     F. HOFFMANN-LA ROCHE LTD     By:   /s/ HEINO VON PRONDYZNSKI    -------------------------------------------------------------------------------- Heino von Prondyznski     Title:   Head of Roche Diagnositics     Date:   21/05/01     By:             --------------------------------------------------------------------------------     Title:         Date:             --------------------------------------------------------------------------------     ROCHE MOLECULAR SYSTEMS, INC.     By:   /s/ HEINER DREISMANN    -------------------------------------------------------------------------------- Heiner Dreismann     Title:   President, RMS     Date:   05/09/01     23 -------------------------------------------------------------------------------- REDACTED Exhibit A Compensation to Chiron Corporation     1.  Earned Royalty. Subject to the adjustments referenced in this Exhibit A, royalties paid to CHIRON under this Agreement in any Calendar Quarter (the "Earned Royalty") shall be calculated as follows:     The Earned Royalty for each Calendar Quarter shall be the [**]: Earned Royalty Amounts Field Category: --------------------------------------------------------------------------------   Region I --------------------------------------------------------------------------------   Region II --------------------------------------------------------------------------------   Region III --------------------------------------------------------------------------------   Region IV1 -------------------------------------------------------------------------------- [**]   [**]   [**]   [**]   [**] [**]   [**]   [**]   [**]   [**] --------------------------------------------------------------------------------     1  See Paragraph 5 below.     (a) Notwithstanding the above:      (i) For Blood Screening:     (1) In Region I, for Existing End Users only, the Earned Royalty Amount shall be [**] used by such Existing End Users in Region I [**], and as to Units used by End Users other than Existing End Users, the Earned Royalty Amount shall be as set forth above;     (2) In Region II,     (A) As to the [**], the Earned Royalty Amount shall be [**]; provided, however, that [**].     (B) As to [**], the Earned Royalty Amount shall be [**]; provided, however, that [**].     (3) In Region III, the Earned Royalty Amount shall be [**]; and     (4) In Region IV, for Existing End Users, the Earned Royalty Amount shall be [**]; as to all other End Users in Region IV, the Earned Royalty Amount shall be as set forth above, as modified by Paragraph 5; and     (ii) [**], as such terms are defined in the Interim Agreement, referenced in that certain letter agreement dated October 10, 2000 by and between CHIRON and F. Hoffmann-La Roche Ltd. (the "Plasma Letter") [**].     (b) Notwithstanding the above, [**].     (c) [**], the parties shall meet and reasonably consider adjustment to the Earned Royalty Amount with respect to each CHIRON Licensed Product [**]. Any such adjustment should reflect both [**]. Accordingly, an increase in Earned Royalty Amounts may be justified by an increase [**]. Generally, the parties intend that Earned Royalty Amounts should be not less than [**]. No adjustment shall be made to any Earned Royalty Amount unless mutually agreed; [**].     (d) Earned Royalties shall be payable quarterly, commencing with the Calendar Quarter ending [**], within seventy-five (75) days following the end of each Calendar Quarter. Such payment shall be made in accordance with the payment and reporting obligations set forth in Article 4 and is fully earned when paid and is non-refundable.     (e) [**], the parties shall meet and reasonably consider adjustment to the allocation of jurisdictions among the Regions set forth on Exhibit G, including the determination of which -------------------------------------------------------------------------------- jurisdictions within Region IV will be governed by Paragraph 5. Generally, the parties intend that [**]. No adjustment shall be made to the allocation of jurisdictions among the Regions unless mutually agreed.     2.  Home Brew Adjustment. With respect to sales of CHIRON Licensed Products in [**] for use in Blood Screening, [**] as set forth in this Paragraph 2, [**], if in the [**]: [**] [**]   Reduced Earned Royalty Amount -------------------------------------------------------------------------------- (in units)     greater than [**]   [**] greater than [**]   [**] If the parties are unable otherwise to agree within thirty (30) days of a request by either party, [**]. In the event that Home Brew Screening achieve a market share in [**] Blood Screening [**], the parties shall meet and confer, at ROCHE's request, to consider reasonably and in good faith the actions that CHIRON might take to abate such Home Brew Screening. [**]. As used herein, "Home Brew Screening" shall mean the use in Blood Screening of probe screening methods Directed to HCV not licensed by CHIRON and not utilizing any assay, kit, reagent or other component Directed to HCV made by or for ROCHE. ROCHE may have the benefit of the adjustment to Earned Royalty Amounts provided by this Paragraph 2 or the adjustment or the adjustment to Earned Royalty Amounts provided under Section 13.2, at its election, but not both.     3.  Pre-Licensing Royalties. Notwithstanding anything to the contrary in the Agreement or this Exhibit A, Earned Royalties shall be paid on Units in the United States under investigational new drug (IND) status and, similarly, on Units in any other jurisdiction for investigational or other pre-licensure use.     4.  Most Favored Licensee. CHIRON shall promptly notify ROCHE if it grants to a third party a license under CHIRON Licensed Patents to practice in Blood Screening or Plasma Fractionation under terms that impose [**] of the applicable Earned Royalty Amounts. With such notification, CHIRON shall provide ROCHE with a summary of [**]. At ROCHE's election, to be made in writing [**] hereunder shall be adjusted [**]. Any such adjustment will be subject to the same terms as are applicable to such minimum amounts payable by such third party, including, without limitation, [**]. This Paragraph 4 only applies to licenses that enable a third party to sell or use Products Directed to HCV for Blood Screening; provided, however, it does not apply to licenses of Products Directed to HCV for Blood Screening that do not compete with Products then being sold by ROCHE. It also does not apply to a license that amends, replaces or supplements CHIRON's arrangement [**]. --------------------------------------------------------------------------------     5.  Credits to Assist Developing Countries. CHIRON and ROCHE recognize the importance of improving the safety of the blood supply throughout the world. Accordingly, CHIRON agrees that ROCHE may take a credit of [**]: Jurisdiction --------------------------------------------------------------------------------   Donation Threshold2 -------------------------------------------------------------------------------- [**]   [**] [**]   [**] [**]   [**] [**]   [**] [**]   [**] [**]   [**] [**]   [**] [**] 3 [**] [**] 3 [**] [**]   [**] [**]   [**] [**]   [**] [**]   [**] [**]   [**] --------------------------------------------------------------------------------     2  Agreed by the parties to be equal to [**] of the annual donations tested in each jurisdiction, as reported by the World Health Organization.     3  If [**] is deemed to be within Region IV, pursuant to Footnote 1 of Exhibit G Notwithstanding anything set forth in this Exhibit A, the Earned Royalty Amount for Blood Screening in all jurisdictions within Region IV other than those set forth in this Paragraph 5 shall be [**].     6.  Single Royalty Per CHIRON Licensed Product. Only one payment of Earned Royalty shall be due with respect to any Net Sales or only one payment of Earned Royalty Amount shall be due with respect to any Unit of CHIRON Licensed Product Shipped, irrespective of the number of patents or Valid Claims in the CHIRON Licensed Patents covering such CHIRON Licensed Product.     7.  Dispute Resolution. Except as set forth in Paragraph 2 of this Exhibit A, any dispute between CHIRON and ROCHE regarding whether any adjustment to or credits against Earned Royalties under this Exhibit A is appropriate, and which the parties fail to resolve themselves may only be resolved by resort to the ADR provisions of Article 10. Until such dispute is resolved, ROCHE shall pay CHIRON the Earned Royalty provided for herein without benefit of the applicable disputed adjustment on the condition that CHIRON shall repay ROCHE the amounts of such disputed payments if ROCHE prevails in the ADR, plus interest at the rate described in Section 4.9. -------------------------------------------------------------------------------- REDACTED Exhibit B — HCV Page 1 of 3 Chiron HCV Patents [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] -------------------------------------------------------------------------------- REDACTED     Exhibit B — HCV Page 2 of 3 [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] -------------------------------------------------------------------------------- REDACTED     Exhibit B — HCV Page 3 of 3 [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] -------------------------------------------------------------------------------- REDACTED Exhibit C — HCV Page 1 of 1 [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] -------------------------------------------------------------------------------- REDACTED EXHIBIT D Product Codes, BS kits: Description --------------------------------------------------------------------------------   SAP/Part No. -------------------------------------------------------------------------------- [**]     [**]   [**] [**]   [**] [**]   [**] -------------------------------------------------------------------------------- Exhibit E Form of Report [To Be Agreed To By The Parties.] -------------------------------------------------------------------------------- REDACTED Exhibit F Existing Licenses or Rights granted in the Field under the Licensed Patents as of the Effective Date     1.  Agreement between Gen-Probe Incorporated and Chiron Corporation dated as of June 11, 1998 (the "Gen-Probe Agreement").     [**]     [**]     [**]     [**] 1 -------------------------------------------------------------------------------- REDACTED Exhibit G Regions Region I [**]       [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**] 1 [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]       Region II [**] [**] Region III [**] Region IV [**] --------------------------------------------------------------------------------     1  If [**], as the case may be, fails to implement a program for use of Products Directed to HCV for Blood Screening prior to [**], the parties shall meet and confer to determine whether [**] shall be deemed to be within Region IV, subject to Paragraph 5 of Exhibit A. If such failure continues beyond [**], then [**], as the case may be, shall thereafter be deemed to be within Region IV, subject to Paragraph 5 of Exhibit A [**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. -------------------------------------------------------------------------------- QuickLinks BLOOD SCREENING HCV PROBE LICENSE AGREEMENT TABLE OF CONTENTS BLOOD SCREENING HCV PROBE LICENSE AGREEMENT BACKGROUND ARTICLE 1 DEFINITIONS ARTICLE 2 LICENSE AND OPTION GRANTS ARTICLE 3 PAYMENTS, ROYALTIES ARTICLE 4 RECORDS AND REPORTS ARTICLE 5 OTHER ACTIONS ARTICLE 6 REPRESENTATIONS AND WARRANTIES ARTICLE 7 TERM AND TERMINATION ARTICLE 8 CONFIDENTIALITY ARTICLE 9 INDEMNITY ARTICLE 10 ALTERNATIVE DISPUTE RESOLUTION ARTICLE 11 MISCELLANEOUS ARTICLE 12 FIELD RESTRICTIONS AND OTHER COVENANTS ARTICLE 13 INFRINGEMENT BY THIRD PARTIES ARTICLE 14 EUROPEAN COMMUNITY PROVISIONS Exhibit A Compensation to Chiron Corporation Earned Royalty Amounts Exhibit B — HCV Page 1 of 3 Chiron HCV Patents [**] Exhibit C — HCV Page 1 of 1 [**] EXHIBIT D Exhibit E Form of Report [To Be Agreed To By The Parties.] Exhibit F Existing Licenses or Rights granted in the Field under the Licensed Patents as of the Effective Date Exhibit G Regions

Exhibit 10.28 EMPLOYMENT AGREEMENT     THIS AGREEMENT, effective as of April   , 2000, is made by and between DELTAGEN, INC., a Delaware corporation (hereinafter the "Company"), and BRIAN E. CROWLEY (hereinafter "Executive"). RECITALS     WHEREAS, the Company and Executive wish to set forth in this Agreement the terms and conditions under which Executive will continue to be employed by the Company; and     WHEREAS, the Company wishes to be assured that Executive will be available to the Company for an additional three (3) years after April ___, 2000.     NOW, THEREFORE, the Company and Executive, in consideration of the mutual promises set forth herein, agree as follows: ARTICLE I. TERM OF AGREEMENT     A.  Commencement Date.  The terms of this Agreement shall govern Executive's employment with the Company from April ____, 2000 ("Commencement Date") and this Agreement shall expire after a period of three (3) years from the Commencement Date, unless terminated earlier pursuant to Article 6.     B.  Renewal.  The term of this Agreement shall be automatically renewed for successive, additional one (1) year term unless either party delivers written notice to the other at least ninety (90) days prior to the expiration date of this Agreement of an intention to terminate this Agreement or to renew it for a term of less than (1) year. ARTICLE II. EMPLOYMENT DUTIES     A.  Title/Responsibilities.  Executive hereby accepts employment with the Company pursuant to the terms and conditions hereof. Executive agrees to serve the Company in the position of Director of Finance. Executive shall have the powers and duties commensurate with such position, including but not limited to, hiring personnel necessary (in the judgment of the Board of Directors) to carry out the responsibilities for such position.     B.  Full Time Attention.  Executive shall devote his best efforts and his full business time and attention to the performance of the services customarily incident to such office and to such other services as the Board may reasonably request, provided that Executive may also serve on the Boards of Directors of a limited number of other companies with the prior written consent of the Board.     C.  Other Activities.  Except upon the prior written consent of the Board of Directors, Executive shall not during the period of employment engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be competitive with, or that might place him in a competing position to that of the Company or any other corporation or entity that directly or indirectly controls, is controlled by, or is under common control with the Company (an "Affiliated Company"), provided that Executive may own less than two percent of the outstanding securities of any such publicly traded competing corporation. -------------------------------------------------------------------------------- ARTICLE III. COMPENSATION     A.  Base Salary.  Executive shall receive a Base Salary at an annual rate of one hundred twenty-five thousand dollars ($125,000), payable in accordance with the Company's customary payroll practices. The Company's Board of Directors shall provide Executive with annual performance reviews, and, thereafter, Executive shall be entitled to such Base Salary as the Board of Directors may from time to time establish in its sole discretion.     B.  Annual Bonus.  Executive shall be eligible for an annual bonus as determined by the Board of Directors in its sole discretion.     C.  Accelerated Vesting of Options.  If the Company enters into a transaction which is a Change in Control Transaction, then fifty percent (50%) of all options held by Executive as of the date of completion of the Change in Control Transaction shall become fully vested and exercisable (provided that such provision shall not apply if, as of such date, more than 50% of the options held by Executive are already fully vested).     D.  Withholdings.  All compensation and benefits to Executive hereunder shall be subject to all federal, state, local and other withholdings and similar taxes and payments required by applicable law. ARTICLE IV. EXPENSE ALLOWANCES AND FRINGE BENEFITS     A.  Vacation.  Executive shall be entitled to [three (3)] weeks of annual paid vacation during the term of this Agreement.     B.  Benefits.  During the term of this Agreement, the Company shall also provide Executive with the usual health insurance benefits it generally provides to its other senior management employees, other than life insurance (which shall be paid directly by Executive). As Executive becomes eligible in accordance with criteria to be adopted by the Company, the Company shall provide Executive with the right to participate in and to receive benefits from accident, disability, medical, pension, bonus, stock, profit-sharing and savings plans and similar benefits made available generally to employees of the Company as such plans and benefits may be adopted by the Company, provided that Executive shall during the term of this Agreement be entitled to receive at a minimum standard medical and dental benefits similar to those typically afforded to Director of Finance in similar sized biotechnology companies, excluding life insurance. The amount and extent of benefits to which Executive is entitled shall be governed by the specific benefit plan as it may be amended from time to time.     C.  Business Expense Reimbursement.  During the term of this Agreement, Executive shall be entitled to receive proper reimbursement for all reasonable out-of-pocket expenses incurred by him (in accordance with the policies and procedures established by the Company for its senior executive officers) in performing services hereunder, provided Executive properly accounts therefor. ARTICLE V. CONFIDENTIALITY     A.  Proprietary Information.  Executive represents and warrants that he has executed and delivered to the Company the Company's standard Proprietary Information and Inventions Agreement in form acceptable to the Company's counsel. 2 --------------------------------------------------------------------------------     B.  Return of Property.  All documents, records, apparatus, equipment and other physical property which is furnished to or obtained by Executive in the course of his employment with the Company shall be and remain the sole property of the Company. Executive agrees that, upon the termination of his employment, he shall return all such property (whether or not it pertains to Proprietary Information as defined in the Proprietary Information and Inventions Agreement), and agrees not to make or retain copies, reproductions or summaries of any such property. ARTICLE VI. TERMINATION     A.  By Death.  The period of employment shall terminate automatically upon the death of Executive. In such event, the Company shall pay to Executive's beneficiaries or his estate, as the case may be, any accrued Base Salary, any bonus compensation to the extent earned, any vested deferred compensation (other than pension plan or profit-sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of the Company in which Executive is a participant to the full extent of Executive's rights under such plans, any accrued vacation pay and any appropriate business expenses incurred by Executive in connection with his duties hereunder, all to the date of termination (collectively "Accrued Compensation"), but no other compensation or reimbursement of any kind, including, without limitation, severance compensation, and thereafter, the Company's obligations hereunder shall terminate.     B.  By Disability.  If Executive is prevented from properly performing his duties hereunder by reason of any physical or mental incapacity for a period of more than 180 days in the aggregate in any 365-day period, then, to the extent permitted by law, the Company may terminate the employment on the 180th day of such incapacity. In such event, the Company shall pay to Executive all Accrued Compensation, and shall continue to pay to Executive the Base Salary until such time as Executive shall become entitled to receive disability insurance payments under the disability insurance policy maintained by the Company.     C.  By Company for Cause.  The Company may terminate Executive's employment for Cause (as defined below) without liability at any time with or without advance notice to Executive. The Company shall pay Executive all Accrued Compensation, but no other compensation or reimbursement of any kind, including without limitation, severance compensation, and thereafter the Company's obligations hereunder shall terminate. Termination shall be for "Cause" in the event of the occurrence of any of the following: (a) any intentional action or intentional failure to act by Executive which was performed in bad faith and to the material detriment of the Company; (b) Executive intentionally refuses or intentionally fails to act in accordance with any lawful and proper direction or order of the Board; (c) Executive willfully and habitually neglects the duties of employment; or (d) Executive is convicted of a felony crime involving moral turpitude, provided that in the event that any of the foregoing events is capable of being cured, the Company shall provide written notice to Executive describing the nature of such event and Executive shall thereafter have five (5) business days to cure such event.     D.  At Will.  At any time, the Company may terminate Executive's employment without liability other than as set forth below, for any reason not specified in Section 6.C above, by giving thirty (30) days advance written notice to Executive. If the Company elects to terminate Executive pursuant to this Section 6.D, the Company shall pay to Executive all Accrued Compensation and shall continue to pay to Executive as provided herein Executive's Salary for three (3) months from the date of such termination as severance compensation. Upon payment of the severance benefits described herein, all obligations of the Company (or its successor) shall terminate.     During the period when such severance compensation is being paid to Executive, Executive shall not (i) engage, directly or indirectly, in any other business activity that is competitive with, or that 3 -------------------------------------------------------------------------------- places him in a competing position to that of the Company or any Affiliated Company (provided that Executive may own less than two percent (2%) of the outstanding securities of any publicly traded corporation), or (ii) hire, solicit, or attempt to hire on behalf of himself or any other party any employee or exclusive consultant of the Company. If the Company terminates this Agreement or the employment of Executive with the Company other than pursuant to Section 6.A, 6.B or 6.C, then this Section 6.D shall apply.     E.  Constructive Termination.  In the event that the Company shall materially reduce the powers and duties of employment of Executive resulting in a material decrease in Base Salary or in the responsibilities of Executive which are inconsistent with Executive acting as Director of Finance of the Company, such action shall be deemed to be a termination of employment of Executive without cause pursuant to Section 6.D.     F.  Change in Control.  For purposes of this Agreement, a "Change in Control" shall have occurred if at any time during the term of Executive's employment hereunder, any of the following events shall occur:     1.  The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity's securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization;     2.  A change in the composition of the Board, as a result of which fewer than one-half of the incumbent directors are directors who either (1) had been directors of the Company 24 months prior to such change; or (2) were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the directors who had been directors of the Company 24 months prior to such change and who were still in office at the time of the election or nomination; or     3.  Any "person" (as such term is used in Section 13(d) and Section 14 of the Exchange Act) by the acquisition of securities is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the "Base Capital Stock") except that any change in the relative beneficial ownership of the Company's securities resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person's ownership of securities shall be disregarded until such person increases in any manner, directly or indirectly, such person's beneficial ownership of any securities of the Company. Thus, for example, any person who owns less than 50% of the Company's outstanding shares, shall cause a Change in Control to occur as of any subsequent date if such person then acquires an additional interest in the Company which, when added to the person's previous holdings, causes the person to hold more than 50% of the Company's outstanding shares.     The term "Change in Control" shall not include a transaction, the sole purpose of which is to change the state of the Company's incorporation. ARTICLE VII. GENERAL PROVISIONS     A.  Governing Law.  The validity, interpretation, construction and performance of this Agreement and the rights of the parties thereunder shall be interpreted and enforced under California law without reference to principles of conflicts of laws. The parties expressly agree that inasmuch as the Company's 4 -------------------------------------------------------------------------------- headquarters and principal place of business are located in California, it is appropriate that California law govern this Agreement.     B.  Assignment; Successors; Binding Agreement.       1.  Executive may not assign, pledge or encumber his interest in this Agreement or any part thereof.     2.  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, operation of law or by agreement in form and substance reasonably satisfactory to Executive, 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 it if no such succession had taken place.     3.  This Agreement shall inure to the benefit of and be enforceable by Executive's personal or legal representatives, executors, administrators, successors, heirs, distributee, devisees and legatees. If Executive should die while any amount is at such time payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Executive's devisee, legates or other designee or, if there be no such designee, to his estate.     C.  No Waiver of Breach.  The waiver by any party of the breach of any provision of this Agreement shall not be deemed to be a waiver of any subsequent breach.     D.  Notice.  For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. To the Company:   Deltagen, Inc. 1003 Hamilton Avenue Menlo Park, CA 94025 To Executive:   Brian E. Crowley c/o Deltagen, Inc. 1003 Hamilton Avenue Menlo Park, CA 94025     E.  Modification; Waiver; Entire Agreement.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by Executive and such officer as may be specifically designated by the Board of the Company. No waiver by either party hereto at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.     F.  Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.     G.  Controlling Document.  In case of conflict between any of the terms and conditions of this Agreement and any prior employment or option agreement between the Company and Executive, the terms and conditions of this Agreement shall control. 5 --------------------------------------------------------------------------------     H.  Executive Acknowledgment.  Executive acknowledges (a) that he has consulted with or has had the opportunity to consult with independent counsel of his own choice concerning this Agreement, and has been advised to do so by the Company, and (b) that he has read and understands the Agreement, is fully aware of its legal effect, and has entered into it freely based on his own judgment.     I.  Remedies.       1.  Injunctive Relief.  The parties agree that the services to be rendered by Executive hereunder are of a unique nature and that in the event of any breach or threatened breach of any of the covenants contained herein, the damage or imminent damage to the value and the goodwill of the Company's business will be irreparable and extremely difficult to estimate, making any remedy at law or in damages inadequate. Accordingly, the parties agree that the Company shall be entitled to injunctive relief against Executive in the event of any breach or threatened breach of any such provisions by Executive, in addition to any other relief (including damages) available to the Company under this Agreement or under law.     2.  Exclusive.  Both parties agree that the remedy specified in Section 7.I.1 above is not exclusive of any other remedy for the breach by Executive of the terms hereof.     J.  Counterparts.  This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same Agreement.     Executed by the parties as of the day and year first above written.     DELTAGEN, INC.     --------------------------------------------------------------------------------     By: William Matthews, Ph.D.     Title: Chief Executive Officer and President     EXECUTIVE:     --------------------------------------------------------------------------------     Brian E. Crowley 6 --------------------------------------------------------------------------------

EXHIBIT 10.13 EMPLOYMENT AGREEMENT                 This EMPLOYMENT AGREEMENT is made as of the 1st day of October 2000 by and between and Paul Sheng-Chun Lo (the "Employee") and Avant! Company, a Delaware corporation (the "Company"). This Agreement restates and supersedes all previous Employment Agreements or Severance Agreements between the Employee and the Company. WITNESSETH:                 WHEREAS, the Employee has been and is now in the employment of the Company; and                 WHEREAS, the Company has concluded that securing the service of the Employee will benefit it.                 NOW, THEREFORE, in consideration of the premises and the mutual promises and agreements hereinafter set forth, the parties therefore agree as follows: 1.  TERM OF EMPLOYMENT (A)  Basic Rules.  The Company hereby employs the Employee, and the Employee hereby accepts such employment with the Company from the date of this Agreement until the date when the Employee's employment terminates pursuant to subsection (b) below. The Employee shall subject to his appointment as such from time to time (the "Term") serve during the Term in the Company and its subsidiaries or affiliates. During the Term, the Employee will devote his best efforts to such employment and all of his business time and attention to the performance of his duties hereunder; provided, however, that the Employee may devote reasonable periods required for serving as a director or member of any Company, partnership, trust or other entity ("Entity") organization involving no conflict of interest with the interests of the Company or his personal affairs so long as the same does not interfere with the performance of his duties hereunder. (B)  Termination of Employment.  The Company may terminate the Employee's employment at any time and for any reason by giving the Employee 30 days' advance notice in writing. The Employee may resign his employment by giving the Company 30 days' advance notice in writing. The Employee's employment shall be terminated automatically in the event of his death. (C)  Termination of Agreement.  This Agreement shall be renewed automatically for successive periods of three (3) years unless the Company notifies the Employees) of its intention not to renew at least 1 month prior to the expiration of this agreement. This Agreement shall also be terminated when all obligations of the parties hereunder have been satisfied. (D)  Compensation (Salary and Cash Bonus).  The Company shall pay to the Employee, not less frequently than monthly; an annual base salary (the "Minimum Salary") as fixed from time to time by the Company during the Term of his employment hereunder. The Minimum Salary is USD $310,000 as of October 1, 2000.  The Company may increase the Minimum Salary from time to time and upon each such increase the term "Minimum Salary" shall mean such increased total amount. References to the Minimum Salary in this Agreement are to the Minimum Salary, as adjusted, in the year in which the event requiring such reference occurs. In addition to the Minimum Salary, the Employee shall be entitled to receive during the Term an annual cash bonus based on the performance of the Company and the Employee. The actual amount of any such annual cash bonus to be paid to the Employee will be determined by the Company. Payment of any bonus compensation in this Section shall be made within 60 days after such determination. (E)  Expenses, Benefit Plans, and Pay–time–off.  The Company will reimburse the Employee for all reasonable and necessary business and entertainment expenses incurred by him in connection with the performance of his duties hereunder. The Employee shall be eligible to participate in any employee benefit programs, pension, profit sharing, stock option or similar plan or program and in any group life insurance, hospitalization, mental, dental, accident, disability or similar plan or program of the Company non–existing or establishes hereafter. In addition, so long as the Company employs the Employee, the Employee shall be entitled to receive other benefits – generally available to all employees and any other, which are now or may hereafter be placed in effect. The Employee shall be entitled to pay–time–off (the "PTO"), at such times and for such periods, as are in accordance with the policies of the Company then in effect for all employees employed by the Company, but in no event shall the Employee be entitled to fewer than 80 hours of PTO per year. The Employee shall not be required to take any PTO to which he is entitled in a given year. In the event the Employee does not take all of the PTO to which he is entitled in a given year, such PTO will be deferred and accumulated for use by the Employee in a subsequent year up to a maximum of 240 hours.   2.  RIGHTS UPON CERTAIN TERMINATIONS (A)  Employee's Rights.  Unless otherwise defined in this section, each capitalized tern used in this Agreement shall have the meaning assigned to it in the Company's 1995 & 2000 Stock Option/Stock Issuance Plan in effect on the date of this Agreement (the "Plan"). Without limiting any other rights which the Employee or the Company may have in such event, upon any voluntary resignation or involuntary termination of the Employee's employment without Employee's written consent (including but not limited to a Constructive Termination as defined below) that occurs within six months after a Change in Control (as defined below), and subject to Section 7 below, the Company shall:   (a) pay to the Employee cash termination payment equal to three (3) years (the "Termination Payment Period") of the Employee's Minimum Salary in effect on the date of termination, in addition to any other payments, benefits, or other rights to which the Employee may then be entitled. The Company shall pay the above–mentioned payment amount in this Section 2.A.a to the Employee in full on the Termination Date;   (b) allow the Employee to automatically vest in full of the shares of Common Stock then subject to any option granted by the Company to the Employee and then outstanding (including but not limited to any such option drat may hereafter be granted to Employee, under the Plan or otherwise) but not otherwise vested; and all outstanding repurchase rights applicable to any Common Stock previously issued to the Employee by the Company (including any Common Stock hereafter issued which is then held by Employee) shall also terminate automatically. If any provisions of the preceding sentence regarding acceleration of options or early termination of repurchase rights shall conflict with any provision of any existing or future option agreement, stock purchase agreement or other agreement between the Employee and the Company, the provisions of the preceding sentence in this Agreement shall govern if they are more favorable to the Employee under the circumstances than the conflicting provisions in such other agreements, unless such other agreements expressly refers to the preceding sentence and states that it is intended to govern in the event of such a conflict with such sentence. (B)  Change in Control.  For all purposes under this Agreement, "Change in Control" shall mean the occurrence of any of the following events after the date of this Agreement:   (a) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity's securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization;         (b) The sale, transfer, exchange or other disposition of all or substantially all of the Company's assets;         (c) A change in the composition of the Company's Board of Directors (the "Board") as a result of which fewer than a majority of the directors are directors who either (A) had been directors of the Company of the date 12 months prior to the date of the event that may constitute a Change in Control (the " original directors") or (B) were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved;         (d) Any transaction as a result of which any person is the "beneficial owner" (as defined in rule 13(d)–3 under the Securities Exchange Act of 1934, as amended – the "Exchange Act"), directly or indirectly, of securities of the Company representing at least 50% of the total voting power represented by the Company's then outstanding voting securities. For purpose of this subsection (d), the terse "person" shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude (A) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a parent or subsidiary of the Company and (B) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the common stock of the Company; or         (e) In the event of Gerald C. Hsu ceases to be the Chairman and CEO of the Company.       A transaction shall in no event constitute a Change in Control if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company's securities immediately before such transaction. (C)  Constructive Termination.  For all purposes under this Agreement, "Constructive Termination" shall be deemed to have occurred, within six months after a Change in Control, that on written notice by the Employee to the Company, upon: (a) the Employee's voluntary resignation within six (6) months after a Change in Control; (b) any refusal by the Employee to relocate the Employee's principal place of employment to a location requested by the Company that is more than fifty (50) miles from the Employee's current principal place of employment;     (c) a reduction by more than fifteen percent (l5%) in the Employee's level of compensation including his Minimum Salary, non–stock–related fringe benefits, and cash bonus (to the extent that any reduction in bonus is disproportionate to a reduction in the Company's earnings per share between (i) the period for which the reduced bonus is paid, and (ii) the period for which the Employee's most recent prior bonus was paid);   (d) any material adverse change in the Employee's position, title, job responsibilities, or reporting lines; or any activity by the Company that constitutes constructive termination of employment under applicable law. Without limiting the events which may constitute a material adverse change in the Employee's position, title, job responsibilities, or reporting lines under this definition, such a material adverse change shall conclusively be deemed to have occurred upon any material diminution or other material adverse of Company employees reporting to the Employee at the time of a Change in Control, or in the extent or nature of the Employee's authority with respect to such function or responsibilities or the employees who perform them. For all purposes under this Agreement, all of the compensation, cash bonus and other relevant benefits provided on this Agreement shall be in no event applied to the Employee(s) who maliciously takes advantage of the bona fide goodwill of the Company–not only acquire(s) the above–mentioned compensation, bonus, and benefits but also return(s) to work for Avant' after the Change in Control with or without any cause. 3.  COVENANT NOT TO COMPETE (A)  Non–Competition.  For the purpose of this Section 3, a company, entity, or person shall be deemed in competition with the Company, if any company, entity, or person engages in the electronic design automation (the "EDA") industry or, to the knowledge of the Employee, has definitive plans to engage in the EDA industry. The parties confirm that it is reasonably necessary for the protection of the Company that the Employee agree, and accordingly, the Employee does hereby agree that he will not, directly or indirectly, except for the benefit of the Company, at any time during his employment hereunder and thereafter during the Restricted Period, as hereinafter defined, from the date of termination of this Agreement provided the Company shall duly perform its obligations to the Employee pursuant to this Agreement:   (i) Become an officer, director, partner, associate, employee, owner, agent, creditor, independent contractor, or otherwise, or be interested in or associated with any other EDA company, firm or business engaged, in any geographical area in which the Company is engaged, in making or selling one or more EDA products competitive with a product or products made or sold by Company now or during the term of this Agreement. However, after obtaining the prior approval from the Company, the Employee may devote reasonable periods required for serving as a director or member of any Company, partnership, trust or other entity ("Entity") organization involving no conflict of interest with the interests of the Company or his personal affairs so long as the same does not interfere with the performance of his duties hereunder;       (ii) Solicit, cause or authorize, directly or indirectly, to be solicited for or on behalf of himself or third parties, from parties who were customers of the Company in the EDA industry at any time within six (6) months prior to the cessation of his employment hereunder, any business competitive to the business transacted by the Company with such customers in the EDA industry;       (iii) Accept or cause or authorize, directly or indirectly, to be accepted for or on behalf of himself or third parties, any such business in the EDA industry from any such customers of the Company as defined in the preceding subsection; (B)  Restricted Period.  The tern "Restricted Period" as used in this Section 3 shall mean the Termination Payment Period of the cash termination payment as a consequence of Constructive Termination due to a Change in Control, which the Employee is entitled to receive pursuant to the provisions of Section 2 hereof. (C)  Others.  This Section 3 shall survive the termination of the Employees employment hereunder for the period provided in paragraph (B). The Employee further agrees that any breach or threatened breach by him of any provisions of this Section 3 shall entitle the Company, in addition to any other legal or equitable remedies available to it, to apply to any court of competent jurisdiction to enjoin such breach or threatened breach. Notwithstanding anything in this Agreement to the contrary, if the Employee violates any of the provisions of paragraph (a) hereof during the Restricted Period and fails to cease such violation and to remedy the consequences of such violation within ninety (90) days after notice from the Company specifying such violation and if the Company obtains a final judgment from a court of competent jurisdiction to the effect that the Employee has violated a provision of paragraph (a) and has failed to cease such violation and to remedy the consequences of such violation within ninety (90) days after notice from the Company, all obligations of the Company to compensate the Employee and to forgive indebtedness, if any, of the Employee to the Company shall cease, and the Company shall be entitled to recover from the Employee compensation received by the Employee and any indebtedness forgiven while such violation existed. (D)  Special Non–Competition Cash Payment.  The Company recognizes that a Change in Control Termination will subject the Employee to losses and damages, the amount of which might not readily be determined, and that there exist only a limited number of employment opportunities comparable in statue, compensation and opportunity to employment as an Employee of the Company. Therefore, the Employee shall not be required to seek or accept employment in mitigation of any obligations of the Company arising by reason of his Constructive Termination due to a Change in Control. In consideration of the Employee's special services and the Employee's agreement to not compete in the EDA industry during the Restricted Period after the date of termination of his employment, hereunder the Company agrees to pay the Employee a lump sum of USD $2 Million dollars, payable within 30 days after the termination of his employment. 4.  MUTUAL RELEASES AFTER TERMINATION OF EMPLOYMENT Upon the termination of the Employee's employment, the Company and the Employee agree that in consideration for the Employee's services, the Company shall execute a general release, in form and substance, satisfactory to the Employee's counsel, that releases and forever discharges the Employee, his heirs, successors and assigns, from any and all actions, causes of actions, claims, or demands for general, special or punitive damages, attorney's fees, expenses, or other compensation, which in any way relate to or arise out of the Employee's employment with the Company or any of its subsidiaries. 5.  INDEMNIFICATION To the fullest extent not inconsistent with applicable law, in the event that the Employee is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director, officer, consultant, employee or agent of the Company or any of its subsidiaries, or is or was serving at the request of the Company as a director, officer, consultant, employee or agent of another Company, partnership, joint venture, trust or other enterprise, the Company shall indemnify the Employee and hold him harmless, against all expenses (including costs and attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by his in connection with such action, suit or 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, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Employee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the Company, or that, with respect to any criminal action or proceeding, the Employee had reasonable cause to believe that his conduct was unlawful. The provisions of this Section 5 shall not be deemed exclusive of any other rights of indemnification to which the Employee maybe entitled or which may be granted to him, and it shall be in addition to any rights of indemnification to which he may be entitled under any policy of insurance. The provisions of this Section 5 shall continue in effect after the Employee has ceased to be an officer, employee or agent of the Company, shall inure to the benefit of the Employee's heirs, executors, administrators and in testate distributes and shall survive the termination of this Agreement under all circumstances.   All litigation or inquiries by third parties (for example, but not limited to, those by shareholders –direct or derivative – or government agencies) arising out of or in connection with this Agreement or the Employee's performance hereunder, against either the Company or the Employee or both, shall be defended or opposed by the parties hereto, as the case may be, to support this Agreement, and the costs, fees and expenses thereof, including fees of counsel for the parties, shall be home by the Company.       Notwithstanding the foregoing provisions of this Section 5, during the term of the Employee's employment hereunder and during such time he continues as an officer, the Company agrees to maintain substantially the same Officers' liability insurance in place on the date hereof and shall increase such coverage in the event the Employee determines that it is in the best interest of the Company to have such increased coverage. 6.  CONFIDENTIAL INFORMATION The Employee recognizes that as an Employee of the Company he has had and will have access to secret and confidential information regarding the Company, its products, customers and plans relating to the EDA industry. The Employee acknowledges that such information is of great value to the Company, and is the sole property of the Company and that such information has been and will be acquired by his in confidence. In consideration of the obligations undertaken by the Company as set forth herein, the Employee will not, at any time, during or for a period of one year after his employment of the Company hereunder, reveal, divulge or make known, except as authorized by the Company or required on its behalf or required pursuant to legal or administrative processes, any information of a confidential nature concerning the Company's business involving the EDA industry acquired by the Employee during the course of his employment to any competitor to the Company in the EDA industry. 7.  MISCELLANEOUS PROVISIONS (A)  No right to Employment.  Notwithstanding this Agreement, either party may terminate the Employee's employment at any time and for any reason, or for no reason upon written notice to the other party; provided, however, that any Change in Control Termination shall be subject to all of the consequences described in sections 2 and 3 above. (B)  Notice.  Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered mail, return receipt requested and postage personally delivered or when the Employee, mailed notices shall be addressed to the Employee at the home address shown below on this Agreement or at the home address which the Employee most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be addressed to the attention of its Secretary. (C)  Waiver.  No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of his Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (D)  WholeAgreement; Modifications.  No agreements, representations or understanding (whether oral or written and whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either part with respect to the subject matter hereof. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof. A modification of this Agreement shall be valid only if it is made in writing and executed by both parties hereto. (E)  Withholding Taxes.  All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges required to be withheld by law. (F)  Choice of Law.  The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of California (except their provisions governing the choice of law). (G)  Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (H)  Company's Successors.  This Agreement shall be binding upon any successor (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. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets, which become bound by this Agreement. (I)  Employee's Successors.  This Agreement and all right of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee's personal of legal representatives, executors, heirs, distributes, devisees, and legatees. (J)  No Assignment.  The rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including (without imitation) bankruptcy, garnishment, attachment, or other creditor's process, and any action in violation of this paragraph shall be void. (K)  Counterparts.  This 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. (L)  Confidentiality.  The Employee agrees that the Employee will not disclose the existence or the terms of this Agreement to anyone other than the Employee's spouse, tax advisor, or legal advisor. In the event the Employee breaches this confidentiality obligation, the Company may immediately terminate this Agreement. (M)  Arbitration.  Any controversy or claim between the Company and Employee, their representatives, heirs, successors and assigns, arising out of or relating to this Agreement or any breach or asserted breach hereof or questioning the validity and binding effect hereof shall be determined by arbitration conducted in San Francisco in accordance with the Rules of the American Arbitration Association then obtaining, and judgment upon any award rendered may be entered in any court having jurisdiction thereof. The decision of the arbitrators shall be final and binding upon the parties hereto. All of the Employee's costs and expenses (including attorneys, fees) arising out of or in connection with any matters submitted to arbitration pursuant to this subsection shall be paid by the Company, unless the award of the arbitrators shall explicitly find that the Employee's claim or his defense against a claim by the Company was frivolous and completely without merit, in which case the Employee shall pay the costs and expenses (including, without limitation, reasonable attorneys, fees) incurred by the Company in such connection. (N)  Section Headings.  The headings or titles of the sections of this Agreement are not a part of this Agreement and are not intended to aid in the construction of any provision thereof. IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company, by its duly authorized officer, as of the day and year first above written.     /s/ Paul Sheng-Chun Lo -------------------------------------------------------------------------------- Signature Of the Employee   Paul Sheng-Chun Lo -------------------------------------------------------------------------------- Printed name of the Employee   10/1/2000 -------------------------------------------------------------------------------- Date of Signature   435 Sheridan Ave. # 101 -------------------------------------------------------------------------------- Palo Alto, CA 94306 -------------------------------------------------------------------------------- The Employee’s mailing address         AVANT! CORPORATION     /s/ Gerald C. Hsu -------------------------------------------------------------------------------- Gerald C. Hsu   Chairman, Chief Executive Officer, & President     10/1/00 -------------------------------------------------------------------------------- Date of Signature    

EXHIBIT 10.2 EARNOUT AGREEMENT              THIS EARNOUT AGREEMENT (this “Agreement”), dated as of September 1, 2001 (the “Closing Date”), is made by and between ADS MB Corporation, a Delaware corporation (“Buyer”) and Mail Box Capital Corporation, a Delaware corporation (“Seller”).  Buyer and Seller are sometimes collectively referred to as the “Parties,” and individually referred to as a “Party.” RECITALS              A.         Buyer, Alliance Data Systems Corporation, a Delaware corporation (the “Parent”) and Seller, among others, are a party to that certain Asset Purchase Agreement, dated as of the date hereof (the “Purchase Agreement”), pursuant to which Buyer has agreed to purchase and assume and Seller has agreed to sell and assign all of the Assets and Assumed Liabilities (as defined in the Purchase Agreement) of Seller.              B.          The Purchase Agreement provides for, among other things, the execution and delivery of this Agreement in order to establish the terms and conditions of the earnout portion of the purchase price specified in the Purchase Agreement.              C.          Capitalized terms used in this Agreement but not defined herein shall have the meanings set forth in the Purchase Agreement. STATEMENT OF AGREEMENT              NOW, THEREFORE, in consideration of the premises and the mutual agreements, covenants, representations and warranties set forth in this Agreement and for other good, valid and binding consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I. DEFINITIONS              Section 1.1       Definitions.  The terms defined in this Article I will have the meanings specified below for all purposes of this Agreement:              “Agreement” has the meaning set forth in the first paragraph.              “Books and Records” means the books and records maintained for or related to the Buyer, as the case may be, including all accounting records, computerized records and storage media and the software used in connection therewith.              “Calculation Statement” has the meaning set forth in Section 2.3(a).              “Closing Date” has the meaning set forth in the first paragraph.              “Earnout Period” means the consecutive twelve (12) month period beginning on January 1, 2002 and ending on December 31, 2002.              “EBITDA” means, with respect to a particular period, the consolidated net income of the Buyer before any deduction for interest, income taxes, depreciation or amortization.  EBITDA will be determined on a consolidated basis for the Buyer in accordance with GAAP, consistently applied as to the Buyer, prepared from the applicable accounts as reflected on the Books and Records after making all year-end adjustments, modified as set forth on Exhibit A attached hereto.              “Financial Statements” has the meaning set forth in Section 2.3(a).              “GAAP” means generally accepted accounting principles in effect in the United States of America as of the date the Financial Statements are prepared.              “Objection Notice” has the meaning set forth in Section 2.4(b).              “Parties” and “Party” has the meaning set forth in the first paragraph.              “Purchase Agreement” will have the meaning set forth in the Recitals.              “Representatives” means, such entity’s directors, employees, officers, agents, accountants, attorneys and shareholders.              Section 1.2       Accounting Terms.  Except as otherwise provided in this Agreement, all accounting terms defined in this Agreement, whether defined herein or otherwise, will be construed in accordance with GAAP.              Section 1.3       Articles, Sections and Exhibits.  Except as specifically stated otherwise, references to Articles, Sections and Exhibits refer to the Articles, Sections and Schedules of this Agreement.              Section 1.4       Drafting.  Neither this Agreement nor any provision set forth in this Agreement will be interpreted in favor of or against any Party because such Party or its legal counsel drafted this Agreement or such provision.  No prior draft of this Agreement or any provision set forth in this Agreement will be used when interpreting this Agreement or its provisions.              Section 1.5       Headings.  Article and section headings are used in this Agreement only as a matter of convenience and will not have any effect upon the construction or interpretation of this Agreement.              Section 1.6       Include.  The term “include” or any derivative of such term does not mean that the items following such term are the only types of such items.              Section 1.7       Plural and Singular Words.  Whenever the plural form of a word is used in this Agreement, that word will include the singular form of that word.  Whenever the singular form of a word is used in this Agreement, that word will include the plural form of that word.              Section 1.8       Pronouns.  Whenever a pronoun of a particular gender is used in this Agreement, if appropriate that pronoun also will refer to the other gender and the neuter.  Whenever a neuter pronoun is used in this Agreement, if appropriate that pronoun also will refer to the masculine and feminine gender. ARTICLE II. EARNOUT PAYMENTS              Section 2.1       Earnout Payments.  As a component of the Final Purchase Price, Buyer will pay to Seller the Earnout Amount (as defined below) within ten (10) Business Days after the date on which such Earnout Amount is deemed final in accordance with Section 2.4(c).  Buyer will make such payments by wire transfer of immediately available funds to the bank account(s) set forth on a notice given by Seller to Buyer on the date that the Earnout Amount is deemed final in accordance with Section 2.4(c).  Buyer acknowledges that Seller has entered into an Agreement with William Blair Mezzanine Capital Fund II, L.P. (“Blair”), dated as of the date hereof, which sets forth certain understandings between Seller and Blair with respect to the priority of payments by the Seller of the Earnout Amount (the “Blair Letter”).              Section 2.2       Earnout Amount.  The Earnout Amount shall be equal to (a) actual EBITDA for the Earnout Period multiplied by six, minus (b) the Up-Front Purchase Price; provided, however, (i) if actual EBITDA for the four months ended December 31, 2001 (the period is hereinafter referred to as the “2001 Period,” and the amount is hereinafter referred to as the “2001 EBITDA”) is less than $1,900,000, the Earnout Amount shall be reduced by an amount equal to six multiplied by the amount by which 2001 EBITDA is less than $1,900,000 or (ii) if 2001 EBITDA is greater than $2,500,000, the Earnout Amount shall be increased by an amount equal to six multiplied by the amount by which 2001 EBITDA is greater than $2,500,000.  Notwithstanding the foregoing, the Earnout Amount shall not exceed $60,000,000 less the Up-Front Purchase Price.  By way of example only, Exhibit B attached hereto, sets forth example calculations for four scenarios.              Section 2.3       Calculation of 2001 EBITDA.              (a)         Preparation of the Calculation Statement.  As soon as reasonably practicable, but not later than 90 calendar days after the end of the 2001 Period, Buyer will deliver to Seller (i) the audited balance sheet of Buyer as of the end of such period and the statement of operations and cash flows of Buyer for the period ended on such date, prepared in accordance with GAAP consistently applied as to the Buyer, with the exception of footnotes thereto (the “2001 Financial Statements”), and (ii) a statement setting forth in reasonable detail the computation of 2001 EBITDA for the 2001 Period, including identification of all excluded items and adjustments and all necessary back up calculations (the work papers showing such calculation, the “2001 Calculation Statement”).              (b)        Review of the 2001 Financial Statements and the 2001 Calculation Statement.  As soon as practicable, but not later than 25 calendar days after receipt of the 2001 Financial Statements and the 2001 Calculation Statement, Seller will inform Buyer in writing of any objection it has to the 2001 Financial Statements or the 2001 Calculation Statement, which objection, if any, will set forth in reasonable detail Seller’s objections and the basis for those objections (an “Objection Notice”).  If Seller so objects and the Parties do not resolve such objections on a mutually agreeable basis within 120 calendar days after the end of the 2001 Period, then the disagreement will be resolved as soon as practicable thereafter, but not later than 150 calendar days after the end of the 2001 Period, by an accounting firm of national reputation, which accounting firm will be selected jointly by Buyer on the one hand and Seller on the other hand and in no event may such accounting firm resolve the objection in a manner that would result in 2001 EBITDA being greater or lesser in the aggregate than such amounts originally proposed by Buyer and Seller.  The Parties acknowledge that the scope of such accounting firm’s work will be limited to resolving the objections set forth in the Objection Notice.  The decision of such accounting firm, which shall be set forth in writing, shall be final and binding upon the Parties, and may be entered as a final judgment in any court of proper jurisdiction.              (c)         Calculation Deemed Final.  The 2001 Financial Statements, the 2001 Calculation Statement (as both or either may be adjusted, if applicable, by the agreement of the Parties or the decision of the accounting firm) and 2001 EBITDA based thereon will be deemed final upon the earlier to occur of (i) the agreement of the Parties, (ii) the decision of the accounting firm, or (iii) the failure of Seller to deliver an Objection Notice to Buyer within 25 calendar days after receipt by Seller of the 2001 Financial Statements and the 2001 Calculation Statement.  The finally determined 2001 EBITDA shall be the amount used in the final calculation of the Earnout Amount as set forth in Section 2.2.              Section 2.4       Calculation of Earnout Payments.              (a)         Preparation of the 2002 Calculation Statement.  As soon as reasonably practicable, but not later than 90 calendar days after the end of the Earnout Period, Buyer will deliver to Seller (i) the audited balance sheet of Buyer as of the end of such period and the statement of operations and cash flows of Buyer for the period ended on such date, prepared in accordance with GAAP consistently applied as to the Buyer, with the exception of footnotes thereto (the “2002 Financial Statements”), (ii) a calculation of the Earnout Amount in the manner provided in Section 2.2, based on the 2002 Financial Statements and the final amount of 2001 EBITDA, along with a statement setting forth in reasonable detail the computation of EBITDA for the Earnout Period, including identification of all excluded items and adjustments and all necessary back up calculations (the work papers showing such calculation, the “2002 Calculation Statement”) and (iii) by wire transfer of immediately available funds an amount equal to half of the amount shown as owing to Seller in the Calculation Statement.              (b)        Review of the 2002 Financial Statements and the 2002 Calculation Statement.  As soon as practicable, but not later than 25 calendar days after receipt of the 2002 Financial Statements and the 2002 Calculation Statement, Seller will inform Buyer in writing of any objection it has to the 2002 Financial Statements or the 2002 Calculation Statement, which objection, if any, will set forth in reasonable detail Seller’s objections and the basis for those objections.  If Seller so objects and the Parties do not resolve such objections on a mutually agreeable basis within 120 calendar days after the end of the Earnout Period, then the disagreement will be resolved as soon as practicable thereafter, but not later than 150 calendar days after the end of the Earnout Period, by an accounting firm of national reputation, which accounting firm will be selected jointly by Buyer on the one hand and Seller on the other hand and in no event may such accounting firm resolve the objection in a manner that would result in the Earnout Amount being greater or lesser in the aggregate than the amounts originally proposed by Buyer and Seller.  The Parties acknowledge that the scope of such accounting firm’s work will be limited to resolving the objections set forth in the Objection Notice.  The decision of such accounting firm, which shall be set forth in writing, shall be final and binding upon the Parties, and may be entered as a final judgment in any court of proper jurisdiction.              (c)         Calculation Deemed Final; Payment.  The 2002 Financial Statements, the 2002 Calculation Statement (as both or either may be adjusted, if applicable, by the agreement of the Parties or the decision of the accounting firm) and the Earnout Amount based thereon will be deemed final upon the earlier to occur of (i) the agreement of the Parties, (ii) the decision of the accounting firm, or (iii) the failure of Seller to deliver an Objection Notice to Buyer within 25 calendar days after receipt by Seller of the 2002 Financial Statements and the 2002 Calculation Statement.  The Buyer shall pay to Seller the balance of the finally determined Earnout Amount, after deducting amounts already paid to Seller pursuant to Section 2.4(a) and subject to Section 2.6, within ten (10) Business Days of the 2002 Financial Statements, the 2002 Calculation Statement and the Earnout Amount becoming final pursuant to this Section 2.4(c).              Section 2.5       Fees and Expenses.  Each Party will bear the fees, costs and expenses of its own accountants, and will share equally in the fees, costs and expenses of the accounting firm selected by the Parties to resolve any disagreements regarding any Objection Notice.              Section 2.6       Right to Set-off.  Buyer shall have the right to withhold and set-off against the Earnout Amount any amount owed or subject to final resolution of any dispute arising out of or relating to the Purchase Agreement to Buyer and/or Parent by Seller.              Section 2.7       Access to Books and Records.  Each of Buyer and Seller will permit the other’s representatives reasonable access to the Books and Records (and shall permit such persons to examine and photocopy such Books and Records at such person’s expense to the extent reasonably requested by such person) necessary to perform any analysis such party deems necessary in order to calculate the 2001 EBITDA and/or the Earnout Amount; provided, however, that any such access or investigation shall be conducted by Seller and Seller’s Representatives in such a manner as not to unreasonably interfere with the operation of the business of the Buyer.   ARTICLE III. OPERATION OF THE BUSINESS; OTHER AGREEMENTS              Section 3.1       Operation of the Business.              (a)         The Buyer agrees that during the Earnout Period, for so long as Buyer achieves at least 70% of the business plan of the Seller at the Closing Date attached hereto as Exhibit C (the “Business Plan”) as of March 31, 2002, June 30, 2002 and September 30, 2002, Buyer shall not, without the written consent of Seller:              (i)          acquire the stock or assets of any other businesses;              (ii)         sell or dispose of the stock or assets of the Buyer, other than in the ordinary course of business;              (iii)        engage in any unrelated line of business in which the Seller is not engaged at the Closing;                (v)        open any additional offices, manufacturing plants or other facilities;              (vi)       effect any change of more than 10% in the number of employees or the total payroll of the Seller at the Closing, other than in the ordinary course of business; and              (vii)      discontinue any line of business in which the Seller is engaged at the Closing.              (b)        The Buyer agrees that during the Earnout Period, for so long as Buyer achieves at least 70% of the Business Plan as of March 31, 2002, June 30, 2002 and September 30, 2002:              (i)          Buyer will remain a separate corporation rather than a division of Parent and that substantially all of the assets of Buyer will continue to be owned by Buyer, except such assets as may be disposed in the ordinary course of business;              (ii)         Buyer will operate the business acquired from the Seller in the ordinary course consistent with the Business Plan;              (iii)        Buyer will ensure that Buyer is sufficiently capitalized and has sufficient working capital to operate the business acquired from the Seller in the ordinary course consistent with the Business Plan and assuming capital expenditures do not exceed $500,000 during the Earnout Period; and              (iv)       any purchases or sales of goods or services or any other transactions between Buyer on the one hand and Parent or any of its other subsidiaries or affiliates on the other, will be on terms no less favorable to Buyer than would be obtainable by it in any arms-length transaction with an unaffiliated third party.              (c)         For purposes of this Section 3.1, Kenneth W. Murphy, Robert Meador, John Erickson and Charles Buchanan (the “Consent Panel”) shall have all requisite power and authority to bind the Seller, subject to any contractual restrictions of the Seller contained in the Blair Letter.  The size and composition of the Consent Panel shall not be changed in any fashion during the Earnout Period.              (d)        During the Earnout Period, Buyer may Terminate with Cause any Designated Individual; provided, however, Buyer shall not, during the Earnout Period, Terminate Without Cause any Designated Individual.  For purposes of this Section 3.2(d): “Designated Individual” means each of Kenneth W. Murphy, Charles Buchanan, Robert Meador, Earl Johnson and Stacy Riffe; “Terminate Without Cause” means the termination of an individual’s employment with the Buyer or the reduction of his or her salary, benefits or responsibilities (other than as provided in the final sentence of this Section 3.1(d)) for any reason other than Voluntary Termination or Termination With Cause; “Termination With Cause” means the termination of an individual’s employment due to (i) misappropriation of funds or property of the Buyer or any of its affiliates or such individual’s admission or conviction of fraud or embezzlement against the Buyer or any of its affiliates (including a plea of nolo contendere), (ii) the conviction of or entry of a plea of nolo contendere by such individual for any felony or any misdemeanor involving moral turpitude, or (iii) any action by such individual which is intended to result in substantial enrichment of such individual at the expense of the Buyer or any of its affiliates or any willful gross misconduct which has an adverse impact on the business, reputation or standing of the Buyer in the community, including, without limitation, acts related to moral turpitude and acts prohibited by the Buyer’s or the Parent’s policy on ethics; “Voluntary Termination” means an individual’s voluntary termination of his or her employment hereunder for any reason.  Notwithstanding the foregoing, Buyer may reduce the responsibilities (but not the salary or benefits) of any Designated Individual if Buyer fails to achieve at least 70% of the Business Plan as of March 31, 2002, June 30, 2002 and September 30, 2002.              Section 3.2       Sale or Discontinuation.  If the business of the Parent shall be sold as an entirety (either by sale of capital stock or assets, a merger or otherwise) to an unaffiliated third party (the “Acquiror”) at any time from the Closing Date through the Earnout Period, the Parent shall cause the Acquiror to assume the obligations of the Buyer and the Parent under this Agreement.  Upon satisfaction of such obligation, the Buyer and the Parent shall not have any further liability to Seller under this Agreement. ARTICLE IV. MISCELLANEOUS              Section 4.1       Amendment and Modification.  Subject to applicable law, this Agreement may be amended, modified or supplemented only by written agreement of the Parties with respect to any of the terms contained herein.              Section 4.2       Waiver of Compliance; Consents.  Except as otherwise provided in this Agreement, any failure of any of the Parties to comply with any obligation, covenant, agreement or condition herein may be waived by the Party or Parties entitled to the benefits thereof only by a written instrument signed by the Party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.  Whenever this Agreement requires or permits consent by or on behalf of any Party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 4.2.              Section 4.3       Notices.  All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or mailed by registered or certified mail (return receipt requested), postage prepaid, to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice; provided, however, that notices of a change of address shall be effective only upon receipt thereof):              (a) if to Buyer or Parent:       Alliance Data Systems Corporation   17655 Waterview Parkway   Dallas, Texas  75292   Attention:        General Counsel     with a copy to:       Akin, Gump, Strauss, Hauer & Feld L.L.P.   1700 Pacific Avenue   Suite 1700   Dallas, Texas  75201   Attention:        Alex Frutos     (b) if to Seller:       Mail Box Capital Corporation   3700 Pipestone   Dallas, Texas  75212   Attention:        Kenneth W. Murphy     with a copy to       Jenkens & Gilchrist, P.C.   1445 Ross Ave.   Suite 3200   Dallas, Texas  75202   Attention:  L. Steven Leshin   (c) if to Blair:       William Blair Mezzanine Capital Fund II, L.P.   222 West Adams Street   Chicago, Illinois 60606   Attention:        Terrance M. Shipp & David M. Jones   (d) with a copy to:  Winston & Strawn       35 West Wacker Drive   Chicago, Illinois  60601   Attn:  Laurence R. Bronska, Esq.   Telecopy:  (312) 558-5700              Section 4.4       GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS (REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE TEXAS PRINCIPLES OF CONFLICTS OF LAW) AS TO ALL MATTERS, INCLUDING BUT NOT LIMITED TO MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES.  All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in a Texas state or federal court sitting in the City of Dallas, and the Parties hereto hereby irrevocably submit to the exclusive jurisdiction of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding.              Section 4.5       Assignment.  This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.  Except as provided in Section 3.2 hereof, neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any Party hereto without the prior written consent of the other Parties; provided, however, that Buyer may assign this Agreement in whole or in part to any of its affiliates without the consent of Seller; provided, further, Buyer acknowledges and agrees that any such assignment shall not relieve or release Buyer from its agreements and obligations hereunder, all of which shall survive such assignment.              Section 4.6       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.              Section 4.7       Entire Agreement.  This Agreement, the Purchase Agreement (including the Exhibits and Disclosure Schedules thereto and the documents, certificates and instruments referred to therein) and that certain Confidentiality Agreement by and between Parent and Seller dated March 26, 2001 (the “Confidentiality Agreement”) embody the entire agreement and understanding of the parties hereto in respect of the transactions contemplated by this Agreement.  There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein.  This Agreement supersedes all prior agreements and understandings, other than the Purchase Agreement and the Confidentiality Agreement, between the Parties with respect to such transactions.              Section 4.8       Severability.  If any term or other provision of this Agreement is determined to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.              Section 4.9       No Third Party Beneficiary.  Nothing herein, expressed or implied, is intended or shall be construed to confer upon or give to any person, firm, corporation or legal entity, other than the Parties hereto and their respective successors and permitted assigns, any right, remedy, or other benefit under or by reason of this Agreement or any documents executed in connection with this Agreement.  Buyer acknowledges that Seller has entered into an Agreement with Blair, dated as of the date hereof, which sets forth certain understandings between Seller and Blair with respect to the priority of payments by the Seller of the Earnout Amount.              Section 4.10     Representation by Legal Counsel.  Each Party is a sophisticated party that was advised by experienced legal counsel and other advisors in the negotiation and preparation of this Agreement. [SIGNATURE PAGE FOLLOWS]                              IN WITNESS WHEREOF, each Party has caused this Agreement to be signed by its duly authorized officers as of the date first above written. BUYER: ADS MB CORPORATION       By: --------------------------------------------------------------------------------   Name:   Title:         SELLER: MAIL BOX CAPITAL CORPORATION       By: --------------------------------------------------------------------------------   Name:   Title:  

QuickLinks -- Click here to rapidly navigate through this document EXHIBIT 10.41 GARDENBURGER, INC FY 2002 EXECUTIVE INCENTIVE PROGRAM     The purpose of this program is to reward employees when the Company has achieved its financial goals, as well as enhance Gardenburger's overall compensation program.     The focus of the Company today is to achieve specific operating income levels which are critical to reward stockholders, investors, customers and employees for their commitment to these goals. The incentive program is specifically designed to reward employees when a pre-determined goal level is met, and to further offer the opportunity to increase the payout received when this level is exceeded. Goals:     The key business goals are established at the beginning of the fiscal year, and approved by the Board of Directors.     In order for any payout, certain goal levels must be obtained. Incentive bonus is based 100% upon the Company meeting the EBITDA (earnings before interest, taxes, depreciation, and amortization) of $9,079,000 for the fiscal year ending September 30, 2002. EBITDA is basically the Company's income with a few non-cash expenses added back. How the Program works:     The Company must first earn $9,079,000 EBITDA. After that, each dollar the Company earns will go to pay bonuses, until the bonus pool is fully funded.     The Executive program payout is as follows:     Bonus percentage President/CEO   45% of annual pay COO   45% of annual pay SR VP—FS and Int'l   40% of annual pay—meeting market profit & revenues VP Finance   40% of annual pay     Depending upon the level of EBITDA above $9,079,000, an executive will earn a portion of their bonus. The levels are in 10% increments. This means they will earn 10% of their potential bonus of their annual salary. This level will be paid to all qualified employees if the Company makes $9,183,500 EBITDA before bonus accruals (see chart for bonus levels).     In order to receive 100% of bonus payout, Gardenburger must achieve $10,124.00 EBITDA, BONUS LEVELS --------------------------------------------------------------------------------   EBITDA GOAL -------------------------------------------------------------------------------- 10%   $9,183,500 20%   $9,288,000 30%   $9,313,500 40%   $9,497,000 50%   $9,601,500 60%   $9,706,000 70%   $9,810,500 80%   $9,915,000 90%   $10,019,500 100%   $10,124,000 --------------------------------------------------------------------------------     Gardenburger's overall goal is to be profitable and all employees can contribute to the success of reaching our goal. Terms:     Employees must be actively employed at the end of the fiscal year in order to receive any payout. Payments will be made no later than 60 days after the end of the fiscal year. -------------------------------------------------------------------------------- QuickLinks GARDENBURGER, INC FY 2002 EXECUTIVE INCENTIVE PROGRAM

EXHIBIT 10(a)(3) COMMERCIAL GUARANTY Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials References in the shaded area are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing ” * * * ” has been omitted due to text length limitations. Borrower: Guarantor: HICKOK INCORPORATED 10514 DUPONT AVENUE CLEVELAND, OH 44108-1348 SUPREME ELECTRONICS CORP. 1714 CARROLLTON AVE GREENWOOD, MS  38930 Lender: THE HUNTINGTON NATIONAL BANK MIDDLEBURG HEIGHTS COMMERCIAL LENDING P. 0. BOX 1558 - HZ0325 COLUMBUS, OH 43272-4195 -------------------------------------------------------------------------------- AMOUNT OF GUARANTY. The amount of this Guaranty is Unlimited. CONTINUING UNLIMITED GUARANTY. For good and valuable consideration, SUPREME ELECTRONICS CORP. (“Guarantor”) absolutely and unconditionally guarantees and promises to pay to THE HUNTINGTON NATIONAL BANK (“Lender”) or its order, in legal tender of the United States of America, the hdebtedness (as that term is defined below) of HICKOK INCORPORATED (“Borrower”) to Lender on the terms and conditions set forth in this Guaranty. Under this Guaranty, the liability of Guarantor is unlimited and the obligations of Guarantor are continuing. INDEBTEDNESS GUARANTEED. The Indebtedness guaranteed by this Guaranty includes any and all of Borrower’s indebtedness to Lender and is used in the most comprehensive sense and means and includes any and all of Borrower’s liabilities, obligations and debts to Lender, now existing or hereinafter incurred or created, including, without limitation, all loans, advances, interest, costs, debts, overdraft indebtedness, credit card indebtedness, lease obligations, other obligations, and liabilities of Borrower, or any of them, and any present or future judgments against Borrower, or any of them; and whether any such Indebtedness is voluntarily or involuntarily incurred, due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined; whether Borrower may be liable individually or jointly with others, or primarily or secondarily, or as guarantor or surety; whether recovery on the Indebtedness may be or may become barred or unenforceable against Borrower for any reason whatsoever; and whether the Indebtedness arises from transactions which may be voidable on account of infancy, insanity, ultra vires, or otherwise . DURATION OF GUARANTY. This Guaranty will take effect when received by Lender without the necessity of any acceptance by Lender, or any notice to Guarantor or to Borrower, and will continue in full force until all Indebtedness incurred or contracted before receipt by Lender of any notice of revocation shall have been fully and finally paid and satisfied and all of Guarantor’s other obligations under this Guaranty shall have been performed in full. If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor’s written notice of revocation must be mailed to Lender, by certified mail, at Lender’s address listed above or such other place as Lender may designate in writing. Written revocation of this Guaranty will apply only to advances or new Indebtedness created after actual receipt by Lender of Guarantor’s written revocation. For this purpose and without limitation, the term “new Indebtedness” does not include Indebtedness which at the time of notice of revocation is contingent, unliquidated, undetermined or not due and which later becomes absolute, liquidated, determined or due. This Guaranty will continue to bind Guarantor for all Indebtedness incurred by Borrower or committed by Lender prior to receipt of Guarantor’s written notice of revocation, including any extensions, renewals, substitutions or modifications of the Indebtedness, All renewals, extensions, substitutions, and modifications of the Indebtedness granted after Guarantor’s revocation, are contemplated under this Guaranty and, specifically will not be considered to be new Indebtedness. This Guaranty shall bind Guarantor’s estate as to Indebtedness created both before and after Guarantor’s death or incapacity, regardless of Lender’s actual notice of Guarantor’s death. Subject to the foregoing, Guarantor’s executor or administrator or other legal representative may terminate this Guaranty in the same manner in which Guarantor might have terminated it and with the same effect. Release of any other guarantor or termination of any other guaranty of the lndebtedness shall not affect the liability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations may occur in the aggregate amount of Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees that reductions in the amount of Indebtedness, even to zero dollars ($0.00), prior to Guarantor’s written revocation of this Guaranty shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor’s heirs, successors and assigns so long as any of the guaranteed Indebtedness remains unpaid and even though the Indebtedness guaranteed may from time to time be zero dollars ($0.00). GUARANTOR’S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before or after any revocation hereof, without notice or demand and without lessening Guarantor’s liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower; (B) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate of .interest on the indebtedness; extensions may be repeated and may be for longer than the original loan term; (C) to take and hold security for the payment of this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such security, with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal with any one or more of Borrower’s sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) to determine how, when and what application of payments and credits shall be made on the Indebtedness (F) to apply such security and direct the order or manner of sale thereof, including without limitation, any nonjudicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) to sell, transfer, assign or grant participations in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part. GUARANTOR’S REPRESENTATIONS AND WARRANTIES. Guarantor represent’s and warrants to Lender that (A) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrower’s request and not at the request of Lender; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all of‘Guarantor’s assets, or any interest therein; (F) upon Lender’s request, Guarantor will provide to Lender financial and credit information in form acceptable to Lender, and all such financial information which currently has been, and all future financial information which will be provided to Lender is and will be true and correct in all material respects and fairly present Guarantor’s financial condition as of the dates the financial information is provided; (G) no material adverse change has occured in Guarantor’s financial condition since the date of the most recent financial statements provided to Lender and no event has occurred which may materially adversely affect Guarantor’s financial condition; (H) no litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending or threatened; (I) Lender has made no representation to Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has established adequate means of obtaining from Borrower on a continuing basis information regarding Borrower’s financial condition. Guarantor agrees to keep adequately informed from such means of any facts, events, or circumstances, which might in any way affect Guarantor’s risks under this Guaranty, and Guarantor further agrees that, absent a request for information, Lender shall have no obligation to disclose to Guarantor any information or documents acquired by Lender in the course of its relationship with Borrower. GUARANTOR’S WAIVERS. Except as prohibited by applicable law, Guarantor waives any right to require Lender (A) to continue lending money or to extend other credit to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness or of any nonpayment related to any collateral, or notice of any action or nonaction on the part of Borrower, Lender, any surety, endorser, or other guarantor in connection with the indebtedness or in connection with the creation of new or additional loans or obligations; (C) to resort for payment or to proceed directly or at once against any person, including Borrower or any other guarantor; (D) to proceed directly against or exhaust any collateral held by Lender from Borrower, any other guarantor, or any other person; (E) to give notice of the terms, time, and place of any public or private sale of personal property security held by Lender from Borrower or to comply with any other applicable provisions of the Uniform Commercial Code; (F) to pursue any other remedy within Lender’s power; or (G) to commit any act or omission of any kind, or at any time, with respect to any matter whatsoever. In addition to the waivers set forth above, if now or hereafter Borrower is or shall become insolvent and the Indebtedness shall not at all times until paid be fully secured by collateral pledged by Borrower, Guarantor hereby forever waives and gives up in favor of Lender and Borrower, and Lender’s and Borrower’s respective successors, any claim or right to payment Guarantor may now have or hereafter have or acquire against Borrower, by subrogation or otherwise, so that at no time shall Guarantor be or become a “creditor” of Borrower within the meaning of 11 U.S.C. section 547(b), or any successor provision of the Federal bankruptcy laws. Guarantor also waives any and all rights or defenses arising by reason of (A) any “one action” or “anti-deficiency” law or any other law which may prevent Lender from bringing any action, including a claim for deficiency, against Guarantor, before or after Lender’s commencement or completion of any foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Lender which destroys or otherwise adversely affects Guarantor’s subrogation rights or Guarantor’s rights to proceed against Borrower for reimbursement, including without limitation, any loss of rlghts Guarantor may suffer by reason of any law limiting, qualifying, or discharging the Indebtedness; (C) any -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- EXHIBIT 10(a)(3) Page 2 COMMERCIAL GUARANTY (CONTINUED) > -------------------------------------------------------------------------------- disability or other defense of Borrowrer, of any other guarantor, or of any other person, or by reason of the cessation of Borrower’s liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness; (E) any statute of limitations, if at any time any action or suit brought by Lender against Guarantor is commenced, there is outstanding Indebtedness of Borrower to Lender which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily or otherwise, or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of that payment to Borrower’s trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty. Guarantor further waives and agrees not to assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor, or both. GUARANTOR’S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor’s full knowledge of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Guarantor’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Guarantor holds jointly with someone else and all accounts Guarantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Guarantor authorizes Lender, to the extent permitted by applicable law, to hold these funds if there is a default, and Lender may apply the funds in these accounts to pay what Guarantor owes under the terms of this Guaranty. SUBORDINATION OF BORROWER’S DEBTS TO GUARANTOR. Guarantor agrees that the Indebtedness of Borrower to Lender, whether now existing or hereafter created, shall be superior to any claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Lender may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the‘assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise, the assets of Borrower applicable to the payment of the claims of both Lender and Guarantor shall be paid to Lender and shall be first applied by Lender to the Indebtedness of Borrower to Lender. Guarantor does hereby assign to Lender all claims which it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such assignment shall be effective only for the purpose of assuring to Lender full payment in legal tender of the Indebtedness. If Lender so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall be marked with a legend that the same are subject to this Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor, from time to time to execute and file financing statements and continuation statements and to execute such other documents and to take such other actions as Lender deems necessary or appropriate to perfect, preserve and enforce its rights under this Guaranty. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of’this Guaranty: > Amendments. This Guaranty, together with any Related Documents, constitutes > the entire understanding and agreement of the parties as to the matters set > forth in this Guaranty. No alteration of or amendment to this Guaranty shall > be effective unless given in writing and signed by the party or parties sought > to be charged or bound by the alteration or amendment. > > Attorneys’ Fees: Expenses. Guarantor agrees to pay upon demand all of Lender’s > costs and expenses, including Lender’s attorneys’ fees and Lender’s legal > expenses, incurred in connection with the enforcement of this Guaranty. Lender > may hire or pay someone else to help enforce this Guaranty, and Guarantor > shall pay the costs and expenses of such enforcement. Costs and expenses > include Lender’s attorneys’ fees and legal expenses whether or not there is a > lawsuit, including attorneys’ fees and legal expenses for bankruptcy > proceedings (including efforts to modify or vacate any automatic stay or > injunction), appeals, and any anticipated post-judgment collection services. > Guarantor also shall pay all court costs and such additional fees as may be > directed by the court. > > Caption Headings. Caption headings in this Guaranty are for convenience > purposes only and are not to be interpret or define the provisions of this > Guaranty. > > Governing Law. This Guaranty will be governed by, construed and enforced in > accordance with law and the laws of the State of Ohio. This Guaranty has been > accepted by Lender in the State of Ohio. > > Integration. Guarantor further agrees that Guarantor has read and fully > understands the terms of this Guaranty; Guarantor has had the opportunity to > be advised by Guarantor’s attorney with respect to this Guaranty; the Guaranty > fully reflects Guarantor’s intentions and parol evidence is not required to > interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds > Lender harmless from ail losses, claims, damages, and costs (including > Lender’s attorneys’ fees) suffered or incurred.by Lender as a result of any > breach by Guarantor of the warranties, representations and agreements of this > paragraph. > > Interpretation. In all cases where there is more than one Borrower or > Guarantor, then all words used in this Guaranty in the singular shall be > deemed to have been used in the plural where the context and construction so > require; and where there is more than one Borrower named in this Guaranty or > when this Guaranty is executed, by more than one Guarantor, the words > “Borrower” and “Guarantor” respectively shall mean all and any one or more of > them. The words “Guarantor,, ” ‘“Borrower,” and “Lender” include the heirs, > successors, assigns, and transferees of each of them. If a court finds that > any provision of this Guaranty is not valid or should not be enforced, that > fact by itself will not mean that the rest of this Guaranty will not be valid > or enforced. Therefore, a court will enforce the rest of the > provisions of this Guaranty even if a provision of this Guaranty may be found > to be invalid or unenforceable. If any one or more of Borrower or Guarantor > are corporations, partnerships, limited liability companies, or similar > entities, it is not necessary for Lender to inquire into the powers of > Borrower or Guarantor or of the officers, directors, partners, managers, or > other agents acting or purporting to act on their behalf, and any Loan > indebtedness made or created in reliance upon the professed exercise of such > powers shall be guaranteed under this Guaranty. > > Notices. Any notice required to be given under this Guaranty shall be given in > writing, and, except for revocation notices by Guarantor, shall be effective > when actually delivered, when actually received by telefacsimile (unless > otherwise required by law), when deposited with a nationally recognized > overnight courier, or, if mailed, when deposited in the United States mail, as > first class, certified or registered mail postage prepaid, directed to the > addresses shown near the beginning of this Guaranty. All revocation notices by > Guarantor shall be in writing and shall be effective upon delivery to Lender > as provided in the section of this Guaranty entitled “DURATION OF GUARANTY.” > Any party may change its address for notices under this Guaranty by giving > formal written notice to the other parties, specifying that the purpose of the > notice is to change the party’s address. For notice purposes, Guarantor agrees > to keep Lender informed at all times of Guarantor’s current address. Unless > otherwise provided or required by law, if there is more than one Guarantor, > any notice given by Lender to any Guarantor is deemed to be notice given to > all Guarantors. > > No Waiver by Lender. Lender shall not be deemed to have waived any rights > under this Guaranty unless such waiver is given in writing and signed by > Lender. No delay or omission on the part of Lender in exercising any right > shall operate as a waiver of such right or any other right. A waiver by Lender > of a provision of this Guaranty shall not prejudice or constitute a waiver of > Lender’s right otherwise to demand strict compliance with that provision or > any other provision of this Guaranty. No prior waiver by Lender, nor any > course of dealing between Lender and Guarantor, shall constitute a waiver of > any of Lender’s rights or of any of Guarantor’s obligations as to any future > transactions. Whenever the consent of Lender is required under this Guaranty, > the granting of such consent by Lender in any instance shall not constitute > continuing consent to subsequent instances where such consent is required and > in all cases such consent may be granted or withheld in > the sole discretion of Lender. > > Successors and Assigns. Subject to any limitations stated in this Guaranty on > transfer of Guarantor’s interest, this Guaranty shall be binding upon and > inure to the benefit of the parties, their successors and assigns. > > Waive Jury. Lender and Guarantor hereby waive the right to any jury trial in > any action, proceeding, or counterclaim brought by either > Lender or Borrower against the other. DEFINITIONS. The following capitalized words and terms shall have the following- meanings when used in this Guaranty. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the pluraI,.and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guaranty shall have the meanings attributed to such terms in the Uniform Commercial Code: > Borrower. The word “Borrower” means HICKOK INCORPORATED, and all other persons > and entities signing the Note in whatever capacity. > > Guarantor. The word “Guarantor” means each and every person or entity signing > this Guaranty, including without limitation SUPREME ELECTRONICS CORP. > > Guaranty. The word “Guaranty” means the guaranty from Guarantor to Lender, > including without limitation a guaranty of all or part of the -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- EXHIBIT 10(a)(3) Page 3 COMMERCLAL GUARANTY (CONTINUED) -------------------------------------------------------------------------------- > Note. > > Indebtedness. The word “Indebtedness” means Borrower’s indebtedness to Lender > as more particularly described in this Guaranty. > > Lender. The word “Lender” means THE HUNTINGTON NATIONAL BANK, its successors > and assigns. > > Related Documents. The words “Related Documents” mean all promissory notes, > credit agreements, loan agreements, environmental agreements, guaranties, > security agreements, mortgages, deeds of trust, security deeds, collateral > mortgages, and all other instruments, agreements and documents,whether now or >  hereafter existing, executed in connection with the Indebtedness. GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL GUARANTY AND GUARANTOR AGREES TO ITS TERMS. THIS COMMERCIAL GUARANTY IS DATED 4-2-01. GUARANTOR: SUPREME ELECTRONICS CORP. By: /s/ Robert L. Bauman ROBERT L. BAUMAN, CHAIRMAN of SUPREME ELECTRONICS CORP. --------------------------------------------------------------------------------

RESTRICTED UNIT AWARD AGREEMENT UNDER THE AMENDED AND RESTATED ALLIANCE PARTNERS COMPENSATION PLAN           You have been granted restricted Units under the Amended and Restated Alliance Partners Compensation Plan (the “Plan”), as specified below, in connection with your 2000 award under the Plan:           Participant (“you”):   John Carifa           Amount of Award (to be           converted to Restricted Units):    $2,000,000.00           Date of Grant:   December 31, 2000           Vesting Commencement Date:   January 31, 2001           In connection with your grant of restricted Units, you, Alliance Capital Management Holding L.P. and Alliance Capital Management L.P. (“Alliance”) agree as set forth in this agreement (the “Agreement”).  The Plan provides a description of the terms and conditions governing restricted Units.  If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms completely supersede and replace the conflicting terms of this Agreement.  All capitalized terms have the meanings given them in the Plan, unless specifically stated otherwise in the Agreement.  The restricted Units granted under this Agreement are referred to in the Agreement as the “Restricted Units.”           1.       Restrictions.  Until restrictions lapse as described in Paragraph 2, you may not sell, transfer, pledge or otherwise assign or dispose of any Restricted Units.           2.       Vesting of Restricted Units. (a) Except as provided in Paragraph 2(b) below, restrictions will lapse with respect to the Restricted Units in equal annual installments during the applicable Vesting Period (as defined below), with restrictions as to the first such installment lapsing on the first anniversary of the Vesting Commencement Date set forth above, and restrictions as to the remaining installments lapsing on the subsequent anniversaries of the Vesting Commencement Date, provided in each case that you are employed by a Company on such anniversary.  The Vesting Period is as set forth in the following table, based on your age as of December 31, 2000:   Your Age As of December 31, 2000 -------------------------------------------------------------------------------- Vesting Period --------------------------------------------------------------------------------     Up to and including 47 8 years 48 7 years 49 6 years 50-57 5 years 58 4 years 59 3 years 60 2 years 61 1 year 62 or older Fully vested at grant               (b)  If your employment with the Companies terminates due to death or Disability, restrictions on any remaining Restricted Units that you hold as of the date of your termination shall immediately lapse.           3.       Forfeitures.   If your employment with the Companies terminates for reasons other than death or Disability, you will immediately forfeit all of your rights and interests in any Restricted Units as to which restrictions have not previously lapsed, unless the Committee determines, in its sole discretion, to accelerate the vesting of those Restricted Units.           4.       Unit Certificates.  Your Restricted Units will be held for you by Alliance.  After your Restricted Units have vested, a certificate for those Units will be released to you.           5.       Distributions.  Any distributions paid by Alliance Capital Management Holding L. P. in connection with Restricted Units (whether or not vested) will be paid directly to you.           6.       Section 83(b) Election.  You agree not to make an election under section 83(b) of the Code with respect to your Restricted Units unless, before you file the election with the Internal Revenue Service, you (i) notify the Committee of your intention to file the election, (ii) furnish the Committee with a copy of the election to be filed and (iii) pay (or make satisfactory arrangements for paying) the necessary tax withholding amount to Alliance in accordance with Section 8.     7.       Tax Withholding.  If the Committee determines that any federal, state or local tax or any other charge is required by law to be withheld with respect to the Restricted Units, the vesting of Restricted Units, or an election under Section 83(b) of the Code (a “Withholding Amount”) then, in the discretion of the Committee, either (a) prior to or contemporaneously with the delivery to you of Restricted Units, you agree to pay the Withholding Amount to Alliance in cash or in vested Units that you already own (which are not subject to a pledge or other security interest), or a combination of cash and such Units, having a total fair market value equal to the Withholding Amount; (b) Alliance Capital Management Holding L.P. will retain from any vested Restricted Units to be delivered to you that number of Units having a fair market value, as determined by the Committee, equal to the necessary Withholding Amount; or (c) if Restricted Units are delivered without the payment of the Withholding Amount under either clause (a) or (b) above, you agree promptly to pay the Withholding Amount to Alliance on at least seven business days notice from the Committee either in cash or in vested Units  that you already own (which are not subject to a pledge or other security interest), or a combination of cash and such Units, having a total fair market value equal to the Withholding Amount.  You agree that if you do not pay the Withholding Amount to Alliance or make satisfactory payment arrangements as described above, Alliance may withhold any unpaid portion of the Withholding Amount from any amount otherwise due to you.           8.       Adjustments in Authorized Units.  In the event of a partnership restructuring, extraordinary distribution or similar event, the Committee has the sole discretion to adjust the number of Restricted Units in accordance with the Plan.           9.       Administration.  It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which shall be binding upon you.  The Committee is under no obligation to treat you or your award consistently with the treatment provided for other participants in the Plan.           10.     Miscellaneous.                     (a)      This Agreement does not confer upon you any right to continuation of employment by a Company, nor does this Agreement interfere in any way with a Company’s right to terminate your employment at any time.                     (b)      This Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.                     (c)      This Agreement will be governed by, and construed in accordance with, the laws of the state of New York (without regard to conflict of law provisions).                         (d)      This Agreement and the Plan constitute the entire understanding between you and the Companies regarding this award.  Any prior agreements, commitments or negotiations concerning this award are superseded.  This Agreement may be amended only by another written agreement, signed by both parties.           BY SIGNING BELOW, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.           IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed effective as of December 31, 2000.             Alliance Capital Management L.P.   By: Alliance Capital Management   Corporation, General Partner                   Participant               /s/ John Carifa --------------------------------------------------------------------------------   John Carifa    

EXHIBIT 10(O) August 14, 2000 Mr. Richard Corrado 3529 264th Avenue SE Samammish, WA 98075 Dear Mr. Corrado, Airborne Freight Corporation (the "Company") and its Board of Directors are not necessarily opposed to any merger proposal or acquisition attempt by third parties. We recognize, and insist that our executives recognize, that in such matters our responsibility is to serve the best interests of our shareholders in maximizing the worth and potential of their investment. However, the Company, as a publicly held corporation, must be aware that insofar as it may be the subject of acquisition attempts, such attempts do raise the possibility of a change in control of the Company. It further recognizes that such a possibility can breed uncertainties as to the continued tenure and fair treatment of key executives regardless of their value to the corporation and their individual merit. The company is concerned that the possibility of acquisition attempts and a change in control can have an adverse effect on its retention of key management personnel, and that such acquisition attempts can make it difficult for such personnel to function most effectively in the best interests of the Company and its shareholders. In light of these concerns, the Company's Board of Directors has determined that it is appropriate to offer additional security to certain key management personnel to better enable them to function effectively without distraction in the event that uncertainties as to the future control of the Company should arise. Therefore, to induce you to remain in the employ of the Company and to encourage high level of effective management in the best interests of the Company and shareholders, this letter agreement sets forth certain benefits which the Company agrees will be provided to you if your employment with the Company should be terminated other than for cause, or by death, disability or normal retirement, subsequent to a "change in control" of the Company as defined and set forth in this Agreement. As the purpose of this Agreement is to provide you with stability of job tenure without being discriminated against because of activities on behalf of the Company and its shareholders in the face of a possible "change in control" or in the alternative to provide you with certain defined severance benefits in the face of termination without cause or upon discriminatory treatment after a "change in control," the provisions of this Agreement with regard to benefits shall not apply unless and until a "change in control" occurs. Further, the benefits set forth in paragraph 7 of this Agreement will not be provided if you cease to be in the Company's employ, even after a "change of control" and during the term of this Agreement, because of death, normal retirement, disability, "for cause," or because of voluntary termination by you without "good reason" as they are defined herein. 1. Term. This Agreement will at all times have a two- year term. At such time as either you or the Company give written notice to the other party that this Agreement is to be terminated (such notice on your part to have no force or effect unless given by you no later than two years after a "change in control"), then this Agreement will expire two years from receipt of the notice. In any event, this Agreement will terminate at your normal retirement date as defined herein. 2. Change in Control. For the purposes of invoking your benefits under this Agreement, a "change in control" shall mean the occurrence of any one of the following actions or events: (a) The acquisition by any person of the power, directly or indirectly, to exercise a controlling influence over the management or policies of the Company (either alone or pursuant to an arrangement or understanding with one or more other persons), whether through the ownership of voting securities, through one or more intermediary persons, by contract, or otherwise; or (b) The acquisition by a person who is not a U.S. citizen (either alone or pursuant to an arrangement or understanding with one or more other persons) of the ownership or power to vote 25% or more of the outstanding voting securities of the Company; or (c) The acquisition by a person who is a U.S. citizen (either alone or pursuant to an arrangement or understanding with one ore more other persons) of the ownership or power to vote 35% or more of the outstanding voting securities of the Company; or (d) If during a period of six years after the acquisition by any person, directly or indirectly, of the ownership or power to vote 10% or more of the outstanding voting securities of the Company, the individuals who prior to such acquisition were Directors of the Company ("Prior Directors") shall cease to constitute a majority of the Board of Directors, unless the nomination of each new Director was approved by a vote of a majority of the Prior Directors; The term "person" for purposes of this paragraph shall include a natural person, corporation, partnership, association, joint-stock company, trust fund, or organized group of persons. 3. Death, Retirement and Disability. In the event of your death, normal retirement, disability or voluntary termination without good reason during the term hereof and following a "change in control," you or your estate will be entitled to receive only those applicable benefits under any plans, programs and policies in effect with regard to the executives or salaried employees of the Company. For purposes of this Agreement, normal retirement and disability are defined as follows: (a) Normal Retirement: Termination by the Company or you of your employment based on normal retirement shall mean termination at age 65 or such earlier or later age set in accordance with the retirement policy then generally in effect with regard to the Company's salaried employees which is not discriminatory as to you. Normal retirement shall also include retirement in accordance with any early or deferred retirement age or date established with your consent. (b) Disability: Disability as grounds for termination shall mean physical or mental illness resulting in your absence from your duties with the Company on a full time basis for 120 consecutive days following the exhaustion of all current and accrued sick leave and vacation (as provided by Company policy to all salaried employees on a nondiscriminatory basis). If within thirty (30) days after written notice of proposed termination for disability is given by the Company, you have not returned to the full time performance of your duties, the Company may terminate your employment by giving written Notice of Termination for "Disability." 4. Other Termination Following a Change in Control. If a "change in control" occurs and you are subsequently terminated as an employee by the Company during the term of this Agreement (except for normal retirement, disability or for cause as herein after defined) or if you terminate your employment for good reason, as hereinafter defined, you will be entitled to receive the benefits set forth in paragraph 7 hereof. 5. Cause. After a "change in control," the Company may terminate your employment for "cause" without liability under the benefit provisions hereof only upon: (a) The willful and continued failure by you to substantially perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness), after a demand for substantial performance is delivered to you by the Board which specifically identifies the manner in which the Board believes that you have not substantially performed your duties, or (b) The willful engaging by you in gross misconduct demonstrably injurious to the Company. For the purpose of this paragraph, no act, or failure to act, on your part shall be considered "willful" if done, or omitted to be done, by you in good faith and in the reasonable belief that your act or omission was in the best interests of the Company. You shall not be deemed to have been terminated for cause unless and until you receive a copy of a resolution duly adopted by the affirmative vote of not less than three- quarters of the entire membership of the Board at a meeting of the Board called and held for that purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth in clauses (a) or (b) of the first sentence of this paragraph and specifying the particulars thereof. If your employment is terminated for cause, the Company shall pay you your then current full base salary plus vacation and any other compensation actually accrued through the date of termination, and the Company shall have no further obligation to you. 6. Good Reason. You may regard your employment as constructively terminated by the Company, and yourself terminate your employment for "good reason" following a "change in control" and during the term hereof, receiving the benefits set forth in paragraph 7, upon the happening of one or more of the following events which will constitute good reason for your own termination of your employment: (a) Without your express written consent, the assignment to you of any duties not customarily performed by officers of the Company and inconsistent with your position as an officer prior to a "change in control," or the failure of the Company to maintain you in an officer position; or to provide you with the normal prerequisites of an officer of the Company, including but not limited to an office and appropriate support services; (b) A reduction by the Company in your base salary as in effect prior to a "change in control" unless such reduction is applied to all officers of the company and does not exceed the average percentage reduction in base salary for all officers of the Company, with a maximum permissible reduction of 25%, or the failure by the Company to increase such base salary each year following a "change in control" by an amount which equals at least one-half (), on a percentage basis, the average percentage increase in base salary for all officers of the Company, and its subsidiaries, or any parent or successor the Company during the prior two full calendar years; (c) A failure by the Company to maintain any of the employee benefits to which you are entitled prior to a "change in control" at a level equal to or greater than that in effect prior to a "change in control," through the continuation of the same or substantially similar plans, programs and policies, or the taking of any action by the Company which would adversely affect your participation in or materially reduce your benefits under any such plans, programs or policies or deprive you of any fringe benefits enjoyed by you prior to a "change in control," unless such a reduction in benefits is nondiscriminatory as to you and is applied generally. (d) The failure by the Company to provide you with the number of paid vacation days to which you would be entitled as a salaried employee of the Company, its subsidiaries or affiliates, or any parent or successor of the Company on a nondiscriminatory basis. (e) The Company's requiring you to be based anywhere other than your current location except for required travel on the Company's business to an extent substantially consistent with your present business travel obligations; or the relocation of your offices outside of their current location without your consent. (f) Any purported termination of your employment by the Company which is not effected pursuant to the notice of termination and procedures required by the specific provision relied upon (i.e., Disability, or Cause), or normal retirement as defined in paragraph 3 hereof, or any purported termination for which the grounds relied upon are not valid. Upon the happening of one or more of these events, should you choose to regard your employment as constructively terminated, delivery of a written notice of termination setting forth the "good reason" therefor will entitle you to the benefits as set forth in paragraph 7 hereof. 7. Compensation Upon Termination Without Cause or Termination for Good Reason. If after a "change in control" and during the term hereof, you are terminated by the Company other than by reason of normal retirement, disability or for cause under the definitions and procedures as set forth herein, or you choose to terminate your employment for good reason as set forth herein, then the Company shall pay to you the following amounts: (a) Your full base salary through the date of any Notice of Termination plus payment for all accrued vacation, and any deferred compensation to which you are entitled for the year most recently ended and the pro rata share of any such compensation which would be due in the year of termination, up to the date of termination, to the extent not already paid; plus (b) An amount equal to: (i) The sum of your annual base salary at the rate in effect as of your termination plus the amount of any additional compensation awarded you for the year most recently ended (whether or not fully paid), including any sums awarded under a Management Incentive Compensation Plan, multiplied by: (ii) The number two. If your normal retirement date is less than two (2) years from your termination date, then the multiplier shall be that fraction remaining until your normal retirement date rounded to the nearest tenth (i.e., 18 months equals 1.5, 8 months equals .7). (iii) With regard to the Company's Profit Sharing Plan and Minimum Monthly Income Retirement Plan, the Company shall pay a lump sum equal to the amount forfeited by you, if any, under such plan which would have vested if your employment had continued for the remaining term of this Agreement. (iv) The Company shall maintain in full force and effect for the remaining term of this Agreement prior to your normal retirement date, all other employee benefit plans, programs and policies (including any life or health insurance plans) in which you were entitled to participate immediately prior to your termination, provided that your continued participation is possible under the general terms and provisions of such plans, programs and policies. In the event that your participation in any such plan, program or policy is not possible under its terms and conditions, the Company shall arrange to provide you with benefits substantially similar to those which you would have been entitled to receive under each plan, program or policy. At the end of the period of coverage, you will have the option to have assigned to you at no cost and with no apportionment of prepaid premiums, any assignable insurance policy owned by the Company and relating to you and to take advantage of any conversion privileges pertinent to the benefits available under Company policies. (v) In addition to the payment of benefits to which you are entitled under the qualified retirement plans maintained by the Company in which you are a participant on the date of your termination, the Company shall pay you in cash at age 65 or such earlier retirement date permitted under the plan or plans as you may elect, an amount equal to the sum of the following: (a) the amount which would have been contributed to your Profit Sharing Plan account had you continued in the employ of the Company for an additional two years [prior to your normal retirement date] at your base salary rate as of the date of termination and based on the average profit-sharing contribution allocated to your account for the three years preceding your termination, which amount shall be adjusted for an increase or decrease in value in the same percentage as the increase or decrease in your Profit Sharing account between the date of your termination and the date of payment; and (b) the difference between the actuarial equivalent of the amount which you are entitled to receive, if any, under the Minimum Monthly Retirement Income Plan and the amount which you would have received from such plan if you had continued in the employ of the Company for an additional two years [prior to your normal retirement date]. If your normal retirement date would occur during that two-year period, then the amount of such additional compensation shall be calculated on the basis that your employment continued to that date. For the purposes of the calculation of benefits under the Minimum Monthly Retirement Income Plan, the "actuarial equivalent" shall be determined by assuming your survival to age 80. (vi) At your option, in lieu of shares of common stock of the Company, without par value ("Company Shares") issuable upon exercise of options ("Options"), if any, granted to you under the Airborne Key Employee's Stock Option and Stock Appreciation Rights Plans (to which options employee waives all rights upon the making of the payment referred to below), you shall receive an amount in cash equal to the difference between the exercise prices of all Options held by you whether or not then fully exercisable, and the higher of (a) the mean between the closing bid and asked prices on the New York Stock Exchange on the date of termination or (b) the highest price per Company Share actually paid in connection with any change in control of the Company. 8. Payments and Disputes. For purposes of this Agreement, your date of termination will be the date written notice of termination is given by the Company to you. If termination is under circumstances invoking the benefits or paragraph 7, then the sums specified therein will be paid no more than ten (10) working days after the date of termination, except that the portion of the payment bases upon the amounts payable under the Management Incentive Compensation Plan and the Profit Sharing Plan shall be paid no later than ten (10) working days after the amounts payable under such plans have been determined following availability of results necessary for computation of such amounts. In the event that the Company wishes to contest or dispute a termination for "good reason" by you, it must give written notice of such dispute within the five day period after the date of termination. If you wish to contest or dispute a termination by the Company, or any failure to make payments claimed to be due hereunder, you must give written notice of such dispute within thirty days of receiving a Notice of Termination [or, if no Notice is provided, within thirty days of your actual termination by the Company]. In the event of a dispute, the Company shall continue to pay your full base salary and continue all your employee benefits in force until final resolution of any such dispute by mutual agreement or the final judgment, decree or order of a court of competent jurisdiction (including any appeals, if such are perfected). You may, at your or the Company's option, be suspended from all duties during the pendency of such a contest or dispute. If you prevail in any such contest or dispute, the Company shall thereupon be liable for the full amounts due under paragraph 7 as of the date of termination after adjustments for amounts already paid. The Company will pay all fees and expenses, including full attorneys' fees, incurred by you in good faith in contesting or disputing any termination after a "change in control" or in seeking to obtain or enforce any right or benefit provided by this Agreement. In the event that any payments due hereunder shall be delayed for any reason for more than ten working days from the date of termination (or availability of results under the Management Incentive Compensation Plan and Profit Sharing Plan as above provided), the amounts due shall bear the maximum legal rate of interest until paid. Notwithstanding the provisions as to time of payment as above set forth, you may at your sole option elect to have some or all of such amounts due you deferred to date or dates of your choosing over a period not to exceed two years, in which event the unpaid balances shall not bear interest during the deferred period elected by you. 9. Mitigation. You shall not be required to mitigate the amount of any payment due under paragraph 7 by seeking other employment. If you should accept a position with another employer after your date of termination and during the period of provision of benefits under paragraph 7, then the Company shall have no further liability for the provision of benefits or further payments under section (b)(iv) of paragraph 7, and the remaining term of this Agreement for purposes of Section (b)(v) of paragraph 7 will terminate as of the date of your new employment. 10. Covenant for Confidentiality and Not to Compete. You agree that as an executive of the Company, with important responsibilities for and knowledge of its operations, your services are a valuable asset to the Company and that you have access to business information of material importance to the Company. Therefore, to protect the Company's interest in you and in the integrity and success of its operations, you agree that during the term of this Agreement while employed by the Company you will keep all Company information confidential and will not enter into the employment of, or invest in or contribute to, participate in the activities of, or act as consultant to or advise any enterprise in whatever form organized and carried on which is directly competitive with any business activity then conducted or planned by the Company or its subsidiaries, provided, however, that you may make investments in publicly traded securities of any issuer if the securities owned represent less than 1% of the class of such securities of such issuer then issued and outstanding. You further agree that for a period of one year following the termination of your employment with the Company you will continue to keep all Company information confidential and that you will not enter into the employment in an executive or consultant capacity or serve on the Board of Directors of any enterprise in whatever form organized and carried on which is directly competitive with any business activity then conducted by the Company or its subsidiaries within the continental United States. 11. Successors; Binding Agreement. (a) This Agreement shall be binding upon any successor (whether director or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company. As used herein, "Company" shall mean the Company as hereinbefore defined and any successor to its business or assets as aforesaid. (b) This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amounts are still payable to you hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be not such designee, to your estate. 12. Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered by United States certified mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Chief Executive Officer of the Company or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 13. Miscellaneous. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by you and the Chief Executive Officer of the Company or such officer as may be specifically designated by the Board of Directors of the Company. No waiver by either party hereto at any time of any breach of, or lack of compliance with, any conditions or provision of this Agreement shall 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, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Washington. 14. Validity. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect. 15. Counterparts. This Agreement is to be executed in counterparts, each of which shall be deemed to be an original. If this letter correctly sets forth our agreements, sign and return to the Company the enclosed copy of this letter, retaining your copy for your files. AIRBORNE FREIGHT CORPORATION By /s/Robert S. Cline Robert S. Cline, Chairman Employee /s/Richard Corrado

QuickLinks -- Click here to rapidly navigate through this document EXHIBIT 10.03 SECOND AMENDMENT TO KEEP-WELL AGREEMENT      Dated as of June 15, 2001, effective as of May 29, 2001 (amending the Keep-Well Agreement dated as of February 26, 1998) by LONDON CLUBS INTERNATIONAL, PLC, THE TRUST UNDER ARTICLE SIXTH UNDER THE WILL OF SIGMUND SOMMER ALADDIN BAZAAR HOLDINGS, LLC and ALADDIN HOLDINGS, LLC as the Sponsors, and THE BANK OF NOVA SCOTIA, as the Administrative Agent for various financial institutions as the Lenders -------------------------------------------------------------------------------- SECOND AMENDMENT TO KEEP-WELL AGREEMENT     THIS SECOND AMENDMENT TO KEEP-WELL AGREEMENT (this "Second Amendment to Keep-Well Agreement") dated as of June 15, 2001, effective as of May 29, 2001, by and among LONDON CLUBS INTERNATIONAL, PLC, a company registered in England and Wales under company number 2862479 ("LCI"), THE TRUST UNDER ARTICLE SIXTH UNDER THE WILL OF SIGMUND SOMMER (the "Trust"), ALADDIN BAZAAR HOLDINGS, LLC, a Nevada limited-liability company ("ABH") and ALADDIN HOLDINGS, LLC, a Delaware limited liability company ("AHL"; AHL, ABH, the Trust and LCI are individually called a "Sponsor" and collectively called the "Sponsors") and THE BANK OF NOVA SCOTIA, as administrative agent (together with any successor thereto in such capacity, the "Administrative Agent") for the various financial institutions as are or may become parties hereto (individually, a "Lender" and collectively, the "Lenders").     In consideration of the mutual agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: W I T N E S S E T H:     WHEREAS, pursuant to a Credit Agreement, dated as of February 26, 1998 (together with that certain First Amendment to Credit Agreement dated as of January 29, 1999, that certain Second Amendment to Credit Agreement dated as of April 5, 1999, effective as of March 10, 1999, that certain Third Amendment to Credit Agreement dated as of June 2, 2000, that certain Fourth Amendment to Credit Agreement dated as of July 27, 2000, that certain Fifth Amendment to Credit Agreement dated as of December 29, 2000, that certain Sixth Amendment to Credit Agreement dated as of March 30, 2001 and that certain Seventh Amendment to Credit Agreement (the "Seventh Amendment to Credit Agreement") of even date herewith and all other amendments and other modifications from time to time hereafter made thereto, the "Credit Agreement"), among Aladdin Gaming, LLC, a Nevada limited-liability company (the "Borrower"), the Lenders and the Administrative Agent, Merrill Lynch Capital Corporation, as the syndication agent, and CIBC Oppenheimer Corp., as the documentation agent, the Lenders have extended Commitments to make Loans to the Borrower and to issue Letters of Credit for the account of the Borrower; and     WHEREAS, the Borrower has requested the Lenders to enter into the Seventh Amendment to Credit Agreement; and     WHEREAS, LCI, ABH, and AHL executed and delivered a Keep-Well Agreement (the "Keep-Well Agreement") in favor of the Lenders and the Administrative Agent dated as of February 26, 1998 pursuant to which LCI, ABH and AHL agreed, inter alia, to perform the obligations set forth in the Keep-Well Agreement and certain subsidiaries of LCI (the "Subsidiary Guarantors") have agreed to guarantee fully and unconditionally the payment of LCI's obligations under the Keep-Well Agreement pursuant to a guaranty agreement dated February 26, 1998 (the "LCI Subsidiary Guaranty"); and     WHEREAS, the Trust executed and delivered a Joinder Agreement and Consent (the "Joinder Agreement") in favor of the Lenders and the Administrative Agent dated as of July 27, 2000 pursuant to which the Trust agreed to become a Sponsor under the Keep-Well Agreement; and     WHEREAS, the Sponsors entered into that certain First Amendment to Keep-Well Agreement (the "First Amendment to Keep-Well Agreement") dated as of March 30, 2001; and     WHEREAS, the Sponsors have requested the Lenders to enter into certain additional amendments to the Keep-Well Agreement; and     WHEREAS, the Sponsors have duly authorized the execution, delivery and performance of this Second Amendment to Keep-Well Agreement and the Subsidiary Guarantors have duly authorized the execution, delivery and performance of a ratification, reaffirmation and consent agreement (the "Ratification of LCI Subsidiary Guaranty") with respect to the Subsidiary Guaranty, an executed –2– -------------------------------------------------------------------------------- counterpart of which is annexed hereto (the LCI Subsidiary Guaranty, together with the Ratification of LCI Subsidiary Guaranty and all other amendments and other modifications from time to time hereafter made thereto, the "Subsidiary Guaranty"); and     WHEREAS, it is in the best interests of the Sponsors to execute this Second Amendment to Keep-Well Agreement and the Subsidiary Guarantors to execute the Ratification of LCI Subsidiary Guaranty inasmuch as the Sponsors and the Subsidiary Guarantors have and will continue to derive substantial direct and indirect benefits from the Loans (as such term is defined in the Credit Agreement; each capitalized term not otherwise defined herein shall have the meaning ascribed to such term in the Credit Agreement) made to the Borrower by the Lenders pursuant to the Credit Agreement; and     WHEREAS, each of the parties hereto is willing, on the terms and subject to the conditions hereinafter set forth, to so amend the Keep-Well Agreement upon the terms and conditions set forth below.     NOW, THEREFORE, in consideration of the agreements contained herein, the parties hereto agree as follows: ARTICLE 1 AMENDMENTS     SECTION 1.1  Amendments.  The parties hereto hereby agree that from and after the Effective Date (as defined in Section 3.1) the following amendments shall be made to the Keep-Well Agreement, as amended by the First Amendment to Credit Agreement:     (a) The definition of "Keep-Well Termination Date" set forth in Section 1 of the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement, shall be deleted in its entirety and the following definition of "Keep-Well Termination Date" shall be substituted in its place: " 'Keep-Well Termination Date' shall mean the earliest of (i) the day on which full and indefeasible payment of the Obligations of the Borrower under the Credit Agreement has been made to reduce the Commitments of the Lenders thereunder to $145,000,000 or less, (ii) the last day of the period of six consecutive fiscal quarters from and after the Conversion Date during which the Borrower shall have satisfied each of the financial covenants set forth in the Credit Agreement (without giving effect to the Seventh Amendment to Credit Agreement or to any other amendment of the Credit Agreement which became effective prior to the date of the Seventh Amendment to Credit Agreement or to any payments to or investments by the Sponsors in or for the benefit of the Borrower), (iii) the date on which both of the following shall have been satisfied: (a) construction of the Aladdin Hotel and Casino and renovation of the Theater has been completed in accordance with all terms of the Credit Agreement and (b) the Commitments and the aggregate outstanding principal amount of the Obligations under the Credit Agreement shall have been reduced to an amount not in excess of the amount specified for such date on Schedule 1 hereto, (iv) the date on which the Sponsors shall have made full payment of the Accelerated Payment Amount described under Section 4 below or (v) in the case of LCI only, the date on which it shall have made full payment of the Accelerated Payment Amount described under Section 13 below."     (b) The following sentences shall be added after the second sentence of Section 2 of the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement: "Notwithstanding the foregoing, with respect only to the Fiscal Quarter ending March 31, 2001, the amount of the Cash Equity Contributions for such Fiscal Quarter (the 'FQ2 Cash Equity Contributions') shall equal all Debt Service (including, without limitation, Debt Service payments due on or about June 29, 2001 and August 1, 2001) and such other amounts –3– -------------------------------------------------------------------------------- reasonably required by the Board of Managers of the Borrower to perform in all material respects its covenants in the first four sentences of Section 7.1.3 of the Credit Agreement (without giving effect to any grace, notice or cure period granted to the Borrower under the Credit Agreement), in each case which is due and payable or otherwise required by the Borrower on or before August 1, 2001 and which has not been funded by the Borrower in accordance with the Loan Documents (without giving effect to any grace, notice or cure period granted to the Borrower under the Credit Agreement). With respect to such Debt Service which is due and payable on or before August 1, 2001, such Cash Equity Contributions shall be made by the Sponsors on or before the date that such amount is due and payable under the Loan Documents, in each case without giving effect to any grace, notice or cure period granted to the Borrower thereunder. With respect to amounts reasonably required by the Borrower to perform in all material respects its covenants in the first four sentences of Section 7.1.3 of the Credit Agreement, such Cash Equity Contributions shall be made within three Business Days after request therefor has been made by the Borrower, without giving effect to any grace, notice or cure period granted to the Borrower under the Loan Documents." ARTICLE 2 RATIFICATION AND REAFFIRMATION     SECTION 2.1  Ratification and Reaffirmation.  This Second Amendment to Keep-Well Agreement shall be deemed to be an amendment to the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement, and the Keep-Well Agreement, as amended by the First Amendment to Keep-Well Agreement and this Second Amendment to Keep-Well Agreement, shall continue in full force and effect and is hereby ratified, approved and confirmed in each and every respect. ARTICLE 3 CONDITIONS PRECEDENT AND COVENANT     SECTION 3.1  Conditions to Effectiveness.  The amendments in Section 1.1 of this Second Amendment to Keep-Well Agreement shall become effective on the date (the "Effective Date") on which each of the following conditions precedent shall have been satisfied.     (a)  Execution of Documents.  The Administrative Agent shall have received counterparts of (i) this Second Amendment to Keep-Well Agreement executed by an Authorized Representative of the parties hereto, (ii) the Ratification of LCI Subsidiary Guaranty executed by the Authorized Representatives of the Subsidiary Guarantors and LCI, (iii) the Seventh Amendment to Credit Agreement executed by Authorized Representatives of the Borrower and the Administrative Agent and (iv) all documentation required by Section 3.1 of the Seventh Amendment to Credit Agreement.     (b)  Seventh Amendment to Credit Agreement.  The Seventh Amendment to Credit Agreement shall have become effective in accordance with its terms.     (c)  Incumbency, etc.  The Administrative Agent shall have received (with copies for each Lender) a certificate, dated as of the Effective Date, of an Authorized Representative of each Sponsor certifying     (i)  as to the incumbency and signatures of the Person or Persons authorized to execute and deliver this Second Amendment to Keep-Well Agreement and any instruments or agreements required hereunder,     (ii) as to an attached copy of one or more resolutions or other authorizations of the Sponsors certified by the Authorized Representative of each such Sponsor as being in full –4– -------------------------------------------------------------------------------- force and effect on the date hereof, authorizing the execution, delivery and performance of this Second Amendment to Keep-Well Agreement and any instruments or agreements required hereunder, and     (iii) that the Organizational Documents of such Sponsor have not been modified since the date on which they were last delivered to the Administrative Agent, upon which certificate the Administrative Agent and the Lenders (collectively, the "Financing Parties") may conclusively rely until the Administrative Agent has received a further certificate of an Authorized Representative of such Sponsor canceling or amending such prior certificate.     (c)  Fees.  All reasonable fees and costs and expenses of Mayer, Brown & Platt and other professionals employed by the Administrative Agent and all other reasonable expenses of the Administrative Agent in connection with the negotiation, execution and delivery of this Second Amendment to Keep-Well Agreement and the transactions contemplated herein shall have been paid in full.     (d)  Satisfactory Legal Form.  Each Financing Party and its counsel shall have received all information, approvals, opinions, documents or instruments as each Financing Party or its counsel may have reasonably requested, and all documents executed or submitted pursuant hereto by or on behalf of each Sponsor shall be reasonably satisfactory in form and substance to each Financing Party and its counsel.     (e)  Default.  After giving effect to this Second Amendment to Keep-Well Agreement and the Seventh Amendment to Credit Agreement the following statements shall be true and correct: (i) to the best knowledge of each Sponsor, no act or condition exists which, with the giving of notice or passage of time would constitute a "Default" or "Event of Default" (as defined in the Credit Agreement, the GECC Facilities Agreement and Discount Note Indenture) has occurred and is continuing as of the date hereof and (ii) no material adverse change in (A) the financial condition, business, property, prospects or ability of the Sponsors or the Borrower to perform in all material respects its respective obligations under any Operative Document or any of the documents evidencing and securing the FF&E Financing to which it is a party or (B) the financial condition, business, property, prospects and ability of any other Aladdin Party or, to the best knowledge of such Sponsor, LCNI to perform in all material respects its obligations under any Operative Document to which it is a party has occurred since the Closing Date.     (f)  Consents and Approvals.  All approvals and consents required to be taken, given or obtained, as the case may be, by or from any Governmental Instrumentality or another Person, or by or from any trustee (including, without limitation, GECC and the Discount Note Indenture Trustee) or holder of any indebtedness or obligation of the Borrower or the Sponsor, that are necessary or, in the reasonable opinion of the Administrative Agent, advisable in connection with the execution, delivery and performance of this Second Amendment to Keep-Well Agreement by all parties hereto, shall have been taken, given or obtained, as the case may be, shall be in full force and effect and the time for appeal with respect to any thereof shall have expired (or, if an appeal shall have been taken, the same shall have been dismissed) and shall not be subject to any pending proceedings or appeals (administrative, judicial or otherwise) and shall be in form and substance reasonably satisfactory to the Administrative Agent.     (g)  Delivery of Second Amendment to Keep-Well Agreement.  The Sponsor shall have delivered this Second Amendment to Keep-Well Agreement to all Persons entitled thereto under the Operative Documents to receive delivery hereof.     (h)  Opinions.  The Administrative Agent shall have received such opinions of counsel as it deems necessary, dated as of the Effective Date and addressed to the Administrative Agent and the Lenders which shall be in form and substance reasonably satisfactory to the Administrative Agent. –5– -------------------------------------------------------------------------------- ARTICLE 4 REPRESENTATIONS AND WARRANTIES     In order to induce each Financing Party to enter into this Second Amendment to Keep-Well Agreement, each Sponsor, as to itself, reaffirms, as of the Effective Date, its representations and warranties contained in the Keep-Well Agreement (as amended by the First Amendment to Keep-Well Agreement and this Second Amendment to Keep-Well Agreement) and additionally represents and warrants, as to itself, unto each Financing Party as set forth in this Article IV.     SECTION 4.1  Due Authorization, Non-Contravention, etc.  The execution, delivery and performance by each Sponsor of this Second Amendment to Keep-Well Agreement and each other document executed or to be executed by it in connection with this Second Amendment to Keep-Well Agreement are within such Sponsor's powers, have been duly authorized by all necessary action, and do not (a)contravene such Sponsor's Organizational Documents; (b)contravene any contractual restriction binding on or affecting such Sponsor; (c)contravene any court decree or order or Legal Requirement binding on or affecting such Sponsor; or (d)result in, or require the creation or imposition of, any Lien on any of such Sponsor's properties except as expressly contemplated by the Operative Documents, and the Financing Parties may conclusively rely on such representation and warranty.     SECTION 4.2  Government Approval, Regulation, etc.  No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by the Sponsor of this Second Amendment to Keep-Well Agreement or any other document to be executed by it in connection with this Second Amendment to Keep-Well Agreement.     SECTION 4.3  Validity, etc.  This Second Amendment to Keep-Well Agreement constitutes the legal, valid and binding obligations of the Sponsors enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors rights generally and by general principles of equity.     SECTION 4.4  Limitation.  Except as expressly provided hereby, all of the representations, warranties, terms, covenants and conditions of the Keep-Well Agreement, as amended by the First Amendment to Credit Agreement and this Second Amendment to Credit Agreement and each other Operative Document shall remain unamended and unwaived and shall continue to be, and shall remain, in full force and effect in accordance with their respective terms. The amendments and modifications set forth herein shall be limited precisely as provided for herein, and shall not be deemed to be a waiver of, amendment or modification of any other term or provision of the Keep-Well Agreement or other Instrument referred to therein or herein, or of any transaction or further or future action on the part of the Borrower or any other Person which would require the consent of the Agents, the Lenders, GECC or the Discount Note Indenture Trustee.     SECTION 4.5  Offsets and Defenses.  The Sponsors have no offsets or defenses to their obligations under the Loan Documents to which they are a party and no claims or counterclaims against any of the Agents or the Lenders. –6– -------------------------------------------------------------------------------- ARTICLE 5 MISCELLANEOUS PROVISIONS     SECTION 5.1  Headings.  The various headings of this Second Amendment to Keep-Well Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Second Amendment to Keep-Well Agreement or any provisions hereof.     SECTION 5.2  Applicable Law.  THIS SECOND AMENDMENT TO KEEP-WELL AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SECOND AMENDMENT TO KEEP-WELL AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAW RULES OF SUCH STATE.     SECTION 5.3  Cross-References.  References in this Second Amendment to Keep-Well Agreement to any Article or Section are, unless otherwise specified, to such Article or Section of this Second Amendment to Keep-Well Agreement.     SECTION 5.4  Operative Document.  This Second Amendment to Keep-Well Agreement is a Loan Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated therein) be construed, administered and applied in accordance with the terms and provisions of the Credit Agreement.     SECTION 5.5  Successors and Assigns.  This Second Amendment to Keep-Well Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.     SECTION 5.6  Counterparts.  This Second Amendment to Keep-Well Agreement may be executed by the parties hereto in any number of counterparts and on separate counterparts, each of which shall be an original but all of which together shall constitute one and the same instrument. –7– --------------------------------------------------------------------------------     IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Keep-Well Agreement as of the day and year first above written.             ALADDIN BAZAAR HOLDINGS, LLC             By:         --------------------------------------------------------------------------------     Name:       Title:               ALADDIN HOLDINGS, LLC             By:         --------------------------------------------------------------------------------     Name:       Title:               THE TRUST UNDER ARTICLE SIXTH UNDER THE WILL OF SIGMUND SOMMER             By:         --------------------------------------------------------------------------------     Name:       Title:  Trustee             By:         --------------------------------------------------------------------------------     Name:       Title:  Trustee             LONDON CLUBS INTERNATIONAL PLC             By:         --------------------------------------------------------------------------------     Name:       Title:               THE BANK OF NOVA SCOTIA, as the Administrative Agent             By:         --------------------------------------------------------------------------------     Name:       Title:   –8– -------------------------------------------------------------------------------- QuickLinks SECOND AMENDMENT TO KEEP-WELL AGREEMENT SECOND AMENDMENT TO KEEP-WELL AGREEMENT W I T N E S S E T H ARTICLE 1 AMENDMENTS ARTICLE 2 RATIFICATION AND REAFFIRMATION ARTICLE 3 CONDITIONS PRECEDENT AND COVENANT ARTICLE 4 REPRESENTATIONS AND WARRANTIES ARTICLE 5 MISCELLANEOUS PROVISIONS

EXHIBIT 10.4   FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT     THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “First Amendment”) is dated as of October ___, 2001 and entered into by and among RESORTQUEST INTERNATIONAL, INC., a Delaware corporation (the “Borrower”), the Guarantors (as defined in the Credit Agreement, as hereinafter defined), the financial institutions listed on the signature pages hereof (the “Lenders”), CITIBANK, N.A., as administrative agent for the Lenders (in such capacity, the “Agent”), BANK OF AMERICA, N.A., as documentation agent (in such capacity, the “Documentation Agent”) and CRÉDIT LYONNAIS NEW YORK BRANCH, as syndication agent (in such capacity, the “Syndication Agent”), and is made with reference to that certain Amended and Restated Credit Agreement dated as of January 22, 2001, by and among the Borrower, the Guarantors, the Lenders (as defined therein), the Documentation Agent, the Syndication Agent and the Agent (the “Credit Agreement”).  Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement. RECITALS WHEREAS, the Borrower and the Lenders desire to amend the Credit Agreement in the manner set forth below, NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: Section 1.  AMENDMENTS TO THE CREDIT AGREEMENT 1.1          Amendments to Section 1:  Definitions A.            Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of “Applicable Percentage” in its entirety and substituting therefor the following:   “‘Applicable Percentage’ means, for purposes of calculating (i) the applicable interest rate for any day for any Base Rate Loan, (ii) the applicable interest rate for any Eurodollar Loan, and (iii) the applicable rate of the Unused Fee for any day for purposes of Section 3.5(a), the appropriate applicable percentage corresponding to the Consolidated Leverage Ratio in effect as of the most recent Calculation Date, as shown in the following table:   Pricing Level   Consolidated Leverage Ratio   Applicable Percentage For Eurodollar Loans   Applicable Percentage For Base Rate Loans   Applicable Percentage For Unused Fees   I   <2.5 to 1.0   2.00%   1.00%   0.50%   II   >2.5 to 1.0   2.25%   1.25%   0.50%   III   >3.0 to 1.0   2.50%   1.50%   0.50%   IV   >3.5 to 1.0   2.75%   1.75%   0.50%   V   >4.0 to 1.0   3.00%   2.00%   0.50%       The Applicable Percentages shall be determined and adjusted quarterly on the date (each, a ‘Calculation Date’) five (5) Business Days after the date by which the Borrower is required to provide the officer’s certificate in accordance with the provisions of Section 7.1(c) for the most recently ended fiscal quarter of the Consolidated Parties and shall be based upon the Consolidated Leverage Ratio as of the last day of the most recently ended fiscal quarter of the Consolidated Parties preceding the applicable Calculation Date; provided, however, that if the Borrower fails to provide the officer’s certificate to the Agency Services Address as required by Section 7.1(c) for the last day of the most recently ended fiscal quarter of the Consolidated Parties preceding the applicable Calculation Date, the Applicable Percentage from such Calculation Date shall be based upon Pricing Level V until such time as an appropriate officer’s certificate is provided, whereupon the Applicable Percentage shall be determined by the Consolidated Leverage Ratio as of the last day of the most recently ended fiscal quarter of the Consolidated Parties preceding such Calculation Date.  Each Applicable Percentage shall be effective from one Calculation Date until the next Calculation Date.  Any adjustment in the Applicable Percentages shall be applicable to all existing Revolving Loans as well as any new Revolving Loans made or issued.”   B.            The definition of “Permitted Acquisition” in Section 1.1. of the Credit Agreement is hereby amended by deleting in its entirety clause (iv) thereof and replacing it with the following:   “(iv) whether or not the Acquisition is made for cash or non-cash consideration (or any combination thereof), including any assumption of Indebtedness, the Borrower shall have delivered to the Agent a Pro Forma Compliance Certificate demonstrating that, upon giving effect to the Acquisition on a pro forma basis, the Credit Parties will be in compliance with all of the covenants set forth in Section 7.11, and the Borrower shall have delivered to the Lender a certificate that, upon giving effect to the Acquisition, (x) the Borrower shall have liquidity (i.e. unused availability of Loans plus cash and Cash Equivalents) of at least $5,000,000 and (y) the Consolidated Leverage Ratio shall be less than or equal to 2.5 to 1.0.”   C.            The definition of “Permitted Investments” in Section 1.1 of the Credit Agreement is hereby amended by (a) adding the word “and” after the semi-colon at the end of clause (viii) thereof, (b) deleting the semi-colon at the end of clause (ix) thereof and inserting “.”, and (c) deleting in their entirety clauses (x) and (xi) thereof.   D.            Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of “Consolidated EBITDA” in its entirety and substituting therefor the following:   “‘Consolidated EBITDA’ means, for any period, the sum of (i) Consolidated Net Income for such period, plus (ii) an amount which, in the determination of Consolidated Net Income for such period, has been deducted for (A) Consolidated Interest Expense for such period, (B) total federal, state, local and foreign income, value added and similar taxes for such period and (C) depreciation and amortization expense for such period, all as determined in accordance with GAAP; provided, however, that the calculation of Consolidated EBITDA shall exclude non-cash charges occurring in the fiscal quarter ended September 30, 2001 in an aggregate amount not to exceed $2,500,000 resulting from (y) the write-down of the value of the Borrower’s existing reservation system, and (z) the recognition of deferred acquisition costs; and provided further that at the option of the Borrower, Consolidated EBITDA would also include Consolidated EBITDA attributable to each acquisition made during such period in an amount equal to:     (1)           when computing Consolidated EBITDA for use in determining the Fixed Charge Coverage Ratio, the greater of (a) the actual Consolidated EBITDA attributable to the Property acquired for the period from the acquisition date to the applicable calculation date, or (b) an amount equal to (I) Consolidated EBITDA computed on a pro forma basis with respect to the Property acquired as if the acquisition date had occurred 12 months prior to the applicable calculation date, divided by (II) twelve (12), multiplied by (III) the number of full calendar months that have elapsed between the actual acquisition date and the applicable calculation date; and (2)           when computing Consolidated EBITDA for any other purpose, an amount equal to Consolidated EBITDA computed on a pro forma basis with respect to the Property acquired as if the acquisition date had occurred 12 months prior to the applicable calculation date.”   1.2.         Amendments to Section 2.1:  Revolving Loans   A.            Section 2.1(a)(iii) is hereby amended by deleting in its entirety the last sentence of the first paragraph thereof and replacing the same with the following:                   “If the Lenders are not willing to commit to the requested Additional Revolving Commitments in the requested amount, then within 45 Business Days after the Borrower’s original request, provided notice thereof has been given to all Lenders within 30 Business Days after the Borrower’s original request and Borrower has obtained the prior written consent of all Lenders to Borrower receiving any commitments from a Supplemental Lender (defined below), which such consent may be withheld by any such Lender in its sole and absolute discretion, another one or more financial institutions that qualify under this Credit Agreement as Eligible Assignees (each, a “Supplemental Lender”) may commit to provide the remainder of the required Additional Credit Commitment.” 1.3          Amendments to Section 7:  Affirmative Covenants A.            Section 7.1 of the Credit Agreement is hereby amended by inserting as a new clause (l) thereto the following: “(l)  Monthly Financial Statements.  As soon as available, and in any event within twenty (20) days after the first day of each calendar month, (i) a consolidated balance sheet and income statement of the Consolidated Parties, as of the end of the immediately preceding calendar month, together with a related consolidated statement of cash flows, in each case setting forth in comparative form consolidated figures for the corresponding calendar month of the preceding fiscal year, (ii) a consolidating balance sheet and income statement of the Borrower and its Subsidiaries, as of the end of the immediately preceding calendar month, together with a related consolidating statement of cash flows, in each case setting forth in comparative form consolidating figures for the corresponding calendar month of the preceding fiscal year and (iii) a consolidated statement as of the end of the immediately preceding calendar month setting forth the occupancy rates in each hotel, resort, place of accommodation or other facility managed, owned, leased or operated by the Consolidated Parties (it being understood that the foregoing occupancy rates need not be set forth on an individual hotel or other facility basis, but may be presented in a consolidated summary format by region, operating units or other manner reasonably approved by the Agent), setting forth in comparative form consolidated figures for the corresponding calendar month of the preceding fiscal year, all such financial information described above to be in reasonable form and detail and reasonably acceptable to the Agent, and accompanied by a certificate of the chief financial officer of the Borrower to the effect that such monthly financial statements fairly present in all material respects the financial condition of the Consolidated Parties or the Borrower and its Subsidiaries, as applicable, and have been prepared in accordance with GAAP, subject to changes resulting from audit and normal year-end audit adjustments.” B.            Section 7.1 of the Credit Agreement is hereby further amended by inserting as a new clause (m) thereto the following: “(m)  Semi-Monthly Reporting.  Within five (5) Business Days after the first (1st) and fifteenth (15th) day of each calendar month, (i) a consolidated statement as of the end of such semi-monthly period of all bookings in each hotel, resort, place of accommodation or other facility managed, owned, leased or operated by the Consolidated Parties (it being understood that the foregoing bookings need not be set forth on an individual hotel or other facility basis, but may be presented in a consolidated summary format by region, operating units or other manner reasonably approved by the Agent), setting forth in comparative form consolidated figures for the corresponding semi-monthly period of the preceding fiscal year and (ii) a consolidated statement of projected unrestricted cash and revolver balances of the Consolidated Parties for the twelve (12) week period commencing on the first day after the end of each such semi-monthly period, all such information described above to be in reasonable form and detail and reasonably acceptable to the Agent, and accompanied by a certificate of the chief financial officer of the Borrower to the effect that such statements are good faith estimates for the respective periods covered thereby.” C.            Section 7.11(a) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting therefor the following: “(a)         Fixed Charge Coverage Ratio.   The Fixed Charge Coverage Ratio, as of the last day of each fiscal quarter of the Consolidated Parties ending during any of the periods set forth below, shall be greater than or equal to the correlative ratio indicated: Period   Minimum Fixed Charge Coverage Ratio   Closing Date – 09/30/01   2.50 to 1.0   10/01/01 – 12/31/01   2.30 to 1.0   01/01/02 – 03/31/02   1.90 to 1.0   04/01/02 – 06/30/02   1.75 to 1.0   07/01/02 – 09/30/02   1.60 to 1.0   10/01/02 – 12/31/02   1.85 to 1.0   1/01/03 – Maturity Date   2.50 to 1.0                                   ” D.            Section 7.11(b) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting therefor the following: “(b)         Consolidated Leverage Ratio.   The Consolidated Leverage Ratio, as of the last day of each fiscal quarter of the Consolidated Parties ending during any of the periods set forth below, shall be less than or equal to the correlative ratio indicated: Period   Maximum Consolidated Leverage Ratio   Closing Date – 06/30/01   2.50 to 1.0   7/01/01 – 9/30/01   3.00 to 1.0   10/01/01 – 12/31/01   4.25 to 1.0   01/01/02 – 03/31/02   5.15 to 1.0   04/01/02 – 06/30/02   5.15 to 1.0   07/01/02 – 09/30/02   5.15 to 1.0   10/01/02 – 12/31/02   3.75 to 1.0   1/01/03 –Maturity Date   2.50 to 1.0                                   ” E.             Section 7.11(d) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting therefor the following: “(d) Consolidated Capital Expenditures.  The Borrower shall not permit Consolidated Capital Expenditures for any fiscal year to exceed the lesser of (i) 4% of Consolidated Revenues or (ii) $10,000,000.  Notwithstanding the foregoing, the Consolidated Parties shall not make any Consolidated Capital Expenditures during calendar year 2002 (other than Software Expenditures permitted pursuant to the next succeeding sentence) unless (i) such Consolidated Capital Expenditures are set forth in a budget approved by the Agent in writing, (ii) such Consolidated Capital Expenditures are for the following purposes and do not exceed the following amounts: (A) an amount not to exceed $4,000,000 for property maintenance capital expenditures (of which up to $1,200,000 may be allocated to a new call center) and (B) an amount not to exceed $2,700,000 for capital expenditures for corporate headquarters, centralized offices and information technology, (iii) the same do not cause a violation of the provisions of the first sentence of this clause (d); and (iv) no Default or Event of Default has occurred and is continuing or would be caused thereby.  In addition to the Consolidated Capital Expenditures permitted under the foregoing provisions of this Section 7.11(d), so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, the Consolidated Parties shall also have the right to make Software Expenditures in an aggregate amount not to exceed $15,000,000 during the period commencing on June 30, 2000 and ending on December 31, 2002.” F.             Section 7.11 of the Credit Agreement is hereby amended by adding thereto as a new clause (e) the following: “(e) Minimum Consolidated EBITDA.  The Consolidated EBITBA, as of the last day of each fiscal quarter of the Consolidated Parties set forth below, shall be greater than or equal to the correlative dollar amount indicated: Fiscal Quarter   Minimum Consolidated EBITDA   10/01/01 – 12/31/01   Negative ($11,700,000)   01/01/02 – 03/31/02   $6,200,000   04/01/02 – 06/30/02   $6,200,000   07/01/02 – 09/30/02   $9,000,000   10/01/02 – 12/31/02   Negative ($7,900,000)   ” 1.4.         Amendments to Section 8:  Negative Covenants Section 8 of the Credit Agreement is hereby amended by adding as a new Section 8.14 the following: “Section 8.14.  Amendment to the Note Purchase and Guarantee Agreement:  Pro Rata Payment.  The Borrower and the other Credit Parties shall not (a) amend or modify the Note Purchase and Guarantee Agreement (or any of the documents executed in connection therewith) if such amendment or modification would add or change any terms in a manner adverse to the Borrower and/or any of the other Credit Parties, or shorten the final maturity or require any payment to be made sooner than originally scheduled or increase the interest rate applicable thereto, or (b) make any prepayment of principal of any Indebtedness, unless the Borrower makes a Pro Rata Prepayment, together with a corresponding reduction of the Revolving Committed Amount, on the Loans (including sums payable with respect to such Pro Rata Prepayment due under Section 3.12 of the Credit Agreement) at the same time as it makes such prepayment of principal.  For the purposes hereof, ‘Pro Rata Prepayment’ means the principal amount determined by multiplying (i) the amount paid to the holder of Indebtedness by (ii) a fraction, the numerator of which is the Revolving Committed Amount, (not including the amounts due under Section 3.12 of the Credit Agreement) and the denominator of which is the principal balance of the Indebtedness with respect to which such prepayment or reduction is being made.  The Pro Rata Prepayment shall be applied to the Loans in such order of priority as the Agent may determine.” 1.5.         Amendment to Section 9:  Events of Default A.            Section 9.1(c)(ii) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting therefor the following: “(ii)  default in the due performance or observance of any term, covenant or agreement contained in Sections 7.1(a), (b), (c), (d), (l) or (m) and such default shall continue unremedied for a period of at least 5 days after the earlier of a responsible officer of a Credit Party becoming aware of such default or notice thereof by the Agent; or” B.            Section 9.1(g)(iii) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting therefor the following: “(iii) Any default under the Senior Note Documents or the Additional Facility Documents shall occur and the applicable grace period (if any) with respect to such default shall have expired without such default being cured by the Credit Parties in a manner acceptable to the necessary percentage of Noteholders or Additional Creditors, as applicable, or permanently waived by the necessary percentage of Noteholders or Additional Creditors, as applicable, provided, however, that notwithstanding the foregoing, it shall nevertheless constitute an Event of Default hereunder should there be an event of default under the Senior Note Documents as the result of any failure to pay any amounts due under the Senior Note Documents or in respect thereof or any failure to comply with any of the provisions of Sections 1, 7, 8, 9 and 10 of the Note Purchase and Guarantee Agreement, regardless of whether such event of default has been waived by the Noteholders party thereto or any agent acting on their behalf and regardless of whether the Noteholders or such agent are attempting to exercise their remedies as a result of such event of default and without giving effect to any amendment altering the terms of the Senior Note Documents so as to eliminate such event of default.” 1.6.         Amendment to Exhibit 7.1(c):  Form of Officer’s Certificate Exhibit 7.1(c) of the Credit Agreement is hereby amended by deleting it in its entirety and substituting therefor the Form of Officer’s Certificate attached hereto as Schedule 1. Section 2.              CONDITIONS TO EFFECTIVENESS Section 1 of this First Amendment shall become effective only upon the satisfaction of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the “First Amendment Effective Date”): A.            On or before the First Amendment Effective Date, the Borrower shall deliver to the Agent executed copies of this First Amendment (with sufficient originally executed copies for each Lender and its counsel) dated the First Amendment Effective Date. B.            On or before the First Amendment Effective Date, all corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found acceptable by the Agent, acting on behalf of the Lenders, and its counsel shall be satisfactory in form and substance to the Agent and such counsel, and the Agent and such counsel shall have received all such counterpart originals or certified copies of such documents as the Agent may reasonably request. C.            On or before the First Amendment Effective Date, the Borrower shall have paid to each Lender who has consented to and joined in the execution of this First Amendment, by wire transfer of immediately available federal funds, an administration fee equal to product of (a) the Commitment of such Lender and (b) 0.25%. D.            The Borrower, the Noteholders and the other parties to the Second Modification Agreement (defined below) shall have executed and delivered the Second Modification Agreement, in form and substance satisfactory to the Agent, and the Agent shall have received a copy thereof, as originally in effect, certified as true and complete by an officer of the Borrower, and the same shall be in full force and effect.   Section 3.              REPRESENTATIONS AND WARRANTIES In order to induce the Agent and the Lenders to enter into this First Amendment and to amend the Credit Agreement in the manner provided herein, each of the Credit Parties hereby represents to the Agent and the Lenders that the following statements are true, correct and complete: A.            Corporate Power and Authority.  Each of the Credit Parties has all requisite corporate power and authority to enter into this First Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this First Amendment (the “Amended Agreement”). B.            Authorization of Agreements.  The execution and delivery of this First Amendment and the performance of the Amended Agreement by the Credit Parties have been duly authorized by all necessary corporate action on the part of the Credit Parties, as applicable. C.            No Conflict.  Neither the execution and delivery of this First Amendment, nor the consummation of the transactions contemplated herein, nor performance of and compliance with the terms and provisions thereof by such Credit Party will (a) violate or conflict with any provision of its articles or certificate of incorporation or bylaws or other organizational or governing documents of such Credit Party, (b) violate, contravene or materially conflict with any Requirement of Law or any other law, regulation (including, without limitation, Regulation U or Regulation X), order, writ, judgment, injunction, decree or permit applicable to it, (c) violate, contravene or conflict with contractual provisions of, or cause an event of default under, any Material Agreement to which it is a party or by which it may be bound, or (d) result in or require the creation of any Lien (other than those contemplated in or created in connection with the Credit Documents) upon or with respect to its properties. D.            Governmental Consents.  The execution and delivery by the Credit Parties of this First Amendment and all other operative documents being delivered in connection herewith and the performance by the Credit Parties of the Credit Party Obligations under the Amended Agreement 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. E.             Binding Obligation.  This First Amendment has been duly executed and delivered by each of the Credit Parties, and the First Amendment and the Amended Agreement will be legally valid and binding obligations of the Credit Parties, enforceable against the Credit Parties, in accordance with their 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 relating to enforceability. F.             Governmental Regulation; Securities Activities.  Neither the making of the Loans pursuant to the Amended Agreement nor the granting of a security interest in any Collateral pursuant to the Collateral Documents violates Regulations T, U or X of the Board of Governors of the Federal Reserve System.  It is not necessary in connection with the execution and delivery of the Amended Agreement to register the Loans under the Securities Act of 1933, as amended, or to qualify any indenture under the Trust Indenture Act of 1939, as amended. G.            Incorporation of Representations and Warranties From Credit Agreement.  The representations and warranties contained in this First Amendment and Section 6 of the Credit Agreement are and will be true, correct and complete in all material respects on and as of the First 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, correct and complete in all material respects on and as of such earlier date. H.            Absence of Default.  No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this First Amendment that would constitute an Event of Default or a default which, with the giving of notice or passage of time, or both, would constitute an Event of Default. I.              Second Modification Agreement.  The Borrower has delivered a true and correct copy of the Second Modification Agreement (the “Second Modification Agreement”) by and among the Borrower, the Guarantors (as defined therein) and the Noteholders, dated as of October __, 2001, to the Agent.  The Second Modification Agreement is in full force and effect and all conditions precedent to its effectiveness have been satisfied in full or otherwise complied with by the Borrower and the Guarantors.  Other than as expressly set forth in the Second Modification Agreement, there are no other agreements or understandings between the Borrower and any Guarantors and the Noteholders with respect to the Note Purchase and Guarantee Agreement, no defaults or events of default exist or will exist thereunder immediately after giving effect to the Second Modification Agreement and this Agreement.  The financial covenants set forth in the Senior Note Documents, as amended by the Second Modification Agreement, are not more restrictive than the financial covenants set forth in Section 7.11 of the Credit Agreement. J.             Compliance with this Agreement and the Second Modification Agreement.  The Borrower and the Guarantors shall have performed and complied with all agreements and conditions contained in this Agreement and the Second Modification Agreement that are required to be performed or complied with by such parties on or prior to, and such performance and compliance shall remain in effect on, the First Amendment Effective Date. Section 4.              ACKNOWLEDGEMENT AND CONSENT Each of the Credit Parties hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this First Amendment and consents to the amendment of the Credit Agreement effected pursuant to this First Amendment.  Each Credit Party hereby confirms that each Credit Document to which it is a party or otherwise bound and all Collateral encumbered thereby will continue to guaranty or secure, as the case may be, to the fullest extent possible the payment and performance of all “Credit Party Obligations”, “Guarantied Obligations” and “Secured Obligations,” as the case may be (in each case as such terms are defined in the applicable Credit Document), including without limitation the payment and performance of all such “Credit Party Obligations”, “Guarantied Obligations” or “Secured Obligations,” as the case may be, now or hereafter existing under or in respect of the Amended Agreement. 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 this First Amendment. Each Credit Party (other than the Borrower) acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this First Amendment, such Credit  Party is not required by the terms of the Credit Agreement or any other Credit Document to consent to the amendments to the Credit Agreement effected pursuant to this First Amendment and (ii) nothing in the Credit Agreement, this First Amendment or any other Credit Document shall be deemed to require the consent of such Credit Party to any future amendments to the Credit Agreement. Section 5.  MISCELLANEOUS A.            Reference to and Effect on the Credit Agreement and the Other Credit Documents. (i)            On and after the First Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”, “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 Amended Agreement. (ii)           Except as specifically amended by this First 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 First Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Agent or any Lender under, the Credit Agreement or any of the other Credit Documents. B.            Fees and Expenses.  The Borrower acknowledges that all costs, fees and expenses as described in Section 11.5 of the Credit Agreement incurred by the Agent and its counsel with respect to this First Amendment and the documents and transactions contemplated hereby shall be for the account of the Borrower.  The foregoing shall not be construed to diminish or limit the obligations of the Borrower set forth in Section 11.5 of the Credit Agreement. C.            Headings.  Section and subsection headings in this First Amendment are included herein for convenience of reference only and shall not constitute a part of this First Amendment for any other purpose or be given any substantive effect. D.            Applicable Law.  THIS FIRST 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. E.             Counterparts; Effectiveness.  This First 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.  This First Amendment shall become effective upon the execution of a counterpart hereof by the Borrower, and the Lenders and each of the Credit Parties and receipt by the Borrower and the Agent of written or telephonic notification of such execution and authorization of delivery thereof. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. BORROWER: RESORTQUEST INTERNATIONAL, INC.   a Delaware corporation           By: /s/  David L. Levine     Name: David L. Levine     Title: Chairman             GUARANTORS: FIRST RESORT SOFTWARE, INC.,   a Colorado corporation       ADVANTAGE VACATION HOMES BY STYLES, INC., a Delaware corporation       STYLES ESTATES, LTD., INC., a Delaware corporation       B&B ON THE BEACH, INC., a North Carolina corporation       BRINDLEY & BRINDLEY REALTY & DEVELOPMENT, INC., a North Carolina corporation       BLUEBILL PROPERTIES, INC., a Delaware corporation       BLUEBILL VACATION PROPERTIES, INC., a Delaware corporation       COATES, REID & WALDRON, INC., a Delaware corporation       CRW PROPERTY MANAGEMENT, INC., a Delaware corporation       COASTAL RESORTS REALTY, L.L.C., a Delaware limited liability company       COASTAL RESORTS MANAGEMENT, INC., a Delaware corporation         COLLECTION OF FINE PROPERTIES, INC., a Colorado corporation       TEN MILE HOLDINGS, LTD., a Colorado corporation       HOTEL CORPORATION OF THE PACIFIC, INC., a Hawaii corporation       HOUSTON AND O’LEARY COMPANY, a Colorado corporation       MAUI CONDOMINIUM & HOME REALTY, INC., a Hawaii corporation       THE MAURY PEOPLE, INC., a Massachusetts corporation       HOWEY ACQUISITION, INC., a Florida corporation       PRISCILLA MURPHY REALTY, INC., a Florida corporation       REALTY CONSULTANTS, INC., a Florida corporation       RESORT PROPERTY MANAGEMENT, INC., a Utah corporation       SHORELINE RENTALS, INC., a Delaware corporation       TELLURIDE RESORT ACCOMMODATIONS, INC., a Colorado corporation       TRUPP-HODNETT ENTERPRISES, INC., a Georgia corporation       THE MANAGEMENT COMPANY, INC., a Georgia corporation       WORTHY OWNER RENTAL GROUP, INC., a South Carolina corporation         ABBOTT & ANDREWS REALTY, INC., a Florida corporation       ABBOTT REALTY SERVICES, INC., a Florida corporation       ABBOTT RESORTS, INC., a Florida corporation       PLANTATION RESORT MANAGEMENT, INC.,  a Delaware corporation       THE TOPS’L GROUP, INC., a Florida corporation       R & R RESORT RENTAL PROPERTIES, INC., a North Carolina corporation           (The following signature is on behalf of each of the foregoing Guarantors)           By: /s/  David L. Levine     Name: David L. Levine     Title: Chairman     [Signatures Continued on Next Page]   LENDERS: CITIBANK, N.A.,   as Agent           By: /s/  Nicolas T. Erni     Name: Nicolas T. Erni     Title: Director/VP           BANK OF AMERICA, N.A.,   as Documentation Agent, Existing Agent, a Lender and an Issuing Lender           By:       Name:     Title:           CRÉDIT LYONNAIS NEW YORK BRANCH,   as Syndication Agent and a Lender           By: /s/  David Bowers     Name: David Bowers     Title: Vice President           CITICORP NORTH AMERICA, INC.,   as a Lender and an Issuing Lender           By: /s/  Nicolas T. Erni     Name: Nicolas T. Erni     Title: Director/VP           UNION PLANTERS BANK,   as a Lender           By: /s/  Craig E. Gardella     Name: Craig E. Gardella     Title: Senior Vice President Schedule 1 Exhibit 7.1(c)   FORM OF OFFICER'S CERTIFICATE     TO:         CITIBANK, N.A., as Agent 390 Greenwich Street New York, New York  10013 Attn:  Larry Farley   RE:          Amended and Restated Credit Agreement dated as of January 22, 2001 among ResortQuest International, Inc., a Delaware corporation (the “Borrower”), the Credit Parties party thereto, the Lenders named therein, Citbank, N.A., as Agent, Bank of America, N.A., as Documentation Agent, Crédit Lyonnais New York Branch, as Syndication Agent, and Salomon Smith Barney Inc., as Arranger (as the same may be amended, modified, extended or restated from time to time, the "Credit Agreement”)   DATE:    _____________, 20__                     Pursuant to the terms of the Credit Agreement, I, ___________________, chief financial officer of ResortQuest International, Inc. hereby certify on behalf of all the Credit Parties that the statements below are accurate and complete in all respects (all capitalized terms used below shall have the respective meanings set forth in the Credit Agreement):                                   (a)           I have reviewed the terms of the Credit Agreement and the terms of the other Credit Documents, and I have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and condition of the Consolidated Parties during the accounting period covered by the attached financial statements.                                   (b)           Attached hereto as Schedule 1 are calculations demonstrating compliance by the Credit Parties with the financial covenants contained in Section 7.11 of the Credit Agreement.                                   (c)           The examination described in paragraph (a) above did not disclose, and we have no knowledge of, the existence of any condition or event which constitutes a Default or Event of Default under the Credit Agreement.                                     (d)           The monthly/quarterly/annual financial statements for the fiscal month/quarter/year ended __________ which accompany this certificate fairly present in all material respects the financial condition of the Consolidated Parties or the Borrower and its Subsidiaries, as applicable, and have been prepared in accordance with GAAP, subject to changes resulting from audit and normal year-end audit adjustments.     RESORTQUEST INTERNATIONAL, INC.                 By:         Name:       Title:     SCHEDULE 1 TO OFFICER'S CERTIFICATE   1. Fixed Charge Coverage Ratio                       (a)   Consolidated EBITDA   $                     (b)   Consolidated Rent Expense   $                     (c)   [(a+(b])   $                     (d)   Consolidated Interest Expense   $                     (e)   Consolidated Scheduled Funded Debt Payments   $                     (f)   Consolidated Rent Expense   $                     (g)   Dividends   $                     (h)   Major Earnout Payments:   $                     (i)   Net Aston Guaranty Payments:   $                     (i)   [(d)+(e)+(f)+(g)+(h)+(i)]:   $                     (k)   Fixed Charge Coverage Ratio [(c)/(i)]:   :1.0                 2. Consolidated Leverage Ratio                       (a)   Funded Indebtedness of the Consolidated Parties   $                     (b)   Consolidated EBITDA of the Consolidated Parties   $                     (c)   Consolidated Leverage Ratio [(a)/(b)]   :1.0                 3. Consolidated Net Worth                       (a)   Actual Consolidated Net Worth as of the end of the fiscal period referred to above   $                     (b)   Base Consolidated Net Worth:   $ 90,000,000                   (c)   .75 x cumulative Consolidated Net Income (to the extent positive) subsequent to the Closing Date   $                     (d)   Net Cash Proceeds from Equity Issuance subsequent to the Closing Date   $                     (e)   Consolidated Net Worth required by Section 7.11(c) [(b)+(c)+(d)]   $                   4. Consolidated Capital Expenditures                       (a)   Consolidated Capital Expenditures for the twelve month period ending as of the end of the fiscal period referred to above:   $                     (b)   The lesser of $10,000,000 or 4% of Consolidated Revenues of the Consolidated Parties   $                     (c)   Software Expenditures for period commencing on June 30, 2000 and ending as of the end of the fiscal period referred to above:                 $     5. Consolidated Capital Expenditures for Calendar Year 2002                       (a)   Consolidated Capital Expenditures for the period commencing January 1, 2002 and ending as of the end of  the fiscal period referred to above, allocable to each of the following categories:                           (i) Property maintenance:   $           (ii) Corporate headquarters, centralized offices and information technology:   $                     (b)   Amount in 5(a)(i) allocable to a new call center:   $                     (c)   Software Expenditures for period commencing on June 30, 2000 and ending as of the end of the fiscal period referred to above:                 $     6. Minimum Consolidated EBITDA for Period 10/01/01 to 12/31/01 and Calendar Year 2002                       (a)   Consolidated EBITDA of the Consolidated Parties ending as of the end of the fiscal period referred to above:   $                    

Exhibit 10.16 STATE OF OREGON DEPARTMENT OF CONSUMER & BUSINESS SERVICES Workers' Compensation Division 350 Winter Street NE, Room 21 Salem, OR 97310–0220 SURETY BOND Bond #08167817 KNOW ALL MEN BY THESE PRESENTS, THAT WE, LABOR READY_NORTHWEST, INC., a Washington Corporation with headquarters in the CITY OF Tacoma Washington , as Principal and Fidelity and Deposit Company of Maryland an Maryland Corporation authorized to do business in Oregon, as Surety are held and firmly bound unto the State of Oregon for the use and benefit of all employes of the Principal and persons who may be entitled to compensation under the Workers' Compensation Law of the State of Oregon and to the Workers' Compensation Division of the State of Oregon for any assessments or contributions due from the Principal to the Workers' Compensation Division in the sum of SEVEN HUNDRED FIFTY SEVEN THOUSAND, AND NO/100) Dollars($ 757,000.00) lawful money of the United States, assigns jointly and severally, firmly by these presents.           THE CONDITION OF THE FOREGOING OBLIGATION IS SUCH that if the Principal which is about to make application to become a self–insured or is a self-insured employer and desires to continue with self-insured status to carry its own risk pays or causes to be paid (a) all compensation for compensable injuries that may become due to subject workers and their beneficiaries, and (b) all assessments, contributions, and other obligations imposed on the employer and his subject workers that may become due from such employer to the Workers' Compensation Division provided by the Oregon Workers' Compensation Law, then this obligation shall be void, otherwise to remain in full force and effect. In the event the said Principal fails to pay the compensation and assessments or contributions due the Workers' Compensation Division provided by law, then Surety will be obligated to pay the compensation and assessments and contributions provided by law. The liability of the Surety shall not be affected by Principal's failure to sign this bond. also apply to this surety bond: IT IS FURTHER UNDERSTOOD AND AGREED that the following conditions shall 1. The Surety undertakes and agrees that the obligation of this bond shall cover and extend to all past , present, existing, and potential liability of said Principal, as a self-insurer, to the extent of the penal sum herein named, without regard to specific injuries, date or dates of injuries, happenings, or events. 2. In the event said Principal shall fail to pay any award or awards which shall be rendered against it by the Workers' Compensation Law or Workers' Compensation Division within thirty (30) days after the same becomes or become final, the Surety shall forthwith pay to the extent of its liability under this bond, said award or awards, to the parties entitled thereto upon the order of the said Workers' Compensation Division. 3. If the said Principal shall suspend payment or shall become insolvent or a receiver shall be appointed for its business, the undersigned Surety will pay said award or awards, to the extend of its liability under this bond, before the expiration of thirty (30) days after the same becomes, or become final, without regard to any proceedings for liquidation of said Principal. 4. The undersigned are held and firmly bound for the payment of all legal costs, including reasonable attorney fees incurred in all or any actions in proceedings taken to enforce payment of this bond, or payments of any award or judgment rendered against the undersigned Surety, on account of the executon by it of this bond.  

QuickLinks -- Click here to rapidly navigate through this document AMENDMENT TO EMPLOYMENT AGREEMENT     This Amendment to Employment Agreement (the "Amendment") is made and entered into effective as of the 9th day of February, 2001, by and between NetZero, Inc., a Delaware corporation (the "Company"), with principal corporate offices at 2555 Townsgate Road, Westlake Village, CA 91361, and Charles Hilliard, whose address is 2112 Marshbrook Road, Lake Sherwood, California 91361 ("Employee"). All capitalized terms used but not otherwise defined herein shall have the meanings given to them in that certain Employment Agreement by and between the Company and Employee dated April 17, 1999 (the "Agreement" or the "Employment Agreement").     WHEREAS, the Company and Employee desire to modify certain terms of the Employment Agreement.     NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1.The Term of the Employment Agreement is hereby extended through February 9, 2005. 2.Employee's Base Salary and Annual Bonus, as defined in the Employment Agreement, shall be increased to include any increases to Employee's base salary and annual bonus as approved by the Board. 3.Section 4.2 shall be replaced with the following:     4.2  Termination Without Cause.  If Employee's employment is terminated without "cause" as defined in Section 4.1(a), or if Employee is Involuntarily Terminated (as defined below), the Company (or its successor, as the case may be) shall pay to Employee (i) any accrued but unpaid Base Salary and vacation through the date of termination, (ii) reimbursement for any expenses as set forth in Section 3.5, through the date of termination and (iii) a severance payment in an amount equal to four times Employee's Base Salary and Annual Bonus, payable in one lump sum on the date of termination, subject to withholding as may be required by law. In addition, if Employee's employment is terminated without cause (other than if Employee is Involuntarily Terminated) or if Employee's employment is terminated due to death or permanent disability, Employee will be credited with an additional twelve (12) months of service toward vesting in the Option shares in addition to the service he has accrued toward vesting through the date of termination. If Employee is Involuntarily Terminated, vesting of all options to purchase shares of the Company's Common Stock and all restricted stock grants (subject to any vesting deferrals provided in any restricted stock grant) will be accelerated in full and all such options shall remain in effect for a one (1) year period following the date of termination. As used in this Section 4.2, Employee shall be deemed "Involuntarily Terminated" if (i) the Company or any successor to the Company terminates Employee's employment without cause in connection with or following a Corporate Transaction or Change of Control (as defined in the Company's 1999 Stock Incentive Plan); or (ii) in connection with or following a Corporate Transaction or Change of Control there is (a) a decrease in Employee's title or responsibilities (it being deemed to be a decrease in title and/or responsibilities if Employee is not offered the position of Senior Vice President and Chief Financial Officer of the Company or its successor as well as the acquiring and ultimate parent entity, if any, following the Corporate Transaction or Change of Control), (b) a decrease in pay and/or benefits from those provided by the Company immediately prior to the Corporate Transaction or (c) a requirement that Employee re-locate out of the greater Los Angeles metropolitan area. 4.For the eighteen (18) month period following the termination of Employee's employment with the Company (the "Noncompetition Period"), Employee shall not directly engage in, or manage or direct persons engaged in, a Competitive Business Activity (as defined below) anywhere in the Restricted Territory (as defined below); provided, that the Noncompetition Period shall terminate if the Company terminates operations or if the Company no longer engages in any Competitive Business Activity. The term "Competitive Business Activity" shall -------------------------------------------------------------------------------- mean the business of providing consumers with dial-up Internet access services (free or pay). The term "Restricted Territory" shall mean each and every county, city or other political subdivision of the United States in which the Company is engaged in business or providing its services.  The Company agrees that providing services to a company or entity that is involved in a Competitive Business Activity but which services are unrelated to the Competitive Business Activity shall not be deemed a violation of this Amendment. 5.Company and Employee agree that, for the purposes of damages to the Company with respect to any breach of Section 4 above, the value of Employee's obligations to the Company under Section 4 equal 37.5% of the severance payment in paragraph 3 above. In the event that any amounts, benefits, and rights payable to Employee upon a termination of employment under Section 4 (CIC Benefits) would be deemed under Section 280G of the Internal Revenue Code (Code) to constitute parachute payments, then the Employee's CIC Benefits shall be payable either (a) in full, or (b) as to such lesser amount which would result in no portion of such CIC Benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by Employee on an after-tax basis, of the greatest amount of benefits under Section 4 notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. The determination as to whether and to what extent payments under Section 4 are required to be reduced in accordance with the preceding sentence shall be made at the Company's expense by PricewaterhouseCoopers LLP or by such other nationally recognized certified public accounting firm, law firm, or benefits consulting firm as the Compensation Committee of the Company's Board of Directors may designate, subject to the reasonable approval of Employee. PricewaterhouseCoopers LLP (or such other firm as may have been designated in accordance with the preceding sentence) shall have the right to engage any service provider of their choosing to provide any assistance or services necessary in making such determination. 6.If any provision of this Agreement is held by an arbitrator or a court of competent jurisdiction to conflict with any federal, state or local law, or to be otherwise invalid or unenforceable, such provision shall be construed in a manner so as to maximize its enforceability while giving the greatest effect as possible to the parties' intent. To the extent any provision cannot be construed to be enforceable, such provision shall be deemed to be eliminated from this Agreement and of no force or effect and the remainder of this Agreement shall otherwise remain in full force and effect and be construed as if such portion had not been included in this Agreement. 7.This Amendment shall be deemed incorporated into the Agreement and, except as specifically modified by this Amendment, the Agreement shall remain unchanged and in full force and effect. The Agreement shall be binding upon successors and assigns.     In witness whereof, the parties have executed this Amendment to be effective as of the first date written above.               NETZERO, INC.               By:   /s/ MARK R. GOLDSTON    -------------------------------------------------------------------------------- Mark R. Goldston Chief Executive Officer               EMPLOYEE         /s/ CHARLES S. HILLIARD    -------------------------------------------------------------------------------- Charles S. Hilliard -------------------------------------------------------------------------------- QuickLinks AMENDMENT TO EMPLOYMENT AGREEMENT

QuickLinks -- Click here to rapidly navigate through this document [***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. Exhibit 10.57 UTSTARCOM, INC. AMENDMENT NO. 1 TO ASSIGNMENT AGREEMENT     Effective as of March 2, 2001     This Amendment No. 1 to the Assignment Agreement (the "Amendment") is entered into as of March 2, 2001 and amends that certain Assignment Agreement dated as of July 24, 2000 (the "Assignment Agreement"), by and among UTStarcom, Inc., a Delaware corporation (the "Company") and Stable Gain International Limited, a British Virgin Islands company ("Stable Gain"). WITNESSETH:     WHEREAS, the Company and Stable Gain desire to amend the Assignment Agreement; and     WHEREAS, the Assignment Agreement may be amended as set forth in Section 9.5 thereof.     NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants contained herein, the parties hereby agree as follows: 1.Amendment to the Assignment Agreement. (a)Section 1.2 shall be amended in its entirety as follows:     "Average Share Price." "Average Share Price" means the average share price of UTStarcom Common Stock, calculated by dividing (i) the sum of the closing prices of UTStarcom Common Stock, as reported at the end of trading on each day during the Valuation Period, by (ii) [***]." (b)Section 1.13 shall be amended in its entirety as follows:     "Valuation Period." "Valuation Period" means the period covering [***] Trading Days immediately preceding the Closing Date." (c)Exhibit C to the Assignment Agreement shall be amended in its entirety as set forth on Appendix 1 attached hereto. 2.Miscellaneous.     Except as amended by this Amendment, the Assignment Agreement shall remain in full force and effect.     Capitalized terms in this Amendment not otherwise defined shall have the same meaning as in the Assignment Agreement.     This Amendment will be governed by and construed in accordance with the laws of the State of California without giving effect to the conflicts of law principles thereof.     This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] --------------------------------------------------------------------------------     IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 to the Assignment Agreement as of the date written above. UTSTARCOM, INC.     By: --------------------------------------------------------------------------------     Hong Lu, Chief Executive Officer     STABLE GAIN INTERNATIONAL LIMITED     By: --------------------------------------------------------------------------------     Wang Jin, Vice President     -------------------------------------------------------------------------------- APPENDIX 1 Exhibit C Shares Purchaser Price --------------------------------------------------------------------------------   Average Share Price --------------------------------------------------------------------------------   Shares -------------------------------------------------------------------------------- [***]   [***]   [***] -------------------------------------------------------------------------------- QuickLinks Exhibit 10.57 UTSTARCOM, INC. AMENDMENT NO. 1 TO ASSIGNMENT AGREEMENT WITNESSETH APPENDIX 1 Exhibit C Shares

QuickLinks -- Click here to rapidly navigate through this document EXHIBIT 10.17 AMENDMENT TO EMPLOYMENT AGREEMENT     This Amendment to Employment Agreement (the "Amendment") is made and entered into effective as of the 9th day of February, 2001, by and between NetZero, Inc., a Delaware corporation (the "Company"), with principal corporate offices at 2555 Townsgate Road, Westlake Village, CA 91361, and Brian Woods, whose address is 22722 Chimera Lane, Topanga, CA 90290 ("Employee"). All capitalized terms used but not otherwise defined herein shall have the meanings given to them in that certain Employment Agreement by and between the Company and Employee dated December 1, 1999 (the "Employment Agreement").     WHEREAS, the Company and Employee desire to modify certain terms of the Employment Agreement.     NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1.The Term of the Employment Agreement is hereby extended through February 9, 2005. 2.Employee's Base Salary and Annual Bonus, as defined in the Employment Agreement, shall be increased to include any increases to Employee's base salary and annual bonus as approved by the Board. 3.Section 4.2 shall be replaced with the following:     4.2  Termination Without Cause.  If Employee's employment is terminated without "cause" as defined in Section 4.1(a), or if Employee is Involuntarily Terminated (as defined below), the Company (or its successor, as the case may be) shall pay to Employee (i) any accrued but unpaid Base Salary and vacation through the date of termination, (ii) reimbursement for any expenses as set forth in Section 3.5, through the date of termination and (iii) a severance payment in an amount equal to four times Employee's Base Salary and Annual Bonus, payable in one lump sum on the date of termination, subject to withholding as may be required by law. In addition, if Employee's employment is terminated without cause (other than if Employee is Involuntarily Terminated) or if Employee's employment is terminated due to death or permanent disability, Employee will be credited with an additional twelve (12) months of service toward vesting in the Option shares in addition to the service he has accrued toward vesting through the date of termination. If Employee is Involuntarily Terminated, vesting of all options to purchase shares of the Company's Common Stock and all restricted stock grants (subject to any vesting deferrals provided in any restricted stock grant) will be accelerated in full and all such options shall remain in effect for a one (1) year period following the date of termination. As used in this Section 4.2, Employee shall be deemed "Involuntarily Terminated" if (i) the Company or any successor to the Company terminates Employee's employment without cause in connection with or following a Corporate Transaction or Change of Control (as defined in the Company's 1999 Stock Incentive Plan); or (ii) in connection with or following a Corporate Transaction or Change of Control there is (a) a decrease in Employee's title or responsibilities (it being deemed to be a decrease in title and/or responsibilities if Employee is not offered the position of Senior Vice President and Chief Marketing Officer of the Company or its successor as well as the acquiring and ultimate parent entity, if any, following the Corporate Transaction or Change of Control), (b) a decrease in pay and/or benefits from those provided by the Company immediately prior to the Corporate Transaction or (c) a requirement that Employee re-locate out of the greater Los Angeles metropolitan area. 4.For the eighteen (18) month period following the termination of Employee's employment with the Company (the "Noncompetition Period"), Employee shall not directly engage in, or manage or direct persons engaged in, a Competitive Business Activity (as defined below) -------------------------------------------------------------------------------- anywhere in the Restricted Territory (as defined below); provided, that the Noncompetition Period shall terminate if the Company terminates operations or if the Company no longer engages in any Competitive Business Activity. The term "Competitive Business Activity" shall mean the business of providing consumers with dial-up Internet access services (free or pay). The term "Restricted Territory" shall mean each and every county, city or other political subdivision of the United States in which the Company is engaged in business or providing its services.   The Company agrees that providing services to a company or entity that is involved in a Competitive Business Activity but which services are unrelated to the Competitive Business Activity shall not be deemed a violation of this Amendment. 5.Company and Employee agree that, for the purposes of damages to the Company with respect to any breach of Section 5 above, the value of Employee's obligations to the Company under Section 5 equal 37.5% of the severance payment in paragraph 3 above. In the event that any amounts, benefits, and rights payable to Employee upon a termination of employment under Section 4 (CIC Benefits) would be deemed under Section 280G of the Internal Revenue Code (Code) to constitute parachute payments, then the Employee's CIC Benefits shall be payable either (a) in full, or (b) as to such lesser amount which would result in no portion of such CIC Benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by Employee on an after-tax basis, of the greatest amount of benefits under Section 5 notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. The determination as to whether and to what extent payments under Section 5 are required to be reduced in accordance with the preceding sentence shall be made at the Company's expense by PricewaterhouseCoopers LLP or by such other nationally recognized certified public accounting firm, law firm, or benefits consulting firm as the Compensation Committee of the Company's Board of Directors may designate, subject to the reasonable approval of Employee. PricewaterhouseCoopers LLP (or such other firm as may have been designated in accordance with the preceding sentence) shall have the right to engage any service provider of their choosing to provide any assistance or services necessary in making such determination. 6.If any provision of this Agreement is held by an arbitrator or a court of competent jurisdiction to conflict with any federal, state or local law, or to be otherwise invalid or unenforceable, such provision shall be construed in a manner so as to maximize its enforceability while giving the greatest effect as possible to the parties' intent. To the extent any provision cannot be construed to be enforceable, such provision shall be deemed to be eliminated from this Agreement and of no force or effect and the remainder of this Agreement shall otherwise remain in full force and effect and be construed as if such portion had not been included in this Agreement. 7.This Amendment shall be deemed incorporated into the Agreement and, except as specifically modified by this Amendment, the Agreement shall remain unchanged and in full force and effect. The Agreement shall be binding upon successors and assigns. --------------------------------------------------------------------------------     In witness whereof, the parties have executed this Amendment to be effective as of the first date written above.               NETZERO, INC.               By:   /s/ MARK R. GOLDSTON    -------------------------------------------------------------------------------- Mark R. Goldston Chief Executive Officer               EMPLOYEE         /s/ BRIAN WOODS    -------------------------------------------------------------------------------- Brian Woods -------------------------------------------------------------------------------- QuickLinks AMENDMENT TO EMPLOYMENT AGREEMENT

Exhibit 10(j) AMENDED AND RESTATED EMPLOYMENT AGREEMENT       AGREEMENT, made and entered into as of the Effective Date by and between TRW Inc., an Ohio corporation (together with its successors and assigns permitted under this Agreement, the “Company”), and David M. Cote (the “Executive”). W I T N E S S E T H :       WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying the terms of such employment (this “Agreement”) and the Executive desires to enter into this Agreement and to accept such employment, subject to the terms and provisions of 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 (individually a “Party” and together the “Parties”) agree as follows:       1. Definitions.             (a) “Affiliate” of a person or other entity shall mean a person or other entity that directly or indirectly controls, is controlled by, or is under common control with the person or other entity specified.             (b) “Base Salary” shall mean the salary provided for in Section 4 below or any increased salary granted to the Executive pursuant to Section 4.             (c) “Board” shall mean the Board of Directors of the Company.             (d) “Cause” shall mean:                   (i) the Executive commits a felony involving moral turpitude; or                   (ii) in carrying out his duties, the Executive engages in conduct that constitutes gross neglect or gross misconduct, resulting, in either case, in economic harm to the Company.             (e) A “Change in Control” shall be defined in the Employment Continuation Agreement, which is attached hereto as Exhibit A. -------------------------------------------------------------------------------- 2             (f) “Constructive Termination Without Cause” shall mean termination by the Executive of his employment at his initiative within 30 days following the occurrence of any of the following events without his consent:                   (i) a reduction in the Executive’s then current Base Salary or target bonus opportunity as a percentage of Base Salary;                   (ii) a material diminution in the Executive’s duties; or                   (iii) the failure of the Company to obtain the assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company within 15 days after a merger, consolidation, sale or similar transaction. Following written notice from the Executive of any of the events described above, the Company shall have 15 calendar days in which to cure. If the Company fails to cure, the Executive’s termination shall become effective on the 16th calendar day following the written notice.             (g) “Disability” shall have the meaning ascribed to it by the Company’s Long-Term Disability Plan.             (h) “Effective Date” shall be November 11, 1999.             (i) “Pro Rata” shall mean a fraction, the numerator of which is the number of days that the Executive was employed in the applicable performance period (a calendar year in the case of an annual bonus and a performance cycle in the case of an award under the Long-Term Incentive Plan) and the denominator of which shall be the number of days in the applicable performance period.             (j) “Stock” shall mean the Common Stock of the Company.             (k) “Term of Employment” shall mean the period specified in Section 2 below (including any extension as provided therein).             (l) “Period of Employment” shall mean the period of time between the Effective Date and the date on which the Executive’s employment terminates.       2. Term of Employment.             The Term of Employment shall begin on the Effective Date, and shall extend until the third anniversary of the Effective Date, with two automatic one-year renewals thereafter unless either Party notifies the other at least 3 months before the scheduled expiration date that the term is not to renew. Notwithstanding the foregoing, the Term of Employment may be earlier terminated by either Party in accordance with the provisions of Section 12. -------------------------------------------------------------------------------- 3       3. Position, Duties and Responsibilities.             (a) Commencing on the Effective Date and continuing through January 31, 2001, the Executive shall be employed as the President and Chief Operating Officer of the Company and be primarily responsible for the general operations of the automotive businesses of the Company. The Executive shall also be elected by the Board as a member of the Board, effective as of the Effective Date. Commencing on February 1, 2001, the Executive shall be employed as Chief Executive Officer of the Company. During the term of this Agreement, the Executive shall devote substantially all of his business time and attention to the business and affairs of the Company and shall use his best efforts, skills and abilities to promote its interests.             (b) Nothing herein shall preclude the Executive from (i) serving on the boards of directors of a reasonable number of other corporations with the concurrence of the Board (which approval shall not be unreasonably withheld), (ii) serving on the boards of a reasonable number of trade associations and/or charitable organizations, (iii) engaging in charitable activities and community affairs, and (iv) managing his personal investments and affairs, provided that such activities set forth in this Section 3(b) do not conflict or materially interfere with the effective discharge of his duties and responsibilities under Section 3(a).       4. Base Salary.             The Executive shall be paid an annualized Base Salary, payable in accordance with the regular payroll practices of the Company, of $750,000 through calendar year 2000. Thereafter, the Base Salary shall be reviewed annually for increase in the discretion of the Board.       5. Annual Incentive Award.             During the Term of Employment, commencing in 2000 the Executive shall have a target bonus opportunity equal to 70% of Base Salary and commencing in 2001 the Executive shall have a target bonus opportunity equal to 90% of Base Salary. This bonus shall be payable in these amounts if the performance goals established for the relevant year are met, but subject to adjustment in accordance with the Company’s Operational Incentive Plan. If such performance goals are not met, the Executive shall receive a lesser amount (or nothing) as determined in accordance with the Company’s Operational Incentive Plan. The Executive is guaranteed a minimum bonus of $525,000 for the year 2000.       6. Sign-on Awards.             (a) In order to keep the Executive whole in respect of compensation he is forfeiting at his previous employer, the Company shall grant the Executive the equity-based awards described in this Section 6. -------------------------------------------------------------------------------- 4             (b) Restricted Stock Award. The Company shall grant the Executive 430,000 shares of restricted stock based on the terms set forth in Exhibit B attached hereto.             (c) Stock Option Award. The Company shall grant the Executive a stock option to purchase 500,000 shares of Common Stock of the Company based on the terms set forth in Exhibit C attached hereto.       7. Additional Long-Term Incentive Awards.             (a) Long-Term Incentive Programs. The Executive shall be eligible to participate in the Company’s on-going long-term incentive programs.             (b) Stock Options. The Executive shall be eligible for stock option awards commencing with awards in 2000, in accordance with Company practices applicable to its senior-level executives at the sole discretion of the Board.             (c) Strategic Incentive Plan (“SIP”). The Executive shall participate in the Company’s 1998-2000 SIP with a target grant of 15,000 performance units for the year 2000.       8. Employee Benefit Programs.             During the Term of Employment, the Executive shall be entitled to participate in any employee pension and welfare benefit plans and programs made available to the Company’s senior level executives or to its employees generally, as such plans or programs may be in effect from time to time, including, without limitation, the Company’s Salaried Pension Plan, Stock Savings Plan and other retirement and savings plans or programs, Executive Health Care Plan (which covers medical, dental and vision), short-term and long-term disability and life insurance plans, accidental death and dismemberment protection, travel accident insurance, and will also participate in the Company’s vacation policy for senior executives.       9. Supplemental Pension.             The Executive shall be entitled to participate in the Company’s Non-Qualified Retirement Plans. In addition, the Company shall provide him with a Supplemental Retirement Benefit (“SRB”) under the TRW Supplemental Executive Retirement Plan (the “SERP”) as described in Schedule D to the SERP, a copy of which is attached as Exhibit D hereto.       10. Reimbursement of Business and Other Expenses; Relocation.             (a) The Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this Agreement and the Company shall promptly reimburse him for all reasonable business expenses incurred in connection with carrying out the business of the Company, subject to documentation in accordance with the Company’s policy. -------------------------------------------------------------------------------- 5             (b) The Executive shall be entitled to participate in the Company’s Relocation Policy, including without limitation, all reasonable moving, closing, temporary housing and other associated expenses.       11. Perquisites. The Executive shall receive standard Company executive perquisites, including, without limitation, the following:             (a) the Executive Life Insurance Plan, providing split dollar insurance with a $5 million single-life covered amount, subject to the provisions of the plan;             (b) the Financial Counseling Program; and             (c) the Executive Automobile Plan.       12. Termination of Employment.             (a) Termination Due to Death. In the event that the Executive’s employment is terminated due to his death, his estate or his beneficiaries, as the case may be, shall be entitled to the following benefits:                   (i) Base Salary through the end of the month in which death occurs;                   (ii) Pro Rata annual incentive award for the year in which the Executive’s death occurs, when bonuses are paid to other officers;                   (iii) all outstanding options, whether or not then exercisable, shall become exercisable and shall remain exercisable through the end of the originally scheduled term;                   (iv) the restrictions on restricted stock shall lapse;                   (v) payout of other long-term incentive plans in accordance with those plans; and                   (vi) SRB benefits in accordance with Section 9.             (b) Termination Due to Disability. In the event that the Executive’s employment is terminated due to his Disability, he shall be entitled to the following benefits:                   (i) disability benefits in accordance with the long-term disability program in effect for senior executives of the Company; -------------------------------------------------------------------------------- 6                   (ii) Base Salary through the end of the month in which disability benefits commence;                   (iii) Pro Rata annual incentive award for the year in which the Executive’s termination occurs, payable when bonuses are paid to other officers;                   (iv) all outstanding options, whether or not then exercisable, shall become exercisable and shall remain exercisable for the end of the originally scheduled term;                   (v) the restrictions on the restricted stock shall lapse;                   (vi) payout of other long-term incentive plans in accordance with those plans; and                   (vii) SRB benefits in accordance with Section 9.             (c) Termination by the Company for Cause.                   (i) A termination for Cause shall not take effect unless the provisions of this paragraph (i) are complied with. The Executive shall be given written notice by the Board of the intention to terminate him for Cause and shall then be entitled to a hearing before the Board, provided he requests such hearing within five calendar days of receipt of the written notice from the Board of the intention to terminate him for Cause. Following such hearing, if the Executive is furnished written notice by the Board confirming that, in its judgment, grounds for Cause on the basis of the original notice exist, he shall thereupon be terminated for Cause.                   (ii) In the event the Company terminates the Executive’s employment for Cause:                         (A) he shall be entitled to Base Salary through the date of the termination;                         (B) all outstanding options which are not then exercisable shall be forfeited;                         (C) all unvested restricted stock shall be forfeited;                         (D) any other long-term incentive grant shall be forfeited; and                         (E) SRB benefits in accordance with Section 9. -------------------------------------------------------------------------------- 7             (d) Termination without Cause or Constructive Termination without Cause after February 1, 2001. In the event the Executive’s employment is terminated by the Company without Cause, other than due to Disability or death, or in the event there is a Constructive Termination without Cause, in either case after February 1, 2001, the Executive shall be entitled to the following benefits:                   (i) Base Salary through the date of termination;                   (ii) Base Salary, at the annualized rate in effect on the date of termination, for a period of 24 months following such termination;                   (iii) a Pro Rata annual incentive award for the year in which termination occurs;                   (iv) an annual incentive award at target for a period of 24 months following the date of termination; payable when such awards are made to other senior executives;                   (v) if the termination is prior to the Executive’s 55th birthday, exercisable options shall remain exercisable for three months, if the termination is on or after the Executive’s 55th birthday, exercisable options shall remain exercisable through the end of the originally scheduled term;                   (vi) unvested restricted stock is forfeited;                   (vii) any other long-term incentives shall be payable in accordance with the plans;                   (viii) SRB benefits in accordance with Section 9; and                   (ix) continued participation in the Executive Health Care Plan and in other employee benefit plans or programs in which he was participating on the date of the termination of his employment until the earlier of 24 months following termination of employment or the date, or dates, he obtains coverage under the plans of another employer.             (e) Voluntary Termination. A termination of employment by the Executive on his own initiative, other than a termination due to death or Disability or a Constructive Termination without Cause, shall have the same consequences as provided in Section 12(c)(ii) for a termination for Cause. A voluntary termination under this Section 12(e) shall be effective 30 calendar days after prior written notice is received by the Company, unless the Company elects to make it effective earlier. -------------------------------------------------------------------------------- 8             (f) Consequences of a Change in Control. In the event of a change in control, the Executive’s entitlements relating to a Change in Control of the Company shall be determined in accordance with the Employment Continuation Agreement, Exhibits B and C of this Employment Agreement and any other post-Effective Date documents relating to Executive benefits upon a change in control of the Company. In no event shall any payments or benefits due the Executive pursuant to the Employment Continuation Agreement be duplicated pursuant to this agreement.             (g) Other Termination Benefits. In the case of any of the foregoing terminations, the Executive or his estate shall also be entitled to:                   (i) the balance of any incentive awards due for performance periods which have been completed, but which have not yet been paid;                   (ii) any expense reimbursements due the Executive; and                   (iii) other benefits, if any, in accordance with applicable plans and programs of the Company.       13. Confidentiality.             (a) The Executive agrees that he will not, at any time during the Term of Employment or thereafter, disclose or use any trade secret, proprietary or confidential information of the Company or any subsidiary or Affiliate of the Company, obtained during the course of his employment, except as required in the course of such employment or with the written permission of the Company or, as applicable, any subsidiary or Affiliate of the Company or as may be required by law, provided that, if the Executive receives legal process with regard to disclosure of such information, he shall promptly notify the Company and cooperate with the Company in seeking a protective order.             (b) The Executive agrees that at the time of the termination of his employment with the Company, whether at the instance of the Executive or the Company, and regardless of the reasons therefor, he will deliver to the Company, and not keep or deliver to anyone else, any and all notes, files, memoranda, papers and, in general, any and all physical matter containing information, including any and all documents significant to the conduct of the business of the Company or any subsidiary or Affiliate of the Company which are in his possession, except for any documents for which the Company or any subsidiary or Affiliate of the Company has given written consent to removal at the time of the termination of the Executive’s employment. -------------------------------------------------------------------------------- 9       14. Noncompetition.             The Executive agrees that during the Period of Employment and for a period of two years thereafter (the “Noncompetition Period”) he shall not in any manner, directly or indirectly, through any person, firm, corporation or enterprise, alone or as a member of a partnership or as an officer, director, stockholder, investor or employee of or advisor or consultant to any person, firm, corporation or enterprise or otherwise (a “Competitor”), engage or be engaged, or assist any Competitor in engaging or being engaged, in any Competitive Activity. A Competitive Activity shall mean a business that (i) is being conducted by the Company or any Affiliate at the time in question, (ii) was being conducted, or was under active consideration to be conducted, by the Company or any Affiliate, at the date of the termination of the Executive’s employment, and (iii) represents fifteen (15) percent or more of the total revenues of the Competitor for its most recent quarterly reporting period. Nothing in this Section 14 shall prohibit the Executive from being a passive owner of not more than one percent of the outstanding common stock, capital stock and equity of any firm, corporation or enterprise so long as the Executive has no active participation in the management of business of such firm, corporation or enterprise.       15. Non solicitation.             The Executive further agrees that during the Noncompetition Period he shall not in any manner, directly or indirectly, induce or attempt to induce any employee of or advisor or consultant to the Company or any of its Affiliates to terminate or abandon his or her or its employment or other relationship for any purpose whatsoever; provided, however, that this restriction shall not apply to, or interfere with, the proper performance by the Executive of his duties and responsibilities during the Period of Employment.             If the restrictions stated in Sections 14 and 15 of this Agreement are found by a court to be unreasonable, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall revise the restrictions contained herein to cover the maximum period, scope and area permitted by law.       16. Remedies.             The Executive agrees that the Company’s remedies at law would be inadequate in the event of a breach or threatened breach of this Agreement; accordingly, the Company shall be entitled, in addition to its rights at law, to seek an injunction and other equitable relief without the need to post a bond. -------------------------------------------------------------------------------- 10       17. Resolution of Disputes.             Any disputes arising under or in connection with this Agreement shall be resolved by third party mediation of the dispute and, failing that, at the election of the Executive by binding arbitration, to be held in Cleveland, Ohio, in accordance with the rules and procedures of the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Each Party shall bear his or its own costs of the mediation, arbitration or litigation.       18. Indemnification.             (a) The Company agrees that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he is or was a director, officer or employee of the Company or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive’s alleged action in an official capacity while serving as a director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Company to the fullest extent legally permitted or authorized by the Company’s certificate of incorporation or bylaws or resolutions of the Company’s Board of Directors or, if greater, by the laws of the State of Ohio, against all cost, expense, liability and loss (including, without limitation, attorney’s fees, judgments, fines, ERISA excise taxes or other liabilities or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if he has ceased to be a director, member, employee or agent of the Company or other entity and shall inure to the benefit of the Executive’s heirs, executors and administrators. The Company shall advance to the Executive all reasonable costs and expenses incurred by him in connection with a Proceeding within 20 calendar days after receipt by the Company of a written request for such advance. Such request shall include an undertaking by the Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses.             (b) The failure of the Company (including its board of directors, independent legal counsel or stockholders) to have made a determination prior to the commencement of any proceeding concerning payment of amounts claimed by the Executive under Section 18(a) above that indemnification of the Executive is proper because he has met the applicable standard of conduct, shall not create a presumption that the Executive has not met the applicable standard of conduct.             (c) The Company agrees to continue and maintain a directors’ and officers’ liability insurance policy covering the Executive to the extent the Company provides such coverage for its other executive officers. -------------------------------------------------------------------------------- 11       19. Assignability; Binding Nature.             This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of the Executive) and assigns. Rights or obligations of the Company under this Agreement may be assigned or transferred by the Company pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. No rights or obligations of the Executive under this Agreement may be assigned or transferred by the Executive other than his rights to compensation and benefits, which may be transferred only by will or operation of law.       20. Entire Agreement.             This Agreement contains the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto.       21. Amendment or Waiver.             No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by the Executive and an authorized officer of the Company. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Executive or an authorized officer of the Company, as the case may be.       22. Severability.             In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law so as to achieve the purposes of this Agreement. -------------------------------------------------------------------------------- 12       23. Survivorship.             Except as otherwise expressly set forth in this Agreement, the respective rights and obligations of the Parties hereunder shall survive any termination of the Executive’s employment. This Agreement itself (as distinguished from the Executive’s employment) may not be terminated by either Party without the written consent of the other Party. Except as otherwise expressly set forth in this Agreement, the respective rights and obligations of the Parties shall survive the Agreement expiration with respect to the rights (including but not limited to vested rights) and the obligations of the Parties.       24. References.             In the event of the Executive’s death or a judicial determination of his incompetence, reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative.       25. Governing Law.             This Agreement shall be governed in accordance with the laws of Ohio without reference to principles of conflict of laws.       26. Notices.             All notices and other communications required or permitted hereunder shall be in writing and shall be deemed given when (a) delivered personally, (b) delivered by certified or registered mail, postage prepaid, return receipt requested or (c) delivered by overnight courier (provided that a written acknowledgment of receipt is obtained by the overnight courier) to the Party concerned at the address indicated below or to such changed address as such Party may subsequently give such notice of:       If to the Company: TRW Inc. Office of the General Counsel 1900 Richmond Road Cleveland, Ohio 44124   If to the Executive: David M. Cote 11804 Springhill Garden Anchorage, Kentucky 40223 -------------------------------------------------------------------------------- 13       27. Headings.             The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.       28. Counterparts.             This Agreement may be executed in two or more counterparts.       IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.       TRW Inc.   By: /s/ John D. Ong -------------------------------------------------------------------------------- John D. Ong Chairman of the Compensation Committee   /s/ David M. Cote -------------------------------------------------------------------------------- David M. Cote

SENIOR EXECUTIVE EMPLOYMENT AGREEMENT                     THIS SENIOR EXECUTIVE EMPLOYMENT AGREEMENT dated October 19, 2001 is by and between TYSON FOODS, INC., a corporation organized under the laws of Delaware (the "  Company"  ), and Donald J. Tyson ("  Employee"  ). WITNESSETH :                     WHEREAS, following Employee's retirement from full time employment, the Company wishes to retain Employee's services and access to Employee's experience and knowledge; and                     WHEREAS, the Employee wishes to furnish advisory services to the Company upon the terms, provisions and conditions herein provided;                     NOW, THEREFORE, in consideration of the foregoing and of the agreements hereinafter contained, the parties hereby agree as follows: 1.       The term of this Agreement (the "  Term"  ) shall begin October 19, 2001 and end October 19, 2011. 2.      During the Term, Employee will, upon reasonable request, provide advisory services to the Company as follows: (a)      Services hereunder shall be provided as an employee of the Company; (b)      Employee may be required to devote up to twenty (20) hours per month to the Company; (c)      Employee may perform advisory services hereunder at any location but may be required to be at the offices of the Company upon reasonable notice; and (d)      Employee shall not be obligated to render services under this Agreement during any period when he is disabled due to illness or injury. 3.      Beginning October 19, 2001, the Company shall (i) pay Employee each year the sum of $800,000 per year, such sum to be payable as the parties may from time to time agree; and (ii) provide Employee with life and health insurance during the Term as generally available to Employee at the time of retirement. In addition, the Company shall continue to provide Employee with his travel and entertainment costs, as well as his estimated income tax liability with respect thereto, consistent with past practices. In the event of the Employee's death, the benefits described above shall continue to be paid to the surviving of Employee's three children, John Tyson, Cheryl Tyson and Carla Tyson, for the duration of the Term. In the event of death by both Employee and the above named children, all benefits under this Agreement shall cease. 305 --------------------------------------------------------------------------------   4.      Employee shall receive, in addition to all other benefits described in this Agreement, as additional consideration for signing this Agreement and for agreeing to abide and be bound by its terms, provisions and restriction an award of 1,000,000 shares of Company Class A Common Stock subject to the terms and conditions of a restricted stock agreement used by the Company for such awards, such restricted stock to vest in its entirety on October 10, 2003. 5.      During the Term, the Company shall reimburse Executive for costs incurred by Executive for tax and estate planning advice from an entity recommended by the Company. 6.      While this Agreement is in effect and thereafter, the Employee shall not divulge to anyone, except in the regular course of the Company's business, any confidential or proprietary information regarding the Company's records, plans or any other aspects of the Company's business which it considers confidential or proprietary. 7.       This Agreement shall terminate in the event Employee accepts employment from anyone deemed by the Company to be a competitor. 8.       The right of the Employee or any other beneficiary under this Agreement to receive payments may not be assigned, pledged or encumbered, except by will or by the laws of descent and distribution, without the permission of the Company which it may withhold in its sole and absolute discretion. 9.       This Agreement represents the complete agreement between Company and Employee concerning the subject matter hereof and supersedes all prior employment or benefit agreements or understandings, written or oral. No attempted modification or waiver of any of the provisions hereof shall be binding on either party unless in writing and signed by both Employee and Company. 10.       It is the intention of the parties hereto that all questions with respect to the construction and performance of this Agreement shall be determined in accordance with the laws of the State of Arkansas. 306 --------------------------------------------------------------------------------               IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date written above.   TYSON FOODS, INC.   By:      /s/ John Tyson Title:   Chairman and Chief Executive Officer             /s/ Donald J. Tyson           Donald J. Tyson   307 --------------------------------------------------------------------------------  

EXHIBIT 10.1 POLYCOM, INC. CHANGE OF CONTROL SEVERANCE AGREEMENT              This Change of Control Severance Agreement (the “Agreement”) is made and entered into by and between ____________ (the “Employee”) and Polycom, Inc., a Delaware Corporation (the “Company”), effective as of _____________  (the “Effective Date”). RECITALS              1.         It is expected that the Company from time to time will consider the possibility of an acquisition by another company or other change of control.  The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities.  The Board has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined herein) of the Company.              2.         The Board believes that it is in the best interests of the Company and its stockholders to provide the Employee with an incentive to continue his or her employment and to motivate the Employee to maximize the value of the Company upon a Change of Control for the benefit of its stockholders.              3.         The Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employee’s termination of employment following a Change of Control.  These benefits will provide the Employee with enhanced financial security and incentive and encouragement to remain with the Company notwithstanding the possibility of a Change of Control.              4.         Certain capitalized terms used in the Agreement are defined in Section 7 below. AGREEMENT              NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:              1.         Term of Agreement.  This Agreement shall terminate upon the date that all of the obligations of the parties hereto with respect to this Agreement have been satisfied.              2.         At-Will Employment.  The Company and the Employee acknowledge that the Employee’s employment is and shall continue to be at-will, as defined under applicable law, except as may otherwise be specifically provided under the terms of any written formal employment agreement between the Company and the Employee (an “Employment Agreement”).  If the Employee’s employment terminates for any reason, including (without limitation) any termination prior to a Change of Control, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement or under his or her Employment Agreement.              3.         Agreement to Remain with the Company for 6 Months Following a Change of Control.  Executive agrees to remain employed with the Company (or its successor corporation) for a period of six (6) months following a “Change of Control” (as defined herein) unless his or her employment terminates due to Executive’s death, becoming “Disabled” (as defined herein), for “Good Reason” (as defined herein), or is terminated involuntarily by the Company during such six (6) month period.              4.         Severance Benefits.              (a)        Involuntary Termination Other than for Cause or Voluntary Termination for Good Reason Following a Change of Control.  If within twenty-four (24) months following a Change of Control (i) the Employee terminates his or her employment with the Company (or any parent or subsidiary of the Company) for “Good Reason” (as defined herein) or (ii) the Company (or any parent or subsidiary of the Company) terminates the Employee’s employment for other than “Cause” (as defined herein), or (iii) the Employee dies or terminates employment due to becoming Disabled (as defined herein) and the Employee, except in the case of death, signs and does not revoke a standard release of claims with the Company in a form acceptable to the Company, then the Employee shall receive the following severance from the Company:                          (i)        Severance Payment.  The Employee shall be entitled to receive a lump-sum severance payment (less applicable withholding taxes) equal to 200% of the Employee’s annual base salary (as in effect immediately prior to (A) the Change of Control, or (B) the Employee’s termination, whichever is greater) plus 200% of the Employee’s target bonus for the fiscal year in which the Change of Control or the Employee’s termination occurs, whichever is greater.                          (ii)       Options; Restricted Stock.  All of the Employee’s then outstanding options to purchase shares of the Company’s Common Stock (the “Options”) shall immediately vest and became exercisable.  Additionally, all of the shares of the Company’s Common Stock then held by the Employee subject to a Company repurchase right (the “Restricted Stock”) shall immediately vest and the Company’s right of repurchase with respect to such shares of Restricted Stock shall lapse.  The Options shall remain exercisable following the termination for the period prescribed in the respective option agreements.                          (iii)      Continued Employee Benefits.  Company-paid health, dental, vision, long-term disability and life insurance coverage at the same level of coverage as was provided to such Employee immediately prior to the Change of Control and at the same ratio of Company premium payment to Employee premium payment as was in effect immediately prior to the Change of Control (the “Company-Paid Coverage”).  If such coverage included the Employee's dependents immediately prior to the Change of Control, such dependents shall also be covered at Company expense.  Company-Paid Coverage shall continue until the earlier of (i) twenty-four (24)  months from the date of termination, or (ii) the date upon which the Employee and his dependents become covered under another employer's group health, dental, vision, long-term disability or life insurance plans that provide Employee and his dependents with comparable benefits and levels of coverage.  For purposes of Title X of the Consolidated Budget Reconciliation Act of 1985 (“COBRA”), the date of the “qualifying event” for Employee and his or her dependents shall be the date upon which the Company-Paid Coverage terminates.              (b)        Timing of Severance Payments.  The severance payment to which Employee is entitled shall be paid by the Company to Employee in cash and in full, not later than ten (10) calendar days after the date of the termination of Employee’s employment as provided in Section 4(a).  If the Employee should die before all amounts have been paid, such unpaid amounts shall be paid in a lump-sum payment (less any withholding taxes) to the Employee’s designated beneficiary, if living, or otherwise to the personal representative of the Employee’s estate.              (c)        Voluntary Resignation; Termination for Cause.  If the Employee’s employment with the Company terminates (i) voluntarily by the Employee other than for Good Reason or Disability or (ii) for Cause by the Company, then the Employee shall not be entitled to receive severance or other benefits except for those (if any) as may then be established under the Company’s then existing severance and benefits plans and practices or pursuant to other written agreements with the Company.              (d)        Termination Apart from Change of Control.  In the event the Employee’s employment is terminated for any reason, either prior to the occurrence of a Change of Control or after the twenty-four (24) –month period following a Change of Control, then the Employee shall be entitled to receive severance and any other benefits only as may then be established under the Company’s existing written severance and benefits plans and practices or pursuant to other written agreements with the Company.              (e)        Exclusive Remedy.  In the event of a termination of Employee’s employment within twenty-four (24)  months following a Change of Control, the provisions of this Section 4 are intended to be and are exclusive and in lieu of any other rights or remedies to which the Employee or the Company may otherwise be entitled, whether at law, tort or contract, in equity, or under this Agreement.  The Employee shall be entitled to no benefits, compensation or other payments or rights upon termination of employment following a Change in Control other than those benefits expressly set forth in this Section 4.              5.         Golden Parachute Excise Tax Gross-Up.  In the event that the benefits provided for in this Agreement or otherwise payable to the Employee constitute “parachute payments” within the meaning of Section 280G of the Code and will be subject to the excise tax imposed by Section 4999 of the Code, then the Employee shall receive a payment from the Company sufficient to pay such excise tax, plus (ii) an additional payment from the Company sufficient to pay the excise tax and federal and state income and employment taxes arising from the payments made by the Company to Employee pursuant to this sentence.  Unless the Company and the Employee otherwise agree in writing, the determination of Employee’s excise tax liability and the amount required to be paid under this Section 5 shall be made in writing by the 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 5, 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 employee 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.              6.         Pooling of Interests Limitation.  To the extent any of the benefits (including the equity compensation vesting acceleration) hereunder would cause a contemplated Change of Control transaction that was intended to be accounted for as a “pooling-of-interests” transaction to become ineligible for such accounting treatment under generally accepted accounting principles, as determined by the Accountants, then this Agreement shall automatically be deemed amended to provide Employee with such lesser benefits as would allow for the contemplated Change of Control transaction to be accounted for as a “pooling-of-interests” transaction.              7.         Definition of Terms.  The following terms referred to in this Agreement shall have the following meanings:              (a)        Cause.  “Cause” shall mean (i) an act of personal dishonesty taken by the Employee in connection with his responsibilities as an employee and intended to result in substantial personal enrichment of the Employee, (ii) Employee being convicted of a felony, (iii) a willful act by the Employee which constitutes gross misconduct and which is injurious to the Company,  (iv) following delivery to the Employee of a written demand for performance from the Company which describes the basis for the Company's reasonable belief that the Employee has not substantially performed his duties, continued violations by the Employee of the Employee's obligations to the Company which are demonstrably willful and deliberate on the Employee's part.              (b)        Change of Control.  “Change of Control” means the occurrence of any of the following:                          (i)        Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “beneficial owner” (as defined in Rule 13d–3 under said Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or                          (ii)       Any action or event occurring within a two–year period, 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 the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or                          (iii)      The consummation 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) at least fifty percent (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)       The consummation of the sale, lease or other disposition by the Company of all or substantially all the Company’s assets.              (c)        Disability.  “Disability” shall mean that the Employee has been unable to perform his or her Company duties as the result of his incapacity due to physical or mental illness, and such inability, at least twenty-six (26) weeks after its commencement, is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Employee or the Employee’s legal representative (such Agreement as to acceptability not to be unreasonably withheld).  Termination resulting from Disability may only be effected after at least thirty (30) days’ written notice by the Company of its intention to terminate the Employee’s employment.  In the event that the Employee resumes the performance of substantially all of his or her duties hereunder before the termination of his or her employment becomes effective, the notice of intent to terminate shall automatically be deemed to have been revoked.              (d)        Good Reason.  “Good Reason” means without the Employee’s express written consent (i) a material reduction of the Employee’s duties, title, authority or responsibilities, relative to the Employee’s duties, title, authority or responsibilities as in effect immediately prior to such reduction, or the assignment to Employee of such reduced duties, title, authority or responsibilities; provided, however, that a reduction in duties, title, authority or responsibilities solely by virtue of the Company being acquired and made part of a larger entity (as, for example, when the Chief Executive Officer of the Company remains the Chief Executive Officer of the subsidiary or business unit containing the Company’s business following a Change of Control) shall not by itself constitute grounds for a “Voluntary Termination for Good Reason”; (ii) a substantial reduction of the facilities and perquisites (including office space and location) available to the Employee immediately prior to such reduction; (iii) a reduction by the Company in the base compensation of the Employee as in effect immediately prior to such reduction; (iv) a material reduction by the Company in the kind or level of benefits to which the Employee was entitled immediately prior to such reduction with the result that such Employee’s overall benefits package is significantly reduced; (v) the relocation of the Employee to a facility or a location more than thirty-five (35) miles from such Employee ‘s then present location.              8.         Successors.              (a)        The Company’s Successors.  Any successor to the Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession.  For all purposes under this Agreement, 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 Section 8(a) or which becomes bound by the terms of this Agreement by operation of law.              (b)        The Employee’s Successors.  The terms of this Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.              9.         Notice.              (a)        General. All notices and other communications required or permitted hereunder shall be in writing, shall be effective when given, and shall in any event be deemed to be given upon receipt or, if earlier, (a) five (5) days after deposit with the U.S. Postal Service or other applicable postal service, if delivered by first class mail, postage prepaid, (b) upon delivery, if delivered by hand, (c) one (1) business day after the business day of deposit with Federal Express or similar overnight courier, freight prepaid or (d) one (1) business day after the business day of facsimile transmission, if delivered by facsimile transmission with copy by first class mail, postage prepaid, and shall be addressed (i) if to Employee, at his or her last known residential address and (ii) if to the Company, at the address of its principal corporate offices (attention:  Secretary), or in any such case at such other address as a party may designate by ten (10) days’ advance written notice to the other party pursuant to the provisions above.              (b)        Notice of Termination.  Any termination by the Company for Cause or by the Employee for Good Reason or Disability or as a result of a voluntary resignation shall be communicated by a notice of termination to the other party hereto given in accordance with Section 9(b) of this Agreement.  Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the termination date (which shall be not more than thirty (30) days after the giving of such notice).  The failure by the Employee to include in the notice any fact or circumstance which contributes to a showing of Good Reason or Disability shall not waive any right of the Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his or her rights hereunder.              10.       Miscellaneous Provisions.              (a)        No Duty to Mitigate.  The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source.              (b)        Waiver.  No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.              (c)        Headings.  All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.              (d)        Entire Agreement.  This Agreement constitutes the entire agreement of the parties hereto and supersedes in their entirety all prior representations, understandings, undertakings or agreements (whether oral or written and whether expressed or implied) of the parties with respect to the subject matter hereof.              (e)        Choice of Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California. The Superior Court of Santa Clara County and/or the United States District Court for the Northern District of California shall have exclusive jurisdiction and venue over all controversies in connection with this Agreement.              (f)        Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.              (g)        Withholding.  All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes.              (h)        Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.              IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.   COMPANY POLYCOM, INC.           By:____________________________________         Title:___________________________________           EMPLOYEE By:_____________________________________         Title:____________________________________    

QuickLinks -- Click here to rapidly navigate through this document Exhibit F FORM OF PURCHASE AGREEMENT     THIS PURCHASE AGREEMENT is made as of the   day of September, 2000, by and between STAAR Surgical Company (the "Company"), a corporation organized under the laws of the State of Delaware, with its principal offices at 1911 Walker Avenue, Monrovia, California 91016, and the purchaser whose name and address is set forth on the signature page hereof (the "Purchaser").     IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:     1.  Sale and Purchase of the Shares.  The Company has authorized the sale of up to 1,500,000 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company on the terms and subject to the conditions set forth in this Agreement. At the Closing (as defined in Section 3), the Company will sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions contained in this Agreement, the number of Shares specified below such Purchaser's name on the signature page attached hereto at the price set forth thereto.     2.  Other Purchasers.  The Company intends to enter into this same form of purchase agreement with certain other investors (the "Other Purchasers") and expects to complete sales of the Shares to them. The Purchaser's obligations hereunder are expressly not subject to or conditioned on the purchase of the Shares by any or all of the Other Purchasers.     3.  Closing; Delivery; Conditions.       3.1  Closing.  The purchase and sale of the Shares (the "Closing") shall occur as soon as practicable after the execution of this Agreement by the Company and the Purchasers at the time and location (the "Closing Date") agreed upon by the Company and the Placement Agent (as defined herein). The Placement Agent will promptly notify the Purchasers of the Closing Date by facsimile transmission or otherwise.     3.2  Delivery of the Shares.  Subject to the satisfaction of the conditions set forth below, at the Closing, the Company will deliver to each Purchaser one or more stock certificates, registered in the name of such Purchaser, representing the number of Shares to be purchased by such Purchaser as set forth opposite such Purchaser's name on the signature page hereto and bearing an appropriate legend stating that the Shares have not been registered under the Securities Act (as defined herein) and cannot be sold unless registered under the Securities Act, or an exemption from registration is available. Such deliveries shall be made against payment of the purchase price therefore (the "Purchase Price") by wire transfers to the respective accounts as designated in writing by the Company, of immediately available funds in the respective amounts set forth on the signature page hereto, as the case may be, at least two business days prior to the Closing. The name(s) in which the stock certificate are to be registered are set forth in the Stock Certificates Questionnaire attached hereto as part of Appendix I.     3.3  Closing Conditions.       (a) The Company's respective obligations to complete the purchase and sale of the Shares and deliver the stock certificates representing the Shares to the Purchasers at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:     (1) receipt by the Company of same-day funds in the full amount of the Purchase Price for the Shares being purchased hereunder; and     (2) the accuracy of the representations and warranties made by the Purchasers and the fulfillment of those obligations of the Purchasers to be fulfilled prior to the Closing. 1 --------------------------------------------------------------------------------     (b) The Purchaser's obligation to accept delivery of such stock certificate(s) and to pay for the Shares evidenced thereby shall be subject to the accuracy in all material respects of the representations and warranties made by the Company herein and the fulfillment in all material respects of those obligations of the Company to be fulfilled prior to the Closing.     4.  Certain Definitions.  Unless the context otherwise requires, the terms defined in this Section 4 shall have the meaning herein specified for purposes of this Agreement.     "Agreement" means this agreement, including the exhibits and appendices thereto.     "Agreements" means this Agreement and the agreements executed by the Other Purchasers, collectively.     "Commission" means the Securities and Exchange Commission.     "Exchange Act" means the Securities and Exchange Act of 1934, as amended from time to time.     "Material Adverse Change" means a material adverse change in the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.     "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.     "Placement Agent" means CIBC World Markets Corp., and Adams, Harkness & Hill, Inc.     "Purchasers" means the Purchaser and the Other Purchasers.     "Private Placement Memorandum" means the Confidential Private Placement Memorandum dated [September XX, 2000], including all exhibits thereto.     "Registration Statement" means the registration statement on Form S-3, as may be amended, that will be filed pursuant to the Private Placement Memorandum with the Commission covering the re-sale of the Shares.     "Securities Act" means the Securities Act of 1933, as amended from time to time.     5.  Representations, Warranties and Covenants of the Company.  The Company hereby represents and warrants to, and covenants with, the Purchaser as follows:     5.1  Organization and Qualification.  The Company (and each such subsidiary or other entity controlled directly or indirectly by the Company (the "Subsidiaries") is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other entity) in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties, owned, leased or licensed by it requires such qualification, except where failure to so qualify or to be in good standing would not have a Material Adverse Effect.     5.2  Authorized Capital Stock.  The Company had the authorized and outstanding capital stock set forth under the heading "Capitalization" in the Private Placement Memorandum, as of the date set forth therein. All of the issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance in all material respects with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the Private Placement Memorandum. Except as disclosed in or contemplated by the Private Placement Memorandum, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to 2 -------------------------------------------------------------------------------- purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock.     5.3  Shares.  The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in the Agreements, will be duly authorized, validly issued, fully paid and nonassessable, and will conform in all material respects to the description thereof set forth in the Private Placement Memorandum. No preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement. No stockholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement) to require the Company to register the sale of any shares owned by such stockholder under the Securities Act in the Registration Statement. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein.     5.4  Corporate Acts and Proceedings.  The Company has full legal right, corporate power and authority to enter into the Agreements and perform the transactions contemplated hereby and thereby. The Agreements have been duly and validly authorized, executed and delivered by the Company. The execution, delivery and performance of the Agreements by the Company or its Subsidiaries and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Company and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company or the Subsidiaries are a party or by which the Company or the Subsidiaries or their respective properties may be bound or affected and in each case which would have a Material Adverse Effect or, to the Company's knowledge, under any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or its Subsidiaries or their respective properties. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Shares. Upon their execution and delivery, and assuming the valid execution thereof by the respective Purchasers and payment of their respective Purchase Price, the Agreements will constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Company in Section 9 hereof may be legally unenforceable.     5.5  Contracts.  The contracts described in the Private Placement Memorandum as being in effect on the date hereof that are material to the Company, are in full force and effect on the date hereof; and neither the Company nor its Subsidiaries, nor, to the Company's knowledge, is any other party in breach of or default under any of such contracts which would have a Material Adverse Effect.     5.6  No Actions.  Other than as described in the Private Placement Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the Company's knowledge, overtly threatened to which the Company or its Subsidiaries are or may be a party or of which property owned or leased by the Company or its Subsidiaries are or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings, individually or in the aggregate, might prevent or might reasonably be expected to materially and adversely affect the transactions 3 -------------------------------------------------------------------------------- contemplated by this Agreement or result in a Material Adverse Change; and no labor disturbance by the employees of the Company exists, to the Company's knowledge, or is imminent which might reasonably be expected to have a Material Adverse Effect. Neither the Company nor its Subsidiaries is a party to or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body.     5.7  Properties.  The Company and each of its Subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property reflected as owned by them in the consolidated financial statements included in the Private Placement Memorandum. Such property is not subject to any lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such consolidated financial statements (including the notes thereto), or (ii) those which are not material in amount and do not adversely affect the use of such property by the Company or its Subsidiaries. Any property or building held under lease by the Company or its Subsidiaries is held under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, and defects except such as would not have a Material Adverse Effect. Except as disclosed in the Private Placement Memorandum and except for the property referred to in Section 5.8, each of the Company and its Subsidiaries owns or leases all such properties as are necessary to its operations as now conducted.     5.8  Proprietary Rights.  Except as disclosed in the Private Placement Memorandum, (i) to the Company's knowledge, the Company has filed for or holds rights, licenses or options for the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, copyrights and trade secrets necessary for the conduct of the Company's business as currently conducted (collectively, the "Intellectual Property"); and (ii) to the Company's knowledge (for each of the following subsections (a) through (e)): (a) there are no third parties who have any ownership rights to any Intellectual Property that is owned by, or has been licensed to the Company for the products described in the Private Placement Memorandum in the case of any business the Company has or intends to conduct during the year ending December 31, 2000 that would preclude the Company from conducting its business as currently conducted and as the Private Placement Memorandum indicates the Company contemplates conducting; (b) there are currently no sales of any products that would constitute an infringement by a third party of any Intellectual Property owned, licensed or optioned by the Company; (c) there is no pending or threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; (d) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; and (e) there is no pending or threatened action, suit, proceeding or claim by others that the Company infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary right of others, other than claims which would not be reasonably expected to have a Material Adverse Effect.     5.9  No Material Adverse Change.  Since June 30, 2000, and except as disclosed in the Private Placement Memorandum, (i) neither the Company nor its Subsidiaries have incurred any material liabilities or obligations, indirect, or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business or which could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) neither the Company nor its Subsidiaries have sustained any material loss or interference with its businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) neither the Company nor its Subsidiaries have paid or declared any dividends or other distributions with respect to its capital stock and the Company and its Subsidiaries are not in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company or its Subsidiaries other than the sale of the Shares 4 -------------------------------------------------------------------------------- hereunder and shares or options issued pursuant to employee equity incentive plans or purchase plans approved by the Company's or the Subsidiaries' Board of Directors, as the case may be, or indebtedness material to the Company or its Subsidiaries (other than in the ordinary course of business); and (v) there has not been a Material Adverse Change.     5.10  Financial Statement.  BDO Seidman, LLP (a) have expressed their opinion with respect to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, (b) have not given the Company any indication that they will not include such opinion in the Registration Statement and the Prospectus, and (c) have confirmed to the Company that they are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.     5.11  No Defaults.  Except as to defaults, violations and breaches which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are in violation or default of any provision of their certificate of incorporation or bylaws, or other organizational documents, or in breach of, or default with respect to, any provision of any material agreement filed as an exhibit to the Company's filings with the Commission, any judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, or permit to which it is a party or by which it or any of its properties are bound; and there does not exist any state of fact which, with notice or lapse of time or both, would constitute an event of breach or default on the part of the Company or the Subsidiaries as defined in such documents, except such breaches or defaults which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole.     5.12  Compliance.  Neither the Company nor its Subsidiaries have been advised, and neither has any reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance therewith would not have a Material Adverse Effect.     5.13  Taxes.  Each of the Company and its Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns which are required to be filed, or has received extensions thereof, and has paid or accrued all taxes shown as due thereon, and neither the Company nor its Subsidiaries has knowledge of a tax deficiency which has been or might be asserted or threatened against it which could have a Material Adverse Effect. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.     5.14  Books, Records and Accounts.  The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its Subsidiaries. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.     5.15  Offering Materials.  The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the Private Placement Memorandum or any amendment or supplement thereto. The Company has not in the past nor will it hereafter take any action independent of the Placement Agent to sell, offer for 5 -------------------------------------------------------------------------------- sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.     5.16  Insurance.  The Company maintains insurance of the type and in the amount that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.     5.17  Investment Company.  The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended.     5.18  Contributions.  At no time since its incorporation has the Company, directly or indirectly, (i) used any corporate or other funds for gifts, entertainment or other unlawful contributions to any candidate for public office, or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.     5.19  Additional Information.  The Company represents and warrants that the information contained in the following documents, which the Placement Agent has furnished to the Purchaser, or will furnish prior to the Closing, is and will be true and correct in all material respects as of the respective dates that they were filed with the Commission, or their final dates, if not filed with the Commission and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading:     (1) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999;     (2) the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000;     (3) the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders;     (4) the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000;     (5) the Registration Statement;     (6) the Private Placement Memorandum, including all addenda and exhibits thereto (other than the Appendices); and     (7) all other documents, if any, filed by the Company with the Commission since June 30, 2000 pursuant to the reporting requirements of the Exchange Act.     5.20  Legal Opinions.  Prior to the Closing, Pollet & Richardson, counsel to the Company, will deliver its legal opinion to the Placement Agent (stating that each of the Purchasers may rely thereon as if directly addressed to each of them), substantially in such form as such counsel rendering the opinion and the Placement Agent may agree upon (the "Opinion Letter").     6.  Representations, Warranties and Covenants of the Purchaser.       6.1  Investment Intent and Expense.  The Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced in making, 6 -------------------------------------------------------------------------------- and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares; (ii) the Purchaser is acquiring the number of Shares set forth on the signature page hereto in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations thereunder) only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares within the meaning of Section 2(11) of the Securities Act; (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Act and the Rules and Regulations; (iv) the Purchaser has completed or caused to be completed the Registration Statement Questionnaire and the Stock Certificate Questionnaire, both attached hereto as Appendix I, for use in preparation of the Registration Statement, and the answers thereto are true, correct and complete as of the date hereof and will be true. correct and complete as of the effective date of the Registration Statement; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth on the signature page hereto, relied solely upon the Private Placement Memorandum and the documents included therein and the representations and warranties of the Company contained herein; and (vi) the Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act.     6.2  Restrictions on Transfer.  The Purchaser hereby covenants with the Company not to make any sale of the Shares without satisfying the prospectus delivery requirement under the Securities Act, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, all federal laws and requirements, including without limitation the Securities Act and the rules and regulations promulgated thereunder and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company determines the use of the prospectus forming a part of the Registration Statement should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares.     6.3  Authorization.  The Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and 7 -------------------------------------------------------------------------------- except as the indemnification agreements of the Purchaser in Section 9 hereof may be legally unenforceable.     6.4  Restriction on Sales, Short Sales and Hedging Transactions.  Purchaser represents and agrees that during the period of five business days immediately prior to the execution of this Agreement by Purchaser, Purchaser did not, and from such date through the effectiveness of the Registration Statement (as defined below), Purchaser will not, directly or indirectly, execute or effect or cause to be executed or effected any short sale, option or equity swap transactions in or with respect to the Common Stock or any other derivative security transaction the purpose or effect of which is to hedge or transfer to a third party all or any part of the risk of loss associated with the ownership of the Shares by the Purchaser; provided however, that the Purchaser shall be allowed to effectuate such above described transactions, but only up to the aggregate number of Shares purchased by such Purchaser hereunder, and then only in compliance with all applicable state and federal securities laws and the rules and regulations thereunder.     6.5  No Legal, Tax or Investment Advice.  Purchaser understands that nothing in the Private Placement Memorandum, the Agreement, the Opinion Letter or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.     6.6  Further Agreements of Purchaser.       (a) The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the rules and regulations promulgated thereunder, and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.     (b) The Purchaser understands that its investment in the Shares involves a significant degree of risk and that the market price of the Common Stock has been volatile and that no representation is being made as to the future value of the Common Stock. The Purchaser has the knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and has the ability to bear the economic risks of an investment in the Shares.     (c) The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.     (d) The Purchaser understands that, until such time as the Registration Statement has been declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Shares will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the Shares): "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope reasonably acceptable to the Company, that registration is not required under said Act or unless sold pursuant to Rule 144 under said Act."     (e) The Purchaser's principal executive offices are in the jurisdiction set forth immediately below the Purchaser's name on the signature pages hereto. 8 --------------------------------------------------------------------------------     (f)  The Purchaser hereby covenants with the Company not to make any sale of the Shares under the Registration Statement without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate Purchaser's Certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares.     (g) Notwithstanding anything to the contrary contained herein, at any time after the effectiveness of the Registration Statement, the Company may refuse to permit the Purchaser to resell any Shares pursuant to the Registration Statement for a period not to exceed ninety (90) days (the "Blackout Period"); provided however, that to exercise this right, the Company must deliver a certificate in writing to the Purchaser to the effect that a delay in such sale is necessary because a sale pursuant to such Registration Statement in its then-current form would not be in the best interests of the Company and its stockholders due to disclosure obligations of the Company. Notwithstanding the foregoing, the Company shall not be entitled to exercise its right to block such sales more than three (3) times during the effectiveness of the Registration Statement or more than one (1) time in any four-month period. Each Purchaser hereby covenants and agrees that it will not sell any Shares pursuant to the Registration Statement during such Blackout Periods.     7.  Survival of Representations, Warranties and Agreements.  Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor.     8.  Covenants.       8.1  Registration Procedures and Expenses.       (a) The Company shall:     (1) as soon as practicable after the Closing, but in no event later than two (2) weeks following the Closing, prepare and file with the Commission the Registration Statement relating to the sale of the Shares by the Purchaser from time to time through the automated quotation system of the Nasdaq National Market or the facilities of any national securities exchange on which the Company's Common Stock is then traded or in privately-negotiated transactions;     (2) use its reasonable efforts subject to receipt of necessary information from the Purchasers, to cause the Commission to notify the Company of the Commission's willingness to declare the 9 -------------------------------------------------------------------------------- Registration Statement effective within 60 days after the Registration Statement is filed by the Company;     (3) 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 keep the Registration Statement effective until the earlier of (i) twenty-four (24) months after the effective date of the Registration Statement or (ii) the date on which the Shares may be resold by the Purchasers without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect;     (4) furnish to the Purchaser with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of prospectuses in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses;     (5) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and     (6) bear all expenses in connection with the procedures in paragraphs (1) through (5) of this Section 8.1 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any.     (b) The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Purchaser, make publicly available other information), and it will take such further action as any Purchaser may reasonably request, all to the extent required from time to time to enable such Purchaser to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Purchaser, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.     8.2  Transfer of Shares After Registration.  The Purchaser agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 8.1, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its Plan of Distribution.     8.3  Termination of Conditions and Obligations.  The restrictions imposed by Section 6 or this Section 8 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the passage of twenty-four months from the effective date of the Registration Statement covering such Shares or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act. 10 --------------------------------------------------------------------------------     8.4  Information Available.  So long as the Registration Statement is effective covering the resale of Shares owned by the Purchaser, the Company will furnish to the Purchaser:     (1) upon request, as soon as practicable after available (but in the case of the Company's Annual Report to Stockholders, within 120 days after the end of each fiscal year of the Company), one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants), (ii) if not included in substance in the Annual Report to Stockholders, its Annual Report on Form 10-K, (iii) if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q, and (iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);     (2) upon the reasonable request of the Purchaser, a reasonable number of copies of the prospectuses to supply to any other party requiring such prospectuses; and the Company, upon the reasonable request of the Purchaser, will meet with the Purchaser or a representative thereof at the Company's headquarters to discuss information relevant for disclosure in the Registration Statement covering the Shares subject to appropriate confidentiality limitations.     9.  Indemnification.  For the purpose of this Section 9 only:     (1) the term "Purchaser" shall include the Purchaser and any affiliate of such Purchaser; and the term "Registration Statement" shall include any final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 8.1.     (2) The Company agrees to indemnify and hold harmless each of the Purchasers and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform in all material respects its obligations hereunder or under law, and will reimburse each Purchaser and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting sale of the Shares, or (iii) the inaccuracy of any representations made by such Purchaser herein or (iv) any statement or 11 -------------------------------------------------------------------------------- omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser.     (3) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of any representation made by such Purchaser herein or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, 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, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.     (4) Promptly after receipt by an indemnified party under this Section 9 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 9 promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 9 or to the extent it is not materially prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, based upon the advice of such indemnified party's counsel, the indemnified party shall have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently reasonably incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance 12 -------------------------------------------------------------------------------- with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (2), representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.     (5) If the indemnification provided for in this Section 9 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (2), (3) or (4) of this Section 9 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the placement of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the "Difference") between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (3) of this Section 9, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (3) of this Section 9 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (5); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (4) for purposes of indemnification. The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined solely by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 9, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged 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. The Purchasers' obligations to contribute pursuant to this Section 9 are several and not joint.     10.  Broker's Fee.  The Purchaser acknowledges that the Company intends to pay to the Placement Agent a fee in respect of the sale of the Shares to the Purchaser. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser. 13 --------------------------------------------------------------------------------     11.  Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:     (1) if to the Company, to: Andrew F. Pollet Chairman STAAR Surgical Company 1911 Walker Avenue Monrovia, California 91016       with a copy to: Pollet & Richardson 10900 Wilshire Boulevard Suite 500 Los Angeles, California 90024 Attention: Andrew F. Pollet, Esq. or to such other person at such other place as the Company shall designate to the Purchaser in writing; and     (2) if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.     12.  Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by an authorized representative of the Company and the Purchaser.     13.  Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.     14.  Severability.  In case any provision contained in this Agreement should be 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.     15.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws and the federal law of the United States of America.     16.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.     [Signature Page Follows] 14 --------------------------------------------------------------------------------     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.     STAAR SURGICAL COMPANY     /s/ ANDREW F. POLLET    -------------------------------------------------------------------------------- By: Andrew F. Pollet Its: Chairman       Pequot Scout Fund, L.P. -------------------------------------------------------------------------------- Name of Purchaser (Individual or Institution)   David J. Malat Pequot Capital Management, Inc. Investment Advisor -------------------------------------------------------------------------------- Name of Individual representing Purchaser (if an Institution) Chief Accounting Officer -------------------------------------------------------------------------------- Title of Individual representing Purchaser (if an Institution)   /s/ DAVID J. MALAT    -------------------------------------------------------------------------------- Signature of Individual Purchaser or Individual representing Purchaser     Address:  500 Nyala Farm Rd.                  Westport, CT 06880 Telephone: 203 429-2200 --------------------------------------------------------------------------------     Telecopier: 203 429-2430 -------------------------------------------------------------------------------- Number to Be Purchased --------------------------------------------------------------------------------   Price Per Share In Dollars --------------------------------------------------------------------------------   Aggregate Price -------------------------------------------------------------------------------- 145,000   $14.00   $2,030,000.00 15 -------------------------------------------------------------------------------- QuickLinks Exhibit F FORM OF PURCHASE AGREEMENT

QuickLinks -- Click here to rapidly navigate through this document EXHIBIT 10.53 LIBERATE TECHNOLOGIES 1999 EQUITY INCENTIVE PLAN NOTICE OF STOCK OPTION GRANT         You have been granted the following option to purchase Common Stock of Liberate Technologies (the "Company"): Name of Optionee:   «Name» Total Number of Shares Covered by This Option:   «TotalShares» Exercise Price Per Share:   «PricePerShare» Date of Grant:   «DateGrant» Vesting Commencement Date:   «VestDay» Vesting Schedule:   This option shall vest in equal monthly installments over 48 months commencing with the vesting commencement date. Acceleration:   Fifty percent (50%) of the then-unvested portion of this grant will vest immediately in the event of a Change in Control that results in (i) your termination, (ii) a material reduction in the scope, level, or nature of your responsibilities, or (iii) a reduction in your title. "Change in Control" is defined as (i) a proposed sale, transfer, or disposition of all or substantially all of the Company's assets, or (ii) the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who own less than 50% of the Company immediately prior to such merger, consolidation, or other reorganization own immediately after such merger, consolidation, or other reorganization 50% or more of the voting power of the outstanding securities of each of (i) the continuing or surviving entity and (ii) any direct or indirect parent corporation of such continuing or surviving entity. A transaction will not constitute a Change in Control if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company's securities immediately before such transaction. Expiration Date:   «ExpDate»         By your signature and the signature of the Company's representative below, you and the Company agree that this option is granted under and governed by the terms and conditions of the 1999 Equity -------------------------------------------------------------------------------- Incentive Plan (the "Plan") and the Stock Option Agreement, both of which are attached to and made a part of this document. OPTIONEE:   LIBERATE TECHNOLOGIES --------------------------------------------------------------------------------   By:   --------------------------------------------------------------------------------         Title: Sr. Vice President and Chief Financial Officer 2 -------------------------------------------------------------------------------- QuickLinks EXHIBIT 10.53

QuickLinks -- Click here to rapidly navigate through this document EXHIBIT 10.39 CONTRACT FOR SERVICES     This contract for services ("Agreement") is executed as of February 22, 2001, by and between The RiceX Company, a Delaware corporation (the "Company") and Dr. Glenn H. Sullivan, an individual ("Contractor"). R E C I T A L S     A.  The Company desires to retain the services of Contractor for the purpose of assisting in the development of direct sales relationships with international and domestic firms in the agribusiness sector.     B.  Contractor is willing to provide such services to the Company on the terms set forth below.     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants herein contained, the parties agree as follows:     1.  Consulting Services.  Contractor is engaged to provide expertise, services and industry relationships that assist the Company in developing direct sales relationships in the agribusiness sector for stabilized rice brand products manufactured by the Company, including (a) at least one (1) finalized sales contract in the international sector in an amount exceeding US$1,500,000, and (b) at least one (1) new direct domestic relationship that establishes the basis for future sales. Both requirements shall be accomplished prior to July 1, 2001. Such services shall be in addition to fulfillment of Contractor's obligations to the Company as set forth in the Definitive Agreement for Issuance and Sale of Stock and Warrants dated September 29, 2000 (the "Definitive Agreement").     2.  Term.  The services to be rendered by Contractor during this Agreement, and the term of this Agreement, shall commence on October 1, 2000 and continue until July 1, 2001. The term of this Agreement also may be extended on a month to month basis until such time that a mutually agreed upon permanent employment agreement is reached between the Company and Contractor as specified in paragraph 11 of the Definitive Agreement.     3.  Time and Manner of Performance.  Contractor shall devote such time as is required to provide his services under this Agreement. Contractor shall be available for telephonic and personal consultation and assistance on a reasonable basis consistent with the needs of the Company and the necessary performance standards for the services described in this Agreement. All services provided hereunder shall be performed in accordance with good and standard professional practice.     4.  Compensation.  In consideration of his services to be rendered hereunder, the Company agrees to pay Contractor US$15,000 per month plus 10% ("Incentive Premium") of the incremental net sales contract amount on any order generated by the efforts of Contractor that exceeds the Company's list price for such order. By way of example, in December 2000 the Contractor successfully negotiated a 2001 contract with Guatemala on behalf of the Company. This contract will generate a monthly net sales price of $4.14 per pound (gross sales $4.70 per pound, $.47 per pound PRODESA sales commission, and $.09 per pound six months advance payment premium), whereas such contract would show a net sales price of $4.00 per pound on the Company's price list. The monthly incentive premium on this order would be $616 per month. The Contractor would receive a payment of $15,616 per month over the term of this Guatemala order. Monthly incentive premium calculations will be based upon shipments made during the month and payable when collections are received. In addition, Contractor will be reimbursed for all out of pocket expenses necessarily incurred for travel, lodging and miscellaneous expenses during the term of this Agreement. Any such expenses in excess of $1,500 must be approved in advance in writing by the Company.     5.  Proprietary Information.  Contractor acknowledges that the Company operates in a competitive environment, and that the Company possesses and will continue to develop and acquire proprietary information of substantial commercial value. The value of that proprietary information depends on it remaining confidential, and by reason of the Contractor's relationship with the Company, -------------------------------------------------------------------------------- he will receive certain of that proprietary information in the course of performing this Agreement. Contractor therefore agrees to keep all such proprietary information confidential and to execute and deliver to the Company a Proprietary Information and Inventions Agreement in form reasonably acceptable to the Company. Contractor also agrees and acknowledges that the Company shall retain full ownership of all proprietary information, materials, contracts, sales, future sales and strategic relationships developed by Contractor for the Company during the term of this Agreement.     6.  Representations and Warranties of Contractor.  Contractor represents and warrants to the Company that his entry into and performance of this Agreement will not conflict with any other agreement or document to which he is a party and that his services performed hereunder on behalf of the Company will not violate the rights of any other persons.     7.  Miscellaneous.     a.  Independent Contractor.  Contractor agrees that in performing this Agreement, he is acting as an independent contractor and not as an employee or agent of the Company. As an independent contractor, Contractor shall not be eligible for any benefits which Company may provide to its employees, including but not limited to insurance benefits or contributions to qualified retirement programs. All persons, if any, hired by Contractor to perform this Agreement shall be employees of Contractor and shall not be construed as employees or agents of the Company in any respect. Contractor shall be responsible for all taxes, insurance and other costs and payments legally required to be withheld or provided in connection with the Contractor's performance of this Agreement, including, without limitation, all withholding taxes, worker's compensation insurance, and similar costs.     b.  Time is of the Essence.  Time is of the essence in the performance of the parties' respective obligations herein contained.     c.  Further Assurance.  Each party agrees that upon the request of the other it will, from time to time, execute and deliver to such other party all such instruments and documents of further assurance or otherwise, and will do any and all such acts and things, as reasonably may be required to carry out the obligations of such party hereunder and consummate the transactions contemplated hereby. The parties further agree not to circumvent each other in any manner relating to the services and proprietary information described in this Agreement.     d.  Headings.  The headings of this Agreement are included for purposes of reference and convenience only and shall not limit or otherwise affect the construction or interpretation of any of the provisions of this Agreement.     e.  Entire Agreement; Modification.  This Agreement, including all exhibits, constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the parties in connection herewith. No supplement, modification or amendment of this Agreement shall be effective unless executed in writing by the parties hereto.     f.   Notice.  Whenever the service or the giving of any document or consent by or on behalf of any party hereto upon any other party is herein provided for, or becomes necessary or convenient under the provisions of this Agreement or any document related hereto, a valid and efficient service of such document shall be effected by delivering the same in writing to such party in person, by Federal Express or other reputable courier, by facsimile, or by sending the same by registered or certified mail, return receipt requested, and shall be deemed received upon personal delivery if delivered personally, by Federal Express or other reputable courier or by facsimile, or four (4) business days after deposit in 2 -------------------------------------------------------------------------------- the mail in the United States, postage prepaid, addressed to the person to receive such notice or communication at the following address: Company:   The RiceX Company 1241 Hawk's Flight Court El Dorado Hills, CA 95762 Telephone: (916) 933-3000 Facsimile: (916) 933-3232 Contractor:   Dr. Glenn H. Sullivan 484 East Carmel Drive, #357 Carmel, Indiana 46032 Telephone: (317) 815-3711 Facsimile: (317) 815-3711     Notice of change of address shall be given by written notice in the manner detailed in this paragraph 7.f.     g.  Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument.     h.  Law Governing.  This Agreement shall be construed in accordance with, and shall be governed by, the laws of the State of California.     i.   Successors and Assigns.  Contractor may not assign any of his rights, duties or obligations hereunder without the prior written consent of the Company, which consent may be withheld in the Company's sole and absolute discretion. Subject to the foregoing, this Agreement shall be binding upon and enforceable by, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.     j.   Severability.  In the event any portion of this Agreement shall be declared by any court of competent jurisdiction to be invalid, illegal or unenforceable, such portion shall be deemed severed from this Agreement, and the remaining parts hereof shall remain in full force and effect, as fully as though such invalid, illegal or unenforceable portion had never been a part of this Agreement.     k.  Gender and Number.  As used in this Agreement, the masculine, the feminine and the neuter gender, and the singular or plural number, shall be deemed to include the others wherever the context so indicates or requires.     l.   Arbitration.  Except with respect to equitable remedies which may be difficult for an arbitrator to enforce, any controversy or claim arising out of or relating to this Agreement, or breach of this Agreement, shall be settled by binding arbitration conducted in Sacramento, California by an arbitration service mutually agreeable to the parties, in accordance with the commercial arbitration rules of the American Arbitration Association, and judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction. Nothing contained herein is intended or shall be construed so as to limit the equitable remedies which a party may seek through judicial proceedings.     m.  Attorneys' Fees.  In the event of the bringing of any action by either party hereto against the other arising out of this Agreement, the party who is determined to be the prevailing party shall be entitled to recover from the other party all costs and expenses of suit, including reasonable attorneys' fees. 3 --------------------------------------------------------------------------------     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.     THE RICEX COMPANY a Delaware corporation (the "Company")     By: /s/ DANIEL L. MCPEAK, SR.    -------------------------------------------------------------------------------- Daniel L. McPeak, Sr. Chief Executive Officer     /s/ DR. GLENN H. SULLIVAN    -------------------------------------------------------------------------------- Dr. Glenn H. Sullivan ("Contractor") 4 -------------------------------------------------------------------------------- QuickLinks CONTRACT FOR SERVICES

QuickLinks -- Click here to rapidly navigate through this document Exhibit 10.1 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of April 2, 2001, by and between Intraware, Inc., a Delaware corporation (the "Company"), [                  ], and each of the investors identified on Schedule 1 hereto (as such schedule may be updated from time to time) and signatory hereto (each, an "Investor", and collectively, the "Investors") or their permitted assigns (each, a "Holder", and collectively, the "Holders"). WHEREAS, this Agreement is being entered into in connection with the financing extended by the Investors to the Company (the "Financing") in which, pursuant to the terms of subscription agreements entered into between the Company and each Investor (collectively, the "Subscription Agreement"), each Investor will receive (a) shares of the Company's Series B Convertible Preferred Shares, par value $0.0001 per share (the "Preferred Shares"), that is convertible into shares of common stock, par value $0.0001 per share (the "Common Stock"), of the Company (the "Conversion Shares"), and (b) warrants ("Preferred Warrants") to purchase shares of Common Stock (the "Warrant Shares"); and WHEREAS, the terms of the Preferred Shares and Preferred Warrants contemplate that the Conversion Shares and the Warrant Shares, as the case may be, are entitled to registration rights. NOW, THEREFORE, in consideration of the foregoing and the mutual promises, representations, warranties and covenants and agreements contained herein, the Company and each of the Investors hereto, intending to be legally bound hereby agree as follows: I.  DEFINITIONS. The following additional definitions shall apply for purposes of this Agreement: 1.1  The term "Holder" means an Investor and any transferee or assignee thereof to whom an Investor assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 6.2. 1.2  The term "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof. 1.3  The term "Prospectus" means the Prospectus included in any Registration Statement (including without limitation, a Prospectus that discloses information previously omitted from a Prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the 1933 Act), as amended or supplemented by any amendment or Prospectus supplement, including post-effective amendments, and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such Prospectus. 1.4  The terms "Register," "Registered," and "Registration" refer to a registration effected by preparing and filing one or more Registration Statements, (as defined below) or similar document in compliance with the Securities Act of 1933, as amended (the "1933 Act"), and Rule 415 thereunder or any successor rule providing for the offering for resale of securities on a continuous or delayed basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement or document by the United States Securities and Exchange Commission (the "SEC"). 1.5  The term "Registrable Securities" means (a) the Warrant Shares and any other securities of the Company issuable upon the exercise of the Warrants, (b) the Conversion Shares, and any other securities of the Company, issued or issuable upon the conversion of the Preferred Shares, and (c) any shares of capital stock or other securities issued or issuable with respect to the Warrant Shares or the Preferred Shares, as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitations on the exercises of the Preferred Warrants or conversion of the Preferred Shares; provided, however, that any securities deemed Registrable Securities in accordance herewith shall cease to be Registrable Securities (i) upon the sale of such -------------------------------------------------------------------------------- securities pursuant to a Registration Statement, (ii) upon the sale of such securities pursuant to Rule 144 promulgated under the 1933 Act, or (iii) on the date on which such securities become available for sale under Rule 144(k). 1.6  The term "Registration Statement" means a registration statement on Form S-1 or Form S-3 or any similar or successor form then appropriate for or applicable to the offer and sale of the Registrable Securities and filed under the 1933 Act. II.  REGISTRATION. 2.1  Right to Include Registrable Stock. If the Company proposes to register any of its securities under the 1933 Act in connection with the public offering of such securities solely for cash (other than a registration on Form S-4 or Form S-8, or any successor or similar forms) (a "Piggyback Registration"), whether for the account of the Company or otherwise, it will promptly, but not later than thirty (30) days before the anticipated date of filing such Registration Statement, give written notice to each Holder. Upon the written request of any of the Holders made within fifteen (15) days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such Holders and the intended method of distribution thereof), the Company will use its reasonable best efforts to effect the registration under the 1933 Act of all Registrable Securities which the Company has been requested to register by any of the Holders in accordance with the intended methods of distribution specified in such request; provided, however, that (a) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the Registration Statement filed in connection with such registration, the Company determines for any reason not to proceed with such registration, the Company may, at its election, give written notice of such determination to the Holders and, thereupon, will be relieved of its obligation to register any Registrable Securities in connection with such registration, and (b) in case of a determination by the Company to delay registration of its securities, the Company will be permitted to delay the registration of Registrable Securities for the same period as the delay in registering such other securities; provided, however, that the provisions of this Article II will not be deemed to limit or otherwise restrict the rights of the Holders under Article III. 2.2  Mandatory Registration. Notwithstanding the foregoing, the Company shall prepare and file with the SEC on or before the earlier of (a) the three-month anniversary of the First Closing (as defined in the Agency Agreement (as defined in the Subscription Agreement) or (b) the date on which a Registration Statement covering the resale of the shares of Common Stock (the "Series A Conversion Shares") into which the Series A Preferred Stock, par value $0.0001 per share, of the Company are convertible is filed with the SEC (the "Filing Deadline"), a Registration Statement or Registration Statements, as necessary, on Form S-3 covering the resale of all of the Holders' Registrable Securities. In the event that Form S-3 is unavailable for such a registration, the Company shall use such other form as is available for such a registration, subject to the provisions of Section 2.5. The Company shall use its reasonable best efforts to cause such Registration Statement to be declared effective by the SEC on or before the date which is earlier of (x) the three-month anniversary of the Filing Deadline or (y) the date on which a Registration Statement covering the resale of the Series A Conversion Shares is declared effective by the SEC (the "Effectiveness Deadline"). 2.3  Priority. If the managing underwriter for a registration (other than with respect to a Registration Statement filed pursuant to Section 2.2) involving an underwritten offering advises the Company in writing that, in its opinion, the number of securities of the Company (including without limitation, Registrable Securities) requested to be included in such registration by the holders thereof exceeds the number of securities of the Company (the "Sale Number") which can be sold in an orderly manner in such offering within a price range acceptable to the Company, the Company will include (a) first, all securities of the Company that the Company proposes to register for its own account, and (b) second, to the extent that the number of securities of the Company to be included by the Company is less than 2 -------------------------------------------------------------------------------- the Sale Number, a number of the Registrable Securities equal to the number derived by multiplying (i) the difference between the Sale Number and the securities proposed to be sold by the Company, and (ii) a fraction the numerator of which is the number of Registrable Securities originally requested to be registered by the Holders, and the denominator of which shall be the aggregate number of all securities requested to be registered by all holders of the Company's securities (other than securities being registered by the Company itself). The Company hereby agrees that it will not grant registration rights to any other holder that are more favorable to such holder than the registration rights granted hereunder. 2.4  Legal Counsel. Subject to Section 6.1 hereof, the Investors holding a majority of the Registrable Securities shall have the right to select one legal counsel to review and oversee any offering pursuant to this Article II ("Legal Counsel"), which shall be Paul, Hastings, Janofsky & Walker LLP or such other counsel as thereafter designated by the holders of a majority of the Registrable Securities. The Company shall reasonably cooperate with Legal Counsel in performing the Company's obligations under this Agreement. 2.5  Ineligibility of Form S-3. In the event that Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (a) register the resale of the Registrable Securities on another appropriate form, and (b) undertake to register the resale of the Registrable Securities on Form S-3 as soon as such form is available; provided, however, that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the SEC. 2.6  Effect of Failure to File and Obtain and Maintain Effectiveness of Registration Statement. If (a) a Registration Statement covering all the Registrable Securities and required to be filed by the Company pursuant to this Agreement is not (i) filed with the SEC on or before the Filing Deadline, or (ii) declared effective by the SEC on or before the applicable Effectiveness Deadline; (b) on any day after the Registration Statement has been declared effective by the SEC, sales of all the Registrable Securities required to be included on such Registration Statement cannot be made pursuant to the Registration Statement (including without limitation, because of a failure to keep the Registration Statement effective, to disclose such information as is necessary for sales to be made pursuant to the Registration Statement, or to register sufficient shares of Common Stock), or (c) the Company fails at any time to fully comply with the rules and regulations of the Nasdaq National Market, including the standards for continued listing of the Company's Common Stock on the Nasdaq National Market, then the Company shall be in breach of this Agreement (such a breach being a "Registration Statement Default"). As partial relief for any Registration Statement Default and for the damages to any Holder by reason of any such delay in or reduction of its ability to sell the Registrable Securities, the remedy shall be as provided for by the Preferred Warrants and the Certificate of Designation (which remedy shall not be exclusive of any other remedies available at law or in equity). Notwithstanding the foregoing, the Company shall have 30 days to cure a Registration Statement Default after the date of its occurrence and to deliver a written statement to the holders of Registrable Securities certifying that such Registration Statement Default has been so cured; and if such cure is timely effected and such statement is timely delivered, the Company shall not be subject to the remedies for a Registration Statement Default. 2.7  Sufficient Number of Shares Registered. In the event the number of shares available under a Registration Statement filed pursuant to Section 2.2 is insufficient to cover all of the Registrable Securities which such Registration Statement is required to cover, the Company shall amend the Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover at least 100% of the Registrable Securities (based on the market price of the Common Stock on the trading day immediately preceding the date of filing of such amendment or new Registration Statement), in each case, as soon as practicable, but in any event not later than fifteen (15) business days after the necessity therefor arises. The Company shall cause such 3 -------------------------------------------------------------------------------- amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed "insufficient to cover all of the Registrable Securities" if the number of Registrable Securities issued or issuable upon conversion of the Preferred Shares and exercise of the Preferred Warrants covered by such Registration Statement is greater than the number of shares of Common Stock available for resale under the Registration Statement to cover shares issued or issuable upon conversion of the Preferred Shares and exercise of the Preferred Warrants. For purposes of the calculation set forth in the foregoing sentence, any restrictions on the conversion of the Preferred Shares and the exercise of the Preferred Warrants shall be disregarded and such calculation shall assume that the Preferred Shares is then convertible into shares of Common Stock at the then prevailing Conversion Price (as defined in the Company's Certificate of Designation for the Preferred Shares) and the Preferred Warrants are then exercisable for shares of Common Stock at the then prevailing applicable Exercise Price (as defined in the applicable Preferred Warrant). III.  OBLIGATIONS OF THE COMPANY. Whenever required under this Agreement to effect the registration of any Registrable Securities, the Company will, as expeditiously as possible, fulfill the following obligations: 3.1  Registration Statement. The Company shall promptly prepare and file with the SEC a Registration Statement with respect to the Registrable Securities (but in no event later than the Filing Deadline) and use its best efforts to cause such Registration Statement to become effective (but in no event later than the applicable Effectiveness Deadline). The Company will keep such Registration Statement effective for up to three (3) years from its effective date, but not in any event after such securities cease being Registrable Securities (the "Registration Period"). The Registration Statement (including any amendments or supplements thereto and Prospectuses contained therein) shall not contain any 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, in light of the circumstances in which they were made, not misleading. The Company shall submit to the SEC, within three (3) business days, unless Legal Counsel withholds approval as provided in 3.3, after the Company learns that no review of a particular Registration Statement will be made by the staff of the SEC or that the staff has no further comments on the Registration Statement, as the case may be, a request for acceleration of effectiveness of such Registration Statement to a time and date not later than 2 business days after the submission of such request. 3.2  Registration Statement Amendments and Supplements. The Company shall prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3.2) by reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Company shall have incorporated such report by reference into the Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement the Registration Statement. 3.3  Legal Counsel. The Company shall (a) permit Legal Counsel to review and comment upon (i) those sections of a Registration Statement relating to the Investors at least five (5) business days prior to its filing with the SEC, and (ii) all other sections of a Registration Statement and all amendments and supplements to all Registration Statements, which are applicable to the Investors 4 -------------------------------------------------------------------------------- (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any similar or successor report and registration statements on Form S-8) at least four (4) business days prior to their filing with the SEC, and (b) not file any document in a form to which Legal Counsel reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement or any amendment or supplement thereto without the prior approval of Legal Counsel, which consent shall not be unreasonably withheld. The Company shall furnish to Legal Counsel, without charge, (a) any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to any Registration Statement, (b) promptly after the same is prepared and filed with the SEC, one copy of any Registration Statement and any amendment(s) thereto, including financial statements and schedules and all exhibits and (c) upon the effectiveness of any Registration Statement, one copy of the Prospectus included in such Registration Statement and all amendments and supplements thereto. The Company shall reasonably cooperate with Legal Counsel in performing the Company's obligations pursuant to this Article III. 3.4  Notification. As promptly as practicable give notice to the Holders and Legal Counsel (a) when the Registration Statement or any post-effective amendment has been declared effective, (b) of the issuance by the SEC or any other federal or state governmental authority of any stop order or other suspension of the effectiveness of the Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceedings for that purpose, (c) of 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, (d) of the occurrence of (but not the nature of or details concerning) a Material Event (defined in Section 3.7), and (e) of the determination by the Company that a post-effective amendment to the Registration Statement will be filed with the SEC, which notice may, at the discretion of the Company (or as required pursuant to Section 3.7), state that it constitutes a Deferral Notice, in which event the provisions of Section 3.7 shall apply. 3.5  Prospectuses. The Company shall deliver to each Holder in connection with any sale of Registrable Securities pursuant to the Registration Statement, without charge, as many copies of the Prospectus or Prospectuses relating to such Registrable Securities (including each preliminary Prospectus) and any amendment or supplement thereto as such Holder may reasonably request, and the Company hereby consents (except during such periods that a Deferral Notice is outstanding and has not been revoked) to the use of such Prospectus or each amendment or supplement thereto by each Holder in connection with any offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto in the manner set forth therein. 3.6  Blue Sky Laws. The Company shall, prior to any public offering of the Registrable Securities pursuant to the Registration Statement, register or qualify or cooperate with the Holders in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or "Blue Sky" laws of such jurisdictions within the United States as any Holder reasonably requests in writing, and keep each such registration or qualification (or exemption therefrom) effective during the Registration Period in connection with such Holder's offer and sale of Registrable Securities pursuant to such registration or qualification (or exemption therefrom) and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of such Registrable Securities in the manner set forth in the Registration Statement and the related Prospectus; provided, however, that the Company will not be required to (a) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Agreement, or (b) take any action that would subject it to general service of process in suits or to taxation in any such jurisdiction where it is not then so subject. The Company shall promptly notify Legal Counsel and each Holder who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension 5 -------------------------------------------------------------------------------- of the registration or qualification of any of the Registrable Securities for sale under the securities or "Blue Sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threat of any proceeding for such purpose. 3.7  Stop Orders; Material Events. The Company shall use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction. Upon (a) any issuance by the SEC of a stop order or other suspension of the effectiveness of the Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction despite the Company's commercially reasonable efforts to prevent such stop order or suspension, or the initiation of proceedings with respect to the Registration Statement under Section 8(d) or 8(e) of the 1933 Act; (b) the occurrence of any event or the existence of any fact (a "Material Event") as a result of which the Registration Statement shall 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, or any Prospectus shall 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 the light of the circumstances under which they were made, not misleading; or (c) the occurrence or existence of any pending corporate development, public filing with the SEC or other similar event with respect to the Company that, in the reasonable discretion of the Company, makes it appropriate to suspend the availability of the Registration Statement and the related Prospectus, the Company shall (i) in the case of clause (b) above, subject to the next sentence, as promptly as practicable prepare and file, if necessary pursuant to applicable law, a post-effective amendment to such Registration Statement or a supplement to the related Prospectus or any document incorporated therein by reference or file any other required document that would be incorporated by reference into such Registration Statement and Prospectus so that such Registration Statement does 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, and such Prospectus does 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 the light of the circumstances under which they were made, not misleading, and, in the case of a post-effective amendment to a Registration Statement, subject to the next sentence, use its reasonable efforts to cause it to be declared effective as promptly as is practicable; and (ii) give notice to the Holders and Legal Counsel that the availability of the Registration Statement is suspended (a "Deferral Notice") and, upon receipt of any Deferral Notice, each Holder agrees not to sell any Registrable Securities pursuant to the Registration Statement until such Holder's receipt of copies of the supplemented or amended Prospectus provided for in clause (i) above, or until it is advised in writing by the Company that the Prospectus may be used, and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus. The Company will use commercially reasonable efforts to ensure that the use of the Prospectus may be resumed (x) in the case of clause (a) above, as promptly as is practicable, (y) in the case of clause (b) above, as soon as, in the sole judgment of the Company, public disclosure of such Material Event would not be prejudicial to or contrary to the interests of the Company or, if necessary to avoid unreasonable burden or expense, as soon as practicable thereafter, and (z) in the case of clause (c) above, as soon as, in the discretion of the Company, such suspension is no longer appropriate (such period, during which the availability of the Registration Statement and any Prospectus is suspended being a "Deferral Period"). Notwithstanding the foregoing, no Deferral Period instituted pursuant to clause (b) or clause (c) above shall last for a period of time in excess of thirty (30) days from the date of the Material Event or other occurrence or state of facts on account of which such Deferral Period is instituted, and the Company shall institute no more than one (1) Deferral Period in the aggregate pursuant to clause (b) or clause (c) above in any consecutive twelve (12) month period. The Company shall use commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement or the lifting of any suspension of the 6 -------------------------------------------------------------------------------- qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction in which they have been qualified for sale, in either case as promptly as practicable. 3.8  Accountants Letters and Legal Opinions. At the reasonable request of any Holder and at the expense of the Company the Company shall furnish to such Holder, on the date of the effectiveness of the Registration Statement and thereafter from time to time on such dates as any of the Holders may reasonably request (if the offering contemplated by such Registration Statement is an underwritten offering) (a) a letter, dated such date, from the Company's independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, and (b) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given to underwriters in an underwritten public offering, addressed to the Holders. 3.9  Listing or Quotation. The Company shall either (a) cause all the Registrable Securities covered by a Registration Statement to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (b) secure designation and quotation of all the Registrable Securities covered by the Registration Statement on the Nasdaq National Market or The New York Stock Exchange, Inc., or, if the Company is unsuccessful in satisfying the preceding clause (a) or (b), (c) the Company shall secure the inclusion for quotation on The American Stock Exchange, Inc., or The Nasdaq SmallCap Market, for such Registrable Securities and, without limiting the generality of the foregoing, to arrange for at least two (2) market makers to register with the National Association of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3.9. 3.10  Access to Information. The Company shall make documents, files, books, records, officers, directors and employees of the Company reasonably available to any Holder, Legal Counsel and one firm of accountants or other agents retained by the Holders and provided the underwriters, if any, shall have agreed to be bound by the provisions of this Section 3.10, to such underwriters (collectively the "Inspectors"), and make such other accommodations as are reasonably necessary for the Inspectors, if any, to perform a due diligence review of the Company; provided, however, that all such information ("Confidential Information") will be kept confidential and not utilized by the Inspectors except as contemplated herein and except as required by law or court order. The term "Confidential Information" does not include information that (a) is already in possession of such other party (other than that which is subject to another confidentiality agreement), (b) becomes generally available to the public, or (c) becomes available on a non-confidential basis from a source other than the Company. Each Holder agrees that it shall, upon learning that disclosure of such Confidential Information is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the information deemed confidential. 3.11  Non-Disclosure. The Company shall hold in confidence and not make any disclosure of information concerning any Holder provided to the Company unless (a) disclosure of such information is necessary to comply with federal or state securities laws, (b) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (c) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, (d) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement, or (e) such Holder consents to the form and content of any such disclosure. The Company agrees that it shall, upon learning that disclosure of such information concerning any Holder is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written 7 -------------------------------------------------------------------------------- notice to such Holder and allow such Holder, at the Holder's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information. 3.12  Certificates. The Company shall cooperate with each of the Holders who hold Registrable Securities being offered, and to the extent applicable, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Holders may reasonably request and registered in such names as the Holders may request. 3.13  Transfer Agent and Registrar. The Company shall provide a transfer agent and registrar of all such Registrable Securities not later than the effective date of such Registration Statement. 3.14  Amendments and Supplements Requested by Holders. If requested by any Holder, the Company shall (a) as soon as practicable incorporate in a Prospectus supplement or post-effective amendment such information as such Holder requests to be included therein relating to the sale and distribution of Registrable Securities, including without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering, (b) as soon as practicable make all required filings of such Prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment, and (c) supplement or make amendments to any Registration Statement if reasonably requested by any Holder of such Registrable Securities. 3.15  Additional Registrations and Approvals. The Company shall use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities. 3.16  Earnings Statements. The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering a twelve (12) month period beginning not later than the first day of the Company's fiscal quarter next following the effective date of the Registration Statement, provided that the Company shall be deemed to satisfy its obligations under this Section 3.16 if it timely makes all required filings under the 1934 Act and does not change its fiscal year. 3.17  SEC Compliance. The Company shall otherwise comply with all applicable rules and regulations of the SEC in connection with any registration hereunder. 3.18  Confirmation of Registration. Within two (2) business days after a Registration Statement which covers applicable Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Holders whose Registrable Securities are included in such Registration Statement and to Legal Counsel) confirmation that such Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A. 3.19  Actions for Public Offering. The Company shall provide such opinions, certifications, indemnifications, and take such other actions, including without limitation, entering into such agreements (including underwriting agreements), as are reasonably required and appropriate, to permit the Holders to make a public offering of the Registrable Securities requested to be registered. 3.20  Rule 144 Requirements. The Company covenants that it shall file the reports required to be filed by it under the 1933 Act and the 1934 Act, and the rules and regulations adopted by the SEC thereunder, provided, however, the Company may delay any such filing but only pursuant to 8 -------------------------------------------------------------------------------- Rule 12b-25 under the 1934 Act, and the Company shall take such further action as any Holder of Registrable Securities may reasonably request (including without limitation, promptly obtaining and required legal opinions from Company counsel necessary to effect the sale of Registrable Securities under Rule 144 and paying the related fees and expenses of such counsel), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the 1933 Act within the limitation of the exemptions provided by (a) Rule 144 under the Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. If the Company fails to satisfy its covenants and obligations under this Section 3.20, then it shall be in breach of this Agreement (such a breach being a "Rule 144 Default"). As partial relief for any Rule 144 Default and for damages to any Holder by reason of any delay or inability to sell the underlying shares of Common Stock, the remedy shall be as provided for by the Preferred Warrants and the Certificate of Designation (which remedy shall not be exclusive of any other remedies available at law or in equity). Notwithstanding the foregoing, the Company shall have 30 days to cure a Rule 144 Default after the date of its occurrence and to deliver a written statement to the holders of Registrable Securities that such Rule 144 Default has been so cured; and if such cure is timely effected and such statement is timely delivered, the Company shall not be subject to the remedies for a Rule 144 Default. IV.  OBLIGATIONS OF THE HOLDERS. 4.1  Furnish Information. The Company's obligation to cause any Registration Statement to become effective in connection with distribution of any Registrable Securities pursuant to this Agreement is contingent upon each Holder, with reasonable promptness, furnishing to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities, as is required pursuant to Regulation S-K promulgated under the 1933 Act, to effect the registration of the Registrable Securities. Each Holder agrees, by acquisition of the Registrable Securities, that it shall not be entitled to sell any of such Registrable Securities pursuant to the Registration Statement or to receive a Prospectus relating thereto, unless such Holder has furnished the Company with all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not misleading in a material respect and any other information regarding such Holder and the distribution of such Registrable Securities as the Company may from time to time reasonably request. Any sale of any Registrable Securities by any Holder shall constitute a representation and warranty by such Holder that the information relating to such Holder and its plan of distribution is as set forth in the Prospectus delivered by such Holder in connection with such disposition, that such Prospectus does not as of the time of such sale contain any untrue statement of a material fact relating to or provided by such Holder or relating to its plan of distribution and that such Prospectus does not as of the time of such sale omit to state any material fact relating to or provided by such Holder or relating to its plan of distribution necessary to make the statements in such Prospectus, in the light of the circumstances under which they were made, not misleading. V.  INDEMNIFICATION. In the event of any registration under this Agreement: 5.1  Indemnification by the Company. The Company will indemnify and hold harmless each Holder and its officers, directors, partners and affiliates (and their officers, directors and partners), any underwriter (as defined in the 1933 Act) for each Holder and each person (and its officers, directors, partners and affiliates), if any, who controls any Holder or underwriter within the meaning of the 1933 Act or the 1934 Act (each a "Company Indemnified Person"), against any losses, claims, damages, expenses or liabilities, joint or several, or actions in respect thereof ("Losses") to which they may become subject under the 1933 Act, the 1934 Act, or other federal or state law, insofar as such Losses arise out of or are based upon any of the following statements, omissions or violations (collectively a 9 -------------------------------------------------------------------------------- "Violation"): (a) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement, including any preliminary Prospectus or final Prospectus contained therein or any amendments or supplements thereto, (b) 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, or (c) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any state securities law, or any rule or regulation promulgated under the 1933 Act, the 1934 Act, or any state securities law, and the Company will pay to each such Company Indemnified Person, as incurred, any legal or other expenses reasonably incurred by or on behalf of him in connection with investigating or defending any such Loss; provided, however, that the indemnity agreement contained in this Section 5.1 shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor will the Company be liable in any such case for any such Loss to the extent that it arises out of or is based upon (a) a Violation which occurs solely as the result of the written information furnished by any Holder, underwriter or controlling person seeking indemnification hereunder, as applicable, expressly for inclusion in the Registration Statement, or (b) with respect to any underwriter and controlling person of such underwriter (and their respective officers and directors), a Violation which results from the fact that there was not sent or given to a person who bought Registrable Securities, at or prior to the written confirmation of the sale, a copy of the final Prospectus, as then amended or supplemented, if the Company had previously furnished copies of such Prospectus hereunder and such Prospectus corrected the misstatement or omission forming the basis of the Violation. 5.2  Indemnification by Holders. Each Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the Registration Statement, each person, if any, who controls the Company within the meaning of the 1933 Act, any underwriter and any controlling person of any such underwriter or other holder (each a "Holder Indemnified Person"), against any Losses to which any of the foregoing persons may become subject, under the 1933 Act, the 1934 Act, or other federal or state law, insofar as such Losses arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs solely as a result of the written information furnished by each Holder expressly for inclusion in the applicable Registration Statement, and such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any Holder Indemnified Person intended to be indemnified pursuant to this Section 5.2, in connection with investigating or defending any such Loss; provided, however, that any Holder's liability pursuant to this Section 5.2 shall be limited to the amount of the net proceeds received by such Holder from the sale of the Registrable Securities sold by it, and further provided that the indemnity agreement contained in this Section 5.2 does not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of such Holder, which consent shall not be unreasonably withheld. 5.3  Indemnification Procedures. Promptly after receipt by an indemnified party under this Article V of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Article V, deliver to the indemnifying party a written notice of the commencement of such action and the indemnifying party will have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) will have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of the indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between the indemnified party and any other party represented by such counsel in the same proceeding. If the indemnifying party shall fail to defend the action, or conducts a defense which is not reasonably adequate in light of the circumstances, the indemnified party may conduct its own defense and shall be entitled to reimbursement for the costs of 10 -------------------------------------------------------------------------------- such defense. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the indemnified party under this Agreement, except to the extent that the indemnifying party is materially prejudiced by such failure. The omission so to deliver written notice to the indemnifying party does not relieve it of any liability that it may have to any indemnified party otherwise than under this Agreement. No indemnifying party under this Agreement will enter into any settlement or consent to any entry of judgment without the indemnified party's written consent which does not include as an unconditional term thereof the giving by the claimant or plaintiff to the indemnified party of a release from all liability in respect of such claim or litigation. 5.4  Contribution. If the indemnification provided for in this Article V is held by a court of competent jurisdiction to be unavailable to an indemnified party or is insufficient to indemnify an indemnified party with respect to any Loss, then the indemnifying party, in lieu of or in addition to, as appropriate, indemnifying such indemnified party hereunder, will contribute to the amount paid or payable by such indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such Loss as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party will 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 relates 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. The obligation of any Holder to make a contribution pursuant to this Section 5.4 shall be limited to the net proceeds received by such Holder from the sale of the Registrable Securities sold by it, less any amounts paid pursuant to Section 5.2. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Article V to the fullest extent permitted by law; provided, however, that: (a) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation, and (b) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement. 5.5  Survival. The indemnity and contribution provisions contained in this Article V shall remain operative and in full force and effect regardless of (a) any termination of this Agreement, (b) any investigation made by or on behalf of any Holder or any person controlling any Holder, or the Company, or the Company's officers or directors or any person controlling the Company, and (c) the sale of any Registrable Securities by any Holder. VI.  MISCELLANEOUS. 6.1  Expenses. The Company shall bear all fees and expenses incurred in connection with the performance by the Company of its obligations under this Agreement (including without limitation, all registration and filing fees, fees with respect to filings required to be made with the National Association of Securities Dealers, Inc., fees and expenses of compliance with securities or "Blue Sky" laws, printing expenses, messenger, telephone and distribution expenses associated with the preparation and distribution of any Registration Statement, all fees and expenses associated with the listing of any Registrable Securities on any securities exchange or exchanges, the fees and disbursements of counsel for the Company and its accountants, any underwriting fees and the reasonable fees and expenses of one counsel to the Holders, not to exceed an amount equal to $25,000, whether or not the Registration Statement is declared effective. Notwithstanding the provisions of this Section 6.1, each seller of Registrable Securities shall pay all underwriting fees and expenses, selling commissions and stock transfer and documentary stamp taxes, if any, applicable to any Registrable Securities registered and sold by such seller and all registration expenses to the extent the Company is prohibited from paying such expenses under applicable law. 11 -------------------------------------------------------------------------------- 6.2  Assignment of Registration Rights. The rights under this Agreement shall be automatically assignable by any Holder to any transferee of all or any portion of Registrable Securities if: (a) such Holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (b) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee, and (ii) the securities with respect to which such registration rights are being transferred or assigned; (c) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws; (d) at or before the time the Company receives the written notice contemplated by clause (b) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein and (e) at least 100,000 shares of Common Stock (or the equivalent number of Preferred Shares that would convert into that number of shares of Common Stock or the equivalent number of Preferred Warrants that are exercisable for that number of shares of Common Stock) are transferred by such Holder to the transferee of the Registrable Securities contemplated by this Section 6.2. VII.  GENERAL. 7.1  Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally, (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party), or (c) one (1) business day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company: Intraware, Inc. 25 Orinda Way Orinda, CA 94563 Telephone: (925) 253-4500 Facsimile: (925) 253-4541 Attention: General Counsel With a copy to (which shall not constitute notice): Wilson Sonsini Goodrich & Rosati, Professional Corporation 650 Page Mill Road Palo Alto, CA 94304 Telephone: (650) 493-9300 Facsimile: (650) 493-6811 Attention: Adam R. Dolinko, Esq. If to a Holder, to its most recent address and facsimile number provided to the Company five (5) days prior to the effectiveness of any change thereof, together with a copy to [                  ]. Written confirmation of receipt (a) given by the recipient of such notice, consent, waiver or other communication, (b) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission, or (c) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (a), (b) or (c) above, respectively. 12 -------------------------------------------------------------------------------- 7.2  Owner of Registrable Securities. A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to be owner of record of such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities. 7.3  Consents. All consents and other determinations to be made by the Holders pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by Holders holding a majority of the Registrable Securities, determined as if all the Preferred Shares then outstanding have been converted into Registrable Securities and all the Preferred Warrants then outstanding have been exercised for Registrable Securities without regard for any limitations on conversion of the Preferred Shares or exercise of the Preferred Warrants. 7.4  Additional Parties. The parties hereto agree that additional holders of Preferred Shares (or warrants to acquire Preferred Shares) of the Company may, with the consent only of the Company, be added as parties to this Agreement with respect to any or all securities of the Company held by them, and shall thereupon be deemed for all purposes "Holders" hereunder; provided, however, that from and after the date of this Agreement, the Company shall not without the prior written consent of holders of majority of the outstanding Conversion Shares enter into any agreement with any holder or prospective holder of any securities of the Company providing for the grant to such holder of rights superior to those granted herein. Any such additional party shall execute a counterpart of this Agreement, and upon execution by such additional party and by the Company, shall be considered a Holder for purposes of this Agreement. 7.5  Specific Performance. Each of the parties hereto acknowledges and agrees that the breach of this Agreement would cause irreparable damage to the other parties hereto and that the other parties hereto will not have an adequate remedy at law. Therefore, the obligations of each of the parties hereto under this Agreement shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any party may have under this Agreement or otherwise. 7.6  Entire Agreement; Amendment. This Agreement supersedes all other prior oral or written agreements among the parties, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein. No provision of this Agreement may be amended or waived other than by an instrument in writing signed by the Company and the Holders of at least a majority of the Registrable Securities then outstanding. 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 Holders of Registrable Securities whose securities are being sold pursuant to the Registration Statement and that does not directly or indirectly affect the rights of other Holders of Registrable Securities may be given by Holders of at least a majority of the Registrable Securities being sold by such Holders pursuant to such Registration Statement. Each Holder of Registrable Securities outstanding at the time of any such amendment, modification, supplement, waiver or consent or thereafter shall be bound by any such amendment, modification, supplement, waiver or consent effected pursuant to this Section 7.6, whether or not any notice, writing or marking indicating such amendment, modification, supplement, waiver or consent appears on the Registrable Securities or is delivered to such Holder. 7.7  Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. 13 -------------------------------------------------------------------------------- 7.8  Termination. This Agreement and the obligations of the parties hereunder shall terminate as of the end of the Registration Period except for Article V hereof which shall survive and remain in full force and effect in accordance with its terms. 7.9  Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against any of the parties in the courts of the State of New York or, if it has or can acquire jurisdiction, in the United States District Court for the Southern District of New York, and each of the parties consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world. 7.10  Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. 7.11  Successors and Assigns; No Third Party Beneficiaries. Subject to Section 6.2, this Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third-party beneficiary rights in any person not a party to this Agreement except as provided below and in Section 6.2. Upon any assignment, the references in this Agreement to any Holder shall also apply to any such assignee unless the context otherwise requires. 7.12  Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 7.13  No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. 7.14  Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature. [The rest of this page has been intentionally left blank] 14 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have executed or have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first written above.     Intraware, Inc.     By: -------------------------------------------------------------------------------- Name: Title: The foregoing Agreement is hereby accepted as of the date first above written:     By --------------------------------------------------------------------------------            Title:     -------------------------------------------------------------------------------- SCHEDULE I This Schedule I shows the names and addresses of the Investors under the Registration Rights Agreement. [NAME OF INVESTOR] Address for all communications, including written confirmation of such wire transfers: [TO BE PROVIDED] Telecopy No. Telephone No. Tax ID # -------------------------------------------------------------------------------- EXHIBIT A Form of Notice of Effectiveness of Registration Statement [Transfer Agent] Attn: Re: Intraware, Inc. Ladies and Gentlemen: We are counsel to Intraware, Inc., a Delaware corporation (the "Company"), and have represented the Company in connection with those certain Subscription Agreements (the "Subscription Agreements") entered into by and among the Company and the Investors named therein (collectively, the "Holders") pursuant to which the Company issued to the Holders shares of its Series B Convertible Preferred Shares (the "Preferred Shares") convertible into shares of the Company's common stock, par value $0.0001 per share (the "Common Stock") and warrants (the "Warrants") to purchase shares of the Company's Common Stock. Pursuant to the above mentioned agreements, the Company also has entered into a Registration Rights Agreement with the Holders (the "Registration Rights Agreement") pursuant to which the Company agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights Agreement), including the shares of Common Stock issuable upon conversion of the Preferred Shares and the shares of Common Stock issuable upon exercise of the Preferred Warrants, under the 1933 Act of 1933, as amended (the "1933 Act"). In connection with the Company's obligations under the Registration Rights Agreement, on                   , the Company filed a Registration Statement on Form  S-3 (File No. 333-            ) (the "Registration Statement") with the Securities and Exchange Commission (the "SEC") relating to the Registrable Securities which names each of the Holders as a selling stockholder thereunder. In connection with the foregoing, we advise you that a member of the SEC's staff has advised us by telephone that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [Enter Time of Effectiveness] on [Enter Date of Effectiveness] and we have no knowledge, after telephonic inquiry of a member of the SEC's staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for resale under the 1933 Act pursuant to the Registration Statement.     Very truly yours, [Issuer's Counsel] By: cc:  [List Names of Holders]     -------------------------------------------------------------------------------- QuickLinks Exhibit 10.1 REGISTRATION RIGHTS AGREEMENT SCHEDULE I EXHIBIT A Form of Notice of Effectiveness of Registration Statement

<DOCUMENT> <TYPE> EX-10.20 <TEXT> <HTML> Exhibit 10.20 THIRD AMENDMENT OF UAL CORPORATION SUPPLEMENTAL ESOP (Effective as of July 12, 1994) By virtue and in exercise of the amending power reserved to UAL Corporation (the "Company") under section 5.1 of the UAL Corporation Supplemental ESOP (effective as of July 12, 1994) (the "Plan"), which amending power thereunder is subject to the approval of the Air Line Pilots Association, International ("ALPA") and the International Association of Machinists and Aerospace Workers (the "IAM"), the Company hereby amends the Plan, as follows, effective January 1, 1995: 1. The material added to the end of Section 1.1(c) by the Second Amendment is deleted and the following inserted in its place: "For Convertible Shares to be allocated under this Plan for Plan Years beginning on or after January 1, 1995, 96.286956% will be allocated to the ALPA Employee Group, 1.699314% will be allocated to the IAM Employee Group, and 2.01373% will be allocated to the Management and Salaried Employee Group." 2. The material added to the end of Section 1.1(d) by the Second Amendment is deleted and the following inserted in its place: "Effective for Plan Years beginning on or after January 1, 1995, the Class M Voting Shares will be contributed to the ESOP (Part B) or the Supplemental Trust." 3. Section 1.3(d) is amended to read as follows: "'Committee' means the ESOP Committee." 4. Section 1.3(g) is amended by adding the following to the end of the Section: "For the Plan Year commencing January 1, 1995, and for subsequent Plan Years, 'Compensation' for an Employee who is a member of the Management and Salaried Employee Group shall include any compensation which would have been paid to the Employee during the Plan Year, but was not paid during that Plan Year because the Employee elected to defer its receipt according to a procedure adopted by the Company.  Compensation included as a result of the preceding sentence shall not be included as Compensation in the Plan Year in which it is actually paid to the Employee." 5. Section 1.3(j) is amended to read as follows: "(j)  'Eligible Employee' means an 'eligible employee' as defined in the ESOP." 6. The second sentence of Section 2.1 is deleted. 7. The first sentence of Section 2.4(c) is amended to read as follows: "For each ESOP Participant, the difference, if any, between the Hypothetical Share Number and the Actual Share Number shall be referred to as the Tentative Allocation." 8. Section 3.1(b) is amended by adding the following to the end of the Section: "The Committee may determine for any Participant or group of Participants that, because of the possibility of transfers to the ESOP (Part B) under Section 2.7, it is not practicable to make payments under Section 3.1(b) until  the amount (if any) of such transfers can be determined." 9. Subsections 4.2 (a), (b), (c) and (i) are deleted and replaced in each instance by "Reserved." 10. Section 5.1 is amended to read as follows: "5.1       Amendment.  While the Company expects and intends to continue the Plan, the Company must necessarily reserve, and does hereby reserve, the right to amend the Plan at any time, except that no amendment may be adopted, without the approval of ALPA and the IAM, provided, that, with respect to amendments adopted which are described in Section 13.1(b) or (d) of the ESOP (which subsections shall be treated as appropriately modified to the extent necessary to reflect the circumstances of this Plan) the need for joint approval shall be modified." IN WITNESS WHEREOF, the Company has caused this Third Amendment to be executed on December 28, 1995.                                                      UAL CORPORATION                                                   /s/ Douglas A. Hacker     Approved by:     AIR LINE PILOTS ASSOCIATION, INTERNATIONAL   /s/ J. Randolph Babbitt                 /s/ Harlow B. Osteboe     INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS     /s/ Kenneth W. Thiede   </HTML> </TEXT> </DOCUMENT>

EXHIBIT 10.1 – ASSET PURCHASE AGREEMENT AMONG ONLINE CREDIT LIMITED AND USA.COM, INC. DATED JUNE 8, 2001 ASSET PURCHASE AGREEMENT Among Online Credit Limited as the Purchaser and eVision USA.Com, Inc. as the Seller Dated: June 8, 2001 -------------------------------------------------------------------------------- ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT, dated as of June 8, 2001, is entered into by eVision USA.Com, Inc. and Online Credit Limited.         WHEREAS, eVision and Online entered into four separate outstanding Debenture Debt agreements whereby Online provided a total original of $7,500,000 in loans to eVision; and         WHEREAS, eVision desires to pay a significant portion of this Debenture debt and Online agrees to accept assets in consideration of the Debenture Debt;         NOW THEREFORE, in consideration of the terms, conditions, and covenants herein contained, the parties hereby agree as follows: ARTICLE I DEFINITIONS When used in this Agreement, the following terms shall have the respective meanings set forth below: “Agreement” shall mean this Asset Purchase Agreement, including all exhibits and schedules thereto, as the same may hereafter be amended, modified or supplemented from time to time. “Assets” shall mean         1) all debt, equity and derivative instruments of eBanker that eVision owns, except that owned by eVision’s subsidiary American Fronteer Financial Corporation, as of the date of this Agreement consisting of: a.         1 Series A preferred share, b.         1,083,533 common shares, c.         330,000 warrants to purchase shares @ $3.00 expiring 8/11/03, d.         307,692 warrants to purchase shares @ $8.00 expiring 3/31/05, e.         307,692 warrants to purchase shares @ $9.00 expiring 3/31/05 and f.         $660,000 face value in 10% convertible debentures;         2) all shares of Global Growth that eVision owns as of the date of this Agreement; and 2 --------------------------------------------------------------------------------         3) 1,050,000 shares of Global Med that eVision owns as of the date of this Agreement. “Business” shall mean all business conducted by the companies underlying the Assets, as currently constituted and operated and as the same continues to be constituted and operated until the Closing. “Closing” shall mean the consummation of the transactions contemplated in this Agreement which will occur on the Effective Time. “Contracts and Other Agreements” shall mean all contracts, agreements, warranties, guaranties, indentures, bonds, options, leases, subleases, easements, mortgages, plans, collective bargaining agreements, licenses, purchase orders, sales orders, commitments or binding arrangements of any nature whatsoever, express or implied, written or unwritten, and all amendments thereto, entered into by or binding upon the Business or to which any of its properties may be subject, other than those, if any which constitute Excluded Assets or relate exclusively to the Excluded Assets. “Debenture Debt” shall mean debt pursuant to the four outstanding debenture agreements between eVision and Online being:      °  The $4,000,000 10% Convertible Debenture Due December 15, 2007 dated December 30, 1997 and all subsequent amendments;      °  The $1,500,000 10% Convertible Debenture Due December 15, 2007 dated May 17, 1998;      °  The $1,000,000 10% Convertible Debenture Due December 15, 2007 dated August 5, 1998; and      °  The $1,000,000 12% Convertible Debenture Due December 15, 2007 dated November 17, 1998 which subsequently had $160,000 in principal paid down under the “Supplemental Letter of Agreement to the $500,000 12% convertible debenture due March 24, 1999 dated September 25, 1998 and all subsequent amendments issued by eVision to Online Credit and the $1,000,000 12% convertible debenture due December 15, 2007 dated November 17, 1998 issued by eVision to Online Credit” dated May 24, 2001. “Documents” shall mean documents referenced in this Agreement including documents to be drafted pursuant to a provision in this Agreement. “eBanker” shall mean eBanker USA.com, Inc., a Colorado, USA company. “Effective Time” shall mean five (5) business days following the date of the Agreement as stated in the heading of this Agreement. “eVision” shall mean eVision USA.Com, Inc., a Colorado, USA company. “Excluded Assets” shall mean all assets not defined as Assets, including any receivables, payables or agreements between the companies underlying the Assets and eVision. “Global Growth” shall mean Global Growth Inc., a British Columbia, Canada company. “Global Med” shall mean Global Med Technologies, Inc., a Colorado, USA company. “Law” shall mean any law, statute, regulation, ordinance, requirement, announcement or other binding action or requirement of an authority. 3 -------------------------------------------------------------------------------- “Lien or Other Encumbrance” and “Lien and Other Encumbrance” shall mean any lien, pledge, mortgage, security interest, lease, charge, conditional sales contract, option, restriction, reversionary interest, right of first refusal, voting trust arrangement, preemptive right, claim under bailment or storage contract, easement or any other adverse claim or right whatsoever. “Online” shall mean Online Credit Limited, a Hong Kong company. “Parties” shall mean Online and eVision collectively. ARTICLE II PAYMENT AND SATISFACTION OF DEBENTURE DEBT         2.1 Payment of Debenture Debt. Upon the Closing of this Agreement, eVision shall pay $7,314,316 to Online in satisfaction of certain Debenture Debt. As payment of the $7,314,316, eVision shall deliver the Assets to Online. Subject to the terms and conditions set forth in this Agreement and in reliance upon the representations and warranties of eVision and Online herein set forth, at the Closing, eVision shall sell, transfer, convey, assign and deliver to Online, by appropriate deeds, bills of sale, assignments and other instruments satisfactory to the Online and its counsel, all of eVision’s right, title and interest, as of the Effective Time, in and to the Assets. Online agrees to accept the Assets in reduction of the Debenture Debt in the amount of $7,314,316.   eVision shall deliver to Online the certificates, or transfer such assets to accounts designated by Online.   The Assets shall be conveyed free and clear of all liabilities, obligations, Liens and Other Encumbrances, excepting only those liabilities and obligations which are expressly to be assumed by Online hereunder and those Liens and Other Encumbrances securing the same which are specifically disclosed herein or expressly permitted by the terms hereof.         2.2 Satisfaction of Debenture Debt. As consideration, eVision’s payment shall satisfy $7,314,316 of Debenture Debt that Online currently holds, consisting of $6,749,924 in principal and $564,392 in accrued and unpaid interest. Accrued and unpaid interest is based on a date of May 31, 2001. No interest will accrue on the $6,749,924 in debenture principal that is satisfied by this agreement subsequent to May 31, 2001. The Parties understand that the interest amount of $564,392 is approximated, but it is understood that as at May 31, 2001 eVision will have no outstanding balance of accrued but unpaid interest due to Online for the Debentures. Online agrees to execute Debenture Cancellation Agreements, substantially in the same form as that attached as Schedule A.         2.3 Remaining Outstanding Debenture Debt. The remaining outstanding Debenture Debt shall be evidenced with a $590,076 Debenture due 2007 bearing 8% interest. This Debenture shall be evidenced in a contract substantially in the same form as that attached as Schedule B.         2.4 Cancellation of eVision Management Agreement. Subject to the consent of eBanker, which shall be sought upon the Closing of this Agreement, eVision agrees to cancel its management agreement with eBanker, dated August 10, 1998. 4 --------------------------------------------------------------------------------         2.5 Cancellation of Inter-Company Payables owed to eVision by Global Growth. As consideration eVision agrees to cancel and forgive all inter-company payables, including but not limited to a loans owed to eVision by Global Growth.         2.6 Business Examinations and Physical Investigations of Assets. Prior to the Effective Time and for a reasonable time thereafter Online shall be entitled, through its employees and representatives, to make such investigations and examinations of the Business of the Assets as Online may request. In order that Online may have the full opportunity to do so, eVision will furnish Online and its representatives during such period with all information concerning the Business of the Assets as Online or such representatives may request and cause the Business’ officers, employees, consultants, agents, accountants and attorneys to cooperate fully with Online and such representatives and to make full disclosure of all information and documents requested by Online and/or such representatives. Any such investigations and examinations shall be conducted at reasonable times and under reasonable circumstances. No investigation by Online shall, however, diminish or obviate in any way, or affect Online’s right to rely upon, any of the representations, warranties, covenants or agreements of eVision contained in this Agreement or in any other eVision Document. Whether or not the Closing shall take place, eVision hereby waives any cause of action, right, or claim arising out of the access of Online or its representatives to any trade secrets or other confidential business information of eVision from the date of this Agreement until the Closing Date, except for the intentional competitive misuse by Online or its representatives of such trade secrets or other confidential business information if the Closing does not take place.         2.7 Transactions at the Closing. At the Closing, the following shall occur:                          a. Online shall designate instruments of sale, transfer, conveyance, assignment and confirmation, and eVision shall take such further actions, as Online may reasonably deem necessary or desirable in order to convey Assets to Online, and to confirm Online’s title to, all of the Assets, to put Online in actual possession and operating control thereof and to assist Online in exercising all rights with respect thereto; and                          b. eVision shall deliver relevant books and records of the Assets to Online. ARTICLE III ASSUMPTION OF LIABILITIES         3.1 Liabilities Not Assumed. Except to the extent expressly assumed by Online, Online shall not assume or be liable for any liabilities or obligations of the Assets, whether the same are direct or indirect, fixed, contingent or otherwise, known or unknown, whether existing at the Effective Time or arising thereafter as a result of any act, omission or circumstance taking place prior to the Effective Time.   To the extent that the assignment of any contract, license, lease, commitment, or receivable to be assigned to Online shall require the consent of any other party to such contract, license, lease, commitment, or receivable, this agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof. eVision shall use its best efforts to obtain the consent of the other party to such contract, license, lease, commitment, or receivable to the assignment thereof to Online. If such consent is not obtained on or before the Closing Date, eVision shall cooperate with Online in any reasonable arrangement designed to provide for Online the benefits under any such contract, license, lease, commitment, or receivable, including enforcement, at the cost and for the benefit of Online, of any and all rights of eVision against the other party thereto arising out of the breach or cancellation by such other party or otherwise. 5 -------------------------------------------------------------------------------- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF eVISION eVision hereby represents and warrants to Online:         4.1 Organization and Good Standing. eVision is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation; has all requisite power to own, lease and operate its assets, properties and business and to carry on its business as conducted during the twelve-month period prior to the date hereof, as now conducted and as proposed to be conducted; and is duly qualified or licensed to do business as a foreign corporation and is in good standing in every jurisdiction in which the nature of its business or the location of its properties requires such qualification or licensing, except for such jurisdictions where the failure to so qualify or be licensed would not have any adverse effect on the enforceability of any of the material Contracts or the eVision’s ability to bring lawsuits, or a material adverse effect upon the condition (financial or otherwise), assets, liabilities, Business, operations or prospects of the Assets, or eVision’s ability to perform fully its obligations under this Agreement and the other eVision Documents.         4.2 Authority to Execute and Perform Agreements. eVision has all requisite power, authority and approvals required to enter into, execute and deliver this Agreement and all of the other eVision Documents and to perform fully the eVision’s obligations hereunder and thereunder.         4.3 Due Authorization; Enforceability. eVision has taken all actions necessary to authorize it to enter into and perform fully its obligations under this Agreement and all of the other eVision Documents and to consummate the transactions contemplated herein and therein. This Agreement is, and as of the Closing Date, the other eVision Documents will be, the legal, valid and binding obligations of eVision, enforceable in accordance with their respective terms.         4.4 No Violation. Neither the execution or delivery by eVision of this Agreement or any of the eVision Documents nor the consummation of the transactions contemplated herein or therein will: (a) violate any provision of the Articles of Incorporation, bylaws or other charter documents of the eVision; (b) violate, conflict with or constitute a default under, permit the termination or acceleration of, or cause the loss of any rights or options under, any material Contract; (c) require any authorization, consent or approval of, exemption or other action by, or notice to, any party to any material contract; (d) result in the creation or imposition of any Lien or Other Encumbrance upon any of the Assets which is of a character not permitted by this Agreement; or (e) violate or require any consent or notice under any Law or order to which eVision or any of its properties is subject. 6 -------------------------------------------------------------------------------- ARTICLE V FINANCIAL CONDITION         5.1 Financial Statements. eVision has presented to Online its audited balance sheets of the Businesses, the related statements of income and retained earnings and the related statements of changes of financial position or cash flows, which where required are, certified by the eVision’s independent certified public accountants, whose reports thereon are included therewith, and said financial statements (a) were prepared in accordance with the books and records of eVision; (b) were prepared in accordance with generally accepted accounting principles consistently applied (except that of the unaudited balance sheets and the related statements of income do not contain all of the information required by generally accepted accounting principles); (c) fairly present the Business’ financial condition and the results of its operations as of the relevant dates thereof and for the periods covered thereby; (d) contain and reflect all necessary adjustments and accruals for a fair presentation of the Business’ financial condition and the results of its operations for the periods covered by said financial statements (except that the unaudited balance sheet, and the related statements of income are subject to year-end audit and adjustments, the net effect of which will not represent a material adverse change in the financial condition of the Business); and (e) with respect to contracts and commitments for the sale of goods or the provision of services by eVision, contain and reflect adequate reserves for all reasonably anticipated material losses and costs and expenses in excess of expected receipts.         5.2 Absence of Certain Changes. Except where specifically indicated herein, eVision has held the Assets only in the ordinary course consistent with its past practices and has not:                          a. suffered any change, event or condition which, in any case or in the aggregate, has had or could reasonably be expected to have a material adverse effect upon the Asset’s condition (financial or otherwise), assets, liabilities, Business, operations or prospects, the value or utility of the Assets, or eVision’s ability to consummate the transactions contemplated herein;                          b. suffered any destruction, damage to or loss of any Asset (whether or not covered by insurance) which could reasonably be expected to have a material adverse effect upon the condition (financial or otherwise), assets, liabilities, Business, operations, or prospects of the Assets, the value or utility of the Assets or eVision’s ability to consummate the transactions contemplated herein;                          c. discharged or satisfied any Lien or Other Encumbrance affecting any of the Assets other than those then required to be discharged or satisfied, or paid any obligation or liability, whether absolute, accrued, contingent or otherwise, and whether due or to become due, other than current liabilities shown on the Balance Sheet and current liabilities incurred since the Balance Sheet Date in connection with the purchase of goods or services in the ordinary course of the Business and consistent with its prior practices;                          d. mortgaged, pledged or subjected any of the Assets to any Lien or Other Encumbrance; 7 --------------------------------------------------------------------------------                          e. sold, transferred, leased to others or otherwise disposed of any of the Assets;                          f. amended or terminated any material Contract or any License or Permit or received any notice of termination of any of the same; and                          g. instituted, settled or agreed to settle any litigation, action, proceeding or investigation before any court or governmental body relating to eVision or to the Assets or suffered any actual or threatened litigation, action, proceeding or investigation before any court or governmental body relating to eVision or the Assets. RTICLE VI CORPORATE CONDITION         6.1 General. eVision has in all material respects complied with, and is now in all material respects in compliance with, all Laws and Orders applicable to eVision or the Assets or the operation of the Business, and no material capital expenditures will be required in order to insure continued compliance therewith. No other franchise, license, permit, order or approval of any Authority is material to or necessary to operate the Assets as previously conducted during the twelve-month period prior to the date hereof, as presently conducted or as proposed to be conducted.         6.2 Litigation. An accurate and complete description of every pending or, to the knowledge of the eVision, threatened adverse claim, dispute, governmental investigation, suit, action (including, without limitation, nonjudicial real or personal property foreclosure actions), arbitration, legal, administrative or other proceeding of any nature, domestic or foreign, criminal or civil, at law or in equity, by or against or otherwise affecting the Assets, as known by eVision, has been presented to Online. eVision has delivered to Online copies of all relevant court papers and other documents relating to the matters.         6.3 Title to Assets. Without limiting the representations and warranties as to specific classes of Assets contained elsewhere herein, eVision has good and marketable title to each of the Assets owned by it and the valid and enforceable right to receive and/or use each of the Assets in which eVision has any other interest, free and clear of all Liens and Other Encumbrances. The delivery to Online of the instruments of transfer of ownership contemplated by this Agreement will at the Effective Time vest good and marketable title to, or the valid and enforceable right to receive and/or use, each such Asset in Online, free and clear of all Liens and Other Encumbrances.         6.4 Full Disclosure. eVision has heretofore made all of the Books and Records available to Online for its inspection and has heretofore delivered to Online copies of all agreements and documents. All documents and other papers delivered to Online by or on behalf of eVision in connection with this Agreement and the transactions contemplated herein are accurate, complete and authentic. Furthermore, the information furnished to Online by or on behalf of eVision in connection with this Agreement and the transactions contemplated herein does not contain any untrue statement of a material fact and does not omit to state any material fact necessary to make the statements made, in the context in which they are made, not false or misleading. There is no fact which eVision has not disclosed to Online in writing which could reasonably be expected to have a Material adverse effect upon the condition (financial or otherwise), assets, liabilities, business, operations, properties or prospects of the Assets. 8 -------------------------------------------------------------------------------- ARTICLE VII REPRESENTATIONS AND WARRANTIES OF ONLINE Online represents and warrants to eVision as follows:         7.1 Organization and Good Standing. Online is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation; has all requisite power to own, lease and operate its assets, properties and business and to carry on its business as conducted during the twelve-month period prior to the date hereof, as now conducted and as proposed to be conducted; and is duly qualified or licensed to do business as a foreign corporation and is in good standing in every jurisdiction in which the nature of its business or the location of its properties requires such qualification or licensing, except for such jurisdictions where the failure to so qualify or be licensed would not have any adverse effect on the enforceability of any of the material Contracts or Online’s ability to bring lawsuits, or a Material adverse effect upon the condition (financial or otherwise), assets, liabilities, Business, operations or prospects of the Online, or Online’s ability to perform fully its obligations under this Agreement and the other Online Documents.         7.2 Authority to Execute and Perform Agreements. Online has all requisite power, authority and approvals required to enter into, execute and deliver this Agreement and all of the other Online Documents and to perform fully Online’s obligations hereunder and there under.         7.2 Due Authorization; Enforceability. Online has taken all actions necessary to authorize it to enter into and perform fully its obligations under this Agreement and all of the other Online Documents and to consummate the transactions contemplated herein and therein. This Agreement is, and as of the Closing Date, the other Online Documents will be, the legal, valid and binding obligations of Online, enforceable in accordance with their respective terms.         7.3 No Violation. Neither the execution or delivery by eVision of this Agreement or any of Online Documents nor the consummation of the transactions contemplated herein or therein will: (a) violate any provision of the Articles of Incorporation, bylaws or other charter documents of Online; (b) violate, conflict with or constitute a default under, permit the termination or acceleration of, or cause the loss of any rights or options under, any material Contract; (c) require any authorization, consent or approval of, exemption or other action by, or notice to, any party to any material Contract; (d) result in the creation or imposition of any Lien or Other Encumbrance upon any of the Assets which is of a character not permitted by this Agreement; or (e) violate or require any consent or notice under any Law or Order to which eVision, the Business or any of its properties is subject. 9 -------------------------------------------------------------------------------- ARTICLE VIII CORPORATE CONDITION OF ONLINE         8.1 General. Online has in all material respects complied with, and is now in all material respects in compliance with, all Laws and orders applicable to Online or the Debentures, and no material capital expenditures will be required in order to insure continued compliance therewith. No other franchise, license, permit, order or approval of any Authority is material to or necessary regarding the Debentures.         8.2 Litigation. An accurate and complete description of every pending or, to the knowledge of the Online, threatened adverse claim, dispute, governmental investigation, suit, action (including, without limitation, non-judicial real or personal property foreclosure actions), arbitration, legal, administrative or other proceeding of any nature, domestic or foreign, criminal or civil, at law or in equity, by or against or otherwise affecting the Debentures, as known by Online, has been presented to eVision. Online has delivered to eVision copies of all relevant court papers and other documents relating to the subject matter.         8.3 Absence of Certain Changes. Except where specifically indicated herein, Online has held the Debentures only in the ordinary course consistent with its past practices and has not:                          a. discharged or satisfied any Lien or Other Encumbrance affecting any of the Debentures other than those then required to be discharged or satisfied, or paid any obligation or liability, whether absolute, accrued, contingent or otherwise, and whether due or to become due, other than current liabilities shown on the Balance Sheet and current liabilities incurred since the Balance Sheet Date in connection with the purchase of goods or services in the ordinary course of the Business and consistent with its prior practices;                          b. mortgaged, pledged or subjected any of the Debentures to any Lien or Other Encumbrance;                          c. sold, transferred, leased to others or otherwise disposed of any of the Debentures; and                          d. instituted, settled or agreed to settle any litigation, action, proceeding or investigation before any court or governmental body relating to Online or to the Debentures or suffered any actual or threatened litigation, action, proceeding or investigation before any court or governmental body relating to Online or the Debentures.         8.4 Financial statements. Online represents that it has received and reviewed the financial statements of the Assets.         8.5 Full Disclosure. Online has reviewed all records relating to the Assets available to Online for its inspection.         8.6 Purchase for Investment. Online represents that its purchase hereunder is being made for its own account for investment, and with no present intention of resale. Certain stock certificates presenting the shares purchased under this agreement may be endorsed with the following restrictive legend: 10 --------------------------------------------------------------------------------   “The Shares represented by this certificate have not been registered under the Securities Act of 1933, and said Shares may not be offered or sold and no transfer will then be made by Online or its transferee except in compliance with the Securities Act of 1933 and the rules and regulations promulgated there under.” ARTICLE IX INDEMNIFICATION         9.1 Indemnification. eVision and Online agree to indemnify, defend, and hold the other party harmless from and against all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, including interest, penalties, and reasonable attorney’s fees, assessed against, resulting to, imposed upon or incurred by the other party by reason of or resulting from a breach of any representation, warranty or covenant of that party contained in this Agreement. ARTICLE X RELEASE         10.1 Releases. Except for the covenants, agreements, representations, and warranties made herein by the parties and in the assignments and documents to be delivered at the Closing, none of which are hereby released, Online hereby releases eVision, its affiliates, and its respective officers, directors, and employees of and from all claims, demands, and liabilities relating to the Assets that arise after the Effective Date. RTICLE XI DISPUTE RESOLUTION         11.1 Resolution of Disputes. In the event of a dispute as to this Agreement and upon written notice to the other party citing this provision, both Parties, including the involvement of the Parties’ respective Board of Directors, agree to negotiate in good faith towards resolution of the dispute.                          a. Expedited Arbitration. In the event that negotiation pursuant to this section does not result in a resolution, disputes shall be resolved by and through an expedited arbitration (“Expedited Arbitration’’) proceeding to be conducted under the auspices of the American Arbitration Association (or any like organization successor thereto) at Denver, Colorado. Such arbitration proceeding shall be conducted in as expedited a manner as is then permitted by the commercial arbitration rules (formal or informal) of the American Arbitration Association. Both the foregoing agreement of the parties to arbitrate any and all such claims, and the results, determination, finding, judgment and/or award rendered through such Expedited Arbitration, shall be final and binding on the parties hereto and may be specifically enforced by legal proceedings. Arbitration may only be initiated after written notice to the other party that negotiations have failed. 11 --------------------------------------------------------------------------------                          b. Procedure. Any such Expedited Arbitration may be initiated by written notice from either party to the other which shall be a compulsory and binding proceeding on each party. The Expedited Arbitration shall be conducted before a panel of one arbitrator selected in accordance with the rules pertaining to expedited arbitration. The costs of said arbitrator and the Expedited Arbitration shall be borne equally by the parties hereto. Each party shall bear separately the cost of their respective attorneys, witnesses and experts in connection with such Expedited Arbitration. Time is of the essence of this Expedited Arbitration procedure, and the arbitrator shall be instructed and required to render his decision within ten (10) days following completion of the Expedited Arbitration.                          c. Venue and Jurisdiction. Any and all legal proceedings to enforce this Agreement (including any action to compel Expedited Arbitration hereunder or to enforce any award or judgment rendered thereby), shall be governed in accordance with the laws of Colorado.                          d. Exclusive Remedy. The parties agree that arbitration as set forth above shall be the sole means of resolving any disputes, claims and controversies among them arising out of this Agreement.                          e. WAIVER OF JURY TRIAL. BOTH PARTIES HEREBY WAIVE THEIR RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT. ARTICLE XII MISCELLANEOUS         12.1 Execution in 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.         12.2 Further Assurances.                          a. Future Documents. From time to time following the execution of this Agreement, the Parties shall execute and deliver, or cause to be executed and delivered, to the other party such documents of conveyance and transfer, in form reasonably satisfactory to the other party, as the other party may reasonably request.                          b. Supporting Documents. Parties and their counsel shall have reasonable access to the following supporting documents of the other Parties: copies of the Articles of Incorporation, bylaws, resolutions, and other corporate documents of each Party and all amendments thereto.         12.3 Notices. All notices that are required or may given pursuant to the terms of this Agreement shall be in writing and shall be sufficient in all respects if delivered by hand or via a national overnight courier service or mailed by registered or certified mail postage prepaid, as follows: If to eVision: eVision USA.Com, Inc. 1888 Sherman Street, 5th Floor Denver, CO 80203 Attention: Robert Trapp, Director 12 -------------------------------------------------------------------------------- If to Online: Online Credit Limited 2601, Island Place Tower 510 King's Road North Point, Hong Kong Attention: Fai Chan, Chairman   All notices, requests and other communications shall be deemed given on the date of actual receipt or delivery as evidenced by written receipt, acknowledgement or other evidence of actual receipt or delivery to the address. In case of service by telecopy, a copy of such notice shall be personally delivered or sent by registered or certified mail, in the manner set forth above, within three (3) business days thereafter. Either party hereto may from time to time by notice in writing served as set forth above designate a different address or a different or additional person to which all such notices or communications thereafter are to be given.         12.4 Waivers. Parties, may, by written notice to the other party:                          a. extend the time for the performance of any of the obligations or other actions of the other party under this Agreement;                          b. waive any inaccuracies in the representations or warranties of the other party contained in this Agreement or in any document delivered pursuant to this Agreement;                          c. waive compliance with any of the conditions or covenants of the other party contained in this Agreement; or                          d. waive performance of any of the obligations of the other party under this Agreement.   The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.         12.5 Amendments, Supplements. This Agreement may only be amended by written document, signed by the Parties.         12.6 Entire Agreement. This Agreement, and any Schedules and Amendments, constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof. No representation, warranty, promise, inducement or statement of intention has been made by any party which is not embodied in this Agreement or such other documents, and neither eVision, on the one hand, nor Online, on the other hand, shall be bound by, or be liable for, any alleged representation, warranty, promise, inducement or statement of intention not embodied herein.         12.7 Applicable Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado. All parties agree to the jurisdiction of the State of Colorado and agree to resolve disputes in the courts of Colorado.         12.8 Binding Effect; Benefits. This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and assigns. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. 13 --------------------------------------------------------------------------------         12.9 Assignment. Neither this Agreement nor any of the Parties’ rights hereunder shall be assignable by any party hereto without the prior written consent, of which shall not be unreasonably withheld, of the other party hereto.         12.10 Required Regulatory Approval. This Agreement is subject to the Parties receiving all required approval from their respective regulatory authorities, if required, including but not limited to the Hong Kong Stock Exchange. ARTICLE XIII EXPENSES; CONFIDENTIALITY         13.1 Expenses of Sale. Each Party shall bear its own direct and indirect expenses incurred in connection with the negotiation and preparation of this Agreement and the consummation and performance of the transactions contemplated herein.         13.2 Confidentiality. Subject to any obligation to comply with (i) any Law (ii) any rule or regulation of any Authority or securities exchange or (iii) any subpoena or other legal process to make information available to the Persons entitled thereto, whether or not the transactions contemplated herein shall be concluded, all information obtained by any party about any other and all of the terms and conditions of this Agreement shall be kept in confidence by each party, and each party shall cause its shareholders, directors, officers, employees, agents and attorneys to hold such information confidential. Such confidentiality shall be maintained to the same degree as such party maintains its own confidential information and shall be maintained until such time, if any, as any such data or information either is, or becomes, published or a matter of public knowledge; provided, however, that the foregoing shall not apply to any information obtained by the Parties through its own independent investigations of eVision or received by the Parties from a third party not under any obligation to keep such information confidential nor to any information obtained by the Parties which is generally known to others engaged in the trade or business of the Parties; and provided, further, that from and after the Closing, the Parties shall be under no obligation to maintain confidential any such information concerning the Agreement. If this Agreement shall be terminated for any reason, each party shall return or cause to be returned to the other all written data, information, files, records and copies of documents, worksheets and other materials obtained by such party in connection with the transactions contemplated herein.         13.3 Publicity. No publicity release or announcement concerning this Agreement or the transactions contemplated herein shall be issued without advance written approval of the form and substance thereof by the Parties; provided, however, that such restrictions shall not apply to any disclosure required by regulatory authorities, applicable Law or the rules of any securities exchange which may be applicable. _______________________________________________________________________________________________________________ (the rest of this page is left intentionally blank) 14 --------------------------------------------------------------------------------         IN WITNESS WHEREOF, this Asset Purchase Agreement has been duly executed and delivered by the Parties hereto as of the date first written. EVISION USA.COM, INC. By: /s/ Robert H. Trapp                  Title: Managing Director                  ONLINE CREDIT LIMITED By: /s/ Peter Wong                          Title: Director                                   15 -------------------------------------------------------------------------------- Schedule A: Debenture Cancellation Agreement between Online Credit Limited and eVision USA.Com, Inc. __________, 2001 As stipulated in, and for consideration stated in, the Asset Purchase Agreement between Online Credit Limited (Online) and eVision USA.Com, Inc. dated __________, 2001, Online hereby cancels the outstanding balance of [insert one:      °  The $4,000,000 10% Convertible Debenture Due December 15, 2007 dated December 30, 1997 and all subsequent amendments      °  The $1,500,000 10% Convertible Debenture Due December 15, 2007 dated May 17, 1998      °  The $1,000,000 10% Convertible Debenture Due December 15, 2007 dated August 5, 1998      °  The $1,000,000 12% Convertible Debenture Due December 15, 2007 dated November 17, 1998 which subsequently had $160,000 in principal paid down under the “Supplemental Letter of Agreement to the $500,000 12% convertible debenture due March 24, 1999 dated September 25, 1998 and all subsequent amendments issued by eVision to Online Credit and the $1,000,000 12% convertible debenture due December 15, 2007 dated November 17, 1998 issued by eVision to Online Credit” dated May 24, 2001.] ONLINE CREDIT LIMITED By:                                                                         Title:                                                                      Agreed and accepted by: EVISION USA.COM, INC. By:                                                                     Title:                                                                  16 -------------------------------------------------------------------------------- Schedule B: THE SECURITIES REPRESENTED BY THIS DEBENTURE MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (THE “ACT”), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE CORPORATION. EVISION USA.COM, INC. 8% Convertible Debenture Due __________________________ $__________________________ ___________________________, _______________________ FOR VALUE RECEIVED, eVision USA.Com, Inc., a corporation duly organized and existing under the laws of the State of Colorado (the “Corporation”), hereby promises to pay to the order of Online Credit Ltd. (“Holder”) the principal sum of _____________________, (______________), with interest from the date hereof at the rate of 8% per annum. Interest only shall be payable on the ______________day of ____________________, ______________, with the final payment of the entire unpaid principal balance and all accrued and unpaid interest, if not sooner paid, due and payable on the __________ day of _________________, _____________ (the “Maturity Date”). At the election of Holder, interest due hereunder may be paid in shares of the Common Stock of the Corporation. The Common Stock shall be valued at the Market Conversion Price (as hereinafter defined) as of the business day before the date the interest is due.         The unpaid principal amount of this convertible Debenture (“Debenture”) and all accrued and unpaid interest hereon shall be due and payable by the Corporation to the Holder on the Maturity Date.         The Holder shall have the right, exercisable at the Holder’s option at any time and from time to time up to and including the Maturity Date (except that, id this Debenture shall be called for prepayment in full by the Corporation and the Corporation shall not thereafter default in the making of the prepayment, such right shall terminate at the close of business on the business day next preceding the date fixed for prepayment), to convert all or any part of the unpaid principal amount hereof into fully paid and non-assessable shares of Common Stock of the Corporation at the Conversion Price, as defined below, upon surrender or partial surrender of this Debenture to Debenture, upon surrender or partial surrender for conversion as aforesaid, shall be duly endorsed by or accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the Holder or by Holder’s duly authorized attorney. The Corporation shall not be required to issue fractional shares of Common Stock of the Corporation, but shall make adjustment therefore in cash based upon the Conversion Price of the Common Stock of the Corporation as of the date of the conversion. The certificate representing the shares of Common Stock issued upon conversion shall contain a legend restricting the transfer thereof similar to the legend that appears on the top of this Debenture.         The term “Conversion Price”, as used with reference to any share of Common Stock on any specified date, shall mean the lesser of $0.35 or the Market Conversion Price. The Market Conversion Price shall be determined as follows:           (i) if such stock is listed and registered on any national securities exchange traded on the Nasdaq Stock Market ("Nasdaq"), the average closing sales price over the ten consecutive trading days prior to the date of conversion on such exchange or Nasdaq; 17 --------------------------------------------------------------------------------           (ii) if such stock is not at the time listed on any such exchange or traded on Nasdaq but is traded on the OTC Bulletin Board, or if not, on the over-the-counter market as reported by the National Quotation Bureau or other comparable service, the average of the closing bid and asked prices for such stock over the ten consecutive trading days prior to the date of conversion; or            (iii) if clauses (i) and (ii) above are not applicable, the fair value per share of such stock as determined in good faith and on a reasonable basis by the Board of Directors of the Corporation and, if requested, set forth in a certificate delivered to the holder of this Debenture upon the conversion hereof.   If any payment of interest or any payment of principal an interest, as the case may be, is not paid by the Corporation within five(5) business days after the date on which such payment shall have become due and payable under this Debenture or upon the bankruptcy or receivership of the Corporation (each, an “Event of Default”), the Holder may, by giving written notice to the Corporation, declare the unpaid principal amount hereof and all accrued and unpaid interest hereon to be immediately due and payable an upon such declaration, the unpaid principal and payable. Upon the occurrence and continuance of an Event of Default and upon notice from Holder to the Corporation, the rate of interest on the Debenture shall increase from 8% per annum to 18% per annum and the Conversion Price shall change to $0.10 per share of Common Stock:   Notwithstanding anything contained herein, Holder shall not be entitled to convert any part of the unpaid principal amount hereof into fully paid and nonassessable share of Common Stock of the Corporation if, at the time of conversion, the Corporation does not have sufficient shares of Common Stock authorized that are not issued and outstanding or reserved for issuance. In such event, the Holder shall only be entitled to convert such part of the unpaid principal amount hereof into such number of fully paid and nonassessable shares of Common Stock of the outstanding and not reserved for issuance. Upon the occurrence of any such election to convert, in the event the Corporation does not have a sufficient number of unissued and reserved shares of Common Stock authorized, the Corporation agrees to call a meeting of its shareholders to be held as soon as possible to propose an amendment to the Corporation’s Articles of Incorporation to increase the number of shares of Common Stock that the Corporation is authorized to issue to enable the Holder to completer the Holder’s requested conversion. Nothing contained herein shall prevent the Corporation from issuing and reserving for issuance such number of shares of the Corporation’s Common Stock as the Board of Directors of the Corporation deems appropriate, in its sole discretion, after the date hereof whether or not such issuance or reservation would prevent the Holder from exercising the Holder’s conversion rights contained herein.   Should the indebtedness represented by this Debenture or any part thereof be collected at law or in equity, or in bankruptcy, receivership or any other court proceedings (whether at the trial or appellate level), or should this Debenture be placed in the hands of attorneys for collection upon the occurrence of an Event of Default, the Corporation agrees to pay, in addition to the principal and interest due and payable hereon, all costs of collection, including reasonable attorneys’ fees.   This Debenture may be prepaid, in part or in whole, at the option of the Corporation, at any time or from time to time prior to the Maturity Date, to the Holder without premium or penalty, together with accrued interest to the date fixed for prepayment; provided, however, that prepayment in full of this Debenture by the Corporation shall require not less 30 nor more than 60 days prior notice of prepayment to the Holder. 18 --------------------------------------------------------------------------------   Subject to compliance with the provision of the Securities Act of 1933, as amended, this Debenture is transferable in the manner authorized by law. Upon surrender of this Debenture for transfer, accompanied by a written instrument of transfer in form satisfactory to the Corporation, a new Debenture or Debentures, for a like aggregate principal amount, will be issued to the transferee.   Prior to the transfer of this Debenture, the Corporation may deem and treat all Holder hereof as the absolute owner hereof (whether or not this Debenture shall be overdue) for the purpose of receiving payment of or on account of the principal hereof and interest hereon, and for all other purposes, and the Corporation shall not be affected by any notice to the contrary. Except as expressly provided for herein, the Corporation hereby waives presentment, demand, notice of demand, protest, notice of protest and notice of dishonor an any other notice required to be given by law in connection with the delivery, acceptance, performance, default or enforcement.   This Debenture shall be governed and construed in accordance with the laws of the State of Colorado. IN WITNESS WHEREOF, eVision USA.Com, Inc. caused this Debenture to be signed by a duly authorized officer on the date first above written.                                                                                                       eVISION USA.COM, INC.                                                                                                       By:                                                                                                                                                       19 --------------------------------------------------------------------------------

May 21, 2001 Mr. Bruce R. Albertson 2182 E. Shadow Mountain Lane South Ogden, Utah 84403 Dear Bruce: Iomega Corporation (the "Company") hereby accepts your resignation as the President, Chief Executive Officer and Director the Company and your resignation from all corporate officer positions and board positions that you hold in any subsidiaries or affiliates of the Company, effective upon your execution and delivery of a copy of this letter to the Company. In connection with your resignation, the Company and you agree as follows: 1. In accordance with your employment agreement dated November 10, 1999, the Company will continue your salary (at the current annual rate of $500,000), target annual incentives ($500,000) and benefits for a period of twelve months ending May 21, 2002, such payments to be made in substantially twenty-four equal bi-weekly installments. 2. The company will pay you, no later than June 1, 2001, an addition sum of $50,000. 3. In addition, the Company will purchase from you 100,000 shares of common stock of the Company at an aggregate purchase price of $366,840 being the aggregate amount that you paid for those shares. The Company will pay for such shares upon your delivery to the Company of properly endorsed certificates for such shares. 4. You agree not to disparage, orally or in writing, the Company, it's directors, officers, employees, management, operations, products, designs, or any other aspects of the Company's affairs to any third person or entity. Iomega agrees that it will instruct its officers and directors to refrain from disparaging you. 5. In consideration of the payments and other valuable consideration under the terms of this Agreement, you hereby knowingly, voluntarily, and irrevocably agree to fully, unconditionally, completely and forever release the Company, and all of the Company's predecessors and successors, and their officers, directors, shareholders, agents, employees and representatives, and all parent, subsidiary and affiliated companies, together with their employees, officers, directors and shareholders (the "Released Parties"), from any and all rights and claims, including, without limitation, demands, causes of action, charges, complaints, promises, grievances, losses, damages, liabilities, debts, or injuries, whether known or unknown, contingent or matured, at law or in equity or in arbitration, which you hold or have ever held against the Company resulting from any act, obligation, or omission occurring on or prior to the date you sign this Agreement ("Released Claims"), including, but not limited to, any Released Claims connected with or arising out of your employment, or separation therefrom. It is expressly agreed and understood that this Agreement is a general release. Nothing contained in this Agreement, however, is a waiver of any rights or claims that may arise with respect of the Company's agreements and obligations set forth in this letter of agreement. 6. The Company hereby generally releases and forever discharges you from any and all claims, demands, obligations, losses, causes of action, damages, penalties, costs, expenses, attorney's fees, liabilities, and indemnities, including any duties and obligations which as of the date of this Agreement, the Company has, or claims to have, or may claim to have in the future, arising out of your acts in the course of your employment with the Company. If you are in agreement with the foregoing, would you please sign a copy of this letter in the space provided below for your signature, whereupon this letter shall constitute a binding agreement between you and the Company with respect to the subject matter hereof. Very truly yours, IOMEGA CORPORATION By: /s/ David J. Dunn ------------------------------------------------ David J. Dunn Read and Agreed this 21st day of May 2001 /s/ Bruce R. Albertson ------------------------------- Bruce R. Albertson

AGREEMENT AND PLAN OF MERGER         THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), made and entered as of this 30 day of March, 2001, is by and among AVERT, INC., a Colorado corporation (“Acquiror”), ADVANTAGE ASSESSMENT, INC., a Florida corporation (the “Company”), and NANCY E. NORRIS, CHRISTOPHER M. SMITH, CHRISTIAN R. BAILEY, and D. SCOTT OTHOSON (collectively, the “Shareholders”). RECITALS         WHEREAS, the Shareholders collectively own and, at the Closing, will own all of the shares of stock of the Company issued and outstanding as of the Closing (the “Shares”) and each agrees to vote in favor of the Merger (as defined below);         WHEREAS, in the conduct of its business the Company utilizes a certain assessment technology (the “Assessment Technology”) pursuant to a License and Settlement Agreement dated as of October 31, 2000 (the “License”);         WHEREAS, the respective Boards of Directors of Acquiror and the Company have each approved the merger (the “Merger”) of the Company with and into the Acquiror in accordance with the applicable statutes of the States of Florida and Colorado.         NOW, THEREFORE, in consideration of the premises, terms and conditions and the mutual covenants herein contained herein, the receipt and adequacy of which being hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: DEFINITIONS         As used in this Agreement, the following terms shall have the following meanings:         “Accredited Investor” shall have the meaning given to such term in Rule 501 of the Securities Act of 1933, as amended.         “Accrued Vacation Pay” means the obligation of the Company to its employees for accrued vacation pay through the Closing Date.         “Acquiror ” has the meaning set forth in the first paragraph of this Agreement.         “Affiliate” has the meaning given to such term in the Securities Act of 1933, as amended.         “Assessment Technology” has the meaning set forth in the third paragraph of this Agreement.         “Assets” means collectively all of the Company's business, assets, properties and rights used or useful by the Company in conducting its business.         “Avert Shares” has the meaning set forth in Section 2.7.         “Closing” has the meaning set forth in Section 2.11.         “Closing Adjustment Certificate” has the meaning set forth in Section 2.7.         “Closing Date” has the meaning set forth in Section 2.11.         “Code” means the Internal Revenue Code of 1986, as amended.         “Consideration” has the meaning set forth in Section 2.7. Page E-1 --------------------------------------------------------------------------------         “Contract” means any contract, mortgage, deed of trust, bond, indenture, lease, license, permit, note, certificate, option, warrant, right or other instrument, document, obligation or agreement, whether written or oral.         “DeMinimis Agreements” means (i) Contracts that are not Material Agreements because those Contracts involve payments of less than $1,000 individually over the life of such Contracts and less than $10,000 in the aggregate for all such Contracts over the life of such Contracts.         “Effective Time” has the meaning set forth in Section 2.2.         “Encumbrances” means, collectively, all debts, claims, liabilities, obligations, taxes, liens, mortgages, security interests and other encumbrances of any kind, character or description, whether accrued, absolute, contingent or otherwise (and whether or not reflected or reserved against in the balance sheets, books of account and records of the Company).         “Environmental Law” means any applicable federal, state, or local law, statute, standard, ordinance, rule, regulation, code, license, permit, authorization, approval, and any consent order, administrative or judicial order, judgment, decree, injunction, or settlement agreement between the Company and a governmental entity relating to the protection, preservation or restoration of the environment (including, without limitation, air, water, land, plant and animal life or any other natural resource).         “Environmental Permit” means any permit, license, approval, consent or other authorization required by any applicable Environmental Law.         “GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, which are applicable to the circumstances as of the date of determination.         “Hazardous Substance” means any substance or material, whether solid, liquid or gas, listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law, whether by type or by quantity; Hazardous Substance includes, without limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance or petroleum or any derivative or by-product thereof, radon, radioactive material, asbestos, asbestos-containing material, urea formaldehyde foam installation, lead and polychlorinated biphenyl classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated under any Environmental Law.         “Improvements” means all buildings, structures, and fixtures, and other improvements now or hereafter actually or constructively attached to the Real Estate, and all modifications, additions, restorations or replacements of the whole or any part thereof.         “Indemnifiable Damages” means any and all liabilities in respect of losses, suits, proceedings, demands, judgments, damages, expenses and costs (including, without limitation, reasonable counsel fees and costs and expenses) incurred in the investigation, defense or settlement of any claims covered by the indemnification set forth in this Agreement, other than special, incidental, punitive or consequential damages.         “Indemnitee” has the meaning set forth in Section 7.4.         “Indemnitor” has the meaning set forth in Section 7.4. Page E-2 --------------------------------------------------------------------------------         “Independent Accountant” shall mean an accountant chosen by both the Acquiror and the Shareholders, provided that if the Acquiror and the Shareholders cannot agree on an accountant to serve as the Independent Accountant, the Acquiror shall choose an accountant and the Shareholders shall choose an accountant, and both accountants so chosen shall choose a third accountant to serve as the Independent Accountant.         “Intellectual Property” has the meaning set forth in Section 4.22.         “Material Adverse Effect” means any effect that is or is reasonably likely to be materially adverse to the Assets, the business of the Company or the results of operations or financial condition of the Company.         “Material Agreement” means any Contract of any nature to which the Company is a party, or by which the Company or any of its properties are bound, which (i) by its terms obligates the Company to pay more than $1,000, (ii) in the aggregate with all such Contracts obligates the Company to pay more than $10,000, or (iii) restricts or prohibits the Company or any Affiliate of the Company from engaging n any business anywhere in the world.         “Merger” has the meaning set forth in the fourth paragraph of this Agreement.         “Permitted Encumbrances” means (a) materialmen’s, mechanic’s, carriers’, or other like liens arising in the ordinary course of business, or deposits to obtain the release of such liens, securing obligations aggregating less than $15,000, (b) liens for current taxes not yet due and payable; (c) imperfections of title that do not interfere with the use or detract from the value of such property; (d) liens to be released at or prior to Closing; and (e) in the case of the Real Estate owned or real property leased by the Company, (i) such leases for real property, (ii) municipal and zoning ordinances, (iii) such rights of way as do not interfere with the use or detract from the value of the property, (iv) standard (printed) title insurance exceptions and (v) easements for public utilities, recorded building and use restrictions and covenants which do not materially interfere with the present use of or materially detract from the value of the property, and other minor encumbrances.         “Person” means an individual, corporation, limited liability company, partnership, sole proprietorship, association, joint venture, joint stock company, trust, incorporated organization, or governmental agency or other entity.         “Plans” has the meaning set forth in Section 4.18.         “Real Estate” means each parcel of real property owned by the Company at the date hereof together with any other parcels of real property acquired by the Company between the date hereof and the Closing Date.         “Required Consents” means those approvals and consents set forth on Schedule 3.3 separately designated as consents required for Closing.         “Resolution Period” has the meaning set forth in Section 2.7.         “Shares” has the meaning set forth in the second paragraph of this Agreement.         “Shareholders” has the meaning set forth in the first paragraph of this Agreement.          “Subsidiaries” means, with respect to any Person, any Affiliate directly or indirectly controlled by such Person.          “Surviving Corporation” has the meaning set forth in Section 2.1. Page E-3 --------------------------------------------------------------------------------         “Tax” and “Taxes” means all federal, state, local, foreign or other taxing authority gross income, gross receipts, gains, profits, net income, franchise, sales, use, ad valorem, property, value added, recording, business license, possessory interest, payroll, withholding, excise, severance, transfer, employment, alternative or add-on minimum, stamp, occupation, premium, environmental or windfall profits taxes, and other taxes, charges, fees, levies, imposts, customs, duties, licenses or other assessments, together with any interest and any penalties, additions to tax or additional amounts imposed by any governmental authority.         “Tax Return” means any return, report, statement, information statement and the like required to be filed with any governmental authority with respect to Taxes.         “Third Party” means any Person other than the Company, Acquiror, Shareholders or any Affiliate of Acquiror.         “Unaudited Financial Statements” has the meaning set forth in Section 4.6.         The plural of any term defined in the singular, and the singular of any term defined in the plural, shall have a meaning correlative to such defined term. ARTICLE II THE MERGER         2.1 The Merger. Subject to the terms and conditions set forth in this Agreement, and in accordance with Florida and Colorado law at the Effective Time, the Company shall be merged with and into the Acquiror. Immediately following the Merger, the separate corporate existence of the Company shall cease and the Acquiror as the surviving corporation (the “Surviving Corporation”) shall continue to exist under and be governed by the laws of the State of Colorado.         2.2 Effective Time. As soon as practicable after the satisfaction of all of the conditions precedent to the obligations of all parties set forth herein, the parties shall cause the Merger to be consummated by causing certificates or articles of merger (collectively, the “Articles of Merger”) with respect to the Merger to be executed, filed and recorded in accordance with the relevant provisions of Florida and Colorado law. The Merger shall become effective at the later of the time of the filing with the Secretary of State of the State of Florida or the filing with the Secretary of State of the State of Colorado (the “Effective Time”).         2.3 Effects of the Merger. The Merger shall have the effect set forth in Section 607.1106 of the Florida Business Corporation Act and Section 7-90-203 of the Colorado Business Corporation Act. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all of the properties, assets, rights, privileges, and powers of the Acquiror and the Company, shall vest in the Surviving Corporation and all debts, liabilities and duties of the Acquiror and the Company shall become the debts, liabilities and duties of the Surviving Corporation in the same manner as if the Surviving Corporation had itself incurred them.         2.4 Certificate of Incorporation and Bylaws of the Surviving Corporation. The Articles of Incorporation of the Acquiror, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation, until thereafter amended in accordance with the provisions thereof and applicable law. The Bylaws of the Acquiror in effect at the Effective Time shall be the Bylaws of the Surviving Corporation until amended in accordance with the provisions thereof and applicable law.         2.5 Directors. The directors of the Acquiror immediately prior to the Effective Time shall be the directors of the Surviving Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal. Page E-4 --------------------------------------------------------------------------------         2.6 Officers. The officers of the Acquiror immediately prior to the Effective Time shall be the officers of the Surviving Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.         2.7 Consideration for the Shares. At the Effective Time, by virtue of the Merger and without any action on the part of the Shareholders, the Shares shall be converted into the right to receive (i) One Million Dollars ($1,000,000), of which $150,000 has been previously advanced to the Company pursuant to a Preliminary Term Sheet between the Company and Acquiror dated October 18, 2000, and shall be credited against the $1,000,000, and 45,000 shares of unregistered common stock, no par value, of Acquiror (the “Avert Shares”) (the cash portion of the consideration and the Avert Shares are hereinafter collectively referred to as the “Consideration”). The Shares owned by the Shareholders who are Accredited Investors shall be converted into the right to receive the Avert Shares and a portion of the cash consideration, as set forth on Schedule 2.9. The Shares owned by the Shareholders who are not Accredited Investors shall be converted into the right to receive a portion of the cash consideration, as set forth on Schedule 2.9. The cash portion of the Consideration shall be adjusted downward by an amount equal to (i) the amount, if any, by which the Company’s liability to customers for prepaid services exceeds $200,000, and (ii) any other liabilities of the Company existing on the Closing Date other than the liabilities pursuant to the equipment leases itemized on Schedule 2.7(A) attached hereto.         The Company shall deliver to Acquiror, not less than three (3) business days prior to the Closing a certificate (the “Closing Adjustment Certificate”) signed by an executive officer of the Company, which shall set forth the Company’s reasonable good faith estimates of the respective amount of the adjustments set forth in this Section 2.7, as of the Effective Time. The Closing Adjustment Certificate shall be in form and substance reasonably acceptable to Acquiror, and the Company shall therewith deliver to Acquiror a copy of such supporting evidence as shall be appropriate hereunder and as Acquiror may reasonably request. The Acquiror and the Shareholders shall jointly determine the adjustments at Closing required by this Section 2.7, with a final adjustment and reconciliation within sixty (60) days after the Closing Date or within such other period as may be mutually agreed upon by the parties hereto. The Acquiror shall deliver to the Shareholders a proposed schedule of final adjustments as promptly as practicable, but in no event later than 60 days after Closing. The Shareholders must, within 30 days after receipt of the proposed schedule of final adjustments, give written notice to the Acquiror specifying in reasonable detail the Shareholders’ objections, if any, with respect thereto. With respect to any disputed amounts, the parties shall meet in person and negotiate in good faith during the ten day period (the “Resolution Period”) after the date of the Acquiror’s receipt of Notice to resolve such disputes. If the parties are unable to resolve all such disputes within the Resolution Period, then within five days after the expiration of the Resolution Period, all unresolved disputes shall be submitted to the Independent Accountant who shall be engaged to provide a final and conclusive resolution of all unresolved disputes within 15 business days after such engagement. The determination of the Independent Accountant shall be final, binding and conclusive on the parties hereto, and the fees and expenses of the Independent Accountant shall be borne by the party that the Independent Accountant determines to be the nonprevailing party or, in the discretion of the Independent Accountant, may be split between the Acquiror, on the one hand, and the Shareholders, on the other.         The Acquiror shall hold back a portion of the cash consideration due and payable to the Shareholders who are Accredited Investors at Closing equal to $150,000 (the “Holdback”), pending the final determination of the cash portion of the consideration. If the cash consideration, as finally determined, is greater than the estimated cash consideration determined at the Closing Date, the Acquiror shall pay the Holdback, plus the difference, to the Shareholders who are Accredited Investors within five days of the final determination. To the extent that the cash consideration, as finally determined, is less than the estimated cash consideration determined at the Closing Date, the Acquiror shall pay the Holdback, less the difference, to the Shareholders who are Accredited Investors within five days of the final determination.         The cash portion of the Consideration, less the amounts previously advanced and the Holdback, shall be payable at the Closing to the Shareholders by the wire transfer of federal funds to the accounts set forth on Schedule 2.7 (B). Page E-5 --------------------------------------------------------------------------------         2.8 Conversion of Shares. The Shares, when converted at the Effective Time into the right to receive the Consideration as provided in Section 2.7, shall no longer be outstanding and shall automatically be canceled and retired and each Shareholder as holder of a certificate representing shares of common stock of the Company shall cease to have any rights with respect thereto, except the right to receive the Consideration.         2.9 Allocation among Shareholders. The Consideration shall be allocated among and paid to the Shareholders as set forth on Schedule 2.9 attached hereto.         2.10 Intentionally Omitted.         2.11 Closing Date. A closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Baker & Hostetler, LLP within 5 days of the satisfaction of all conditions precedent contained herein, or at such other time and place as the parties may mutually agree (the “Closing Date”).         2.12 Closing Date Deliveries.                  (a) The Company's and the Shareholder's Obligations. On the Closing Date, the Company and the Shareholders shall deliver to Acquiror each of the following in form and substance reasonably satisfactory to Acquiror:       (1) The Articles of Merger executed by the Company.       (2) A good standing certificate for the Company from the Secretary of State of the State of Florida.       (3) A corporate opinion of counsel for the Company in the form of Exhibit 2.12(A)(3) attached hereto.       (4) Certificates of the Company and the Shareholders that all of the representations and warranties of the Company contained herein are true and correct in all material respects as of the Closing Date (except to the extent that any such representation or warranty relates by its express terms solely to a prior date, in which event such representation or warranty was true and correct as of such date) and that the Company and each Shareholder shall have, or have caused to be performed all covenants, agreements and conditions contained herein to be performed and observed by the Company and each Shareholder on or before the Closing Date.       (5) A certificate of the Secretary of the Company certifying resolutions duly adopted by the Company’s Board of Directors authorizing the execution, delivery and performance of this Agreement on the Company’s part and certifying that such resolutions are then in full force and effect.       (6) Each Shareholder who is an Accredited Investor, shall have executed and delivered an Investment Representation Letter in the form attached hereto as Exhibit 2.12(A)(6).       (7) Each Shareholder shall deliver the certificates which immediately prior to the Effective Time represent the Shares. Page E-6 --------------------------------------------------------------------------------       (8) Each Shareholder shall deliver a release to the Company of all rights and claims of such Shareholder against the Company.         (9) Such other documents and certificates of officers as reasonably may be required by Acquiror to consummate this Agreement and the transactions contemplated herein.         (10) Each Shareholders shall deliver to the Company a written consent approving the Merger Agreement, the merger and all related transactions.                  (b) Acquiror's Obligations. On the Closing Date, Acquiror shall deliver to the Company and/or the Shareholders each of the following in form and substance reasonably satisfactory to them:       (1) A certificate of an officer of Acquiror that (a) all of the representations and warranties of Acquiror contained herein are true and correct in all material respects as of the Closing Date (except to the extent that any such representation or warranty relates by its express terms solely to a prior date, in which event such representation or warranty was true and correct as of such date), and (b) Acquiror shall have, or have caused to be performed all covenants, agreements and conditions contained herein to be performed and observed by Acquiror at or before the Closing Date.       (2) A certificate of the Secretary of Acquiror certifying resolutions duly adopted by Acquiror’s part and certifying that such resolutions are then in full force and effect, and certifying to the signature of those persons authorized to execute this Agreement and any other document contemplated hereby on behalf of Acquiror.       (3) The Articles of Merger executed by the Acquiror.       (4) A certificate of good standing issued by the Secretary of State of the State of Colorado as to Acquiror.       (5) A corporate opinion of counsel for the Acquiror substantially in the form of Exhibit 2.12 (B)(5) attached hereto.       (6) Such other documents as reasonably may be required by the Company to consummate this Agreement and the transactions contemplated herein.       (7) Cash payments to each of the Shareholders in the amounts set forth on Schedule 2.9 by wire transfer of federal funds to the accounts designated for each Shareholder on Schedule 2.7(B).       (8) Share certificates representing the Avert Shares that each Shareholder who is an Accredited Investor is entitled to as set forth in Schedule 2.9.       (9) An employment agreement to Chris Smith in the form of Exhibit 2.12(B)(9) attached hereto. Page E-7 -------------------------------------------------------------------------------- ARTICLE III REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS         Each Shareholder hereby, severally and not jointly, represents and warrants (as of the date of this Agreement, except where a prior or future date is indicated) as follows, and acknowledges that Acquiror is relying on such representations and warranties in connection with the purchase of the Shares:         3.1 Title to the Shares.         Such Shareholder owns, beneficially and of record, all of the Shares identified opposite such Shareholder’s name on Schedule 3.1, free and clear of all liens and encumbrances other than any liens or encumbrances that will be terminated or otherwise released prior to the Closing.         3.2 Enforceability of Agreement.         This Agreement has been duly and validly executed and delivered by such Shareholder and constitutes a legal, valid and binding obligation of such Shareholder, enforceable against such Shareholder in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium and other similar laws or principles affecting the rights of creditors generally and except for limitations imposed by general principles of equity.         3.3 No Conflict; Required Filings and Consents.         Except as set forth on Schedule 3.3 hereto, the execution and delivery of this Agreement by such Shareholder does not, and the performance by such Shareholder of its obligations under this Agreement will not, (i) assuming receipt of consents described in Schedule 3.3 or 4.3 hereto, conflict with or violate any law, rule, regulation, order, judgment or decree applicable to such Shareholder or by which any property or asset of such Shareholder is bound or affected or (ii) result in any breach or violation of, or constitute any default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right of termination, cancellation or acceleration of any obligation or the loss of a material benefit under, any Contract to which such Shareholder is a party or by which such Shareholder or any property or asset of such Shareholder is bound, except as would not impair such Shareholder’s ability to perform its obligations under this Agreement.         3.4 Brokers' Fees.         Neither such Shareholder nor anyone authorized to act on his or its behalf has retained any broker, finder or agent or agreed to pay any brokerage fee, finder’s fee or commission with respect to the transactions contemplated by this Agreement.         3.5 Compliance with Laws.         To the best of such Shareholder’s knowledge, the Company has complied and is in compliance with all laws, regulations, orders, writs, judgments, injunctions and decrees of all applicable jurisdictions and governmental authorities, departments, commissions, boards, bureaus, agencies and instrumentalities. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY         As an inducement to Acquiror to enter into this Agreement and to consummate the transactions contemplated hereby, the Company hereby represents and warrants (as of the date of this Agreement, except where a prior or future date is indicated) to Acquiror as follows:         4.1 Organization and Qualification; Subsidiaries.         The Company is a corporation duly organized, validly existing and/or in good standing under the laws of the State of Florida. The Company has the requisite power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted. The Company is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary. The Company has no Subsidiaries. Page E-8 --------------------------------------------------------------------------------         4.2 Organizational Documents.         The Company has heretofore delivered to Acquiror a complete and correct copy of each of the certificate of incorporation and bylaws of Company, or equivalent organizational documents, each as amended to date. Such organizational documents are in full force and effect and constitute all of the organizational documents relating to the Company. The Company is not in violation of any provision of its certificate of incorporation, bylaws or equivalent organizational documents, as applicable.         4.3 Effect of Agreement.         All approvals and consents required under (i) any of the contracts or agreements which the Company is subject to, and (ii) any applicable government regulations, in any such case, in order for the consummation of the sale of the Shares to Acquiror pursuant to this Agreement are listed in Schedule 4.3 hereto. Other than as set forth on Schedule 4.3, the execution and delivery of this Agreement by Shareholders and the Company does not, and the performance of this Agreement by Shareholders and the Company will not, require the Company to obtain or make any consent, approval, authorization or permit of, or filing with or notification to, any governmental authority, except for applicable requirements, if any, of federal or state securities or “blue sky” laws.         Subject to obtaining the requisite approvals and consents listed in Schedule 3.3 hereto, neither the execution, delivery and performance by Shareholders and the Company of this Agreement nor the consummation of the transactions contemplated hereby, alone or in conjunction with any other event (such as a voluntary or involuntary termination of employment), will (i) conflict with, or result in a breach of the terms of, or constitute a default under, or a violation of, or give rise to any termination right under, amendment or extension of, or a loss of any benefit under, any contract or agreement which the Company is a party, (ii) result in the violation of any law, rule, regulation, order, writ, judgment, decree, determination or award presently in effect or having applicability to the Company, (iii) conflict with or violate the certificate of incorporation or by-laws of the Company, or (iv) result in any payment becoming due to any employee, former employee, officer, director, or consultant, or any of their dependents; (v) increase any benefits otherwise payable under any employee benefit plan; or (vi) result in the acceleration of the time of payment or vesting of any benefits under any employee benefit plan.         4.4 Capitalization.         The Shares, as identified on Schedule 3.1 hereto, constitute all the issued and outstanding shares of the Company. The Company does not own all or part of any other companies. There are no (i) options, warrants or other rights or contracts obligating the Company to issue or sell any shares of capital stock of, or other equity interests in the Company or to pay cash in lieu thereof, (ii) equity equivalents, stock appreciation rights, performance shares, interests in the ownership or earnings of the Company or other similar rights issued by the Company or (iii) outstanding obligations of the Company to purchase, redeem or otherwise acquire any equity interest therein.         4.5 Authority Relative to this Agreement.         The Company has all necessary power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by the other parties hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium and similar laws or principles affecting the rights of creditors generally and except for limitations imposed by general principles of equity.         4.6 Financial Statements.         Attached hereto as Schedule 4.6 are copies of (i) the Company’s unaudited Balance Sheet at December 31, 2000 and related Statement of Operations and Statement of Changes in Financial Position of the Company for its fiscal year then ended, which have been prepared by the Company’s independent certified public accountant (the “Unaudited Financial Statements”) and (ii) monthly compiled statements of operations, together with month-end balance sheets, for the months of January and February, 2001 (the “Monthly Financial Statements”). The Unaudited Financial Statements and Monthly Financial Statements (i) were prepared in conformity with GAAP consistently applied, and (ii) present fairly the financial position of the Company at the dates indicated and the results of operations of the Company and changes in financial position for the periods indicated. Page E-9 --------------------------------------------------------------------------------         4.7 Undisclosed Liabilities.         The Company does not have any material liabilities or obligations, whether accrued, absolute, contingent or otherwise, and whether due or to become due, and the Company does not know of any basis for any claim against the Company for any such liabilities or obligations, except (i) to the extent set forth in this Agreement or in the Schedules hereto, including the Audited Financial Statements attached hereto, (ii) liabilities to its customers in the ordinary course of business in connection with prepaid services as set forth by customer on Schedule 4.7 attached hereto.         4.8 Tax Returns and Audits.         (a) The Company has timely filed all material federal, state, local and foreign tax returns required to be filed by it through the date hereof and shall timely file all tax returns required to be filed at or before the Closing. Such reports and returns are and will be true, correct and complete in all material respects. The Company has paid and discharged all taxes due from it, other than such taxes that are being contested in good faith by appropriate proceedings and are adequately reserved as shown in the audited balance sheet of such entity dated December 31, 2000. Neither the Internal Revenue Service (the “IRS”) nor any other taxing authority or agency, domestic or foreign, is now asserting or, to the knowledge of the Company, threatening to assert against the Company any material deficiency or material claim for additional taxes. Moreover, the Company does not have knowledge of any facts on the basis of which taxing authorities could assert material deficiencies or material claims described in the preceding sentence. The Company has withheld or collected and paid over to the appropriate governmental authorities or is properly holding for such payment all taxes required by law to be withheld or collected. The Company does not have any liability for the taxes pursuant to Section 1.1502-6 of the Treasury Regulations promulgated under the Code or comparable provisions of any taxing authority in respect of a consolidated or combined Tax Return. There are no liens for Taxes upon the assets of the Company other than (i) liens for current taxes not yet due and payable, (ii) liens for taxes that are being contested in good faith by appropriate proceedings and (iii) other liens, which, in the aggregate, are not material.         (b) The Company filed with the Internal Revenue Service a valid S corporation election on May 18th 1998 and such S corporation election remained valid through December 31, 1999. The Corporation incurred no tax liability from May 18th 1998 through December 31, 1999.         4.9 Material Agreements and Obligations.         (a) Schedule 4.9 hereto lists the Material Agreements. Except for those Contracts listed on the Schedules hereto, and the DeMinimis Agreements, the Company is not a party to any written or oral contract that is not cancelable without penalty upon thirty (30) days’ notice or less, including any:   (i) bonus, incentive, pension, profit sharing, retirement, hospitalization, insurance, or other plan providing for deferred or other compensation to employees, or any other employee benefit or “fringe benefit” plan, including, without limitation, vacation, sick leave, medical or other insurance plans or any union collective bargaining or any other contract with any labor union.   (ii) employment contract for any Person on a full-time, part-time, consulting or other basis.   (iii) agreement or indenture relating to the borrowing of money or to mortgaging, pledging or otherwise placing a lien on any asset or group of assets of the Company.   (iv) guarantee of any obligation.   (v) lease or agreement under which it is lessee or lessor, or holds or operates any property, real or personal, owned by any other party, except for any lease under which the aggregate annual rental payments do not exceed $1,000. Page E-10 --------------------------------------------------------------------------------   (vi) Contract or group of related Contracts with the same party or any group of affiliated parties which requires or may in the future require aggregate consideration by or to the Company in excess of $1,000 individually over the life of such Contracts and less than $10,000 in the aggregate for all such Contracts over the life of such Contracts.   (vii) Contract in effect between the Company and any Shareholder (or an Affiliate thereof) or any of the officers, directors or Affiliates of the Company.   (viii) obligations of the Company to make payments to any Shareholder (or an Affiliate thereof) or any Affiliate of the Company.   (ix) loans by the Company to any Shareholder (or any Affiliate thereof) or any of the officers, directors or Affiliates of the Company.         (b) The Company has performed all obligations required to be performed by it and is not in material default under, or in material breach of, or in receipt of any claim of material default under, any Material Agreement; and the Company does not have any knowledge of any material breach by the other parties to any Material Agreement.         (c) There is no term or provision of any Contract not included on the Schedules hereto to which the Company is a party or by which it or any of its properties is bound that would have a Material Adverse Effect. There is no term or provision of any federal or state judgment, decree or order applicable to or binding upon any member of the Company, the enforcement of which would have a Material Adverse Effect.         4.10 Employees.         (a) The Company is not aware that any officer, executive employee or any group of employees of the Company has or have any plans to terminate his, her or their employment with the Company. the Company has complied in all material respects with all applicable laws relating to the employment of labor, including provisions thereof relating to wages, hours, equal opportunity, collective bargaining and the payment of social security and other taxes, and except as set forth in Schedule 4.10 hereto, the Company has not received any notice of any claim at the date of this Agreement and during the preceding three years that it has not complied in any material respect with any laws relating to the employment of employees or that it is liable for any arrearages of wages or any taxes or penalties for failure to comply with any laws. The Company does not have written policies and/or employee handbooks or manuals except those set forth in Schedule 4.10. The Accrued Vacation Pay for the Company’s employees is set forth by employee on Schedule 4.10.         (b) Except as set forth in Schedule 4.10 hereto, the Company is not, and during the 12 months prior to the date of this Agreement the Company has not been, involved in any labor discussion with any unit or group seeking to become the bargaining unit for any of its employees. Except as set forth in Schedule 4.10 hereto, the Company is not a party to any collective bargaining agreement and there are no unfair labor practice or arbitration proceedings pending with respect to the Company or, to the knowledge that the Company, threatened and there are no facts or circumstances known to the Company that could reasonably be expected to give rise to such a claim. To the knowledge of the Company, there are no organizational efforts presently underway or threatened involving any employees of the Company or any of the employees performing work for the Company but provided by an outside employment agency, if any. Within the last 12 months, there has been no work stoppage, strike or other consorted activity by any employees of the Company.         (c) Except as set forth in the Schedule 4.10 and as to those employees (if any) represented by a labor organization, all employees of the Company are employed at-will. Except as set forth in Schedule 4.10, completion of the transactions contemplated by this Agreement will not result in any payment or increased payment becoming due from the Company to any officer, director, or employee of, or consultant to, the Company.         (d) The Company is not a party to any agreement for the provision of labor from any outside agency except as set forth in Schedule 4.10. To the knowledge of the Company, at the date of this Agreement and during the preceding three years, there have been no claims by employees of such outside agencies, if any, with regard to employees assigned to work for the Company, and no claims by any governmental agency with regard to such employees except as set forth in Schedule 4.10.         4.11 Absence of Certain Developments.         Except as set forth on Schedule 4.11 hereto, and except for the transactions contemplated by this Agreement, the Company has not, insofar as the Assets are concerned, since December 31, 2000:   (i) borrowed any amount or incurred or become subject to any liabilities (absolute or contingent) except liabilities incurred in the ordinary course of business; Page E-11 --------------------------------------------------------------------------------   (ii) mortgaged or pledged any of its assets, tangible or intangible, or subjected them to any lien, charge or other encumbrance, except Permitted Encumbrances and liens securing indebtedness to be retired on or prior to the Closing Date;   (iii) sold, assigned or transferred any of its tangible assets, except in the ordinary course of business, or canceled any debts or claims;   (iv) suffered any substantial losses other than consistent with recent operating history;   (v) except in the ordinary course of business, waived or released any material right or claim;   (vi) made any changes in employee compensation or personnel policies, including the establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, option, stock purchase or other Plan (as hereinafter defined), declared, paid or committed to pay a bonus or   additional salary or compensation to any Person, or made any other increase in the compensation payable to or to become payable to any executive officers of the Company, except in the ordinary course of business and consistent with past practices;   (vii) entered into any other transaction other than in the ordinary course of business;   (viii) amended or terminated any Contract listed in any Schedule hereto, except in the ordinary course of business and except for Contracts that have expired by their own terms;   (ix) suffered any material damage, destruction or casualty loss, whether or not covered by insurance;   (x) has suffered a Material Adverse Effect, or has had any event or events occur that, individually or in the aggregate, are reasonably likely to result in a Material Adverse Effect;   (xii) materially changed any of its accounting principles or practices, or revalued any Assets for financial reporting, property tax or other purposes; or   (xiii) entered into any Contract or understanding to do any of the foregoing.         4.12 Real Property.         Schedule 4.12 hereto contains a legal description of each parcel of Real Estate owned by the Company together with a description of the type of use of each such parcel. The Company has furnished to Acquiror a copy of any title insurance policy or other evidence of title issued with respect to each owned parcel of Real Estate owned by the Company. Except for any Permitted Encumbrances, the Company is the sole owner (both legal and equitable) of, and has good and marketable title in fee simple absolute to, each parcel of Real Estate listed on Schedule 4.12 and all buildings, structures and Improvements thereon, and the unfettered right to occupy the leased property free and clear of any options to lease or purchase. The location and use of each parcel of real property leased by the Company is identified on Schedule 4.9. The Real Estate and all of the real property leased by the Company complies and is operated in material compliance with all applicable laws. There are no defects in the physical condition of the Real Estate or the Improvements located on the Real Estate, which could impair or prevent the current or proposed use thereof by the Company. The Company has not received any notice from any governmental body (a) requiring it to make any material repairs or changes to the Real Estate or the Improvements located on the Real Estate or (b) giving notice of any material governmental actions pending. There is no action, proceeding or litigation pending (or, to the best knowledge of the Company, contemplated or threatened): (i) to take all or any portion of the Real Estate, or any interest therein, by eminent domain; or (ii) to modify the zoning of, or other governmental rules or restrictions applicable to, the Real Estate or the use or development thereof in any manner which could impair or prevent the current or proposed use thereof by the Company. There are no contracts or other obligations outstanding for the sale, exchange or transfer of any of the Real Estate.         4.13 Title to Assets; Personal Property.         The Company is the sole owner (both legal and equitable) of and has good and marketable title to the Assets constituting personal property, tangible and intangible, free and clear of all mortgages, liens, security interests, charges, claims, restrictions and other encumbrances of every kind other than with respect to the liens securing the Company’s indebtedness and the Permitted Encumbrances. The material items of machinery, equipment and other tangible assets included in the Assets are in satisfactory operating condition, reasonable wear and tear excepted, and conform, in all material respects, to all applicable ordinances, rules, regulations and technical standards, and all applicable building, zoning and other laws. Page E-12 --------------------------------------------------------------------------------         4.14 Compliance with Laws.         The operations of the Company’s business has been, and is being, conducted in material compliance with all applicable laws, rules, regulations and other requirements of all federal, state, county or local governmental authorities or agencies.         4.15 Transactions.         Except as disclosed on Schedule 4.15 hereto, since December 31, 2000, the Company has not entered into any transaction outside the ordinary course of its business, and there has not been any material change in the manner in which the Company conducts its business. Since December 31, 2000 there has not been any Material Adverse Effect.         4.16 Litigation and Legal Proceedings.         Set forth on Schedule 4.16 hereto is a complete and accurate list and description of all suits, claims, actions and administrative, arbitration or other similar proceedings relating to the Company (including proceedings concerning labor disputes or grievances, civil rights discrimination cases and affirmative action proceedings) and all governmental investigations pending or, to the knowledge of the Company, threatened, to which the Company is a party, or against its properties or business, and each judgment, order, injunction, decree or award relating to the Company or the Assets (whether rendered by a court or administrative agency, or by arbitration pursuant to a grievance or other procedure) to which the Company is a party that is unsatisfied or requires continuing compliance therewith. To the Company’s knowledge, there are no facts or circumstances that would give rise to any material claims against the Company or the Assets.         4.17 Brokers' Fees.         The Company has not employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders’ fees in connection with the transactions contemplated by this Agreement.         4.18 Plans; ERISA.         (a) Existence of Plans. For purposes of this Agreement, the term “Plans” shall mean (i) all “employee benefit plans” (as such term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), of which the Company, or any member of the same controlled group as the Company within the meaning of Section 4001(a)(14) of ERISA (an “ERISA Affiliate”) is or ever was a sponsor or participating employer or as to which the Company or any of their ERISA Affiliates makes contributions or is required to make contributions, and (ii) any similar employment, severance or other arrangement or policy of the Company or any of its ERISA Affiliates (whether written or oral) providing for health, life, vision or dental insurance coverage (including self-insured arrangements), workers’ compensation, disability benefits, supplemental unemployment benefits, vacation benefits or retirement benefits, fringe benefits, or for profit sharing, deferred compensation, bonuses, stock options, stock appreciation or other forms of incentive compensation or post-retirement insurance, compensation or benefits. Except as disclosed on Schedule 4.18, neither the Company nor any of its respective ERISA Affiliates maintains or sponsors (or ever maintained or sponsored), or makes or is required to make contributions to, any Plans. None of the Plans is or was a “multi-employer plan,” as defined in Section 3(37) of ERISA. None of the Plans is or was a “defined benefit pension plan” within the meaning of Section 3(35) of ERISA. None of the Plans provides or provided post-retirement medical or health benefits. None of the Plans is or was a “welfare benefit fund,” as defined in Section 419(e) of the Code, or an organization described in Sections 501(c)(9) or 501(c)(20) of the Code. Neither the Company nor any ERISA Affiliate is or was a party to any collective bargaining agreement. Except as disclosed on Schedule 4.18, neither the Company nor any ERISA Affiliate has announced or otherwise made any commitment to create or amend any Plan. Notwithstanding any statement or indication in this Agreement to the contrary, except as disclosed on Schedule 4.18, there are no Plans which the Company will not be able to terminate immediately after the Closing in accordance with their terms and ERISA. The Company has made available to Acquiror true and complete copies of: (i) each of the Plans and any related funding agreements thereto (including insurance contracts) including all amendments, all of which are legally valid and binding and in full force and effect and there are no defaults thereunder, (ii) the currently effective Summary Plan Description pertaining to each of the Plans, as applicable, (iii) the three (3) most recent annual reports for each of the Plans (including all related schedules), (iv) the most recent Internal Revenue Service determination or opinion letter, as applicable, for each Plan which is intended to constitute a qualified plan under Section 401 of the Code and each amendment to each of the foregoing documents, and (v) for each unfunded Plan, financial statements which shall fairly present the financial condition and the results of operations of such Plan in accordance with GAAP, consistently applied, as of such dates. Page E-13 --------------------------------------------------------------------------------         (b) Penalties. To the Company’s knowledge, neither the Company nor any of its respective ERISA Affiliates is subject to any material liability, tax or penalty whatsoever to any Person or agency whomsoever as a result of engaging in a prohibited transaction under ERISA or the Code, and neither the Company nor any of its respective ERISA Affiliates has any knowledge of any circumstances which reasonably might result in any material liability, tax or penalty, including but not limited to, a penalty under Section 502 of ERISA, as a result of a breach of any duty under ERISA or under other applicable laws. Each Plan which is required to comply with the provisions of Sections 4980B and 4980C of the Code, or with the requirements referred to in Section 4980D of the Code, has complied in all material respects. No event has occurred which could subject any Plan to tax under Section 511 of the Code.         (c) Qualification. Each of the Plans which is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination or opinion letter from the Internal Revenue Service, and has been operated in all material respects in accordance with its terms and with the provisions of the Code. All of the Plans have been administered and maintained in substantial compliance with ERISA, the Code and all other applicable laws. All contributions required to be made to each of the Plans under the terms of that Plan, ERISA, the Code or any other applicable laws have been timely made. Each Plan intended to meet the requirements for tax-favored treatment under Subchapter B of Chapter 1 of the Code meet such requirements. Except as set forth in Schedule 4.18, the Company has not made any payments, are not obligated to make any payments, and are not parties to any Contract or Plan that under certain circumstances, considered either individually or in the aggregate, could require it to make any payments, that are not deductible as a result of the provisions set forth in Section 280G of the Code or the treasury regulations thereunder or would result in an excise tax to the recipient of any such payment under Section 4999 of the Code. The Audited Financial Statements and the Unaudited Financial Statements properly reflect all amounts required to be accrued as liabilities to date under each of the Plans. Except as disclosed on Schedule 4.18, or as a result of the employment agreement required by Section 2.12(B)(a), the execution and performance of this Agreement will not (i) result in any obligation or liability (with respect to accrued benefits or otherwise) of the Company or Acquiror to any Plan, or any present or former employee of the Company, (ii) be a trigger event under any Plan that will result in any payment (whether of severance pay or otherwise) becoming due to any present or former employee, officer, director, shareholder, contractor, or consultant, or any of their dependents, or (iii) accelerate the time of payment or vesting, or increase the amount, of compensation due to any employee, officer, director, shareholder, contractor, or consultant of the Company. With respect to any insurance policy which provides, or has provided, funding for benefits under any Plan, (I) there is and will be no liability of the Company or Acquiror in the nature of a retroactive or retrospective rate adjustment, loss sharing arrangement, or actual or contingent liability as of the Closing Date, nor would there be any such liability if such insurance policy were terminated as of the Closing Date, and (II) no insurance company issuing any such policy is in receivership, conservatorship, bankruptcy, liquidation, or similar proceeding, and, to the knowledge of the Company, no such proceedings with respect to any insurer are imminent.         (d) Litigation. Other than routine claims for benefits under the Plans, there are no pending, or, to the best knowledge of the Company, threatened, investigations, proceedings, claims, lawsuits, disputes, actions, audits or controversies involving the Plans, or the fiduciaries, administrators, or trustees of any of the Plans or the Company, any Subsidiary or any of their respective ERISA Affiliates as the employer or sponsor under any Plan, with any of the IRS, the Department of Labor, the PBGC, any participant in or beneficiary of any Plan or any other Person whomsoever. The Company knows of no reasonable basis for any such claim, lawsuit, dispute, action or controversy.         4.19 Insurance, Surety Bonds, Damages.         Set forth on Schedule 4.19 hereto is a correct list of all insurance policies and surety bonds of the Company now in effect, including the names of the insureds and their addresses. The premiums on such insurance policies and bonds have been currently paid, and such policies and bonds are valid, outstanding and enforceable, in full force and effect and insure against risks and liabilities and provide for coverage to the extent and in a manner required of or deemed reasonably appropriate and sufficient by the Company. The Company will maintain coverage of similar kinds and amounts and will pay the premium for such coverage through the Closing Date. Page E-14 --------------------------------------------------------------------------------         4.20 Environmental Laws.         Except as set forth in Schedule 4.20: (i) the Company is in material compliance with all Environmental Laws; (ii) the Company has not received any order, directions or notices relating to any release or threatened release of any Hazardous Substance, or alleging a violation of any Environmental Law and no government agency has submitted to the Company any request for information pursuant to any Environmental Law; (iii) to the best of the Company’s knowledge, there are no material Environmental Permits required under any Environmental Law in connection with the conduct of the Company’s business; and (iv) there has been no generation, use, treatment, disposal, or actual or threatened release of any Hazardous Substance by the Company or, to the Company’s knowledge (without any obligation of further investigation), by any other party at, in, under, or about any of the real property currently or formerly owned, leased, occupied or used by Company. Except as set forth on Schedule 4.20, the Company has not received any notification pursuant to any Environmental Laws that: (i) any work, repairs, construction or capital expenditures are required to be made in respect of any of the Assets as a condition of continued compliance with any Environmental Laws; or (ii) any currently held material Environmental Permit is about to be made subject to materially different limitations or conditions, or is about to be revoked, withdrawn or terminated. The Company has provided Acquiror with complete and correct copies of all studies, reports or surveys in the possession of the Company relating to the presence or alleged presence of Hazardous Substances at, on or affecting the Real Estate or leased or occupied real property.         4.21 No Other Commitment to Sell.         Neither the Company nor any of the Assets is directly or indirectly subject in any manner to any written or oral commitment or any arrangement for the sale, transfer, assignment, or disposition thereof, in whole or in part, except (i) as provided in the general security provisions of any of the Company’s debt instruments, (ii) the sale of any Asset in the ordinary course of business which has been or will be replaced by the Company on or before the Closing Date with a replacement Asset of equal or greater value, or (iii) as otherwise set forth in Schedule 4.21 hereto.         4.22 Trademarks, Patents and Copyrights.         The Company owns or possesses adequate licenses or other valid rights, title and interest to use all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, copyrights, service marks, trade secrets, applications for trademarks and for service marks, know-how, inventions, software, manuals, logos and other proprietary rights and information, including, without limitation, the Assessment Technology (collectively, “Intellectual Property”) used or held for use in connection with the business of the Company as currently conducted or as contemplated to be conducted. Except as set forth on Schedule 4.22, the Company is the sole and exclusive owner of all right, title and interest in and to all Intellectual Property free and clear of all liens, claims, charges, equities, rights of use, encumbrances and restrictions whatsoever. None of Intellectual Property is registered with any governmental or regulatory authority except as set forth on Schedule 4.22.         Other than the Intellectual Property listed on Schedule 4.22, no patent, invention, trade secret, process, proprietary right, proprietary knowledge, know how, computer software, trademark, name, service mark, trade name, copyright, mark, symbol, logos, franchise, permit license, sublicense or other such right is necessary for the operation of the business of the Company as the same is currently conducted. The business of the Company as conducted prior to the Time of Closing, the sale by Sellers, and ownership by Buyer of any of the Assets, was not, is not and will not be in contravention of any trade name, service mark, patent, trademark, copyright or other proprietary right, including, without limitation, the License, of any third party.         Except as set forth in Schedule 4.22, none of the Intellectual Property: has been hypothecated, sold, assigned or licensed by the Company or to the best knowledge of each Seller and the Company, any other person, corporation, firm or other legal entity; infringe upon or violate the rights of any person, firm, corporation, or other legal entity; are subject to challenge, claims of infringement, unfair competition or other claims; or are being infringed upon or violated by any person, firm, corporation or other legal entity. Except as set forth in Schedule 4.22: neither any Seller nor the Company has given any indemnification against patent, trademark or copyright infringement as to any equipment, materials, products, services or supplies which any Seller or the Company produces, uses, licenses or sells; no product, process, method or operation presently sold, licensed, offered, engaged in or employed by the Company infringes upon any rights of any other person, firm, corporation or other legal entity; there is not pending or threatened any claim or litigation against any Seller or the Company contesting the right of any Seller or the Company to sell, license, offer, engage in or employ any such product, process, method, or operation; and there is not, to the best knowledge of each Seller and the Company, pending, proposed or threatened, any patent, copyright, trade name, trademark, service mark, invention, device, application or principle which would adversely affect in a material fashion the future operation by Buyer of the Company’s business after the Closing on substantially the same basis as said business was theretofore operated. Page E-15 --------------------------------------------------------------------------------         The Assessment Technology contains, includes and performs to the technical and functional specifications set forth on Schedule 4.22.         4.23 Bank Accounts.         A complete list of each bank account maintained by Company, including safe deposit boxes maintained by Company, the account balances and the names of the persons authorized to draw down upon or have access thereto is set forth on Schedule 4.23. ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUIROR         As an inducement to Shareholders to enter into this Agreement and to consummate the transactions contemplated hereby, Acquiror hereby represents (as of the date of this Agreement) and warrants as follows:         5.1 Organization.         Acquiror is a corporation duly organized, validly existing, and in good standing under the laws of the State of Colorado and has the power and authority to own and use its properties and to transact the business in which it is engaged.         5.2 Authority Relative to this Agreement.         Acquiror has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Acquiror and the consummation by Acquiror of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of Acquiror are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Acquiror and, assuming the due authorization, execution and delivery by the other parties hereto, constitutes a legal, valid and binding obligation of Acquiror, enforceable against Acquiror in accordance with its terms.         5.3 No Conflict; Required Filings and Consents.         The execution and delivery of this Agreement and all other instruments or documents executed by Acquiror in connection herewith and the consummation of the transactions contemplated hereby will not (i) conflict with or violate the certificate of incorporation, or bylaws of Acquiror, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Acquiror or by which any property or asset of Acquiror is bound or affected or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, any Contract to which Acquiror is a party or by which Acquiror or any property or asset of Acquiror is bound except, in the case of clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences that would not prevent or delay consummation of the Closing, or otherwise prevent Acquiror from performing its obligations under this Agreement.         The execution and delivery of this Agreement by Acquiror does not, and the performance of this Agreement by Acquiror will not, require Acquiror to obtain or make any consent, approval, authorization or permit of, or filing with or notification to, any Governmental authority, except (i) for applicable requirements, if any, of (A) federal or state securities or “blue sky” laws, and (B) state and local governmental authorities, (ii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay consummation of the Closing or otherwise prevent Acquiror from performing its obligations under this Agreement. Page E-16 --------------------------------------------------------------------------------         5.4 Litigation.         There is no claim, action or proceeding pending or threatened against Acquiror of which Acquiror has received notice, which if determined adversely would prevent or delay the consummation of the transactions contemplated by this Agreement, and no judgment, order or decree has been entered nor any such liability incurred having such effect.         5.5 Finders' and Brokers' Fees.         No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transaction provided for in this Agreement based upon arrangements made by or on behalf of Acquiror. ARTICLE VI CONDITIONS TO CLOSING         6.1 Conditions to Acquiror's Obligations. The obligations of the Acquiror under this Agreement are subject, at the option of the Acquiror, to the fulfillment of each of the following conditions as of the Closing:                  (a) Accuracy of Representations and Compliance with Agreement. All representations and warranties of Shareholders and the Company contained in this Agreement shall be true and accurate, in all material respects, as of the Closing, and Shareholders and the Company shall have performed and complied with, in all material respects, all of their respective obligations under this Agreement.                  (b) Threatened or Pending Proceedings. No proceedings shall have been initiated or threatened by any person or governmental agency or instrumentality seeking to enjoin or otherwise restrain the consummation of the transactions contemplated hereby.                  (c) No Law Prohibiting Consummation. At the Closing Date, there shall exist no applicable law, rule, regulation, order, judgment or injunction the effect of which is to prohibit consummation of the transactions contemplated by this Agreement.                  (d) Delivery of Documents. Shareholders shall have delivered to the Acquiror the documents set forth in Section 2.12 hereof.         6.2 Conditions to Obligations of Shareholders and the Company. The obligations of Shareholders and the Company under this Agreement are subject, at the option of Shareholders and the Company, to the fulfillment of each of the following conditions as of the Closing:                  (a) Accuracy of Representations and Compliance with Agreement. All representations and warranties of Acquiror contained in this Agreement shall be true and accurate, in all material respects, as of the Closing, and Acquiror shall have performed and complied with, in all material respects, all of its obligations under this Agreement and there shall be no uncured default of Acquiror under any term of this Agreement.                  (b) Receipt of Purchase Price. Shareholders shall have received the Consideration as provided in Section 2.7 hereof.                  (c) Threatened or Pending Proceedings. No proceedings shall have been initiated or threatened by any person or governmental agency or instrumentality seeking to enjoin or otherwise restrain the consummation of the transactions contemplated hereby. Page E-17 --------------------------------------------------------------------------------                  (d) Delivery of Documents. Acquiror shall have delivered the documents set forth in Section 2.12(b) to Shareholders. ARTICLE VII INDEMNIFICATION         7.1 Indemnification by Shareholders with Respect to the Company.         From and after the Closing, Shareholders shall jointly and severally indemnify Acquiror against and hold it harmless from any and all Indemnifiable Damages which Acquiror may suffer or incur by reason of the Company’s breach of any of the Company’s representations and warranties contained in this Agreement or any document, certificate or agreement delivered pursuant hereto; or (ii) the company’s breach of any of the Company’s covenants or agreements contained in this Agreement or any document, certificate or agreement delivered by the Company pursuant hereto. However, notwithstanding anything contained in this Agreement to the contrary, if Acquiror makes any claim for damages, Acquiror will use reasonable efforts to mitigate the amount and nature thereof in accordance with customary industry maintenance procedures.         7.2 Indemnification by Shareholders for Shareholder Breaches.         From and after the Closing each Shareholder shall indemnify Acquiror against and hold it harmless from any and all Indemnifiable Damages which Acquiror may suffer or incur by reason of (i) inaccuracy of any of the representations or warranties of such Shareholder contained in Article III of this Agreement; or (ii) such Shareholder’s breach of any of its covenants or agreements contained in this Agreement or any document, certificate or agreement delivered by such Shareholder pursuant hereto. Notwithstanding anything contained in this Section 7.2 to the contrary, if there is a claim for damages, Acquiror will use commercially reasonable efforts to mitigate the amount and nature of such damages in accordance with customary industry maintenance procedures.         7.3 Indemnification by Acquiror.         From and after the Closing, Acquiror will indemnify Shareholders against and hold them harmless from any and all Indemnifiable Damages which any of the Shareholders may suffer or incur by reason of (i) Acquiror’s breach of any of Acquiror’s representations and warranties contained in this Agreement or any document, certificate or agreement delivered pursuant hereto; or (ii) Acquiror’s breach of any of Acquiror’s covenants, or agreements contained in this Agreement or any document, certificate or agreement delivered pursuant hereto; or (iii) any liability for claims made by Third Parties against any of the Shareholders arising out of the operation of the Company’s business by Acquiror after the Closing Date. Without limiting the generality of the foregoing, with respect to the measurement of Indemnifiable Damages, Shareholders shall have the right to be put in the same financial position as they would have been in had Acquiror not breached the respective representation, warranty, covenant or agreement.         7.4 Notice and Right to Defend Third Party Claims.         Promptly upon receipt of notice of any claim, demand or assessment made by any Third Party or the commencement of any suit, action or proceeding brought by any Third Party in respect of which indemnity may be sought under any provision of Article VII hereof, the party seeking indemnification (the “Indemnitee”) will give written notice thereof to the party from whom indemnification is sought (the “Indemnitor”) promptly and in any event within sufficient time to enable the Indemnitor to respond to such claim, demand, or assessment or answer or otherwise plead in such suit, action or proceeding. The failure or omission of such Indemnitee to so notify promptly the Indemnitor of any such Third Party claim, demand, assessment, suit, action or proceeding shall not relieve such Indemnitor from any liability which it may have to such Indemnitee in connection therewith, on account of any indemnity agreement contained in Article VII hereof, except to the extent that the Indemnitor shall have been actually prejudiced thereby. In case any Third Party claim, demand or assessment shall be asserted or Third Party suit, action or proceeding commenced against an Indemnitee, and such Indemnitee shall notify the Indemnitor of the commencement thereof, the Indemnitor shall be entitled to participate therein, and, to the extent that it may wish, to assume the defense, conduct or settlement thereof, with counsel reasonably satisfactory to the Indemnitee by providing the Indemnitee with written notice within 10 business days after the Indemnitor’s receipt of the Indemnitee’s notice of the claim, demand, assessment, suit, action or proceeding. After notice from the Indemnitor to the Indemnitee of its election so to assume the defense, conduct or settlement thereof within such 10-business day period, the Indemnitor will not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense, conduct or settlement thereof. The Indemnitee, at Indemnitor’s cost and expense, will cooperate with the Indemnitor in connection with any such claim, and make personnel, books and records relevant to the claim available to the Indemnitor. Neither party shall settle such claim, demand, assessment, suit, action or proceeding without the consent of the other party, which shall not be unreasonably withheld provided that in no event shall either party be obligated to consent to any settlement which (i) arises from or is part of any criminal action, suit or proceeding, (ii) contains a stipulation to, confession of judgment with respect to, or admission or acknowledgment of, any liability or wrongdoing on the part of such party, (iii) provides for injunctive relief, or other relief or finding other than money damages, which is binding on such party, or (iv) does not contain an unconditional release of such party. Page E-18 -------------------------------------------------------------------------------- ARTICLE VIII SECURITIES LAW MATTERS         The parties agree as follows with respect to the sale or other disposition after the Closing Date of the Avert Shares:         8.1 Disposition of Shares. Each Shareholder who will receive Avert Shares pursuant to Section 2.7 hereof, represents and warrants that the Avert Shares being acquired by him hereunder are being acquired and will be acquired for his own account and will not be sold or otherwise disposed of, except (a) pursuant to an exemption from the registration requirements under the Securities Act, or (b) pursuant to an effective registration statement filed by Acquiror with the SEC under the Securities Act.         8.2 Legends. The certificates representing the Avert Shares shall bear the following legend (or such similar legend used by Acquiror at the Closing):   THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE ACT AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO, OR (b) IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. Acquiror may place stop transfer orders with its transfer agent with respect to such certificates in accordance with federal securities laws. ARTICLE IX MISCELLANEOUS PROVISIONS         9.1 Nature and Survival of Representations and Warranties. All representations and warranties made by the parties hereto shall survive the Closing, except to the extent waived in writing by the party to whom such representation and warranty was made, and notwithstanding any investigation heretofore or hereafter made by or on behalf of such party. Page E-19 --------------------------------------------------------------------------------         9.2 Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes any and all prior discussions, agreements and understandings of every and any nature among the parties hereto, other than as set forth in this Agreement or any agreement or writing supplied in conjunction herewith, or as may be, on or after the date hereof, set forth in writing and signed by the party to be bound thereby.         9.3 Assignment. No party may assign any of its rights or delegate any of its duties under this Agreement without the consent of the other parties.         9.4 Governing Law. This Agreement shall be governed by and construed in accordance with the laws and judicial decisions of the State of Colorado.         9.5 Headings. The headings of the sections of this Agreement have been inserted solely for the convenience of reference only for the parties hereto and shall not be deemed to be a part of this Agreement nor shall such be used to construe any of the terms or provisions hereof.         9.6 Notices. All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified U.S. Mail with postage prepaid, return receipt requested, on the first attempted delivery date to the following addresses:   If to the Company: Advantage Assessment, Inc. With a copy to: If to Shareholders:   Christopher M. Smith 1195 Gulf Breeze Parkway Gulf Breeze, Florida 32561 Christian R. Bailey 2905 Davenport Drive Owens Cross Roads, Alabama 35763 D. Scott Othoson 108 W. Cross Street Galena, Maryland 21635 Nancy E. Norris 343 Deerpoint Drive Gulf Breeze, Florida 43561 If to Acquiror: Avert, Inc. 301 Remington Street Fort Collins, Colorado 80524 Attention: Dean Suposs Telecopy: 970-221-1526 Page E-20 --------------------------------------------------------------------------------   With a copy to: Thomas H. Maxfield, Esq. Baker & Hostetler LLP 303 East 17th Avenue, Suite 1100 Denver, Colorado 80203 Telecopy: 303-861-2307         or to such other addresses as any respective party shall specify by written notice to the other parties hereto.         9.7 Expenses. Whether or not the transactions contemplated by this Agreement are consummated, each party hereto shall bear his or its own fees and expenses incurred in the negotiation, preparation and execution of and Closing pursuant to this Agreement.         9.8 Severability. If one or more of the provisions contained in this Agreement shall be declared to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.         9.9 Counterparts. This Agreement may be executed in one or more counterparts and each executed copy shall constitute an original.   IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written. ACQUIROR: AVERT, INC. By: _____________________ Name: ___________________ Title:____________________ COMPANY: ADVANTAGE ASSESSMENT, INC. By: ______________________ Name:____________________ Title:_____________________ SHAREHOLDERS: Christopher M. Smith Nancy E. Norris Christian R. Bailey D. Scott Othoson Page E-21 -------------------------------------------------------------------------------- INDEX TO EXHIBITS Exhibit 2.12(A)(3) Company's Opinion of Counsel Exhibit 2.12(A)(6) Investment Representation Letter Exhibit 2.12(B)(5) Acquiror's Opinion of Counsel Exhibit 2.12(B)(9) Smith Employment Agreement INDEX OF SCHEDULES ------------------ Schedule Title -------- ----- 2.7(A) Equipment Lease Liabilities 2.7(B) Shareholders' Accounts 2.9 Allocation among Shareholders 3.1 Shares 3.3 Shareholders' Required Consents 4.3 Company Required Consents 4.6 Financial Statements 4.7 Prepaid Services 4.9 Material Agreements 4.10 Employment Matters 4.11 Absence of Certain Developments 4.12 Real Estate 4.15 Transactions Outside of Ordinary Course of Business 4.16 Litigation 4.18 Employee Benefit Plans 4.19 Insurance Policies 4.20 Noncompliance with Environmental Laws 4.21 Sale Commitments 4.22 Intellectual Property Page E-22 -------------------------------------------------------------------------------- Exhibit 2.12(A)(3) E-2.2(A)(3)-1          ______________, 2001 Avert, Inc. 301 Remington Street Fort Collins, Colorado 80524         Re: Agreement and Plan of Merger dated as of [ ], 2001 (the "Agreement") among Avert, Inc. (the "Company"), Advantage Assessment, Inc. ("Advantage"), and the Shareholders listed on the signature pages of the Agreement (collectively, the "Shareholders"); Gentlemen and Ladies:         We are furnishing this opinion pursuant to Section 2.12(a)(3) of the Agreement. Capitalized terms used herein and not defined shall have the meanings set forth in the Agreement. EXAMINATION         We have acted as counsel to Advantage in connection with the Agreement and the merger of Advantage with and into the Company in accordance with the applicable statutes of the States of Florida and Colorado (the “Merger”) contemplated thereby. For purposes of this opinion we have examined and relied upon the following:         A. The executed Agreement and the schedules and exhibits attached thereto;         B. The Articles of Incorporation of Advantage, certified by the Florida Secretary of State as of a recent date (the "Articles");         C. The Bylaws of Advantage, certified by an officer of Advantage (the "Bylaws");         D. Copies of certain resolutions adopted by the Board of Directors of Advantage authorizing the execution and delivery of the Agreement;         E. Certificates as to the incumbency and signatures of officers of Advantage authorized to execute documents on behalf of Advantage;         F. Certificate of the Secretary of State of Florida as to the good standing of Advantage, dated [        ] (the "Good Standing Certificate"); and         G. The Officers' Certificate (as defined below) attached hereto as Annex A.         We specifically advise you, with your consent, that we have not been requested to review, nor have we reviewed, any other documents in connection with the transactions contemplated by the Agreement.         Further, we advise you that we have not been retained or engaged to perform, nor have we performed, any independent investigation of the existence of orders or decrees to which Advantage may be a party or to which any of its assets or property may be subject, or by which Advantage or any of its assets or property may be bound, nor have we been retained or engaged to perform, or performed, any independent review or investigation as to the existence of any claims, litigation, action, suits, proceedings, investigations or inquiries, administrative or judicial, pending or threatened, against or relating to Advantage or its assets or property. The opinions expressed herein are limited by the scope of our review. E-2.2(A)(3)-1 -------------------------------------------------------------------------------- ASSUMPTIONS         For purposes of this opinion, we assume the following:         A. The genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity with the original documents of all documents submitted to us as certified, photostatic or reproduced copies and the authenticity of such;         B. All representations, warranties, covenants and conditions set forth in the Agreement and all other agreements required thereby are accurate as to factual matters, and all terms, conditions and covenants set forth therein have been complied with, as of the date hereof;         C. The authenticity and accuracy of all matters set forth in the Officers' Certificate and all other oral or written certifications and statements of fact upon which we are relying; and         D. The due authorization, execution and delivery of the Agreement and other agreements of the Company, Advantage, and the Shareholders required thereby by such parties, and that all such agreements, including the Agreement, are the legal, valid and binding obligations of such party enforceable against each in accordance with their respective terms. OPINION         Based upon and subject to the foregoing and the qualifications set forth at the end of this opinion, we are of the opinion that: 1. Advantage is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Florida. 2. Advantage has all requisite corporate power and authority to execute, deliver and perform, as of the Closing Date, the Agreement and all other agreements of Advantage required thereby. 3. The execution, delivery and performance by Advantage, as of the Closing Date, of the Agreement, and of each other agreement of Advantage required thereby will not violate the Articles or Bylaws and will not violate, result in a breach of, or constitute a default under, any material lease, mortgage, contract, agreement, instrument, law, rule, regulation, judgment, order or decree known to us to which Advantage is a party or to which it or any of its properties or assets may be bound. 4. The Agreement and each other agreement of Advantage required thereby have been duly executed and delivered by Advantage and each constitutes a valid and binding obligation of Advantage, enforceable against it in accordance with their respective terms. 5. To our knowledge, there is no litigation or other proceeding before any court or administrative agency pending or threatened against Advantage which questions the validity of, or which would prevent consummation of the transactions contemplated by, the Agreement or such other agreements of Advantage required thereby. 6. All outstanding shares of Advantage’s common stock are duly and validly authorized and issued, fully paid and nonassessable and have not been issued in violation of any preemptive right of any stockholders; and, to our knowledge, there is no existing option, warrant, right, call subscription or other agreement or commitment obligating Advantage to issue or sell, or to purchase or redeem, any shares of its capital stock other than as stated in the Agreement. E-2.2(A)(3)-2 -------------------------------------------------------------------------------- 7. To our knowledge, no consent, approval, authorization or order of any court or governmental agency or body, which has not been obtained is required on behalf of Advantage for consummation of the transactions contemplated by this Agreement. 8. Advantage has complied with the shareholder dissenter rights under Florida law. QUALIFICATIONS         A. Our opinion set forth in paragraph 1 above as to the existence and/or good standing of Advantage under the laws of the State of Florida is based solely upon the Good Standing Certificate.         B. Our opinion as to the enforceability of the Agreement, as set forth in paragraph 4 above, is subject to the qualifications that (1) enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, and other similar laws, now or hereafter in effect, and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law), and (2) the remedies of specific performance and injunctive relief and other forms of equitable relief are subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.         C. In all instances, to the extent that any opinion herein is stated to be “to our knowledge,” we have relied, with your consent, solely on a certificate of one or more officers of Advantage (the “Officers’ Certificate”) and on the absence of contrary knowledge by those attorneys presently practicing with our firm who have given substantive attention to the transaction contemplated by the Agreement, but we have otherwise neither investigated nor attempted to verify any of such matters. A form of the Officers’ Certificate is attached hereto as Annex A.         D. We express no opinion in any provision of the Agreement or other agreements of Advantage required thereby that waive or purport to waive rights of Advantage.         E. To the extent that any document listed above as examined by us refers to another document not listed above as examined by us, we express no opinion as to such other document or the effect thereof on the opinions expressed herein.         F. This opinion is based solely upon existing laws, rules and regulations.         G. The opinion is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated.         H. This opinion is being furnished to you for your own use. No other use or distribution may be made without our prior written consent.         I. This opinion is given as of the date hereof, and we specifically disclaim any duty or obligation to advise you of any future changes in the foregoing or to otherwise update the opinions expressed herein.         J. We express no opinion as to any laws other than the laws of the United States of America and the laws of the State of Florida. Very truly yours, MOORE, HILL & WESTMORELAND, P.A. J. LOFTON WESTMORELAND JLW:jap E-2.2(A)(3)-3 -------------------------------------------------------------------------------- Exhibit 2.12(A)(6) E-2.2(A)(6)-1 FORM OF INVESTMENT REPRESENTATION LETTER March __, 2001 Avert, Inc. 301 Remington Street Fort Collins, Colorado 80524         This letter is being submitted to Avert, Inc. ("Avert") in connection with and as a condition to Avert's closing of the transactions contemplated by the Agreement and Plan of Merger among Avert, Advantage Assessment, Inc., Nancy E. Norris, Christopher M. Smith, Christian R. Bailey and D. Scott Othoson. Capitalized terms not defined herein shall have the meaning given them in the Memorandum (as defined below).    1. Representations and Warranties.         Each of the undersigned hereby represents and warrants to Avert that the following statements are true: a. Each of the undersigned has been furnished a copy of the Memorandum, dated March __, 2001 (the “Memorandum”) containing a copy of Avert’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and all other reports filed by Avert with the Securities and Exchange Commission since January 1, 2001 (collectively, the “Reports”) and has carefully reviewed the Memorandum and the Reports, including, but not limited to, the statements in the Memorandum relating to the lack of free transferability of the Avert Common Stock to be issued by Avert as consideration for the Merger. b. Each of the undersigned has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in Avert vis-a-vis the Avert Common Stock to be issued by Avert as partial consideration for the Merger. c. Each of the undersigned has had an opportunity to ask questions of Avert and its management concerning Avert, the businesses of Avert and the Avert Common Stock and, if asked, all such questions have been answered to the full satisfaction of the undersigned. d. Each of the undersigned understands that Avert has not registered the offer or sale of the Avert Common Stock under the Securities Act of 1933, as amended (the “Act”), in reliance upon an exemption therefrom under Section 4(2) of the Act and the provisions of Regulation D promulgated thereunder. Each of the undersigned therefore acknowledges that in no event may he sell or otherwise transfer the Avert Common Stock without registration under the Act (see paragraph (f) below). e. Each of the undersigned (i) has adequate means of providing for his current needs and possible personal contingencies, (ii) has no need for liquidity in this investment, (iii) is able to bear the economic risks of an investment in the Avert Common Stock for an indefinite period of time, and (iv) at the present time, could afford a complete loss of such investment. f. Each of the undersigned represents that he will acquire the Avert Common Stock for his own account, with no intention to distribute or offer to distribute the same to others without registration under the Act or pursuant to an exemption from registration under the Act, and understands that the issuance by Avert of the Avert Common Stock will be predicated upon the undersigned’s lack of such intention. g. Each of the undersigned understands that neither the Securities and Exchange Commission nor the securities commissioner of any state has received or reviewed any documents relative to an investment in Avert, or has made any finding or determination relating to the fairness of an investment in Avert. E-2.2(A)(6)-1 -------------------------------------------------------------------------------- h. Each of the undersigned acknowledges that stop transfer instructions will be placed with Avert’s transfer agent to restrict the resale, pledge, hypothecation or other transfer of the Avert Common Stock. i. Each of the undersigned acknowledges that Avert is under no obligation to register the Avert Common Stock for sale under the Act or to assist the undersigned in complying with any exemption from registration under the Act, or any state securities laws. j. Each of the undersigned is an accredited investor within the meaning of Rule 501(a) of Regulation D promulgated by the SEC under the Act. k. Each of the undersigned understands and acknowledges that the foregoing representations and warranties will be relied upon by Avert in connection with the issuance of the Avert Common Stock.    2. Indemnification.         Each of the undersigned agrees to indemnify and hold harmless Avert, the officers, directors and affiliates of Avert and each other person, if any, who controls Avert, within the meaning of Section 15 of the Act, against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false representation or warranty or failure by the undersigned to comply with any covenant or agreement made by each of the undersigned herein.         3. Survival.         All representations, warranties and covenants contained in this letter shall survive the closing of the Merger. Very truly yours, Name: --------------------------------------- Name: --------------------------------------- I, _______________, do hereby certify that I am an accredited investor within the meaning of Rule 501(a) of Regulation D promulgated by the SEC under the Act because (initial all that apply): _____ I have had individual income (exclusive of any income earned by my spouse) of more than $200,000 in each of the two most recent years and I reasonably expect to have an individual income in excess of $200,000 for the current year. _____ I currently have had joint income with my spouse in excess of $300,000 in each of the two most recent years and I reasonably expect to have joint income with my spouse in excess of $300,000 for the current year. _____ I currently have an individual net worth, or my spouse and I have a joint net worth, in excess of $1,000,000. For purposes of this item, net worth means the excess of total assets at fair market value, including home and personal property, over total liabilities. E-2.2(A)(6)-2 -------------------------------------------------------------------------------- _____________________________________________ I, _______________, do hereby certify that I am an accredited investor within the meaning of Rule 501(a) of Regulation D promulgated by the SEC under the Act because (initial all that apply): _____ I have had individual income (exclusive of any income earned by my spouse) of more than $200,000 in each of the two most recent years and I reasonably expect to have an individual income in excess of $200,000 for the current year. _____ I currently have had joint income with my spouse in excess of $300,000 in each of the two most recent years and I reasonably expect to have joint income with my spouse in excess of $300,000 for the current year. _____ I currently have an individual net worth, or my spouse and I have a joint net worth, in excess of $1,000,000. For purposes of this item, net worth means the excess of total assets at fair market value, including home and personal property, over total liabilities. _________________________________________________________ E-2.2(A)(6)-3 -------------------------------------------------------------------------------- Exhibit 2.12(B)(5)          ______________, 2001 Advantage Assessment, Inc. > [        ]         Re: Agreement and Plan of Merger dated as of [ ], 2001 (the "Agreement") among Avert, Inc. (the "Company"), Advantage Assessment, Inc. ("Advantage"), and the Shareholders listed on the signature pages of the Agreement (collectively, the "Shareholders"); Gentlemen and Ladies:         We have acted as counsel to the Company in connection with the Agreement and the merger of Advantage with and into the Company (the “Merger”). We are furnishing this opinion pursuant to Section 2.12(b)(5) of the Agreement. Capitalized terms used herein and not defined shall have the meanings set forth in the Agreement. EXAMINATION         For purposes of this opinion we have examined and relied upon the following:         A. The executed Agreement and the schedules and exhibits attached thereto;         B. The Articles of Incorporation of the Company, certified by the Colorado Secretary of State as of a recent date (the "Articles");         C. The Bylaws of the Company, certified by an officer of the Company (the "Bylaws");         D. Copies of certain resolutions adopted by the Board of Directors of the of the Company authorizing the execution and delivery of the Agreement;         E. Certificates as to the incumbency and signatures of officers of the Company authorized to execute documents on behalf of the Company;         F. Certificate of the Secretary of State of Colorado as to the good standing of the Company, dated [ ] (the "Good Standing Certificate"); and         G. The Officers' Certificate (as defined below) attached hereto as Annex A.         We specifically advise you, with your consent, that we have not been requested to review, nor have we reviewed, any other documents in connection with the transactions contemplated by the Agreement. E-2.2(B)(5)-1 --------------------------------------------------------------------------------         Further, we advise you that we have not been retained or engaged to perform, nor have we performed, any independent investigation of the existence of orders or decrees to which the Company may be a party or to which any of its assets or property may be subject, or by which the Company or any of its assets or property may be bound, nor have we been retained or engaged to perform, or performed, any independent review or investigation as to the existence of any claims, litigation, action, suits, proceedings, investigations or inquiries, administrative or judicial, pending or threatened, against or relating to the Company or its assets or property. The opinions expressed herein are limited by the scope of our review. ASSUMPTIONS         Fo r purposes of this opinion, we assume the following:         A. The genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity with the original documents of all documents submitted to us as certified, photostatic or reproduced copies and the authenticity of such;         B. All representations, warranties, covenants and conditions set forth in the Agreement are accurate as to factual matters, and all terms, conditions and covenants set forth therein have been complied with, as of the date hereof;         C. The authenticity and accuracy of all matters set forth in the Officers' Certificate and all other oral or written certifications and statements of fact upon which we are relying; and         D. The due authorization, execution and delivery of the Agreement by each party thereto other than the Company and that the Agreement is a legal, valid, and binding agreement against each such other party, enforceable against each such party in accordance with its terms. OPINION         Based upon and subject to the foregoing and the qualifications set forth at the end of this opinion, we are of the opinion that:         1. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Colorado.         2. The Company has all requisite corporate power and authority to execute, deliver and perform, as of the Closing Date, the Agreement.         3. The execution, delivery and performance by the Company of the Agreement will not violate the Articles or the Bylaws.         4. The Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against it in accordance its terms.         5. To our knowledge, there is no litigation or other proceeding before any court or administrative agency pending or threatened against the Company which questions the validity of, or which would prevent consummation of the transactions contemplated by, the Agreement.         6. The Shares to be issued pursuant to the Agreement, when so issued, will be duly authorized, validly issued and outstanding, fully paid and nonassessable. E-2.2(B)(5)-2 -------------------------------------------------------------------------------- QUALIFICATIONS         A. Our opinion set forth in paragraph 1 above as to the existence and/or good standing of the Company under the laws of the State of Colorado is based solely upon the Good Standing Certificate.         B. Our opinion as to the enforceability of the Agreement, as set forth in paragraph 4 above, is subject to the qualifications that (1) enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, and other similar laws, now or hereafter in effect, and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law), and (2) the remedies of specific performance and injunctive relief and other forms of equitable relief are subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.         C. In all instances, to the extent that any opinion herein is stated to be “to our knowledge,” we have relied, with your consent, solely on a certificate of one or more officers of the Company (the “Officers’ Certificate”) and on the absence of contrary knowledge by those attorneys presently practicing with our firm who have given substantive attention to the transaction contemplated by the Agreement, but we have otherwise neither investigated nor attempted to verify any of such matters. A form of the Officers’ Certificate is attached hereto as Annex A.         D. We express no opinion in any provision of the Agreement that waives or purport to waive rights of the Company.         E. To the extent that any document listed above as examined by us refers to another document not listed above as examined by us, we express no opinion as to such other document or the effect thereof on the opinions expressed herein.         F. This opinion is based solely upon existing laws, rules and regulations.         G. The opinion is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated.         H. This opinion is being furnished to you for your own use. No other use or distribution may be made without our prior written consent.         I. This opinion is given as of the date hereof, and we specifically disclaim any duty or obligation to advise you of any future changes in the foregoing or to otherwise update the opinions expressed herein.         J. We express no opinion as to any laws other than the laws of the United States of America and the laws of the State of Colorado. Very truly yours, BAKER & HOSTETLER LLP E-2.2(B)(5)-3 -------------------------------------------------------------------------------- EMPLOYMENT AGREEMENT         This EMPLOYMENT AGREEMENT between Avert, Inc., a Colorado corporation (the “Company”), and Christopher M. Smith (the “Executive”) is made this ___ day of March, 2001.         WHEREAS, the Company desires to employ the Executive in the areas of product development and sales support;         WHEREAS, the Executive desires to be employed by the Company in such capacities; and         WHEREAS, the Company and the Executive desire to set forth in writing the terms and conditions of their agreements and understandings.         NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:         1. Employment. The Company shall employ the Executive in the areas of product development and sales support and the Executive hereby accepts and agrees to serve the Company in the capacities described herein, during the term of this Agreement in accordance with the terms and conditions hereinafter set forth.         2. Term of Employment. The term of this Agreement shall be a one (1) year period commencing on March __, 2001 and terminating on the first anniversary of such date, provided, however, that such term shall be automatically extended for successive one (1) year periods unless either party shall have served written notice upon the other at least thirty (30) days prior to the first anniversary of the commencement of employment and each anniversary of this Agreement in each succeeding year.         3. Duties and Responsibilities. a. The Executive shall be responsible for product development and sales support and shall report to Jerry Thurber or his designee. b. During the term of this Agreement, excluding periods of illness, injury or other disability, the Executive shall devote his full time and attention to rendering his services in the duties and responsibilities set forth by the Company. The Executive hereby accepts such employment and agrees that he will, during the continuance hereof, devote his full time and attention and best talents and abilities to the duties of employment hereby accepted by him. E-2.2(B)(9)-1 --------------------------------------------------------------------------------         4. Compensation and Benefits. During the term of this Agreement, the Company shall pay to the Executive, and Executive shall accept from the Company, as full compensation for Executive's services hereunder, compensation as follows:     a. Base Salary. The Executive shall be paid a base annual compensation of $60,000, which amount shall be increased to $96,000 as of the first day of any month in the event that the monthly assessment revenue for the previous month exceeds $125,000. The base annual compensation shall be paid in 26 equal payments (hereinafter referred to as the “Base Monthly Payments”). As used herein, “assessment revenue” shall mean all revenue derived from the assessment testing system based on the tests that were purchased or developed by the Company using the accrual accounting method. In determining the monthly assessment revenue, any customer prepayments shall be accrued ratably over the time period for which the services will be provided to the customer. Past accruals up to the time of closing, do not count in these computations.     b. Bonus Payments. The Executive shall be entitled to a monthly bonus payment during the term of this Agreement beginning with all sales after the date of closing equal to ten percent (10%) of the monthly assessment revenue for the prior month. Notwithstanding anything herein to the contrary, the monthly bonus payments provided in this paragraph 4(b) shall terminate upon the earlier of (i) the time that aggregate bonus payments provided hereunder exceed $2,000,000, or (ii) the third anniversary of the commencement date of Executive’s employment pursuant hereto.     c. Other Benefits. During the term of this Agreement, the Executive shall be entitled to participate in each pension, profit sharing, other tax-qualified plan or non-qualified plan, insurance, health, disability, major medical insurance or other arrangement the Company may adopt for the general benefit of its eligible employees or executive employees to the extent permitted by law and to the extent the Executive is otherwise entitled to participate based upon his age, service, compensation, job classification, and any other factors determining eligibility to participate under each such plan.         5. Reimbursement of Expenses. The Company shall reimburse the Executive for all approved expenses necessarily incurred by him in connection with the performance of his duties hereunder during the term of this Agreement, upon presentation of the Avert expense report indicating the amount and business purpose and supported by appropriate documentation, subject, however, to the Company’s written employee reimbursement policies and procedures relating to business related expenses as in effect from time to time.         6. Covenant of Non-Competition. The Executive covenants and agrees that for such period as he shall be employed by the Company and, in the event this Agreement is terminated by the Company and the Executive pursuant to Section 7(a) hereof or by the Company pursuant to Section 7(f), for a period of three (3) years after such termination, he will not, without the prior written consent of the Company, either directly or indirectly, whether as principal or as agent, officer, director, employee, consultant, stockholder, investor (other than as a holder of not more than five percent (5%) of any class of securities traded on a national or regional stock exchange) or otherwise, alone or in association with any other person, firm, corporation, or other business organization, carry on, or be engaged, concerned or take part in, or render like services to, or own any interest or share in earnings of any person, firm, corporation, or other business organization which is engaged in the provision of the same or similar services to those provided by the Company in the United States. In the event of a breach or threatened breach by the Executive of the provisions of this Section 6, the Company shall be entitled, in addition to any remedy hereunder or under any applicable law, to an injunction restraining the Executive from breaching the provisions hereof. If, at the time of enforcement of this Section 6 a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. Executive agrees that the restrictions contained in this Section 6 are reasonable. E-2.2(B)(9)-2 --------------------------------------------------------------------------------         7. Termination. This Agreement shall terminate in accordance with the provisions of this Section 7.     a. Mutual Agreement. This Agreement shall terminate upon written agreement of the Executive and the Company.     c. Notice by Either Party. In addition to termination pursuant to the notice described in Section 2 and pursuant to Sections 7(d) or 7(f) this Agreement may be terminated by the Executive or the Company at any time upon written notice.     c. Death. This Agreement shall terminate automatically upon the death of the Executive, such termination to be effective on the date of the Executive's death.     d. Disability. This Agreement shall terminate automatically in the event the Executive is unable to substantially perform the duties hereunder by reason of disability or incapacity due to physical or mental illness, for a period in excess of one (1) consecutive month in any twelve (12) month period or two (2) months in the aggregate in any twenty-four (24) month period. The term of employment may be terminated by the Company pursuant to this paragraph only if the Executive does not return to work within and for a continuous period of at least thirty (30) days after a notice of termination has been provided to the Executive by the Company.     e. Good Reason. The Executive shall have the right to terminate this Agreement at any time for "Good Reason." For purposes of this Agreement, "Good Reason" shall mean the occurrence, without the express written consent of the Executive, of any of the following circumstances: i. the assignment to the Executive of any duties which the Executive reasonably considers to be inconsistent with his position, duties, and responsibilities, or any other action by the Company which results in a material diminution or material adverse change in such position, duties or responsibilities; ii. any reduction in the Executive's Base Monthly Payments as in effect on the date hereof or as the same may be increased from time to time during the term of this Agreement; iii. any failure by the Company to include the Executive in any benefit plan or arrangement, as set forth in Section 4(c) hereof, maintained by the Company from time to time; iv. any relocation of the Executive to any office or location outside the greater Pensacola, Florida metropolitan area; v. the failure to pay the Executive any payment described in Section 4(b) hereof in accordance with the terms thereof; vi. any material breach of this Agreement by the Company, other than an isolated failure not occurring in bad faith which is cured within five (5) days after receipt by the Company of written notice thereof by the Executive; and vii. any purported termination of the Executive's employment by the Company which is not effected in accordance with the notice provisions under this Agreement. E-2.2(B)(9)-3 --------------------------------------------------------------------------------     f. Cause. The Company shall have the right to terminate this Agreement at any time for “cause.” For purposes of this Agreement, “cause” shall mean (i) fraud, misappropriation or embezzlement involving property of the Company or any of its divisions, subsidiaries or affiliates; (ii) conviction of the Executive of a felony; (iii) gross misconduct unless (where such misconduct is in the reasonable opinion of the Company capable of cure) such misconduct is cured within fifteen (15) days after the Executive receives written notice of such misconduct; or (iv) the willful and continued failure by the Executive substantially to perform his duties hereunder (other than as a result of total or partial incapacity due to physical or mental illness or as a result of a termination by him for Good Reason) after a written demand for substantial performance is delivered to him by the Company, which demand specifically identifies the manner in which the Company believes that he has not substantially performed his duties; provided, however, that in the event the Executive is terminated for “cause,” the Executive shall have ten (10) days to appeal such determination.     g. Expiration Without Renewal. This Agreement may be terminated pursuant to Section 2 hereof.         8. Compensation Upon Termination.     a. Termination For Cause. In the event this Agreement is terminated by the Company for "cause," the Executive (or his beneficiary in the event of his death) shall be entitled to any Base Monthly Payments, and other vested compensation earned or accrued but not paid to the Executive prior to the termination of this Agreement.     b. Termination by Written Agreement. In the event that this Agreement is terminated by the parties pursuant to a written agreement, the Executive shall be entitled to receive the compensation specified in any written agreement between the parties regarding the Executive's termination of employment.     c. Termination by the Executive. In the event the Executive terminates this Agreement by providing the notice pursuant to Section 7(b) hereof, the Executive shall not be entitled to any compensation for any period after termination; provided, however, that the Executive shall be entitled to any Base Monthly Payments, and other bonus payments earned or accrued but not paid to the Executive prior to the termination of this Agreement.     d. Termination by the Company. In the event the Company terminates this Agreement, except for cause under Section 7(f), by providing the notice pursuant to Section 7(b) hereof or the Agreement is terminated by reason of the Executive’s death or disability, the Executive (or in the case of Executive’s death, his estate) shall be entitled to the continuation of the Executive’s Base Monthly Payments and bonus payments in effect at the time of the termination of this Agreement for the remainder of the term of this Agreement. In the event the Company terminates this Agreement by providing notice pursuant to Section 7(f), the Executive shall be entitled to any Base Monthly Payments, and other bonus payments earned or accrued but not paid to the Executive prior to the termination of this Agreement.     e. Termination for Good Reason. In the event the Executive terminates this Agreement for Good Reason, the Executive shall be entitled to the benefits provided under Section 8(d) hereof.     f. Expiration Without Renewal. In the event this Agreement is terminated pursuant to Section 2 hereof, the Executive shall not be entitled to any compensation for any period after termination; provided, however, that the Executive shall be entitled to any Base Monthly Payments and other vested compensation earned or accrued but not paid to the Executive prior to the termination of this Agreement. E-2.2(B)(9)-4 --------------------------------------------------------------------------------         9. Assignment. This Agreement shall inure to the benefit and be binding upon the parties and their respective legal representatives, heirs, permitted successors and permitted assigns. Notwithstanding the foregoing, this Agreement shall not be assignable by the Executive. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or the assets of the Company to assume expressly and to agree to perform this Agreement 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.         10. Arbitration. In the event that any dispute arises between the parties with respect to any provision of this Agreement, such dispute shall be settled and determined by arbitration, to be conducted in accordance with and subject to the then current rules of the American Arbitration Association.         11. Governing Law. This Agreement shall be governed by, and construed and interpreted under the laws of the State of Colorado, without regard to its conflict of laws provisions.         12. Notices. All notices required or permitted to be given pursuant to this Agreement shall be in writing and shall be deemed to have been delivered upon the earlier of personal delivery, or upon first attempted delivery by the United Postal Service or the overnight carrier if sent by certified mail, return receipt requested, postage prepaid or by recognized overnight carrier addressed: (i) in the case of the Company, at its principal office and (ii) in the case of the Executive, at the last known residence as shown on the Company’s records.         13. Non-Waiver. A delay or failure by either party to enforce any provision of this Agreement shall not constitute a waiver of that or any other provision.         14. Severability. In the event that any provision of this Agreement shall be held to be invalid, illegal or unenforceable, it shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein, unless to do so would cause this Agreement to fail of its essential purpose.         15. Entire Agreement. This Agreement constitutes the entire understanding and agreement between the Company and the Executive with respect to the terms and conditions of the Executive’s employment during the term of employment and supersedes all previous agreements and arrangements (if any), oral or written, relating to the employment of the Executive (which shall be deemed to have been terminated by mutual consent). Except as set forth herein, there are no other agreements, conditions, or representations, oral or written, express or implied with regard thereto.         16. Amendment of Agreement. This Agreement may be amended only in writing duly executed by the Company and the Executive.         17. Headings. The Section headings herein are for convenience of reference only, do not constitute a part of this Agreement, and shall not be deemed to limit or affect any of the provisions herein.         IN WITNESS WHEREOF, the parties have duty executed this Agreement as of the date first above written. COMPANY: -------- AVERT, INC. By: _____________________________________ Its: ______________________________________ EXECUTIVE: --------- ________________________________________ Christopher M. Smith E-2.2(B)(9)-5 --------------------------------------------------------------------------------

<DOCUMENT> <TYPE> EX-10.5 <TEXT> <HTML>     Exhibit 10.5   FIRST AMENDMENT OF UAL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN (Effective as of July 12, 1994) By virtue and in exercise of the amending power reserved to UAL Corporation (the "Company") under section 13.1(a) of the UAL Corporation Employee Stock Ownership Plan (Effective as of July 12, 1994) (the "Plan"), which amending power thereunder is subject to the approval of the Air Line Pilots and Association, International ("ALPA") and the International Association of Machinists and Aerospace Workers (the "IAM"), the Company hereby amends the Plan, as follows, effective July 12, 1994: 1. Section 1(g), defining "ALPA Employee Group" is amended to read as follows effective July 12, 1994: "(g) 'ALPA Employee Group' means (i) Eligible Employees who are in classifications represented by ALPA under the Railway Labor Act who are listed on the Pilots' System Seniority List or the Second Officer Eligibility Seniority List, and (ii) notwithstanding the fact that they are not in classifications represented by ALPA under the Railway Labor Act, Eligible Employees in the classification of Student Flight Officer who, upon completion of the necessary training, expect to become listed on the Pilots' System Seniority List or Second Officer Eligibility Seniority List." 2. Section 1(p), defining "Compensation," is amended by inserting the following after the first sentence thereof: "Except as set forth herein, a Participant's Compensation shall be credited to the Participant for the Plan Year in which the Participant received payment of such Compensation, even if the services to which the Compensation relates were performed in a prior Plan Year.                  (i) With respect to those members of the ALPA Employee Group who are paid in the month following the month in which their services are performed, Compensation has the meaning set forth in the preceding two sentences, with the following modifications: (x) with respect to the 1994 Plan Year, "Compensation" means Compensation paid during the period beginning August 1, 1994 and ending with the payment of the second regular paycheck of January, 1995 as such Compensation relates to services performed during the period beginning on July 13, 1994 and ending on December 31, 1994; (y) with respect to Plan Years 1995 through 1999, "Compensation" means Compensation paid during the period beginning on the day after the payment of the second regular paycheck during such Plan Year and ending with the payment of the second regular paycheck of the next Plan Year as such Compensation relates to services performed during the Plan Year; and (z) with respect to the Plan Year 2000, "Compensation" means Compensation paid during the period beginning with the day after the payment of the second regular paycheck in such year and ending with the payment of the second regular paycheck in May, 2000 as such Compensation relates to services performed during the period beginning on January 1, 2000 and ending on April 12, 2000.                  (ii) With respect to the members of the Management and Salaried Group and with respect to those members of the ALPA Employee Group who are not paid in the month following the month in which their services are performed, Compensation for a particular Plan Year shall include Compensation paid in the first and second paychecks received in the next Plan Year to the extent such Compensation relates to services performed in the earlier Plan Year. For purposes of the foregoing, the Company shall determine the extent to which Compensation from the first and second paychecks received in a Plan Year relate to services performed in a particular Plan Year according to the Company's month-end time recording documents which are timely received (according to Company policies and procedures), and if such month-end time recording documents are not timely received, according to the reasonable assumptions adopted by the Company. Notwithstanding the previous two sentences, only Compensation from the first paycheck received in the next Plan Year shall count as Compensation for the earlier Plan Year if the base pay taken into account in such first paycheck solely relates to services performed in the Plan Year in which such paycheck was received.                  (iii) Notwithstanding anything to the contrary herein, no payment shall be counted as Compensation in more than one Plan Year." 3. Section 1(gg) is amended by adding the following to the end thereof: "An Eligible Employee who is represented by the IAM shall be a member of the Management and Salaried Group (i) from the Effective Date through October 29, 1994, for each period in which such Eligible Employee's temporary reclassification as a salaried, managerial or non-union employee is evidenced by Form UG-100 placed in the personnel record of the Eligible Employee by the Employer, including an actual change in the job code, but excluding any period during which a temporary reclassification occurs on a limited basis and is only evidenced by a payroll certification; and (ii) effective October 30, 1994, for each hour or fraction thereof during which such Eligible Employee is temporarily reclassified as a salaried, managerial or non-union employee." 4. Section 1(yy)(i) is amended to read as follows effective July 12, 1994: "the product of (A) the number of hours for which the Participant earns compensation during the Plan Year (up to and including the last day of each Plan Year), but only to the extent such hours are reflected on the compensation paid during the Plan Year or on the first and second paychecks received by the Participant in the Plan Year following the Plan Year in which the compensation was earned, multiplied by (B) the difference between the "book rate of pay" as in effect immediately prior to the Effective Date and the "actual rate of pay" as in effect on the Effective Date for services performed during a Plan Year; plus" 4. Section 1(yy)(iii) is amended to read as follows effective July 12, 1994: "the actual rate of pay (including the applicable overtime rates) for each hour, or fraction thereof, of lunch (or other meal) multiplied by the sum of (a) the number of days during which at least 3.5 hours are worked during a Plan Year, plus (b) the number of overtime shifts of at least two (2) hours worked during a Plan Year, plus (c) the number of overtime shifts of at least eight (8) hours which immediately precede or follow a regular full shift. Notwithstanding the foregoing, for any day worked prior to October 16. 1994, in lieu of the foregoing, the actual rate of pay shall be multiplied by one half hour for each day worked during the Plan Year." 6. Section 1(yy) of the ESOP shall be amended by adding the following three paragraphs to the end thereof: "If any hours of a Participant for compensation earned in a particular Plan Year are excluded from the calculation of the Wage Investment for that Plan Year pursuant to Section 1(yy)(i)(A) because compensation for such hours was not reflected in pay received during the Plan Year or the first or second paycheck of the following Plan Year, then such hours shall be counted towards the calculation of the Participant's Wage Investment in the Plan Year for which the Participant received payment for such hours. For purposes of the calculation of the Wage Investment for a particular Plan Year, the Company shall determine the extent to which compensation was earned in a particular Plan Year according to the Company's month-end time recording documents which are timely received (according to Company policies and procedures), and if such month-end time recording documents are not timely received, according to the reasonable assumptions adopted by the Company. "In clarification of the foregoing provisions of Section 1(yy)(i)(A), the Wage Investment for a member of the IAM Employee Group shall exclude (i) from the Effective Date through October 29, 1994, each period in which the temporary reclassification as a salaried, managerial or non-union employee of a member of the IAM Employee Group is evidenced by Form UG-100 placed in the personnel record of such member by the Employer, including an actual change in the job code, but excluding any periods during which a temporary reclassification occurs on a limited basis and is only evidenced by a payroll certification, and (ii) effective October 30, 1994, each hour or fraction thereof when such member is reclassified and is treated, for payroll and other purposes, as a salaried, managerial or non-union employee. "Notwithstanding the foregoing provisions of this Section 1(yy), only hours reflecting compensation received on the first paycheck received in the next Plan Year shall count towards calculation of the Wage Investment for an earlier Plan Year if the base pay taken into account in such first paycheck solely relates to services performed in the Plan Year in which such paycheck was received. Notwithstanding anything to the contrary herein, no hours shall be counted towards calculation of a Participant's Wage Investment in more than one Plan Year." 7. Section 7.4(b), concerning deferred distributions, is amended by replacing the phrase "any date" with the phrase "the last day of any month." IN WITNESS WHEREOF, the Company has caused this First Amendment to be executed on December 28, 1994.                                                     UAL CORPORATION                                                   /s/ Stuart I. Oran                                                  Stuart I. Oran                                                  Executive Vice President                                                  Corporate Affairs and                                                  General Counsel Approved by: AIR LINE PILOTS ASSOCIATION,                INTERNATIONAL ASSOCIATION INTERNATIONAL                                            OF MACHINISTS AND AEROSPACE                                                                             WORKERS /s/ Harlow B. Osteboe                                         /s/Kenneth W. Thiede </HTML> </TEXT> </DOCUMENT>

PROMISSORY NOTE $450,000.00 Boston, Massachusetts July 10, 2001 As amended on October 4, 2001         FOR VALUE RECEIVED, the undersigned, Richard T. Schumacher, having an address at 349 Foundry St., South Easton, MA 02375 (“Maker”), promises to pay to the order of Boston Biomedica, Inc., a Massachusetts corporation having an address at 375 West Street, West Bridgewater, MA 02379 the sum of FOUR HUNDRED FIFTY THOUSAND ($450,000.00) DOLLARS together with interest on the unpaid balance at the rate of seven (7.0%) percent per annum payable as to interest only on the first day of each month, and with the entire balance of accrued interest, if any, and principal to be paid in full one (1) year from the date hereof (the “Maturity Date”).         This Note may be prepaid in whole or in part at any time without premium or penalty.         As of the date of this Note, the Maker has drawn $250,000.00 of the face amount of this Note. In addition, the Maker has drawn an additional $50,000 on August 30, 2001, $50,000 on September 27, 2001, and $100,000 on October 4, 2001 under this note. At the option of the Maker, Maker may satisfy his obligation to make monthly payments of interest by instructing the holder to draw and pay such monthly interest payments to the holder from the unadvanced face amount of this Note, provided that the holder shall not have any obligation to advance or readvance any amount (i) in excess of the face amount of this Note, or (ii) if there exists an the event of a default under this Note or any stock pledge or other security instrument given therefor or in connection therewith.         At the option of the holder, the Maturity Date may be extended for one or more additional one year term(s).         The Maker also agrees to pay all costs and expenses incurred by the holder hereof, including all reasonable attorneys’ fees for implementing this loan, or for the collection of this Note and the indebtedness evidenced hereby, or the enforcement of the holder’s rights hereunder or under any other instrument creating any collateral security or guaranty now or hereafter given to secure this loan.         At the option of the holder, this Note shall become immediately due and payable without further notice or demand, and notwithstanding any prior waiver of any breach or default or other indulgence, upon the occurrence at any time of any one or more of the following events (“event of default”): (i) default continuing for ten (10) days in making any payment of principal, interest or other charges due hereunder; (ii) default continuing uncured for thirty (30) days under any security agreement now or hereafter executed in connection with the indebtedness evidenced hereby (except that there shall be no grace period in respect of a sale of any collateral or in respect of any bankruptcy proceedings); (iii) if any party liable hereon whether as maker, endorser, guarantor, surety or otherwise shall make an assignment for the benefit of creditors, or if a receiver of any such party’s property shall be appointed, or if a petition in bankruptcy or other similar proceeding under any law for relief of debtors shall be filed by or against any such party; (iv) if a tax lien is filed against the Maker, or against any property which is collateral for this Note, and the same is not discharged within thirty (30) days; (v) in the event of any sale or transfer of any real or personal property comprising collateral for this Note; and (vi) if the Maker shall fail to pay or perform any obligations secured by any senior security interest affecting any collateral given to secure this Note.         Each and every party liable hereon whether as maker, endorser, guarantor, surety or otherwise hereby: (a) waives presentment, demand, protest, suretyship defenses and defenses in the nature thereof; (b) waives any defenses based upon and specifically assents to any and all extensions and postponements of the time for payment, changes in terms and conditions and all other indulgences and forebearances which may be granted by the holder to any party now or hereafter liable hereunder; (c) agrees to any substitution, exchange, release, surrender or other delivery of any collateral now or hereafter held hereunder and to the addition or release of any other party or person primarily or secondarily liable; and (d) agrees to be bound by all of the terms contained in this Note and in any stock pledge agreement, security agreement, mortgage and all other instruments now or hereafter executed, evidencing or governing all or any portion of the collateral for this Note. Every such party to this Note and each such instrument agrees that the obligations of all such parties shall be joint and several.         No delay or omission on the part of the holder in exercising any right hereunder or any right under any instrument or agreement executed in connection herewith which is given or may be given to secure the indebtedness evidenced hereby shall operate as a waiver of such right, or of any other right, of such holder, nor shall any delay, omission or waiver on any one occasion be deemed to be a bar to, or waiver of, the same or of any other right on any future occasion.         During the period of any event of default, and after maturity (which shall mean the date stated above on which the entire balance of principal and interest is due and payable hereunder, or such earlier date on which the entire sum may become due and payable at the option of the holder following default as set forth above) this Note shall bear interest at the rate of eighteen percent (18%) per annum.         Notwithstanding any provision contained herein or contained in any stock pledge, security agreement or other instrument or agreement now or hereafter executed in connection with this Note, the maximum amount of interest and other charges in the nature thereof contracted for, or payable hereunder or thereunder, shall not exceed the maximum amount which may be lawfully contracted for, charged and received in this loan transaction all as determined by the final judgment of a court of competent jurisdiction, including all appeals therefrom.         All payments due hereunder shall be made Boston Biomedica, Inc., 375 West Street, West Bridgewater, MA 02379, ATTENTION: Treasurer, or such other place as the holder hereof may designate from time to time in writing. Executed as a sealed instrument. WITNESS: ____________________________ ______________________________ Richard T. Schumacher * * * * * * * * * * * * * * THIS NOTE IS SECURED BY THE PLEDGE OF 90,000 SHARES OF COMMON STOCK OF BOSTON BIOMEDICA, INC., A MASSACHUSETTS CORPORATION. * * * * * * * * * * * * * *

Exhibit 10 EXECUTION COPY FOURTH AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of November 13, 2001, among SUN INTERNATIONAL HOTELS LIMITED, SUN INTERNATIONAL NORTH AMERICA, INC. and SUN INTERNATIONAL BAHAMAS LIMITED, as the Borrowers and the Guarantors, VARIOUS FINANCIAL INSTITUTIONS, as the Lenders, CANADIAN IMPERIAL BANK OF COMMERCE, as the Administrative Agent, DEUTSCHE BANC ALEX.BROWN INC. and BEAR STEARNS CORPORATE LENDING INC., as the Co-Syndication Agents, BANK OF AMERICA, N.A. and WELLS FARGO BANK, N.A., as the Co-Documentation Agents ------------------------------ CIBC WORLD MARKETS CORP. and DEUTSCHE BANC ALEX.BROWN INC., as the Co-Lead Arrangers and the Joint Book Runners. FOURTH AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT THIS FOURTH AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of November 9, 2001, is among SUN INTERNATIONAL HOTELS LIMITED, a corporation organized under the laws of The Commonwealth of the Bahamas ("SIHL"), SUN ---- INTERNATIONAL NORTH AMERICA, INC., a corporation organized under the laws of the State of Delaware ("SINA"), SUN INTERNATIONAL BAHAMAS LIMITED, a ---- corporation organized under the laws of The Commonwealth of the Bahamas ("SIBL"; SIHL, SINA and SIBL are each individually referred to as a "Borrower" and collectively referred to as the "Borrowers"), the financial --------- institutions as are or may become parties hereto (collectively referred to as the "Lenders"), CANADIAN IMPERIAL BANK OF COMMERCE, acting through one or ------- more of its agencies, branches or affiliates ("CIBC"), as the administrative ---- agent (in such capacity, the "Administrative Agent"), DEUTSCHE BANC -------------------- ALEX.BROWN INC. and BEAR STEARNS CORPORATE LENDING INC., as co-syndication agents (collectively in such capacities, the "Co-Syndication Agents") and --------------------- BANK OF AMERICA, N.A. and WELLS FARGO BANK, N.A., as co-documentation agents (collectively in such capacities, the "Co-Documentation Agents"). ----------------------- W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrowers are engaged directly and through their various Subsidiaries in the business of, among other things, owning and operating hotel and casino properties and other activities in the resort and gaming industry; WHEREAS, pursuant to a Third Amended and Restated Revolving Credit Agreement, dated as of November 1, 1999 (as amended by the First Amendment thereto, dated as of June 13, 2000, and the Second Amendment thereto, dated as of January 26, 2001, and as further amended, supplemented, amended and restated or otherwise modified prior to the date hereof, the "Existing Credit ---------------- Agreement"), among SIBL, SIHL, Resorts International Hotel, Inc., Sun --------- International Nevada, Inc. (collectively, the "Existing Credit Agreement -------------------------- Borrowers"), the financial institutions parties thereto, as lenders --------- (collectively, the "Existing Lenders"), and the agents party thereto, the ---------------- Existing Lenders made commitments to make extensions of credit to the Existing Credit Agreement Borrowers; WHEREAS, the Borrowers have requested that the Existing Credit Agreement be amended and restated in its entirety to become effective and binding on the Borrowers pursuant to the terms of this Agreement, and the Lenders (including certain Existing Lenders) have agreed (subject to the terms of this Agreement) to amend and restate the Existing Credit Agreement in its entirety to read as set forth in this Agreement, and it has been agreed by the parties to the Existing Credit Agreement that the commitments which certain Existing Lenders have agreed to extend to the Borrowers under the Existing Credit Agreement shall be extended or advanced to the Borrowers upon the amended and restated terms and conditions contained in this Agreement with the intent that the terms of this Agreement shall supersede the terms of the Existing Credit Agreement (which shall hereafter have no further effect upon the parties thereto, other than for accrued fees and expenses and indemnification provisions accrued and owing under the terms of the Existing Credit Agreement on or prior to the date hereof or arising (in the case of an indemnification) under the terms of the Existing Credit Agreement); provided that any Rate Protection Agreements with any one or more -------- Existing Lenders (or their respective Affiliates) shall continue unamended and in full force and effect; WHEREAS, in connection with amending and restating the Existing Credit Agreement, the Borrowers desire to obtain, on the terms and conditions set forth below, Commitments pursuant to which (a) Loans will be made to the Borrowers from time to time prior to the Commitment Termination Date in a maximum aggregate principal amount, together with all Letter of Credit Outstandings at any one time outstanding, not to exceed the then existing Commitment Amount; and (b) Letters of Credit will be issued for the account of a Borrower or a Guarantor (and the Lenders will participate in such Letters of Credit) from time to time prior to the Commitment Termination Date in a maximum aggregate Stated Amount at any one time outstanding not to exceed the then existing Letter of Credit Commitment Amount (provided that the -------- aggregate outstanding principal amount of Loans and Letter of Credit Outstandings at any time shall not exceed the then existing Commitment Amount); WHEREAS, subject to the terms of this Agreement and the other Loan Documents, certain Existing Lenders have agreed to continue their Commitments under this Agreement and, in addition to certain Existing Lenders, other financial institutions will, on the Effective Date, become parties to this Agreement and have agreed to have all of the rights, and be subject to the obligations (including their respective Commitments as in effect from time to time), of a Lender; WHEREAS, the Lenders and the Issuer are willing, on the terms and subject to the conditions hereinafter set forth (including Article V), to --------- amend and restate the Existing Credit Agreement in its entirety pursuant to the terms of this Agreement, and on and subsequent to the Effective Date, the Lenders and the Issuer are willing to extend such Commitments and make such Loans to the Borrowers and issue (or participate in) such Letters of Credit for the account of the Borrowers and the Guarantors; and WHEREAS, pursuant to the terms of this Agreement, the proceeds of Loans and Letters of Credit will be used for the general corporate purposes of the Borrowers and the Guarantors, including working capital, capital expenditures, acquisitions and investments; NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.1. Defined Terms. The following terms (whether or not ------------- underscored) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "8 5/8% Senior Subordinated Notes Indenture" means the Indenture dated ------------------------------------------ as of December 10, 1997, among SIHL and SINA (as issuers), certain Subsidiaries of SIHL from time to time parties thereto (as guarantors) and The Bank of New York, as trustee. "8 7/8% Senior Subordinated Notes Indenture" means the Indenture, dated ------------------------------------------ as of August 9, 2001, among SIHL and SINA (as issuers), certain Subsidiaries of SIHL from time to time parties thereto (as guarantors) and The Bank of New York, as trustee. "9% Senior Subordinated Notes Indenture" means the Indenture, dated as -------------------------------------- of March 10, 1997, among SIHL and SINA (as issuers), certain Subsidiaries of SIHL from time to time parties thereto (as guarantors) and The Bank of New York, as trustee. "Additional Increasing Lender" is defined in Section 2.2.3. ---------------------------- ------------- "Administrative Agent" is defined in the preamble and includes each -------------------- -------- other Person as shall have subsequently been appointed as the successor Administrative Agent pursuant to Section 9.4. ----------- "Affiliate" of any Person means any other Person which, directly or --------- indirectly, controls, is controlled by or is under common control with such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan). A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners; or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "Agents" means, collectively, the Administrative Agent, the ------ Co-Documentation Agents and the Co-Syndication Agents. "Agreement" means, on any date, this Fourth Amended and Restated --------- Revolving Credit Agreement as originally in effect on the Effective Date and as thereafter from time to time amended, supplemented, amended and restated, or otherwise modified and in effect on such date. "Alternate Base Rate" means, on any date and with respect to all Base ------------------- Rate Loans, a fluctuating rate of interest per annum equal to the higher of (a) the rate of interest most recently established by the Administrative Agent at its Domestic Office as its base rate for Dollar loans; and (b) the Federal Funds Rate most recently determined by the Administrative Agent, plus1/2of 1%. The Alternate Base Rate is not necessarily intended to be the lowest rate of interest determined by the Administrative Agent in connection with extensions of credit. Changes in the rate of interest on that portion of any Loans maintained as Base Rate Loans will take effect simultaneously with each change in the Alternate Base Rate. The Administrative Agent will give notice promptly to SIHL and the Lenders of changes in the Alternate Base Rate. "Applicable Commitment Fee" means the per annum percentage set forth ------------------------- below opposite the Total Leverage Ratio indicated in the Compliance Certificate most recently delivered pursuant to this Agreement: Applicable Total Leverage Ratio Commitment Fee -------------------- -------------- Greater than or equal to 4.0:1 .500% Greater than or equal to 2.0:1 but less .375% than 4.0:1 Less than 2.0:1 .250% The Applicable Commitment Fee shall be adjusted on the fifteenth day of each March, June, September and December (or, if such day is not a Business Day, on the next succeeding Business Day), based on the Total Leverage Ratio as of the last day of the preceding Fiscal Quarter. If SIHL shall fail to deliver a Compliance Certificate within 60 days after the end of the first three Fiscal Quarters of any Fiscal Year or a certificate showing the calculation of the Total Leverage Ratio within 60 days after each Fiscal Year end, all as required pursuant to clause (c) of Section 7.1.1, the Applicable ---------- ------------- Commitment Fee from and including the 61st day after the end of such Fiscal Quarter or Fiscal Year to but not including the date SIHL delivers to the Administrative Agent a Compliance Certificate shall conclusively equal .500% per annum. If the calculation of the Total Leverage Ratio set forth in the Compliance Certificate for any Fiscal Year end shall differ from the calculation of the Total Leverage Ratio that was included in the certificate delivered pursuant to clause (c) of Section 7.1.1 for such Fiscal Year end, ---------- ------------- to the extent necessary, the Applicable Commitment Fee shall be adjusted as of the date of such Compliance Certificate and a retroactive adjustment shall be made for the commitment fees accrued and paid prior to such date. "Applicable Margin" means, on any date, (i) with respect to any Base ----------------- Rate Loan, the per annum percentage set forth below under the column entitled "Applicable Base Rate Margin" and (ii) with respect to any LIBO Rate Loan, the per annum percentage set forth below under the column entitled "Applicable LIBO Rate Margin", in each case opposite the applicable Total Leverage Ratio below corresponding to the Total Leverage Ratio indicated in the Compliance Certificate most recently delivered pursuant to this Agreement. Applicable Base Applicable LIBO Total Leverage Ratio Rate Margin Rate Margin -------------------- --------------- -------------- Greater than or equal to 4.5:1 1.75% 2.75% Greater than or equal to 4.0:1 but less than 4.5:1 1.25% 2.25% Greater than or equal to 3.5:1 but less than 4.0:1 1.00% 2.00% Greater than or equal to 3.0:1 but less than 3.5:1 0.75% 1.75% Greater than or equal to 2.0:1 but less than 3.0:1 0.50% 1.50% Less than 2.0:1 0.25% 1.25% The Applicable Margin shall be adjusted on the fifteenth day of each March, June, September and December (or, if such day is not a Business Day, on the next succeeding Business Day), based on the Total Leverage Ratio as of the last day of the preceding Fiscal Quarter. If SIHL shall fail to deliver a Compliance Certificate within 60 days after the end of the first three Fiscal Quarters of any Fiscal Year or a certificate showing the calculation of the Total Leverage Ratio within 60 days after each Fiscal Year end, all as required pursuant to clause (c) of Section 7.1.1, the Applicable Margin from ---------- ------------- and including the 61st day after the end of such Fiscal Quarter to but not including the date SIHL delivers to the Administrative Agent a Compliance Certificate shall conclusively equal 1.75% per annum for Base Rate Loans or 2.75% per annum for LIBO Rate Loans. Notwithstanding the foregoing, from the Effective Date until adjusted pursuant to the Compliance Certificate delivered for the Fiscal Quarter ending March 31, 2002, the Applicable Margin shall in no event be less than 1.25% per annum for Base Rate Loans and 2.25% per annum for LIBO Rate Loans. If the calculation of the Total Leverage Ratio set forth in the Compliance Certificate for any Fiscal Year end shall differ from the calculation of the Total Leverage Ratio that was included in the certificate delivered pursuant to clause (c) of Section 7.1.1 for such ---------- ------------- Fiscal Year end, to the extent necessary, the Applicable Margin shall be adjusted as of the date of such Compliance Certificate and a retroactive adjustment shall be made for the interest accrued and paid prior to such date. "Approved Fund" means any fund with net assets of at least $100,000,000 ------------- that invests (in whole or in part) in commercial loans, or any other fund that invests (in whole or in part) in commercial loans and is managed by a Lender, the same investment advisor as such Lender or by an Affiliate of such Lender or investment advisor. "Asset Sale Offer Amount" has the meaning set forth in the Existing ----------------------- Indentures as in effect on the Effective Date. "Assignee Lender" is defined in Section 10.11.1. --------------- --------------- "Atlantis" means the approximately 2,300-room resort and casino located -------- on Paradise Island, The Bahamas. "Authorized Officer" means, relative to any Borrower, those of its ------------------ officers whose signatures and incumbency shall have been certified to the Administrative Agent and the Lenders pursuant to Section 5.1.1 and relative ------------- to any other Obligor, those Persons who shall have been authorized to act on behalf of such Obligor by such Obligor's board of directors and whose signatures and incumbency shall have been certified to the Administrative Agent and the Lenders pursuant to Section 5.1.1. ------------- "Bahamas Property" means all the real property, improvements, fixtures ---------------- and personal property now or hereafter owned by SIHL or any of its Subsidiaries (including approximately 100 acres of undeveloped real property, three hotels, a casino and an 18 hole golf course) located on Paradise Island, The Bahamas. "Base Rate Loan" means a Loan bearing interest at a fluctuating rate -------------- determined by reference to the Alternate Base Rate. "Borrower" and "Borrowers" are defined in the preamble. -------- --------- -------- "Borrower Effective Date Certificate" means the certificate executed ----------------------------------- and delivered by the Borrowers pursuant to Section 5.1.8, substantially in ------------- the form of Exhibit E hereto. --------- "Borrower Security Agreement" means the Amended and Restated Security --------------------------- Agreement, dated as of the Effective Date, executed and delivered by the Borrowers pursuant to the terms of this Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time. "Borrowing" means the Loans of the same type and, in the case of LIBO --------- Rate Loans, having the same Interest Period made by all Lenders on the same Business Day and pursuant to the same Borrowing Request in accordance with Section 2.1. ----------- "Borrowing Request" means a loan request and certificate duly executed ----------------- by an Authorized Officer of a Borrower, substantially in the form of Exhibit -------- B-1 hereto. --- "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 any LIBO Rate loan, any day that (a) is a Business Day described in clause (i) above, and (b) is a day for trading by and between banks in Dollar deposits in the London interbank market. "Capital Expenditures" means, for any period, the sum of the aggregate -------------------- amount of all expenditures (including under leasing and similar arrangements) of any Person for fixed or capital assets made during such period which, in accordance with GAAP, would be classified as capital expenditures. "Capitalized Lease Liabilities" means all monetary obligations of any ----------------------------- Person under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases, and, for purposes of this Agreement and each other Loan Document, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "Cash Equivalent Investment" means, at any time: -------------------------- (a) any evidence of Indebtedness, maturing not more than one year after such time, issued or guaranteed by the United States Government; (b) commercial paper, maturing not more than nine months from the date of issue, which is issued by (i) a corporation (other than an Affiliate of any Obligor) organized under the laws of any state of the United States or of the District of Columbia and rated A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc., or (ii) any Lender (or its holding company); (c) demand or time deposits maintained with, or any certificate of deposit or bankers' acceptance maturing not more than one year after such time which is issued by, either (i) a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, or (ii) any Lender; or (d) any repurchase agreement entered into with any Lender (or other commercial banking institution of the stature referred to in clause ------ (c)(i)) which ------ (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c); and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such Lender (or other commercial banking institution) thereunder. "Casino Licenses" means, collectively, all licenses that are required --------------- to be granted by any applicable federal, state, local, tribal or other regulatory body, gaming board or other agency that has jurisdiction over (i) any casino now or hereafter located on Paradise Island, The Bahamas, and (ii) any other casinos otherwise owned or operated by the Borrowers or any of their respective Significant Subsidiaries that are singly or in the aggregate of equal or greater importance to the ongoing operations of the Borrowers and their respective Significant Subsidiaries as those casinos specified in clause (i) and (if and when applicable), this clause. ---------- "CERCLA" means the Comprehensive Environmental Response, Compensation ------ and Liability Act of 1980, as amended. "CERCLIS" means the Comprehensive Environmental Response Compensation ------- Liability Information System List. "Change in Control" means ----------------- (a) the failure of the WLG Group to control and have the power to vote individually or in aggregate, directly or indirectly, at least 15% of all of the outstanding shares of all classes of voting stock of SIHL (on a fully diluted basis); or (b) any "person" or "group" (as such terms are used in Rule 13d-5 under the Exchange Act, and Sections 13(d) and 14(d) of the Exchange Act) of persons (other than the WLG Group) becomes, directly or indirectly, in a single transaction or in a related series of transactions by way of merger, consolidation, or other business combination or otherwise, the "beneficial owner" (as such term is used in Rule 13d-3 of the Exchange Act) of more than 28% of the outstanding shares of all classes of voting stock of SIHL (on a fully diluted basis); or (c) during any period of 24 consecutive months, individuals who at the beginning of such period constituted the Board of Directors of SIHL (together with any new directors whose election to such Board or whose nomination for election by the stockholders of SIHL was approved by the WLG Group or a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of SIHL then in office; or (d) the failure of SIHL to directly own, free and clear of all Liens (other than Liens in favor of the Secured Parties) 100% of the issued and outstanding shares of capital stock of SIBL, on a fully-diluted basis. "CIBC" is defined in the preamble. ---- -------- "Code" means the Internal Revenue Code of 1986, as amended, reformed or ---- otherwise modified from time to time. "Collateral Documents" means each Pledge Agreement, each Security -------------------- Agreement, each Mortgage, each Debenture and each other agreement delivered by an Obligor which grants to or any Secured Party a security interest in or Lien on any property (real or personal) of such Obligor. "Commitment" means, as the context may require, a Lender's Loan ---------- Commitment or the Issuer's (or a Lender's) Letter of Credit Commitment. "Commitment Amount" means, prior to the Effective Date, $373,000,000, ----------------- and from and after the Effective Date, $200,000,000, as such amount may be reduced from time to time pursuant to Section 2.2.1 and 2.2.2 or increased ------------- ----- from time to time pursuant to Section 2.2.3. ------------- "Commitment Termination Date" means the earliest to occur of --------------------------- (a) the Stated Maturity Date; (b) the date on which the Commitment Amount is terminated in full or reduced to zero pursuant to Section 2.2; and ----------- (c) the date on which any Commitment Termination Event occurs. Upon the occurrence of any event described in clause (b) or (c), the ---------- --- Commitments shall terminate automatically and without further action. "Commitment Termination Event" means the earliest to occur of ---------------------------- (a) the occurrence of any Event of Default described in clauses (a) ----------- through (d) of Section 8.1.9; or --- ------------- (b) the occurrence and continuance of any other Event of Default and either (i) the declaration of the Loans to be due and payable pursuant to Section 8.3, or ----------- (ii) in the absence of such declaration, the giving of notice by the Administrative Agent, acting at the direction of the Required Lenders, to SIHL that the Commitments have been terminated. "Compliance Certificate" means a certificate duly completed and ---------------------- executed by an Authorized Officer of SIHL, substantially in the form of Exhibit F hereto, as amended, supplemented, amended and restated or otherwise --------- modified from time to time, together with such changes thereto as the Administrative Agent may from time to time reasonably request for the purpose of monitoring SIHL's compliance with the financial covenants contained herein. "Consolidated EBITDA" means, for any period, the sum, without ------------------- duplication, of the amounts for such period of (i) Net Income, (ii) Interest Expense (including amortization of financing fees), (iii) provisions for taxes based on income, (iv) total depreciation expense, (v) total amortization expense, (vi) other non-recurring and non-cash items reducing Net Income, (vii) pre-opening expenses and (viii) up to $2,500,000 of severance payments incurred during the period from September 11, 2001 through March 31, 2002, less any non-recurring and non-cash items increasing Net ---- Income, all of the foregoing as determined on a consolidated basis for SIHL and its Subsidiaries in conformity with GAAP. "Consolidated Net Worth" means, on any date of determination, the Net ---------------------- Worth of SIHL and its Subsidiaries on such date. "Contingent Liability" means any agreement, undertaking or arrangement -------------------- by which any Person guarantees, endorses or otherwise becomes or is contingently liable (i) by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, (ii) to otherwise assure a creditor against loss for Indebtedness of any other Person (other than by endorsements of instruments in the course of collection), or (iii) for the payment of dividends or other distributions upon the shares of any other Person. The amount of any Person's obligation under any Contingent Liability shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum principal amount, if larger) of the debt, obligation or other liability guaranteed thereby. "Continuation/Conversion Notice" means a notice of continuation or ------------------------------ conversion and certificate duly executed by an Authorized Officer of a Borrower, substantially in the form of Exhibit C hereto. --------- "Controlled Group" means all members of a controlled group of ---------------- corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with any Borrower, are treated as a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA. "Core Assets" means the Ocean Club and the Atlantis, and the real ----------- property upon which the Ocean Club and the Atlantis are located. "Co-Syndication Agents" is defined in the preamble. --------------------- -------- "Credit Extension" means, as the context may require, ---------------- (a) the making of a Loan by a Lender; or (b) the issuance of any Letter of Credit, or the extension of any Stated Expiry Date of any existing Letter of Credit, by the Issuer and participation in such Letter of Credit by the Lenders pursuant to the terms of this Agreement. "Credit Extension Request" means, as the context may require, any ------------------------ Borrowing Request or Issuance Request. "Debentures" means the debentures set forth on Schedule II hereto, ---------- ----------- executed by each owner of the Bahamas Property constituting real property, in each case as amended, supplemented, consolidated, spread, severed, partially released, partially reconveyed, restated and otherwise modified from time to time. "Debt" means, without duplication, (i) the aggregate outstanding ---- principal and stated amount of all Indebtedness of SIHL and its Subsidiaries of the nature referred to in clauses (a), (b), (c), (e) and (f) of the ----------- --- --- --- --- definition of "Indebtedness" and (ii) any Contingent Liabilities of SIHL and its Subsidiaries in respect of any types of the Indebtedness described in clause (i) above. ---------- "Default" means any Event of Default or any condition, occurrence or ------- event which, after notice or lapse of time or both, would constitute an Event of Default. "Defaulting Lender" means ----------------- (a) any Lender that fails in its obligation to fund any Loan pursuant to Section 2.1 or participate in any Letter of Credit ------------ Outstandings pursuant to the terms of this Agreement and such failure continues for three consecutive Business Days; provided that the refusal -------- of a Lender to make a Loan because it in good faith asserts that a Borrower has failed to satisfy a condition precedent to borrowing contained in Article V shall not result in such Lender becoming a ---------- "Defaulting Lender"; (b) any Lender as to which any event of the type described in Section 8.1.9 occurs (with all references in such Section to "SIHL" or -------------- "such Person" instead being to such Lender); (c) any Lender as to which any governmental authority (including the Office of Thrift Supervision, the Federal Deposit Insurance Company, the Office of the Comptroller of Currency or the Federal Reserve Board) directly or indirectly seizes, takes possession of or undertakes, authorizes, or orders similar action with respect to, or authorizes, or orders the liquidation, dissolution, winding up, sale, transfer or other disposition of, or takes steps or institutes proceedings or otherwise proceeds to liquidate, dissolve, wind up, sell, transfer or otherwise dispose of, such Lender or all or any part of such Lender's property or appoints or authorizes or orders the appointment of a receiver, liquidator, sequestrator, trustee, custodian, conservator or other officer or entity having similar powers over such Lender or over all or any part of such Lender's property. "Disbursement" is defined in Section 2.6.2. ------------ ------------- "Disbursement Date" is defined in Section 2.6.2. ----------------- ------------- "Disclosure Schedule" means the Disclosure Schedule attached hereto as ------------------- Schedule I as it may be amended, supplemented or otherwise modified from time ---------- to time by SIHL with the written consent of the Required Lenders. "Disposition" (or similar words such as "Dispose", and any derivation ----------- thereof) is defined in Section 7.2.11. -------------- "Dollar" and the sign "$" mean lawful money of the United States. ------ - "Dollar Equivalent" means, on any date of determination, the equivalent ----------------- in Dollars of any Foreign Currency, determined by using the quoted spot rate at which the Administrative Agent's principal office in New York, New York offers to exchange Dollars for such Foreign Currency at the opening of business on such date. "Domestic Office" means, relative to any Lender, the office of such --------------- Lender (or any successor or assign of such Lender) within the United States as currently on file with the Administrative Agent or designated in the Lender Assignment Agreement or as may be designated from time to time by notice from such Lender, as the case may be, to SIHL and the Administrative Agent. "Effective Date" means the date this Agreement becomes effective -------------- pursuant to Section 10.8. ------------ "Eligible Assignee" means (A) any of the following entities: (i) a ----------------- commercial bank organized under the laws of the United States or any state thereof; (ii) a savings and loan association or savings bank organized under the laws of the United States or any state thereof; (iii) a commercial bank organized under the laws of any other country or a political subdivision thereof (provided that (x) such bank is acting through a branch or agency -------- located in the United States or (y) such bank is organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country); and (iv) any other entity which is an "accredited investor" (as defined in Regulation D under the Securities Act) which extends credit or buys loans as one of its businesses including insurance companies, mutual funds and lease financing companies or (B) a Lender, an Affiliate of a Lender or an Approved Fund; or (C) any other Person (other than a natural Person) approved by (1) the Administrative Agent, (2) the Issuer, and (3) unless an Event of Default has occurred and is continuing, Borrower (each such approval not to be unreasonably withheld or delayed); provided that no Affiliate of Borrower -------- shall be an Eligible Assignee. "Environmental Laws" means all applicable federal, state or local ------------------ statutes, laws, ordinances, codes, rules, regulations and guidelines (including consent decrees and administrative orders) relating to public health and safety and protection of the environment. "ERISA" means the Employee Retirement Income Security Act of 1974, as ----- amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections. "Euro" means the single currency of Participating Member States of the ---- European Union. "Event of Default" is defined in Section 8.1. ---------------- ----------- "Exchange Act" means the Securities and Exchange Act of 1934, as ------------ amended. "Existing Credit Agreement" is defined in the second recital. ------------------------- -------------- "Existing Credit Agreement Borrowers" is defined in the second recital. ----------------------------------- -------------- "Existing Indentures" means the 8 5/8% Senior Subordinated Notes ------------------- Indenture, the 8 7/8% Senior Subordinated Notes Indenture and the 9% Senior Subordinated Notes Indenture. "Existing Lenders" is defined in the second recital. ---------------- -------------- "Existing Subordinated Notes" means (a) the 9% Senior Subordinated --------------------------- Notes due 2007 executed and delivered by SIHL and SINA evidencing the Subordinated Debt issued pursuant to the 9% Senior Subordinated Notes Indenture, (b) the 8 7/8% Senior Subordinated Notes due 2011 executed and delivered by SIHL and SINA evidencing the Subordinated Debt issued pursuant to the 8 7/8% Senior Subordinated Notes Indenture and (c) the 8 5/8% Senior Subordinated Notes due 2007 executed and delivered by SIHL and SINA evidencing the Subordinated Debt issued pursuant to the 8 5/8% Senior Subordinated Notes Indenture. "Federal Funds Rate" means, for any period, a fluctuating interest rate ------------------ per annum equal for each day during such period to (a) 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 for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York; or (b) if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. "Fee Letters" means, collectively, the confidential letter agreements ----------- by and among the Borrowers (or any one of them) and any Lender entering into a fee arrangement with such Person. "Fiscal Quarter" means any quarter, ending on March 31, June 30, -------------- September 30 or December 31 of a Fiscal Year. "Fiscal Year" means any period of twelve consecutive calendar months ----------- ending on December 31; references to a Fiscal Year with a number corresponding to any calendar year (e.g. the "2001 Fiscal Year") refer to the ---- Fiscal Year ending on the December 31 occurring during such calendar year. "Foreign Currency" means Euros, French Francs, Pounds Sterling and any ---------------- additional currency, other than Dollars, that is freely transferable, convertible into Dollars and approved by the Administrative Agent and the Issuer (which approval shall not be unreasonably withheld). "Foreign Currency Letter of Credit" means any Letter of Credit --------------------------------- denominated in a Foreign Currency. "Foreign Currency Letter of Credit Commitment Amount" means $3,000,000. --------------------------------------------------- "Foreign Currency Letter of Credit Outstandings" means any Letter of ---------------------------------------------- Credit Outstandings in respect of Foreign Currency Letters of Credit. "Foreign Pledge Agreement" means any supplemental pledge agreement ------------------------ governed by the laws of a jurisdiction other than a State of the United States executed and delivered by SIHL or any of its Subsidiaries pursuant to the terms of this Agreement or the Existing Credit Agreement, in form and substance satisfactory to the Administrative Agent, as may be necessary or desirable under the laws of organization or incorporation of a Subsidiary or Person in which an equity or similar interest is to be pledged to the Administrative Agent pursuant to the terms of Section 7.1.7, to further ------------- protect or perfect the Lien on and security interest in any collateral being pledged pursuant to a Pledge Agreement. "French Francs" means the lawful currency of the French Republic. ------------- "F.R.S. Board" means the Board of Governors of the Federal Reserve ------------ System or any successor thereto. "Funding Date" is defined in Section 2.3. ------------ ----------- "GAAP" is defined in Section 1.4. ---- ----------- "Governmental Authority" means The Commonwealth of The Bahamas, the ---------------------- United States of America, any state, local or municipal entity located within the foregoing, and (in each case), any political subdivision thereof and any agency, department, commission, board, bureau or instrumentality of any of the foregoing or any quasi-governmental authority, now existing or hereafter created, having jurisdiction over the Bahamas Property, the real property in the State of New Jersey that is subject to a Mortgage, any Borrower, any Obligor or any Lender Party. "Guarantor" means each Significant Subsidiary; provided, however, that, --------- -------- ------- without limiting the generality of the foregoing, each Subsidiary of SIHL (including Sun International Timeshare Limited) that is required to be a guarantor of Subordinated Debt shall be or become a Guarantor hereunder. "Guaranty" means the Amended and Restated Subsidiary Guaranty, dated as -------- of the Effective Date, executed and delivered by an Authorized Officer of each Guarantor, as amended, supplemented, amended and restated or otherwise modified from time to time. "Guaranty Supplement" means each Guaranty Supplement executed and ------------------- delivered by an Authorized Officer of a Guarantor pursuant to this Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time. "Hazardous Material" means ------------------ (a) any "hazardous substance", as defined by CERCLA; (b) any "hazardous waste", as defined by the Resource Conservation and Recovery Act, as amended; (c) any petroleum product; or (d) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance within the meaning of any other applicable federal, state or local law, regulation, ordinance or requirement (including consent decrees and administrative orders) relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, all as amended or hereafter amended. "Hedging Obligations" means, with respect to any Person, all ------------------- liabilities of such Person under interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. "herein", "hereof", "hereto", "hereunder" and similar terms contained ------ ------ ------ --------- in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular Section, paragraph or provision of this Agreement or such other Loan Document. "Impermissible Qualification" means, relative to the opinion or --------------------------- certification of any independent public accountant as to any financial statement of any Obligor, any qualification or exception to such opinion or certification (a) which is of a "going concern" or similar nature; (b) which relates to the limited scope of examination of matters relevant to such financial statement; or (c) which relates to the treatment or classification of any item in such financial statement and which, as a condition to its removal, would require an adjustment to such item the effect of which would be to cause such Obligor to be in default of any of its obligations under Section ------- 7.2.4. ----- "including" means including without limiting the generality of any --------- description preceding such term, and, for purposes of this Agreement and each other Loan Document, the parties hereto agree that the rule of ejusdem ------- generis shall not be applicable to limit a general statement, which is followed by or referable to an enumeration of specific matters, to matters similar to the matters specifically mentioned. "Increasing Lender" is defined in Section 2.2.3. ----------------- ------------- "Indebtedness" of any Person means, without duplication: ------------ (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (b) all obligations, contingent or otherwise, relative to the face amount of all letters of credit (including the Letters of Credit), whether or not drawn, and banker's acceptances issued for the account of such Person; (c) all obligations of such Person as lessee under leases which have been or should be, in accordance with GAAP, recorded as Capitalized Lease Liabilities; (d) all other items which, in accordance with GAAP, would be included as liabilities on the liability side of the balance sheet of such Person as of the date at which Indebtedness is to be determined (other than current liabilities of a nature other than the current portion of Indebtedness of the type described in clause (a), (b) or (c) of this ----------- --- --- definition); (e) all mandatorily redeemable preferred stock; (f) whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services, and indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; and (g) all Contingent Liabilities of such Person in respect of any of the foregoing. For all purposes of this Agreement, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer and as such is automatically liable for the obligations of such partnership or joint venture. "Indemnified Liabilities" is defined in Section 10.4. ----------------------- ------------ "Indemnified Parties" is defined in Section 10.4. ------------------- ------------ "Instruments" means any contract, agreement, indenture, mortgage, ----------- financing statement, document or writing (whether by formal agreement, letter or otherwise) under which any obligation is evidenced, assumed or undertaken, or any Lien (or right or interest therein) is granted or perfected. "Interest Coverage Ratio" means, as of the last day of any Fiscal ----------------------- Quarter, the ratio computed for the period consisting of such Fiscal Quarter and each of the three immediately preceding Fiscal Quarters of: (a) Consolidated EBITDA (for all such Fiscal Quarters) and (b) the sum (for all such Fiscal Quarters) of Interest Expense (which, for the purposes of this clause only, shall include capitalized interest). "Interest Expense" means, for any period, the consolidated interest ---------------- expense (as defined under GAAP) of SIHL and its Subsidiaries for such period (including that portion attributable to Capitalized Lease Liabilities in accordance with GAAP and capitalized interest), exclusive of any amortization of fees during such period. "Interest Period" means, relative to any LIBO Rate Loans, the period --------------- beginning on (and including) the date on which such LIBO Rate Loan is made or continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.3 or ----------- 2.4 and shall end on (but exclude) the day which numerically corresponds to --- such date one, two, three or six months (or a period of such other length as may be requested by the Borrowers and as may be acceptable to the Administrative Agent) thereafter (or, if such month has no numerically corresponding day, on the last Business Day of such month), as a Borrower may select in its relevant notice (if a Borrower does not so select then such Borrower shall be deemed to have selected one month) pursuant to Section 2.3 ----------- or 2.4; provided, however, that --- -------- ------- (a) the Borrowers shall not be permitted to select Interest Periods to be in effect at any one time which have expiration dates occurring on more than five different dates; (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 following Business Day (unless such next following Business Day is the first Business Day of a calendar month, in which case such Interest Period shall end on the Business Day next preceding such numerically corresponding day); (c) 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) shall, subject to clause (e) below, end on the last Business Day of the calendar month at the end of such Interest Period; (d) no Interest period with respect to any portion of the Loans shall extend beyond the date on which a permanent reduction of the Commitment Amount is scheduled to occur unless the sum of (a) the aggregate principal amount of Loans that are Base Rate Loans plus (b) the ---- aggregate principal amount of Loans that are LIBO Rate Loans with Interest Period expiring on or before such date plus (c) the excess of the ---- Commitment Amount then in effect over the aggregate principal amount of Loans then outstanding equals or exceeds the permanent reduction of the Commitment Amount that is scheduled to occur on such date; and (e) no Interest Period may end later than the Stated Maturity Date. "Investment" means, relative to any Person, ---------- (a) any loan or advance made by such Person to any other Person (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business); (b) any Contingent Liability of such Person; and (c) any ownership or similar interest held by such Person in any other Person totaling less than 100%. The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person) and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property. "Issuance Request" means a Letter of Credit request and certificate ---------------- duly executed by an Authorized Officer of a Borrower, substantially in the form of Exhibit B-2 hereto. ----------- "Issuer" means CIBC or another Lender, as applicable, in its capacity ------ as the issuer of the Letters of Credit, as requested from time to time by a Borrower. "Legal Requirements" with respect to any Person or property, means all ------------------ laws, statutes, codes, acts, ordinances, permits, licenses, authorizations, directions and requirements of all Governmental Authorities, departments, commissions, boards, courts, authorities, agencies, officials and officers, and any material deed restrictions or other requirements of record, applicable to such Person or such property, or any portion thereof or interest therein or any use or condition of such property or any portion thereof or interest therein (including those relating to zoning, planning, subdivision, building, safety, health, use, environmental quality and other similar matters). "Kersaf" is defined in the definition of the term "Trademark Agreement". ------ "Lender Assignment Agreement" means a Lender Assignment Agreement, --------------------------- substantially in the form of Exhibit D hereto. --------- "Lender Parties" means, collectively, each Agent, the Issuer and each -------------- Lender (and including, for purposes of the Rate Protection Agreements, any Affiliate of any Lender that is a counterparty to such Rate Protection Agreement), and their respective successors, transferees and assigns. "Lenders" is defined in the preamble. ------- -------- "Letter of Credit" is defined in Section 2.1.2. ---------------- ------------- "Letter of Credit Commitment" means as to the Issuer, the Issuer's --------------------------- obligation to issue Letters of Credit pursuant to Section 2.1.2 and, with ------------- respect to each Lender, the obligations of such Lender to participate in such Letters of Credit pursuant to Section 2.6.1. ------------- "Letter of Credit Commitment Amount" means, on any date, a maximum ---------------------------------- amount of $30,000,000 (or, if less, the then existing Commitment Amount). "Letter of Credit Outstandings" means, on any date, an amount equal to ----------------------------- the sum of (a) the then aggregate amount which is undrawn and available under all issued and outstanding Letters of Credit (after converting the aggregate Stated Amounts of all Foreign Currency Letters of Credit to the Dollar Equivalents thereof), plus ---- (b) the then aggregate amount of all unpaid and outstanding Reimbursement Obligations (after converting the aggregate Reimbursement Obligations with respect to Disbursements made in a Foreign Currency to the Dollar Equivalents thereof) in respect of such Letters of Credit. "LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans, --------- the rate of interest equal to (a) the rate of interest that appears on page 3750 of the Dow Jones Telerate Screen as at or about 11:00 a.m. (New York City Time) two Business Days prior to the beginning of such Interest Period for delivery on the first day of such Interest Period or (b) if such a rate does not appear on page 3750 of the Dow Jones Telerate screen, the average (rounded upwards, if necessary, to the nearest 1/100 of 1%) of the rates per annum at which Dollar deposits in immediately available funds are offered to the Administrative Agent in the interbank market as at or about 11:00 a.m. (New York time) two Business Days prior to the beginning of such Interest Period for delivery on the first day of such Interest Period and for a period approximately equal to such Interest Period. "LIBO Rate Loan" means a Loan bearing interest, at all times during an -------------- Interest Period applicable to such Loan, at a fixed rate of interest determined by reference to the LIBO Rate (Reserve Adjusted). "LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made, ---------------------------- continued or maintained as, or converted into, a LIBO Rate Loan for any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: LIBO Rate = LIBO Rate --------------------------------------- (Reserve Adjusted) 1.00 - LIBOR Reserve Percentage The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans will be determined by the Administrative Agent on the basis of the LIBOR Reserve Percentage in effect on, and the applicable rates furnished to and received by the Administrative Agent, two Business Days before the first day of such Interest Period. "LIBOR Office" means, relative to any Lender, the office of such Lender ------------ as currently on file with the Administrative Agent or designated in the Lender Assignment Agreement or such other office of a Lender as designated from time to time by notice from such Lender to SIHL and the Administrative Agent, whether or not outside the United States, which shall be making or maintaining LIBO Rate Loans of such Lender hereunder. "LIBOR Reserve Percentage" means, relative to any Interest Period for ------------------------ LIBO Rate Loans, the reserve percentage (expressed as a decimal) equal to the maximum aggregate reserve requirements (including all basic, emergency, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements) specified under regulations issued from time to time by the F.R.S. Board and then applicable to assets or liabilities consisting of and including "Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S. Board, having a term approximately equal or comparable to such Interest Period. "Lien" means any security interest, mortgage, pledge, hypothecation, ---- assignment, deposit arrangement, encumbrance, lien (statutory or otherwise) or charge against or interest in property to secure payment of a debt or performance of an obligation. "Loan" is defined in Section 2.1.1. ---- ------------- "Loan Commitment" means, relative to any Lender, such Lender's --------------- obligation to make Loans pursuant to Section 2.1.1. ------------- "Loan Document" means this Agreement, the Notes, the Letters of Credit, ------------- each Collateral Document, each Guaranty, each Borrowing Request, each Issuance Request, each Fee Letter, each Rate Protection Agreement and each other agreement, document or instrument delivered in connection herewith or therewith. "Material Adverse Effect" means any material adverse effect on (i) the ----------------------- condition (financial or otherwise), results of operations, properties, assets, business, revenues or business prospects of SIHL and its Subsidiaries taken as a whole, (ii) the ability of an Obligor to consummate the transactions contemplated hereby to occur on the Effective Date, (iii) the ability of an Obligor to perform its obligations under this Agreement and the other Loan Documents or (iv) the rights and remedies of the Administrative Agent and the Lenders under this Agreement and the other Loan Documents. In determining whether any individual event or occurrence of the foregoing types would result in a Material Adverse Effect, notwithstanding that a particular event or occurrence does not itself have such effect, a Material Adverse Effect shall be deemed to have occurred if the cumulative effect of such event or occurrence and all other events or occurrences of the foregoing types which have occurred would result in a Material Adverse Effect. "Mohegan Sun Casino" means the hotel and casino located in Montville, ------------------ Connecticut, U.S.A., as so named as of the date hereof. "Mortgage" means each mortgage, deed of trust or agreement executed and -------- delivered by a Borrower or any other Obligor in favor of the Administrative Agent for the benefit of the Secured Parties pursuant to the requirements of this Agreement or the Existing Credit Agreement, in each case as amended, supplemented, amended and restated or otherwise modified. "Moody's" means Moody's Investors Service, Inc. ------- "Net Equity Proceeds" means with respect to the sale or issuance by ------------------- SIHL to any Person of any stock or other equity interests, warrants or options or the exercise of any such warrants or options in respect thereof, the excess of: ------ (a) the gross proceeds received by SIHL from such sale, issuance or exercise over ---- (b) all underwriting, broker and out-of-pocket fees and expenses paid by SIHL to other than an Affiliate of SIHL in connection therewith. "Net Income" means, for any period, the aggregate of all amounts ---------- (exclusive of extraordinary gains and extraordinary losses (it being understood that the sale or other Disposition to consumers of residential lots, homes, time-shares or condominiums on Paradise Island held for development (excluding in all cases the Core Assets) shall be included in the calculation of Net Income and that the sale or other Disposition to non-consumers of residential lots, homes, time-shares or condominiums on Paradise Island shall be excluded from the calculation of Net Income)) which, in accordance with GAAP, would be included as net income on the most recently available consolidated financial statements of SIHL for such period; provided -------- that Net Income shall not include (i) any non-cash interest income until such amounts are received by SIHL or its Subsidiaries in cash, and (ii) the net income (or loss) of any Person, other than a Subsidiary, in which SIHL or any of its Subsidiaries has an interest, except that the amount of any dividends or distributions actually paid in cash to SIHL or any of its Subsidiaries during such period shall be included in Net Income (even if the amount of such cash dividends or distributions received exceed SIHL's allocated portion of such Person's earnings under GAAP). "Net Worth" at any time means the excess of total assets of SIHL and --------- its Subsidiaries at such time over total liabilities of SIHL and its Subsidiaries at such time, in each case as determined on a consolidated basis in accordance with GAAP. "Note" means a promissory note of a Borrower payable to any Lender, ---- substantially in the form of Exhibit A hereto (as such promissory note may be --------- amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of such Borrower to such Lender resulting from outstanding Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof. "Obligations" means all present or future obligations (monetary or ----------- otherwise, absolute or contingent) of the Borrowers and each other Obligor arising under or in connection with this Agreement and each other Loan Document. "Obligor" means the Borrowers, the Guarantors or any other Subsidiaries ------- of SIHL obligated under any Loan Document. "Ocean Club" means the Ocean Club located on Paradise Island, The ---------- Bahamas. "Omnibus Termination Agreement" means the Amended and Restated Omnibus ----------------------------- Termination Agreement, dated January 1, 2001, among SIHL and the other parties thereto. "Optional Increase" is defined in Section 2.2.3. ----------------- ------------- "Ordinary Shares" means the ordinary shares of common stock of SIHL, --------------- par value $0.001 per share. "Organic Document" means, as applicable and relative to any Obligor, ---------------- its certificate of incorporation, its by-laws, its certificate of partnership, its partnership agreement, and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized shares of capital stock. "Participant" is defined in Section 10.11. ----------- ------------- "Participating Member State" means each state so described in any -------------------------- legislative measures of the European Council 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 economic and monetary union as contemplated in 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 7, 1992, and came into force on November 1, 1993), as amended from time to time. "PBGC" means the Pension Benefit Guaranty Corporation and any entity ---- succeeding to any or all of its functions under ERISA. "Pension Plan" means a "pension plan", as such term is defined in ------------ section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which any Borrower or any corporation, trade or business that is, along with any Borrower, a member of a Controlled Group, may have liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA. "Percentage" means, relative to any Lender, the percentage on file with ---------- the Administrative Agent (which Percentages give effect to the inclusion of a Lender on the Effective Date that was not an Existing Lender), as such percentage may be adjusted from time to time pursuant to (a) Section 2.2.3, ------------- (b) Lender Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and delivered pursuant to Section 10.11 or (c) Section 4.10. ------------- ------------ "Perfection Certificate" means the Perfection Certificate executed and ---------------------- delivered pursuant to Section 5.1.6. ------------- "Permitted Encumbrances" means the exceptions to title (i) to the ---------------------- Bahamas Property that are listed in Schedule B of the title insurance policy issued as of August 12, 1997 by the Title Insurer of such property, and (ii) in the case of real property in New Jersey on which a Mortgage was delivered to the Administrative Agent, to such real property listed on the title insurance policy issued by the Title Insurer of such property. "Permitted Investment" means Investments in or acquisitions of the -------------------- capital stock of, or partnership and/or other ownership interests in, a Person engaged in the hotel, resort and/or gaming industry, and/or the acquisition of parcels of real property or assets that can be used in the hotel, resort and/or gaming industry. "Person" means any natural person, corporation, partnership, firm, ------ association, trust, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity. "Plan" means any Pension Plan or Welfare Plan. ---- "Pledge Agreement" means, as the context may require, the SIHL Pledge ---------------- Agreement, the SIBL Pledge Agreement, the SINA Pledge Agreement and the Subsidiary Pledge Agreement. "Pounds Sterling" means the lawful currency of the United Kingdom of --------------- Great Britain and Northern Ireland. "Quarterly Payment Date" means the last day of each February, May, ---------------------- August, and November or, if any such day is not a Business Day, the next succeeding Business Day. "Rate Protection Agreement" means, collectively, any interest rate ------------------------- swap, cap, collar or similar agreement entered into by SIHL or any of its Subsidiaries under which the counterparty to such agreement is (or at the time such Rate Protection Agreement was entered into, was) a Lender or an Affiliate of a Lender. "Register" is defined in Section 2.9. -------- ----------- "Reimbursement Obligation" is defined in Section 2.6.3. ------------------------ ------------- "Release" means a "release", as such term is defined in CERCLA. ------- "Relinquishment Agreement" means the Relinquishment Agreement, dated ------------------------ February 7, 1998, between the Mohegan Tribal Gaming Authority and TCA. "Required Lenders" means, at any time, Lenders holding more than 50% of ---------------- the then aggregate outstanding principal amount of the Loans then held by the Lenders, or, if no such principal amount is then outstanding, Lenders having more than 50% of the Commitments. "Reset Date" is defined in Section 2.6.7. ---------- ------------- "Resource Conservation and Recovery Act" means the Resource -------------------------------------- Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect -- --- from time to time. "Restricted Payment" means, with respect to SIHL and the Subsidiaries, ------------------ (a) the declaration, payment or making of any dividend or distribution (in cash, property or obligations) on any shares of any class of capital stock (now or hereafter outstanding) of SIHL or on any warrants, options or other rights with respect to any shares of any class of capital stock (now or hereafter outstanding) of SIHL (other than dividends or distributions payable in its common stock or warrants to purchase its common stock or splitups or reclassifications of its stock into additional or other shares of its common stock; or (b) the application by SIHL or any Subsidiary of any of its funds, property or assets to the purchase, redemption, sinking fund or other retirement of, or the purchase or making by any Subsidiary of any deposit in respect of, or the redemption by such Subsidiary of any shares of any class of capital stock (now or hereafter outstanding) of SIHL, or any warrants, options or other rights with respect to any shares of any class of capital stock (now or hereafter outstanding) of SIHL; provided, -------- however, that the exercise of options, warrants or similar instruments on ------- a cashless basis by way of partial redemptions of the newly-issued shares (or other structures with substantially the same economic effect) shall not be included as Restricted Payments hereunder. "Restricted Payment Amount" means, as of the date of determination, the ------------------------- aggregate of (a) $25,000,000, (b) 25% of SIHL's Net Income after September 30, 2001 and (c) 50% of any Net Equity Proceeds received after September 30, 2001 minus the amount of Restricted Payments, if any, made ----- after September 30, 2001. "S&P" means Standard & Poor's Ratings Services. --- "Secured Parties" means, collectively, (i) the Lender Parties and --------------- (ii) each Person that is a counterparty to one or more Rate Protection Agreements. "Security Agreement" means, as the context may require, the Borrower ------------------ Security Agreement or the Subsidiary Security Agreement. "Senior Funded Debt" means, with respect to SIHL and its Subsidiaries ------------------ as of any time, Debt outstanding at such time less the amount of Subordinated Debt then outstanding. "Senior Leverage Ratio" means, as of the last day of any Fiscal --------------------- Quarter, the ratio of (a) Senior Funded Debt outstanding as of the last day of such Fiscal Quarter to (b) Consolidated EBITDA for the four Fiscal Quarter -- Period then ended; provided, that in calculating Consolidated EBITDA for such -------- period, any acquisitions or Dispositions during such period shall have been deemed to have occurred on the first day of such period. "SIBL" is defined in the preamble. ---- "SIBL Group" means, collectively SIBL and each of its Subsidiaries ---------- existing on the Effective Date, and Sun International Representation, Inc., a Florida corporation and each of its Subsidiaries existing on the Effective Date. "SIBL Pledge Agreement" means the Amended and Restated Pledge --------------------- Agreement, dated as of the Effective Date, executed and delivered by SIBL pursuant to the terms of this Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time. "Significant Subsidiary" means, at any date of determination, Sun ---------------------- International Development Limited and any Subsidiary of SIHL (other than SIBL and SINA) that, together with its Subsidiaries, (i) for the most recent Fiscal Quarter of SIHL accounted for (or, in the case of any Subsidiary that is acquired following the Effective Date, would have accounted for) more than 5% of the Consolidated EBITDA of SIHL and its Subsidiaries during such Fiscal Quarter or (ii) as of the end of the most recent Fiscal Quarter of SIHL was the owner of (or, in the case of any Subsidiary that is acquired following the Effective Date, would have been the owner of) more than 5% of the consolidated assets of SIHL and its Subsidiaries at the end of such Fiscal Quarter, all as set forth on the most recently available consolidated financial statements of SIHL for such Fiscal Quarter. "SIHL" is defined in the preamble. ---- -------- "SIHL Pledge Agreement" means the Amended and Restated Pledge --------------------- Agreement, dated as of the Effective Date, executed and delivered by SIHL pursuant to the terms of this Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time. "SINA" is defined in the preamble. ---- -------- "SINA Pledge Agreement" means the Amended and Restated Pledge --------------------- Agreement, dated as of the Effective Date, executed and delivered by SINA pursuant to the terms of this Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time. "Stated Amount" of each Letter of Credit means the total amount ------------- available to be drawn under such Letter of Credit upon the issuance thereof. "Stated Expiry Date" is defined in Section 2.6. ------------------ ----------- "Stated Maturity Date" means November 8, 2006. -------------------- "Subordinated Debt" means, collectively, (i) the Indebtedness evidenced ----------------- by the Existing Subordinated Notes and (ii) all other unsecured subordinated Indebtedness of SIHL or a wholly-owned Subsidiary for money borrowed which is incurred under the terms of any Subordinated Note Indenture and evidenced by Subordinated Notes and which matures on a date that is at least one year after the Stated Maturity Date. "Subordinated Debt Issuer" means SINA, SIHL and (if and when ------------------------ applicable), each other Guarantor that may after the date hereof incur or issue any Subordinated Debt. "Subordinated Noteholder" means, at any time, any holder of a ----------------------- Subordinated Note. "Subordinated Note Indenture" means, collectively, (i) the Existing --------------------------- Indentures and (ii) each other Indenture, note purchase agreement or other agreement evidencing the terms or agreements relating to Subordinated Debt, if any, to be executed and delivered by SIHL or a wholly-owned Subsidiary in connection with the incurrence by SIHL or a wholly-owned Subsidiary of Subordinated Debt containing covenants and events of default relating to such Subordinated Debt which are no more restrictive in any material respect on SIHL or such wholly-owned Subsidiary, as the case may be, than the comparable provisions of the Existing Indentures and containing subordination provisions relating to such Subordinated Debt which are no less favorable in any material respect to the Agents and the Lenders than those contained in the Existing Indentures, as each such Subordinated Note Indenture may be amended, supplemented, amended and restated or otherwise modified in accordance with the terms of Section 7.2.13. -------------- "Subordinated Notes" means, collectively, (i) the Existing Subordinated ------------------ Notes and (ii) any other subordinated notes, if any, issued pursuant to a Subordinated Note Indenture, as such Subordinated Notes may be amended, supplemented or otherwise modified from time to time in accordance with Section 7.2.13. -------------- "Subordination Agreement" means a Subordination Agreement executed and ----------------------- delivered to the Administrative Agent pursuant to clause (b) of Section 7.2.2 ---------- ------------- by a Borrower and any Subsidiary of SIHL that makes a loan to a Borrower, in a form satisfactory to the Administrative Agent. "Subordination Provisions" is defined in Section 8.1.15. ------------------------ -------------- "Subsidiary" means, with respect to any Person, any corporation, ---------- partnership or other entity (whether now or hereafter acquired or existing) of which more than 50% of the outstanding capital stock, partnership interests or similar interests having ordinary voting power (irrespective of whether at the time capital stock or interests of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person. "Subsidiary Pledge Agreement" means the Subsidiary Pledge Agreement, --------------------------- dated as of the Effective Date, executed and delivered by each Significant Subsidiary of SIHL pursuant to the terms of this Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time. "Subsidiary Security Agreement" means the Security Agreement, dated as ----------------------------- of the Effective Date, executed and delivered by each Significant Subsidiary of SIHL pursuant to the terms of this Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time. "Taxes" is defined in Section 4.6. ----- ----------- "TCA" means Trading Cove Associates, a Connecticut general partnership. --- "Title Insurer" means any Person that issues a title insurance policy ------------- on any real property on which a Mortgage or a Debenture is placed. "Total Leverage Ratio" means, as of the last day of any Fiscal Quarter, -------------------- the ratio of (a) Debt outstanding on the last day of such Fiscal Quarter to -- (b) Consolidated EBITDA for the four Fiscal Quarter period then ended; provided, that in calculating Consolidated EBITDA for such period, any -------- acquisitions or Dispositions during such period shall have been deemed to have occurred on the first day of such period. "Trademark Agreement" means the Trade Name and Trademark Agreement, ------------------- dated as of July 3, 2001, by and among SIHL, Sun International Investments Limited, WGL Group and Sun International Management Limited ("Kersaf"), pursuant to which the Borrowers and their Subsidiaries will cease using the names "Sun" and "Sun International", and Kersaf will have exclusive rights to use such names. "type" means, relative to any Loan, the portion thereof, if any, being ---- maintained as a Base Rate Loan or a LIBO Rate Loan. "United States" or "U.S." means the United States of America, its fifty ------------- ---- States and the District of Columbia. "Welfare Plan" means a "welfare plan", as such term is defined in ------------ section 3(1) of ERISA. "wholly-owned Subsidiary" of any Person means any corporation, ----------------------- partnership, association or other business entity of which 100% of the total voting power of shares of stock, partnership interests or other equity interest entitled (without regard to the occurrence of any contingency) to vote in the election of directors, general partners, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other wholly-owned Subsidiaries of such Person or a combination thereof. "WLG Group" means World Leisure Group Limited, a British Virgin Islands --------- corporation and its Affiliates. SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the context -------------------- otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in the Disclosure Schedule and in each Note, Borrowing Request, Issuance Request, Continuation/Conversion Notice, Loan Document, notice and other communication delivered from time to time in connection with this Agreement or any other Loan Document. SECTION 1.3. Cross-References. Unless otherwise specified, references in ---------------- this Agreement and in each other Loan Document to any Article or Section are references to such Article or Section of this Agreement or such other Loan Document, as the case may be, and, unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition. SECTION 1.4. Accounting and Financial Determinations. Unless otherwise ---------------------------------------- specified, all accounting terms used herein or in any other Loan Document shall be interpreted, all accounting determinations and computations hereunder or thereunder (including under Section 7.2.4) shall be made, and all financial -------------- statements required to be delivered hereunder or thereunder shall be prepared in accordance with, those U.S. generally accepted accounting principles ("GAAP") ---- applied in the preparation of the financial statements referred to in Section ------- 6.5. If any preparation in the financial statements referred to in Section 6.5 --- ----------- or Section 7.1.1 hereafter occasioned by the promulgation of rules, regulations, ------------- pronouncements and opinions by or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) result in a change in any results, amounts, calculations, ratios, standards or terms found in this Agreement from those which would be derived or be applicable absent such changes, SIHL may reflect such changes in the financial statements required to be delivered pursuant to Section 7.1.1, but calculations of financial covenants shall be made ------------- without giving effect to any such changes. Upon the request of SIHL or any Lender the parties hereto agree to enter into negotiations in order to amend the financial covenants and other terms of this Agreement if there occur any changes in GAAP that have a material effect on the financial statements of the SIHL, so as to equitably reflect such changes with the desired result that the criteria for evaluating SIHL's financial condition and such other terms shall be the same in all material respects after such changes as if the changes had not been made. ARTICLE II COMMITMENTS, BORROWING PROCEDURES, NOTES AND LETTERS OF CREDIT SECTION 2.1. Amendment and Restatement; Commitments. The Borrowers -------------------------------------- (subject to the terms of this Agreement) and the Lenders (including certain Existing Lenders), the Administrative Agent, the Co-Syndication Agents, the Co-Documentation Agents and the Issuer hereby agree that the Existing Credit Agreement is hereby amended and restated in its entirety to become effective and binding on the Borrowers and the Lenders (including certain Existing Lenders), the Administrative Agent, the Co-Syndication Agents, the Co-Documentation Agents and the Issuer pursuant to the terms of this Agreement, and the Existing Credit Agreement is hereby amended and restated in its entirety to read as set forth in this Agreement; and the commitments which certain Existing Lenders have agreed to extend to the Borrowers under the Existing Credit Agreement shall be extended or advanced to the Borrowers upon the amended and restated terms and conditions contained in this Agreement with the intent that the terms of this Agreement shall supersede the terms of the Existing Credit Agreement (which shall hereafter have no further effect upon the parties thereto, other than for accrued fees and expenses, and indemnification provisions, accrued and owing under the terms of the Existing Credit Agreement, on or prior to the date hereof or arising (in the case of an indemnification) under the terms of the Existing Credit Agreement); provided that any Rate Protection Agreements with any one or more -------- Existing Lenders (or their respective Affiliates) shall continue unamended and in full force and effect. In furtherance of the foregoing, on the terms and subject to the conditions of this Agreement (including Article V), --------- (a) each Lender severally agrees to make Loans pursuant to the Commitments described in Section 2.1.1; and ------------- (b) the Issuer agrees that it will issue Letters of Credit pursuant to Section 2.1.2, and each Lender severally agrees that it will -------------- participate in such Letters of Credit in accordance with Section 2.6.1. ------------- SECTION 2.1.1. Commitment of Each Lender. From time to time on any ------------------------- Business Day occurring prior to the Commitment Termination Date, each Lender will, subject to the terms of this Agreement, make loans (relative to such Lender, and of any type, its "Loans") to a Borrower equal to such Lender's ----- Percentage of the aggregate amount of the Borrowing requested by such Borrower to be made on such day. The commitment of each Lender described in this Section 2.1.1 is herein referred to as its "Commitment". On the terms ------------- ---------- and subject to the conditions hereof, the Borrowers may from time to time borrow, prepay and reborrow Loans; provided, however, that notwithstanding -------- ------- any provision in this Agreement to the contrary, the Lenders and the Issuer shall not be obligated to make Credit Extensions to SIHL in an aggregate amount in excess of $30,000,000. SECTION 2.1.2. Letter of Credit Commitment. From time to time on any --------------------------- Business Day occurring prior to the Commitment Termination Date, the Issuer will, subject to the terms of this Agreement, (a) issue one or more letters of credit (a "Letter of Credit") for ---------------- the account of a Borrower or a Guarantor in the Stated Amount requested by SIHL on such day; or (b) extend the Stated Expiry Date of an existing Letter of Credit previously issued hereunder to a date not later than the earlier of (x) the Commitment Termination Date and (y) one year from the date of such extension. SECTION 2.1.3. Lenders Not Permitted or Required to Make Loans. No Lender ----------------------------------------------- shall be permitted or required to make any Loan if, after giving effect thereto, such Lender's Percentage of all Loans and Letter of Credit Outstandings would exceed such Lender's Percentage of the Commitment Amount or if the aggregate outstanding principal amount of all Loans and Letter of Credit Outstandings (a) of all Lenders would exceed the Commitment Amount; or (b) to a particular Borrower would exceed the maximum aggregate amount of Credit Extensions set forth in Section 2.1.1 that can be -------------- extended to such Borrower. SECTION 2.1.4. Issuer Not Permitted or Required to Issue Letters of ----------------------------------------------------- Credit. The Issuer shall not be permitted or required to issue any Letter of ------ Credit if, after giving effect thereto, (a) the aggregate amount of all Letter of Credit Outstandings would exceed the Letter of Credit Commitment Amount; (b) the sum of the aggregate amount of all Letter of Credit Outstandings plus the aggregate principal amount of all Loans then outstanding would exceed the Commitment Amount then in effect; or (c) the provisions of Section 2.1.1 would not be complied with. ------------- SECTION 2.2. Reduction/Increase of Commitment Amount. The Commitment --------------------------------------- Amount is subject to (i) reduction from time to time pursuant to Sections 2.2.1 and 2.2.2 and (ii) increase from time to time pursuant to -------------- ----- Section 2.2.3. SECTION 2.2.1. Optional Reduction. SIHL may, from time to time on any ------------------ Business Day, voluntarily reduce the Commitment Amount and such voluntary Commitment reductions shall be binding on all Borrowers; provided, however, -------- ------- that all such reductions shall require at least three Business Days' prior notice to the Administrative Agent and be permanent, and any partial reduction of the Commitment Amount shall be in a minimum amount of $1,000,000 and in an integral multiple of $1,000,000. SECTION 2.2.2. Mandatory Reduction. The Commitment Amount shall be ------------------- automatically and permanently reduced on the date that is 300 days following the occurrence of an Asset Sale by the amount of the Net Cash Proceeds (as such terms are defined in the Existing Indentures), if any, that would be required to be applied as the Asset Sale Offer Amount under the terms of the Existing Indentures. SECTION 2.2.3. Optional Increase. (a) Provided that no Default or Event ----------------- of Default then exists, SIHL may on any Business Day prior to the Commitment Termination Date, request from time to time in writing that the then effective Commitment Amount be increased by an aggregate amount not to exceed $150,000,000. Any request under this Section to increase the Commitment Amount shall be submitted by the Borrowers to the Administrative Agent, specify the proposed effective date (which date shall be not less than 5 days after the date of such request) and specify the amount of such increase (which shall be in integral multiples of $1,000,000). No Lender shall have any obligation, express or implied, to offer to increase its Commitment. Only the consent of the Administrative Agent (which consent shall not be unreasonably withheld) and those Lenders agreeing to increase their Commitments (the "Increasing Lenders") shall be required for an increase in ------------------ the Commitment Amount pursuant to this Section. (b) The Borrowers may accept some or all of the offered amounts from the then-current Lenders or designate new lenders which qualify as Eligible Assignees and are reasonably acceptable to the Administrative Agent and the Issuer as additional Lenders hereunder (each, an "Additional ----------- Increasing Lender"), which Additional Increasing Lenders may assume all ----------------- or a portion of the increase in the applicable Commitment Amount. The Administrative Agent and SIHL shall have discretion to adjust the allocation of the increased Commitment Amount among Increasing Lenders and Additional Increasing Lenders. Each Additional Increasing Lender shall become an additional party hereto as an Additional Increasing Lender concurrently with the effectiveness of the proposed increase in the applicable Commitment Amount upon its execution of an instrument of joinder to this Agreement which is in form and substance reasonably acceptable to the Administrative Agent and which, in any event, contains the representations, warranties, indemnities and other protections afforded to the Administrative Agent and the other Lenders. (c) Subject to the foregoing, any increase requested by SIHL shall be effective as of the date proposed by SIHL and shall be in the principal amount equal to (i) the amount which Increasing Lenders are willing to assume as increases to the amount of their Commitments plus (ii) the ---- amount offered by any Additional Increasing Lenders. Upon the effectiveness of any such increase, if requested by the applicable Lender, the Borrowers shall issue replacement Notes to each Increasing Lender and new Notes to each Additional Increasing Lender, and the applicable Percentages of each Lender will be adjusted to give effect to the increase in the applicable Commitment Amount. To the extent that the adjustment of Percentages results in loss or expenses to any Lender as a result of the prepayment of any LIBO Rate Loan on a date other than the scheduled last day of the Interest Period applicable thereto, the Borrowers shall be responsible for such loss or expenses pursuant to Section 4.4. ----------- SECTION 2.3. Borrowing Procedure. By delivering a Borrowing Request to ------------------- the Administrative Agent on or before 12:00 noon, New York time, on a Business Day, a Borrower may from time to time irrevocably request, on not less than one, in the case of Base Rate Loans, or three, in the case of LIBO Rate Loans, nor (in either case), more than five Business Days' notice, that a Borrowing be made in a minimum amount of $1,000,000 and an integral multiple of $1,000,000, or in the unused amount of the Commitments. On the terms and subject to the conditions of this Agreement, each Borrowing shall be comprised of the type of Loans, and shall be made on the Business Day, specified in such Borrowing Request (the "Funding Date"). On or before ------------ 11:00 a.m., New York time, on such Funding Date, each Lender shall deposit with the Administrative Agent same day funds in an amount equal to such Lender's Percentage of the requested Borrowing. Such deposit will be made to an account which the Administrative Agent shall specify from time to time by notice to the Lenders. Unless the Administrative Agent shall have been notified by any Lender prior to the Funding Date for any Loans that such Lender does not intend to make available to the Administrative Agent the amount of such Lender's Loan requested on such Funding Date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such Funding Date and the Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to the Borrowers a corresponding amount on such Funding 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 Funding 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 Alternate Base Rate. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent's demand therefore, the Administrative Agent shall promptly notify the Borrowers and the Borrowers shall within five Business Days pay such corresponding amount to the Administrative Agent together with interest thereon, for each day from such Funding Date until the date such amount is paid to Administrative Agent, at the rate payable under this Agreement for Base Rate Loans. Nothing in this Section shall be deemed to relieve any Lender from its obligation to fulfill its Commitments hereunder or to prejudice any rights that the Borrowers may have against any Lender as a result of any default by such Lender hereunder. No Lender's obligation to make any Loan shall be affected by any other Lender's failure to make any Loan. SECTION 2.4. Continuation and Conversion Elections. By delivering a ------------------------------------- Continuation/Conversion Notice to the Administrative Agent on or before 11:00 a.m., New York time, on a Business Day, a Borrower may from time to time irrevocably elect, on not less than three nor more than five Business Days' notice that all, or any portion in an aggregate minimum amount of $1,000,000 and an integral multiple of $1,000,000, of any Loans made to it be, in the case of Base Rate Loans, converted into LIBO Rate Loans or, in the case of LIBO Rate Loans, be converted into a Base Rate Loan or continued as a LIBO Rate Loan (in the absence of delivery of a Continuation/Conversion Notice with respect to any LIBO Rate Loan at least three Business Days before the last day of the then current Interest Period with respect thereto, such LIBO Rate Loan shall, on such last day, automatically convert to a Base Rate Loan); provided, however, that (i) each such conversion or continuation shall -------- ------- be made pro rata among the applicable outstanding Loans of all Lenders, and (ii) no portion of the outstanding principal amount of any Loans may be continued as, or be converted into, LIBO Rate Loans when any Event of Default has occurred and is continuing. SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its ------- obligation to make, continue or convert LIBO Rate Loans hereunder by causing one of its foreign branches or Affiliates (or an international banking facility created by such Lender) to make or maintain such LIBO Rate Loan; provided, however, that such LIBO Rate Loan shall nonetheless be deemed to -------- ------- have been made and to be held by such Lender, and the obligation of the Borrowers, to repay such LIBO Rate Loan shall nevertheless be to such Lender for the account of such foreign branch, Affiliate or international banking facility. In addition, each Borrower and each Lender hereby consents and agrees that, for purposes of any determination to be made for purposes of Section 4.1, 4.2, 4.3 or 4.4, it shall be conclusively assumed that each ----------- --- --- --- Lender elected to fund all LIBO Rate Loans by purchasing Dollar deposits in its LIBOR Office's interbank eurodollar market. SECTION 2.6. Issuance Procedures. By delivering to the Administrative ------------------- Agent an Issuance Request on or before 11:00 a.m., New York City time, on a Business Day, SIHL may, from time to time irrevocably request, on not less than five Business Days' notice, in the case of an initial issuance of a Letter of Credit, and not less than five Business Days' notice prior to the existing Stated Expiry Date (or, if a Letter of Credit has an automatic extension provision, at least five Business Days' notice prior to the date that such Letter of Credit will, by its terms, be extended or, if earlier, the date on which a notice from the Issuer is required to be delivered to the beneficiary of the Letter of Credit informing the beneficiary that the Letter of Credit will not be extended) in the case of a request for the extension of the Stated Expiry Date of a Letter of Credit, that the Issuer issue, or extend the Stated Expiry Date of, as the case may be, a Letter of Credit in Dollars or a Foreign Currency (provided, that the Dollar Equivalent of the -------- aggregate amount of Foreign Currency Letters of Credit shall not exceed the Foreign Currency Letter of Credit Commitment Amount) in such form as may be requested by SIHL and approved by the Issuer, solely for the purposes described in Section 7.1.9. Each Letter of Credit shall by its terms be ------------- stated to expire on a date (its "Stated Expiry Date") no later than the ------------------ earlier to occur of (i) the Commitment Termination Date or (ii) one year from the date of its issuance. The Issuer will make available to the beneficiary thereof the original of each Letter of Credit which it issues hereunder. SECTION 2.6.1. Other Lenders' Participation. Upon the issuance of each ---------------------------- Letter of Credit issued by the Issuer pursuant hereto, and without further action, each Lender shall be deemed to have irrevocably purchased, to the extent of its Percentage, a participation interest in such Letter of Credit (including the Contingent Liability and any Reimbursement Obligation with respect thereto), and such Lender shall, to the extent of its Percentage, be responsible for reimbursing promptly (and in any event within three Business Days following the Disbursement Date) the Issuer for Reimbursement Obligations arising under the Letter of Credit issued by the Issuer which have not been reimbursed by the Borrowers in accordance with Section 2.6.3. ------------- In addition, such Lender shall, to the extent of its Percentage, be entitled to receive (i) a ratable portion of the Letter of Credit fees payable pursuant to Section 3.3.2 with respect to each Letter of Credit (other than ------------- the issuance fees payable to the Issuer with respect to such Letter of Credit pursuant to the last sentence of Section 3.3.2) and (ii) from the date that ------------- such Lender has reimbursed the Issuer in accordance with the first sentence of this Section, (A) the interest payable pursuant to Section 2.6.2 and, if ------------- applicable, (B) the interest payable pursuant to Section 3.2.2 with respect ------------- to any Reimbursement Obligation not paid when due. To the extent that any Lender has reimbursed the Issuer for a Disbursement as required by this Section, such Lender shall be entitled to receive its ratable portion of any amounts subsequently received (from a Borrower or otherwise) in respect of such Disbursement. SECTION 2.6.2. Disbursements. The Issuer will notify SIHL and the ------------- Administrative Agent promptly of the presentment for payment of any Letter of Credit issued by the Issuer, together with notice of the date (the "Disbursement Date") such payment shall be made (each such payment, a ------------------ "Disbursement"). Subject to the terms and provisions of such Letter of ------------- Credit and this Agreement, the Issuer shall make such Disbursement to the beneficiary (or its designee) of such Letter of Credit. Prior to 5:00 p.m., New York City time, on the Disbursement Date, the Borrowers will (or any one of them) reimburse the Administrative Agent, for the account of the Issuer, for all amounts which the Issuer has disbursed under such Letter of Credit (in the currency in which such Disbursement was made), together with interest thereon (in the currency in which such Disbursement was made) at a rate per annum equal to the rate then in effect for Base Rate Loans (with the then Applicable Margin for Loans accruing on such amount) for the period from the Disbursement Date through the date of such reimbursement. Without limiting in any way the foregoing and notwithstanding anything to the contrary contained herein or in any separate application for any Letter of Credit, each Borrower hereby acknowledges and agrees that it shall be jointly and severally obligated to reimburse the Issuer upon each Disbursement of a Letter of Credit (including Letters of Credit issued for the account of the other Borrowers or a Guarantor), and each Borrower shall be deemed to be the obligor for purposes of each such Letter of Credit issued hereunder (whether the account party on such Letter of Credit is such Borrower or a Guarantor). SECTION 2.6.3. Reimbursement. The obligation (a "Reimbursement ------------- -------------- Obligation") of each Borrower under Section 2.6.2 to reimburse the Issuer ---------- ------------- with respect to each Disbursement (including interest thereon), and, upon the failure of the Borrowers to reimburse the Issuer, each Lender's obligation under Section 2.6.1 to reimburse the Issuer, shall be absolute and ------------- unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which any Borrower, any Obligor or such Lender, as the case may be, may have or have had against the Issuer or any such Lender, including any defense based upon the failure of any Disbursement to conform to the terms of the applicable Letter of Credit (if, in the Issuer's good faith opinion, such Disbursement is determined to be appropriate) or any non-application or misapplication by the beneficiary of the proceeds of such Letter of Credit; provided, however, that after paying -------- ------- in full its Reimbursement Obligation hereunder, nothing herein shall adversely affect the right of any Borrower or such Lender, as the case may be, to commence any proceeding against the Issuer for any wrongful Disbursement made by the Issuer under a Letter of Credit as a result of acts or omissions constituting gross negligence or willful misconduct on the part of the Issuer. SECTION 2.6.4. Deemed Disbursements. Upon the occurrence and during the -------------------- continuation of any Default of the type described in Section 8.1.9 or, with ------------- notice from the Administrative Agent, upon the occurrence and during the continuation of any other Event of Default, (a) an amount equal to that portion of all Letter of Credit Outstandings attributable to the then aggregate amount which is undrawn and available under all Letters of Credit issued and outstanding hereunder shall, without demand upon or notice to any Borrower, be deemed to have been paid or disbursed, in the applicable currency or currencies, by the Issuer under such Letters of Credit (notwithstanding that such amount may not in fact have been so paid or disbursed); and (b) upon notification by the Administrative Agent to the Borrowers of their obligations under this Section, the Borrowers shall be immediately obligated to reimburse the Issuer for the amount, and in the currency, deemed to have been so paid or disbursed by the Issuer. Any amounts so payable by the Borrowers pursuant to this Section shall be deposited in cash with the Administrative Agent and held as collateral security pursuant to a cash collateral agreement in form and substance satisfactory to the Administrative Agent for the Obligations in connection with the Letters of Credit issued by the Issuer. At such time when the Defaults or Events of Default giving rise to the deemed disbursements hereunder shall have been cured or waived, the Administrative Agent shall return to SIHL all amounts then on deposit with the Administrative Agent pursuant to this Section which have not been applied to the partial satisfaction of such Obligations. SECTION 2.6.5. Nature of Reimbursement Obligations. Each Borrower, ------------------------------------ each other Obligor and, to the extent set forth in Section 2.6.1, each Lender ------------- shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. The Issuer shall not be (except to the extent of its own gross negligence or willful misconduct) responsible for: (a) the form, validity, sufficiency, accuracy, genuineness or legal effect of any Letter of Credit or any document submitted by any party in connection with the application for and issuance of a Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (b) the form, validity, sufficiency, accuracy, genuineness or legal effect of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or the proceeds thereof in whole or in part, which may prove to be invalid or ineffective for any reason; (c) the failure of the beneficiary of a Letter of Credit to comply fully with conditions required in order to demand payment under a Letter of Credit; (d) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise; or (e) any loss or delay in the transmission or otherwise of any document or draft required in order to make a Disbursement under a Letter of Credit. None of the foregoing shall affect, impair or prevent the vesting of any of the rights or powers granted to the Issuer or any Lender. In furtherance and extension and not in limitation or derogation of any of the foregoing, any action taken or omitted to be taken by the Issuer in connection with such Letter of Credit in good faith (and not constituting gross negligence or willful misconduct) shall be binding upon each Borrower and each other Obligor and each such Lender, and shall not put the Issuer under any resulting liability to any Borrower, any Obligor or any such Lender, as the case may be. SECTION 2.6.6. Dollar Equivalent Determinations. For purposes of -------------------------------- determining the amount of Foreign Currency Letter of Credit Outstandings and for purposes of calculating fees payable under Section 3.3.2 with respect to ------------- Foreign Currency Letter of Credit Outstandings, the principal amount of such Foreign Currency Letter of Credit Outstandings shall be deemed to be, as of any date of determination, the Dollar Equivalent thereof at such date. The initial Dollar Equivalent of any Foreign Currency Letter of Credit shall be determined by the Administrative Agent and/or the Issuer, as the case may be, on the date of issuance thereof. If a Disbursement is made by the Issuer under any Foreign Currency Letter of Credit, the Dollar Equivalent of such Disbursement shall be determined by the Issuer on the Disbursement Date related thereto, and the Issuer shall notify the Administrative Agent and the applicable Borrower promptly of such Dollar Equivalent. SECTION 2.7. Currency Fluctuation, etc. Not later than 12:00 p.m., --------------------------- New York time, on each Quarterly Payment Date, the Administrative Agent shall determine the Dollar Equivalent as of such Quarterly Payment Date with respect to each Foreign Currency for which there are at such time outstanding Foreign Currency Letters of Credit or in respect thereof (after giving effect to any Loans to be made or repaid or Letters of Credit to be issued or Reimbursement Obligations to be repaid on such date). The Dollar Equivalent so determined shall become effective on the first Business Day immediately following the relevant Quarterly Payment Date (a "Reset Date") and shall ---------- remain effective until the next succeeding Reset Date. SECTION 2.8. Notes. Each Borrower agrees that, upon the request to ----- the Administrative Agent by any Lender, each such Borrower will execute and deliver to such Lender a Note payable to the order of such Lender in a maximum principal amount equal to the amount of Credit Extensions that can be made to a particular Borrower, which shall, in the aggregate, equal such Lender's Percentage of the original Commitment Amount. Each Borrower hereby irrevocably authorizes each Lender to make (or cause to be made) appropriate notations on the grid attached to such Lender's Note (or on any continuation of such grid), which notations, if made, shall evidence, inter alia, the date ----- ---- of, the outstanding principal of, and the interest rate and Interest Period applicable to the Loans evidenced thereby. Such notations shall be conclusive and binding on the Borrowers absent manifest error; provided, -------- however, that the failure of any Lender to make any such notations shall not ------- limit or otherwise affect any Obligations of any Borrower or any other Obligor. SECTION 2.9. Register. Each Borrower hereby designates the -------- Administrative Agent to serve as such Borrower's agent, solely for the purpose of this Section 2.9, to maintain a register (the "Register") on which ----------- -------- the Administrative Agent will record each Lender's Commitment, each Lender's Percentage, the Loans made by each Lender and each repayment in respect of the principal amount of the Loans of each Lender and annexed to which the Administrative Agent shall retain a copy of each Assignment and Assumption Agreement delivered to the Administrative Agent pursuant to Section 10.11.1. --------------- Failure to make any recordation, or any error in such recordation, shall not affect any Borrower's obligation in respect of such Loans. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrowers, the Administrative Agent and the Lenders shall treat each Person in whose name a Loan (and, as provided in Section 2.7, the Note evidencing ----------- such Loan, if any) is registered as the owner thereof for all purposes of this Agreement, notwithstanding notice or any provision herein to the contrary. ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES SECTION 3.1. Repayments and Prepayments. Each Borrower shall repay -------------------------- in full the unpaid principal amount of its Loans upon the Stated Maturity Date. Prior thereto, the Borrowers may (or shall, as applicable), make the repayments and prepayments set forth below. (a) Each Borrower may, from time to time on any Business Day, make a voluntary prepayment, in whole or in part, of the outstanding principal amount of any of its Loans, and such Borrower may select whether such prepayment shall be allocated to the Base Rate Loans, LIBO Rate Loans or both (and the amounts so allocated to each); provided, however, that -------- ------- (i) any such prepayment shall be made first to Base Rate Loans to the full extent thereof before application to LIBO Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made to the Borrowers pursuant to Section 4.4; ------------ (ii) all such voluntary prepayments shall require at least one but no more than five Business Days' prior written notice to the Administrative Agent; and (iii) all such voluntary partial prepayments shall be in an aggregate minimum amount of $1,000,000 and an integral multiple of $1,000,000. (b) The Borrowers shall, on each date when any reduction in the Commitment Amount shall become effective, including pursuant to Section ------- 2.2, make a mandatory prepayment of the Loans made to it, and if required --- deliver cash collateral for Letter of Credit Outstandings, equal to the excess, if any, of the aggregate outstanding principal amount of all Loans and Letter of Credit Outstandings over the Commitment Amount as so reduced and, as so reduced, applicable to such Borrower. (c) The Borrowers shall, immediately upon any acceleration of the Stated Maturity Date of any Loans pursuant to Section 8.2 or Section 8.3, ----------- ----------- repay all of their Loans, unless, pursuant to Section 8.3, only a ----------- portion of all Loans is so accelerated. (d) The Borrowers shall, on each Quarterly Payment Date, deliver cash collateral for Foreign Currency Letters of Credit in an amount equal to the excess, if any, of the Dollar Equivalent of all Foreign Currency Letter of Credit Outstandings over 105% of the Foreign Currency Letter of Credit Commitment Amount. Each prepayment of any Loans made pursuant to this Section shall be without premium or penalty, except as may be required by Section 4.4. No voluntary ----------- prepayment of principal of any Loans shall cause a reduction in the Commitment Amount. SECTION 3.2. Interest Provisions. Interest on the outstanding -------------------- principal amount of Loans shall accrue and be payable in accordance with this Section 3.2. ----------- SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing ----- Request or Continuation/Conversion Notice, a Borrower may elect that Loans comprising a Borrowing accrue interest at a rate per annum: (a) on that portion maintained from time to time as a Base Rate Loan, equal to the sum of the Alternate Base Rate from time to time in effect plus the Applicable Margin; and (b) on that portion maintained as a LIBO Rate Loan, during each Interest Period applicable thereto, equal to the sum of the LIBO Rate (Reserve Adjusted) for such Interest Period plus the Applicable Margin. All LIBO Rate Loans shall bear interest from and including the first day of the applicable Interest Period to (but not including) the last day of such Interest Period at the interest rate determined as applicable to such LIBO Rate Loan. SECTION 3.2.2. Post-Maturity Rates. After the date any principal amount of ------------------- any Loan is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise), or after any other monetary Obligation of a Borrower shall have become due and payable, such Borrower shall pay, but only to the extent permitted by law, interest (after as well as before judgment) on such amounts at a rate per annum equal to the Alternate Base Rate plus the highest Applicable Margin for Base Rate Loans then listed within such definition plus a margin of 2%. SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be ------------- payable, without duplication: (a) on the Stated Maturity Date therefor; (b) with respect to LIBO Rate Loans, on the date of any payment or prepayment, in whole or in part, of principal outstanding on such LIBO Rate Loans; (c) with respect to Base Rate Loans, on each Quarterly Payment Date occurring after the date of the initial Borrowing hereunder; (d) with respect to LIBO Rate Loans, the last day of each applicable Interest Period (and, if such Interest Period shall exceed three months, on the third month anniversary of such Interest Period); and (e) on that portion of any Loans the maturity of which is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon such ----------- ----------- acceleration. Interest accrued on Loans or other monetary Obligations arising under this Agreement or any other Loan Document after the date such amount is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise) shall be payable upon demand. SECTION 3.3. Fees. SIHL agrees to pay the fees set forth in this ---- Section 3.3. All such fees shall be non-refundable. ----------- SECTION 3.3.1. Commitment Fee. SIHL agrees to pay to the Administrative -------------- Agent for the account of each Lender for the period (including any portion thereof when its Commitment is suspended by reason of any Borrower's inability to satisfy any condition of Article V) commencing on the Effective --------- Date and continuing through the Commitment Termination Date, a commitment fee at the rate of the Applicable Commitment Fee Rate per annum, in each case on such Lender's Percentage of the average daily unused portion of the Commitment Amount (net of Letter of Credit Outstandings). Such commitment fees shall be payable by SIHL, in arrears on each Quarterly Payment Date, commencing with the first such day following the Effective Date, and on the Commitment Termination Date. SECTION 3.3.2. Letter of Credit Fee. SIHL agrees to pay to the -------------------- Administrative Agent, for the pro rata account of the Issuer and each other --- ---- Lender, a Letter of Credit fee, in Dollars, in an amount equal to the then Applicable Margin for LIBO Rate Loans, multiplied by the average daily undrawn Stated Amount (or the Dollar Equivalent thereof with respect to Foreign Currency Letters of Credit) of all Letters of Credit outstanding during the applicable period, with such fees being payable quarterly in arrears on each Quarterly Payment Date (or more frequently if requested by the Administrative Agent). SIHL further agrees to pay to the Issuer an issuance fee in an amount, in Dollars, equal to 1/4 of 1% per annum of the Stated Amount (or the Dollar Equivalent thereof with respect to Foreign Currency Letters of Credit) of the Letter of Credit issued by the Issuer thereof, with such fees being payable quarterly in arrears on each Quarterly Payment Date (or more frequently if requested by the Administrative Agent). SECTION 3.3.3. Other Fees. The Borrowers agree to pay to each Lender for ---------- its own account upfront fees in such amounts and on such dates as the Borrowers and such Lender have agreed to. SECTION 3.4. Guaranty Provisions. Each Borrower hereby jointly and ------------------- severally irrevocably guarantees the payment of all Obligations as set forth in this Section 3.4. ----------- SECTION 3.4.1. Guaranty. Each Borrower hereby absolutely, unconditionally -------- and irrevocably jointly and severally (a) guarantees the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all Obligations of the other Borrowers and each other Obligor, whether for principal, interest, fees, expenses or otherwise (including all such amounts which would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C.ss.362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C.ss.502(b) andss.506(b)); and (b) indemnifies and holds harmless each Lender Party and each holder of a Note for any and all costs and expenses (including reasonable attorneys' fees and expenses) incurred by such Lender Party or such holder, as the case may be, in enforcing any rights under Section 3.4; ----------- provided that in the case of the guaranty of a Borrower of the Obligations of -------- other than its direct or indirect Subsidiaries, such guaranty shall be limited to the maximum amount that can be guaranteed without rendering such guaranty unenforceable under fraudulent conveyance or similar laws. This guaranty and the provisions of this Section 3.4 constitutes a guaranty of ----------- payment when due and not of collection, and each Borrower specifically agrees that it shall not be necessary or required that any Lender Party exercise any right, assert any claim or demand or enforce any remedy whatsoever against the Borrowers or any other Obligor (or any other Person) before or as a condition to the obligations of such Borrower hereunder. Each Borrower acknowledges and agrees that it shall be jointly and severally liable for the Obligations arising under Letters of Credit issued for Subsidiaries of SIHL, notwithstanding that such Borrower is not the account party of any particular Letter of Credit. SECTION 3.4.2. Acceleration of Guaranty. Each Borrower agrees that, in ------------------------ the event of a Default of the type set forth in Section 8.1.9 and if such ------------- event shall occur at a time when any of the Obligations of the other Borrowers and each other Obligor may not then be due and payable, such Borrower will pay to the Administrative Agent for the account of the Lender Parties forthwith the full amount which would be payable hereunder by such Borrower or Obligor if all such Obligations were then due and payable. SECTION 3.4.3. Guaranty Absolute, etc. Section 3.4 shall in all respects ----------------------- ----------- be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until all Obligations of the Borrowers and each other Obligor have been paid in full, all obligations of each Borrower hereunder shall have been paid in full and all Commitments shall have terminated. Each Borrower guarantees that the Obligations of the other Borrowers and each other Obligor will be paid strictly in accordance with the terms of this Agreement and each other Loan Document under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Lender Party with respect thereto. The liability of each Borrower under Section 3.4 shall be absolute, unconditional and irrevocable irrespective of: ----------- (a) any lack of validity, legality or enforceability of this Agreement or any other Loan Document; (b) the failure of any Lender Party (i) to assert any claim or demand or to enforce any right or remedy against any other Borrower, any other Obligor or any other Person (including any other guarantor) under Section 3.4 of this ----------- Agreement, any other Loan Document or otherwise, or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Obligations of any other Borrower or any other Obligor; (c) 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 other Borrowers or any other Obligor, or any other extension, compromise or renewal of any Obligation of any other Borrower or any other Obligor; (d) any reduction, limitation, impairment or termination of the Obligations of any other Borrower or any other Obligor for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Borrower hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, the Obligations of any other Borrower, any other Obligor or otherwise; (e) any amendment to, rescission, waiver, or other modification of, or any consent to departure from, any of the terms of this Agreement or any other Loan Document; (f) any addition, exchange, release, surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition of, or consent to departure from, any other guaranty, held by any Lender Party or any holder of any Note securing any of the Obligations of any other Borrower or any other Obligor; or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any other Borrower, any other Obligor, any surety or any guarantor. SECTION 3.4.4. Reinstatement, etc. Each Borrower agrees that Section 3.4 ------------------- ----------- shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Obligations is rescinded or must otherwise be restored by any Lender Party or any holder of any Note, upon the insolvency, bankruptcy or reorganization of any other Borrower, any other Obligor or otherwise, all as though such payment had not been made. SECTION 3.4.5. Waiver, etc. Each Borrower hereby waives promptness, ------------ diligence, notice of acceptance and any other notice with respect to any of the Obligations of any other Borrower or any other Obligor and Section 3.4 ----------- and any requirement that any Lender Party or any holder of any Note protect, secure, perfect or insure any security interest or Lien, or any property subject thereto, or exhaust any right or take any action against any other Borrower, any other Obligor or any other Person (including any other guarantor) or entity or any collateral securing the Obligations of any other Borrower or any other Obligor, as the case may be. SECTION 3.4.6. Postponement of Subrogation, etc. No Borrower will --------------------------------- exercise any rights which it may acquire by way of rights of subrogation under Section 3.4, by any payment made hereunder or otherwise, until the ----------- prior payment, in full and in cash, of all Obligations of the Borrowers and each other Obligor. Any amount paid to any Borrower on account of any such subrogation rights prior to the payment in full of all Obligations of the Borrowers and each other Obligor shall be held in trust for the benefit of the Lender Parties and shall immediately be paid to the Administrative Agent and credited and applied against the Obligations of the Borrowers and each other Obligor, whether matured or unmatured, in accordance with the terms hereof; provided, however, that if (a) any Borrower has made payment to the -------- ------- Lender Parties and each holder of a Note of all or any part of the Obligations of any other Borrower or any other Obligor, and (b) all Obligations have been paid in full and all Commitments have been permanently terminated, each Lender Party agrees that, at such Borrower's request, the Administrative Agent, on behalf of the Lender Parties, will execute and deliver to such Borrower appropriate documents (without recourse and without representation or warranty) necessary to evidence the transfer by subrogation to such Borrower of an interest in the Obligations of such other Borrower and each other Obligor resulting from such payment by the Borrower paying any such amount. In furtherance of the foregoing, for so long as any Obligations or Commitments remain outstanding, each Borrower shall refrain from taking any action or commencing any proceeding against the other Borrowers or any other Obligor (or its successors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in the respect of payments made under the provisions of Section 3.4 to any Lender Party. ----------- ARTICLE IV CERTAIN LIBO RATE AND OTHER PROVISIONS SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender shall determine -------------------------- (which determination shall, so long as such Lender shall then be taking the same action with respect to all other similar loans it may have outstanding to other borrowers, upon notice thereof to the Borrowers and the Lenders, be conclusive and binding on the Borrowers) that the introduction of or any change in or in the interpretation of any law makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for such Lender to make, continue or maintain any Loan as, or to convert any Loan into, a LIBO Rate Loan, the obligations of all Lenders to make, continue, maintain or convert any such Loans shall, upon notice of such determination to the Borrowers and Administrative Agent, forthwith be suspended until such Lender shall notify the Administrative Agent that the circumstances causing such suspension no longer exist, and all LIBO Rate Loans shall automatically convert into Base Rate Loans at the end of the then current Interest Periods with respect thereto or sooner, if required by such law or assertion. Any Lender affected by such event or condition shall use its commercially reasonable efforts (including to change its applicable lending office with respect to some or all of its LIBO Rate Loans) to avoid the effect of such event or condition, so long as such Lender will not be materially disadvantaged and such change is not inconsistent with such Lender's internal policies. SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall -------------------- have determined that (a) dollar deposits in the relevant amount and for the relevant Interest Period are not available to CIBC in its relevant market, or (b) by reason of circumstances affecting CIBC's relevant market, adequate means do not exist for ascertaining the interest rate applicable hereunder to LIBO Rate Loans, then, so long as the Administrative Agent shall then be taking the same action with respect to all other similar loans it may have outstanding to other borrowers, upon notice from the Administrative Agent to the Borrowers and the Lenders, the obligations of all Lenders under Section -------- 2.3 and Section 2.4 to make or continue any Loans as, or to convert any Loans --- ----------- into, LIBO Rate Loans shall forthwith be suspended until the Administrative Agent shall notify the Borrowers and the Lenders that the circumstances causing such suspension no longer exist. SECTION 4.3. Increased LIBO Rate Loan Costs, etc. Provided that each ------------------------------------ Lender requesting reimbursement under this Section 4.3 is then taking the ----------- same action with respect to all other similar loans it has outstanding to other borrowers of a class similar to the Borrowers (including as to the aggregate amount of credit extensions made to such other borrowers), the Borrowers agree to reimburse each Lender for any increase in the cost to such Lender of, or any reduction in the amount of any sum receivable by such Lender in respect of, making, continuing or maintaining (or of its obligation to make, continue or maintain) any Loans as, or of converting (or of its obligation to convert) any Loans into, LIBO Rate Loans caused by the imposition of any reserve requirements (including all basic, emergency, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements) required by any central bank, regulator or other governmental authority (including the Bank of England) having authority over any Lender, in each case to the extent not already specifically addressed by the provisions of the definition of "LIBOR Reserve Percentage", except as to any increased cost or reduced amount that results from the imposition of Taxes (liability for which is determined pursuant to Section 4.6). The Lender requesting ----------- reimbursement under this Section shall promptly notify the Administrative Agent and SIHL in writing of the occurrence of any such event, such notice to state, in reasonable detail, the reasons therefor and the additional amount required fully to compensate such Lender for such increased cost or reduced amount. Such additional amounts shall be payable by the Borrowers directly to such Lender within ten days of its receipt of such notice, and such notice shall, in the absence of manifest error, be conclusive and binding on the Borrowers; provided, however, that the Borrowers shall have no obligation to -------- ------- make any payment to any Lender under this Section 4.3 unless SIHL receives notice of such increased costs or reduced amounts within six months after they are incurred or realized. Any Lender claiming any amounts payable pursuant to this Section shall use its commercially reasonable efforts (including to change its applicable lending office with respect to some or all of its LIBO Rate Loans) in order to avoid the need for or reduce the amount of any such additional amounts that would thereafter accrue, so long as such Lender will not be materially disadvantaged and such change is not inconsistent with such Lender's internal policies. SECTION 4.4. Funding Losses. In the event any Lender shall incur any -------------- loss or expense (including any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to make, continue or maintain any portion of the principal amount of any Loan as, or to convert any portion of the principal amount of any Loan into, a LIBO Rate Loan) as a result of, (a) any conversion or repayment or prepayment of the principal amount of any LIBO Rate Loans on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 3.1 ----------- or otherwise, including all such loss or expense arising as a result of the provisions of Section 4.11; ------------ (b) the Borrowers' failure to borrow any LIBO Rate Loans in accordance with the Borrowing Request therefor; or (c) any Loans not being continued as, or converted into, LIBO Rate Loans in accordance with the Continuation/Conversion Notice therefor due to the Borrowers' action or inaction, then, upon the written notice of such Lender to SIHL (with a copy to the Administrative Agent), the Borrowers shall, within five days of its receipt thereof, pay directly to such Lender such amount as will (in the reasonable determination of such Lender) reimburse such Lender for such loss or expense. Such written notice (which shall include calculations in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrowers. SECTION 4.5. Increased Capital Costs. If any change in, or the ----------------------- introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority affects or would affect the amount of capital required or expected to be maintained by any Lender or any Person controlling such Lender, and such Lender determines (in its sole and absolute discretion) that the rate of return on its or such controlling Person's capital as a consequence of its Commitment or the Loans made, or the Letters of Credit issued or participated in, by such Lender is reduced to a level below that which such Lender or such controlling Person could have achieved but for the occurrence of any such circumstance, then, in any such case so long as such Lender shall then be taking the same action with respect to all other similar loans it may have outstanding to other borrowers, within ten Business Days following notice by such Lender to the Borrowers, the Borrowers shall pay directly to such Lender additional amounts sufficient to compensate such Lender or such controlling Person for such reduction in rate of return; provided, however, that the Borrowers shall have no obligation to make any -------- ------- payment to any Lender under this Section 4.5 unless the Borrowers receive notice of such reduction in rate of return within six months after the reduced rate of return is realized. A statement of such Lender as to any such additional amount or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrowers. In determining such amount, such Lender may use any reasonable method of averaging and attribution that it (in its sole and absolute discretion) shall deem applicable. Any Lender claiming any amounts payable pursuant to this Section shall use its commercially reasonable efforts (including to change its applicable lending office with respect to some or all of its LIBO Rate Loans) to avoid or materially reduce any amounts which the Borrowers are obligated to pay pursuant to this Section 4.5, so long as such Lender will not be materially disadvantaged and such change is not inconsistent with such Lender's internal policies. SECTION 4.6. Taxes. (a) All payments by SIHL, each other Borrower or ----- any other Guarantor of principal of, and interest on, the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by any Lender's net income or receipts (such non-excluded items being called "Taxes"). In the event that any withholding ----- or deduction from any payment to be made by SIHL, each other Borrower or any other Guarantor hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then SIHL, such Guarantor or such Borrower (as applicable) will (i) pay directly to the relevant authority the full amount required to be so withheld or deducted; (ii) promptly forward to the Administrative Agent an official receipt or other documentation reasonably satisfactory to the Administrative Agent evidencing such payment to such authority; and (iii) pay to the Administrative Agent for the account of the Lenders such additional amount or amounts as is necessary to ensure that the net amount actually received by each Lender will equal the full amount such Lender would have received had no such withholding or deduction been required. Moreover, if any Taxes are directly asserted against the Administrative Agent or any Lender with respect to any payment received by the Administrative Agent or such Lender hereunder, the Administrative Agent or such Lender may pay such Taxes and each of SIHL, each other Borrower and each other Guarantor will (without duplication) promptly pay such additional amounts (including any penalties, interest or expenses) as is necessary in order that the net amount received by such person after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such person would have received had such Taxes not been asserted. (b) If either SIHL, any other Borrower or any other Guarantor fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent, for the account of the respective Lenders, the required receipts or other required documentary evidence, SIHL, each other Guarantor and each other Borrower shall jointly and severally indemnify the Lenders for any incremental Taxes, interest or penalties that may become payable by any Lender as a result of any such failure. For purposes of this Section 4.6, a distribution hereunder by the ----------- Administrative Agent or any Lender to or for the account of any Lender shall be deemed a payment by SIHL, such Guarantor and such Borrower. (c) Each Lender that is not organized under the laws of the United States or a State thereof shall, not later than the first payment of interest or other amounts hereunder to such Lender, deliver to each Borrower and the Administrative Agent two duly completed copies of Internal Revenue Service Form W-8BEN (or any successor form) claiming complete exemption from U.S. Federal withholding tax on payments of interest hereunder; provided, however, that in the case of a Lender that -------- ------- is not legally entitled to deliver such Form (or successor form) as of the date of the first payment of interest or other amounts hereunder to such Lender, such Lender shall deliver written notice of its inability to provide such form on such date and no such Lender shall be obligated to deliver such Form (or successor form) earlier than the date of the first payment of interest or other amounts hereunder next following the date as of which such Lender becomes legally entitled to deliver such Form or successor form. Each such Lender shall further deliver two duly completed copies of such Form (or successor form) prior to the expiration of the most recently delivered Form. By the delivery of such Form (or successor form), such Lender shall be deemed to have represented that it is entitled to receive payments of interest hereunder without the imposition of U.S. Federal withholding tax. (d) In addition, any Lender claiming any indemnity payment or additional amount payable pursuant to this Section shall use commercially reasonable efforts to file any certificate or document reasonably requested by SIHL or to change the jurisdiction of its applicable lending office if the making of such a filing or change would avoid the need for or reduce the amount of any such indemnity payment or additional amount which may thereafter accrue and such filing or change is not, in the sole determination of such Lender, inconsistent with that Lender's internal policies. SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly ---------------------------- provided, all payments by SIHL, each other Borrower and each other Guarantor pursuant to this Agreement or any other Loan Document shall be made by SIHL, such Guarantor and such Borrower (without duplication) to the Administrative Agent for the pro rata account of the Lenders entitled to receive such --- ---- payment. All such payments required to be made to the Administrative Agent shall be made, without setoff, recoupment, deduction, counterclaim or other defense, not later than 12:00 noon, New York time, on the date due, in same day or immediately available funds, to such account as the Administrative Agent shall specify from time to time by notice to the Borrowers. Funds received after that time shall be deemed to have been received by the Administrative Agent on the next succeeding Business Day and such extension of time shall be included in computing interest and fees, if any, in connection with such extension. The Administrative Agent shall promptly remit in same day funds to each Lender its share, if any, of such payments received by the Administrative Agent for the account of such Lender. All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days (or, in the case of interest on a Base Rate Loan, 365 days or, if appropriate, 366 days). Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall (except as otherwise required by clause (b) or (c) of the definition of the term ---------- --- "Interest Period") be made on the next succeeding Business Day and such extension of time shall be included in computing interest and fees, if any, in connection with such payment. SECTION 4.8. Sharing of Payments. If any Lender shall obtain any ------------------- payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of any Loan or Reimbursement Obligation (other than pursuant to the terms of Sections 4.3, 4.4, 4.5 and 4.6) in ------------ --- --- --- excess of its pro rata share of payments then or therewith obtained by all --- ---- Lenders, such Lender shall purchase from the other Lenders such participations in Credit Extensions made by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided, however, that if all or any portion of -------- ------- the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and each Lender which has sold a participation to the purchasing Lender shall repay to the purchasing Lender the purchase price to the ratable extent of such recovery together with an amount equal to such selling Lender's ratable share (according to the proportion of (a) the amount of such selling Lender's required repayment to the purchasing Lender to (b) 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. Each of SIHL, each other Borrower and each other Guarantor agrees that any Lender so purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by law, exercise all its rights of payment (including pursuant to Section 4.9) with respect to such participation as ----------- fully as if such Lender were the direct creditor of SIHL, such Borrower or such Guarantor in the amount of such participation. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section to share in the benefits of any recovery on such secured claim. SECTION 4.9. Setoff. Each Lender shall, upon the occurrence of any ------ Event of Default described in clauses (a) through (d) of Section 8.1.9 or, ----------- --- ------------- with the consent of the Required Lenders, upon the occurrence of any other Event of Default, have the right to appropriate and apply to the payment of the Obligations owing to it (whether or not then due), and (as security for such Obligations) each of SIHL, each other Borrower and each other Guarantor hereby grants to each Lender a continuing security interest in, any and all balances, credits, deposits, accounts or money of each of SIHL, such Guarantor and such Borrower then or thereafter maintained with such Lender; provided, however, that any such appropriation and application shall be -------- ------- subject to the provisions of Section 4.8. Each Lender agrees promptly to ----------- notify SIHL, such Guarantor or such Borrower and the Administrative Agent after any such setoff and application made by such Lender; provided, however, -------- ------- that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which such Lender may have. SECTION 4.10. Defaulting Lender. (a) Upon any Lender becoming a ----------------- Defaulting Lender, (i) the Administrative Agent shall endeavor to promptly notify each other Lender of the amount owed or potentially owed, as the case may be, by such Defaulting Lender and (ii) the Commitment Amount shall be reduced by an amount equal to the unutilized portion of such Defaulting Lender's Percentage thereof then in effect (the "Unutilized Portion"); ------------------ provided, however, that, with the prior written consent of the Administrative -------- ------- Agent, SIHL may request a non-defaulting Lender to, whereupon such non-defaulting Lender may (in its sole discretion and without the consent of any other Lender), by promptly notifying SIHL and the Administrative Agent, increase its Commitment in an amount equal to the Unutilized Portion, in which case, upon receipt by SIHL and the Administrative Agent of such notice, (x) the Commitment of such non-defaulting Lender shall be so increased and (y) the amount of the Commitment Amount then in effect shall be equal to the amount of the Commitment Amount in effect immediately prior to the time such Defaulting Lender became a Defaulting Lender and (iii) the Percentage of such Defaulting Lender shall be reduced to zero. (b) No Defaulting Lender shall be entitled to receive any fees accrued on and after the date such Lender became a Defaulting Lender. (c) Notwithstanding anything contained herein to the contrary, no Defaulting Lender shall be entitled to receive any payments hereunder on account of any Loans or Notes until all amounts that are due and payable with respect to any Loans as to which such Defaulting Lender is not a Lender or a participant shall have been paid in full. (d) Nothing in this Section shall be deemed to release any Defaulting Lender from fulfilling its obligations under this Agreement or otherwise or to prejudice the rights which SIHL, the Borrowers or any other Lender or the Administrative Agent may have against any such Defaulting Lender. SECTION 4.11. Replacement Lender. In the event that SIHL, any other ------------------ Borrower or any other Guarantor becomes obligated to pay any additional material amounts to any Lender pursuant to Section 4.3 or 4.5 (which amounts ----------- --- are not due or payable to all Lenders generally under such Sections) or such Lender is not able to make LIBO Rate Loans pursuant to Section 4.1, as a ----------- result of any event or condition described in any of such Sections, or any Lender is subject to a withholding tax for which it seeks a gross up pursuant to Section 4.6, then, unless such Lender has removed or cured the conditions ----------- creating the cause of such obligation to pay such additional amounts or agrees (in the case of Taxes) not to require any Obligor to pay such gross up amount under Section 4.6, SIHL may designate one or more substitute lenders ----------- (and such Lender agrees to be replaced by such substitute lender upon and in accordance with the terms set forth in this Section) reasonably acceptable to the Administrative Agent and Issuer (such lender or lenders each called a "Replacement Lender") to have assigned to it pursuant to Section 10.11.1, and ------------------- --------------- to purchase, such Lender's rights and obligations with respect to its entire Loans and Commitment hereunder, without recourse to or warranty by, or expense to, such Lender for a purchase price equal to the outstanding principal amount payable to such Lender with respect to its Loans and Commitment hereunder, plus any accrued and unpaid interest and accrued and unpaid fees in respect of such Lender's Loans and Commitment owing to such Lender. SIHL agrees that, so long as the Borrowers are not then obligated to pay any gross up for Taxes under a Loan Document to the Administrative Agent, it will first designate the Administrative Agent as the Replacement Lender in the case of another Lender that has required the Borrowers (or any Obligor) to pay any gross up for Taxes under a Loan Document and the Administrative Agent shall have the right (but be under no obligation) to have assigned to them an equal amount of the Loans and Commitments (and corresponding rights and obligations) of the Lender being replaced. Upon any assignment and purchase by the Replacement Lender and payment of all other amounts owing to the Lender being replaced hereunder (including under Section 4.6), and the ----------- payment to the Administrative Agent of the processing fee due to it under Section 10.11.1, such Lender shall no longer be a party hereto or have any --------------- rights or obligations hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender with respect to its Loans and Commitment hereunder; provided that the rights of such replaced Lender -------- pursuant to Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the rights and ------------ --- --- --- ---- ---- obligations of such Lender pursuant to Article IX and Sections 10.3 and 10.4, ---------- ------------- ---- shall survive any assignment described in this Section. ARTICLE V CONDITIONS TO EFFECTIVENESS SECTION 5.1. Effectiveness. The effectiveness of this Agreement shall ------------- be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 5.1. ----------- SECTION 5.1.1. Resolutions, etc. The Administrative Agent shall have ----------------- received from each Borrower and Significant Subsidiary a certificate, dated the date hereof, of its Secretary or Assistant Secretary as to (a) resolutions of its Board of Directors then in full force and effect authorizing the execution, delivery and performance of this Agreement and each other Loan Document to be executed by it; (b) the incumbency and signatures of those of its officers authorized to act with respect to this Agreement and each other Loan Document executed by it; and (c) upon which certificate each Lender Party may conclusively rely until it shall have received a further certificate of the Secretary or Assistant Secretary of such Obligor canceling or amending such prior certificate. SECTION 5.1.2. Delivery of this Agreement, Notes. The Administrative --------------------------------- Agent shall have received (x) duly executed counterparts of this Agreement delivered by each Borrower and each Lender and (y) for the account of each Lender requesting Notes pursuant to Section 2.8, its Notes duly executed and ----------- delivered by each Borrower. SECTION 5.1.3. Debentures. The Administrative Agent shall have received ---------- (a) counterparts of the Debentures, amended and modified as required to reflect the provisions of this Agreement (as reasonably determined by the Administrative Agent), each duly executed by an Authorized Officer of the owner of the property covered thereby, (b) evidence of the completion (or satisfactory arrangements for the completion) of all recordings and filings of the Debentures as may be necessary or, in the reasonable opinion of the Administrative Agent, desirable effectively to create a valid first mortgage Lien (or, in the case of personal property, floating charge Lien) against the properties purported to be covered thereby in the full amount of the aggregate principal amount of all Credit Extensions which may at any time be outstanding, subject only to the Permitted Encumbrances, and (c) such other approvals, opinions or documents as the Administrative Agent may reasonably request with respect to the Debentures. SECTION 5.1.4. Exchange Approval. The Administrative Agent shall have ----------------- received a copy of a letter from The Central Bank of The Bahamas to SIBL, SIHL and the other Guarantors organized under the laws of The Commonwealth of The Bahamas, in a form and substance satisfactory to the Administrative Agent, confirming that it is aware of this Agreement and the Pledge Agreements and undertaking to make available to SIBL, SIHL and such Guarantors such foreign exchange as may be necessary to enable SIBL, SIHL and such Guarantors to fulfill their payment obligations under this Agreement in Dollars and to pledge the collateral under the Pledge Agreements and Debentures. SECTION 5.1.5. Endorsement to Title Insurance Policies. The --------------------------------------- Administrative Agent shall have received an endorsement (known as CLTA Form 110.5), dated on or about the date hereof, duly issued by the Title Insurer which issued the mortgagee's title insurance policies on the Debentures, confirming coverage under the mortgagee's title insurance policy on the Debentures and insuring that the Debentures constitute valid first Liens against the properties purported to be covered thereby, free and clear of all defects and encumbrances other than the Permitted Encumbrances. In lieu of such endorsement, the Borrowers may provide a new mortgagee's title insurance policy on the Debentures in form and substance, and in amounts, reasonably satisfactory to the Administrative Agent and its counsel, providing comparable coverage (up to a $200,000,000 limit, which limit shall increase accordingly if the Commitment Amount is increased at any time and from time to time pursuant to Section 2.2.3) to the existing mortgagee's title ------------- insurance policy. All premiums, title examination, surveys, departmental violations, judgment and Uniform Commercial Code search charges (as applicable) and other charges and fees shall have been paid in full or provided for in a manner satisfactory to the applicable Title Insurer and the Administrative Agent, and the Administrative Agent shall have received satisfactory evidence of such payment or provision. SECTION 5.1.6. Perfection Certificate. The Administrative Agent shall ---------------------- have received a fully completed and duly executed Perfection Certificate substantially in the form of Exhibit G attached hereto. SECTION 5.1.7. Opinions of Counsel. The Administrative Agent shall have ------------------- received opinions, dated the date hereof and addressed to the Administrative Agent and all Lenders, from (a) Dickstein, Shapiro, Morin & Oshinsky LPP, counsel to the Obligors, in form and substance satisfactory to the Administrative Agent; (b) Charles Adamo, General Counsel to SIHL and counsel to the other Obligors, in form and substance satisfactory to the Administrative Agent; and (c) Giselle Pyfrom, Bahamian counsel to certain Obligors, in form and substance satisfactory to the Administrative Agent. SECTION 5.1.8. Effective Date Certificate. The Administrative Agent shall -------------------------- have received, with counterparts for each Lender, the Borrower Effective Date Certificate, dated the date hereof, duly executed and delivered by an Authorized Officer of each Borrower, in which certificate each Borrower shall, among other things, agree and acknowledge that the statements made therein shall be deemed to be true and correct representations and warranties of such Person, made as of such date (and under this Agreement), and, at the time such certificate is delivered, such statements shall in fact be true and correct. All documents and agreements required to be appended to the Borrower Effective Date Certificate shall be in form and substance satisfactory to the Administrative Agent. SECTION 5.1.9. Fees and Expenses. The Lenders and the Agents shall have ----------------- received all fees and expenses required to be paid by SIHL and its Subsidiaries on or before the Effective Date. SECTION 5.1.10. Guaranty. The Administrative Agent shall have received, -------- with counterparts for each Lender, the Guaranty, dated as of the date hereof, duly executed and delivered by each Guarantor. SECTION 5.1.11. Pledge Agreements. The Administrative Agent shall have ----------------- received executed counterparts of each Pledge Agreement, each dated as of the date hereof, duly executed and delivered by an Authorized Officer of each Borrower and each Significant Subsidiary, as applicable, together with (i) the certificates evidencing all of the issued and outstanding shares of capital stock pledged pursuant to the applicable Pledge Agreement, which certificates shall in each case be accompanied by undated powers of transfer duly executed in blank, or, if any such shares of capital stock are uncertificated securities or are held through a securities intermediary, the Administrative Agent shall have obtained "control" (as defined in the UCC) over such shares of capital stock and such other instruments and documents as the Administrative Agent shall deem necessary or, in the reasonable opinion of the Administrative Agent, desirable under applicable law to perfect the security interest of the Administrative Agent in such shares of capital stock and (ii) all promissory notes evidencing intercompany Indebtedness payable to the Borrowers or each Significant Subsidiary duly endorsed to the order of the Administrative Agent. SECTION 5.1.12. Security Agreements. The Administrative Agent shall have ------------------- received executed counterparts of each Security Agreement, each dated as of the Effective Date, duly executed and delivered by an Authorized Officer of each Borrower and each Significant Subsidiary, as applicable, together with (i) executed UCC financing statements (Form UCC-1) naming such Obligor as the debtor and the Administrative Agent as the secured party, or other similar instruments or documents, suitable for filing under the UCC of all jurisdictions as may be necessary or, in the opinion of the Administrative Agent, desirable to perfect the security interest of the Administrative Agent in the interests of such Obligor in the collateral pledged pursuant to the applicable Security Agreement (provided that perfection of security interests -------- in motor vehicles shall not be required), (ii) executed copies of proper UCC termination statements (Form UCC-3), if any, necessary to release all Liens and other rights of any Person (other than Liens permitted under Section 7.2.3) in any collateral described in the applicable Security Agreement previously granted by any Person, together with such other UCC termination statements (Form UCC-3) as the Administrative Agent may reasonably request from such Obligor; and (iii) certified copies of UCC Requests for Information or Copies (Form UCC-11), or a similar search report certified by a party reasonably acceptable to the Administrative Agent, dated a date reasonably near to the date hereof, listing all effective financing statements which name such Obligor (under its present names and any previous names) as the debtor and which are filed in the jurisdictions in which filings are to be made pursuant to clause (i) above, together with copies of ---------- such financing statements. SECTION 5.2. All Credit Extensions. The obligation of each Lender to --------------------- fund any Loan or the Issuer to issue any Letter of Credit on the occasion of any Credit Extension shall be subject to the satisfaction of each of the conditions precedent set forth in Sections 5.2.1, 5.2.2 and 5.2.3. -------------- ----- ----- SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both before -------------------------------------------- and after giving effect to any Credit Extension (but, if any Default of the nature referred to in Section 8.1.5 shall have occurred with respect to any ------------- other Indebtedness, without giving effect to the application, directly or indirectly, of the proceeds thereof) the following statements shall be true and correct (a) the representations and warranties set forth in Article VI and ---------- in the other Loan Documents shall be true and correct in all material respects with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date); and (b) no Default shall have then occurred and be continuing, and neither SIHL nor any Subsidiary is in material violation of any law or governmental regulation or court order or decree. SECTION 5.2.2. Credit Extension Request. The Administrative Agent shall ------------------------ have received a Borrowing Request if Loans are being requested, or an Issuance Request if a Letter of Credit is being requested or extended. Each of the delivery of a Borrowing Request or Issuance Request and the acceptance by the applicable Borrower of the proceeds of such Credit Extension shall constitute a representation and warranty by the relevant Borrower that on the date of such Credit Extension (both immediately before and after giving effect to such Credit Extension and the application of the proceeds thereof) the statements made in Section 5.2.1 are true and correct in all material ------------- respects. SECTION 5.2.3. Satisfactory Legal Form. All documents executed or ----------------------- submitted pursuant hereto by or on behalf of SIHL or any of its Subsidiaries or any other Obligors shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel; the Administrative Agent and its counsel shall have received all information, approvals, opinions, documents or instruments as such Agent or its counsel may reasonably request. ARTICLE VI REPRESENTATIONS AND WARRANTIES In order to induce the Lenders, the Issuer and the Agents to enter into this Agreement and to make Credit Extensions hereunder, each of the Borrowers represents and warrants unto the Agents, the Issuer and each Lender as set forth in this Article VI. ---------- SECTION 6.1. Organization, etc. Each of SIHL and the Obligors is a ------------------ corporation or partnership validly organized and existing and in good standing under the laws of the State or jurisdiction of its incorporation or organization, is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the nature of its business requires such qualification (except where the failure to so qualify would not reasonably be expected to have a material adverse effect on the financial condition, operations, assets, business or properties of SIHL and its Subsidiaries, taken as a whole), and has full power and authority and holds all requisite governmental licenses, permits and other approvals to enter into and perform its Obligations under this Agreement and each other Loan Document to which it is a party and to own and hold under lease its property and to conduct its business substantially as currently conducted by it. SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution, ------------------------------------------ delivery and performance by each of the Borrowers of this Agreement and each other Loan Document executed or to be executed by it, and the execution, delivery and performance by each other Obligor of each Loan Document executed or to be executed by it are within such Borrower's and each such other Person's corporate or partnership powers (as applicable), have been duly authorized by all necessary corporate or partnership action, and do not (a) contravene such Borrower's or other Person's Organic Documents; (b) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting any Borrower or any such other Person; or (c) result in, or require the creation or imposition of, any Lien on any of any Borrower's or any such other Person's properties, other than pursuant to a Loan Document. SECTION 6.3. Government Approval, Regulation, etc. Except for those ------------------------------------- that have been duly obtained or made and are in full force and effect, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by the Borrowers or any other Obligor of this Agreement or any other Loan Document to which it is a party. Neither SIHL nor any of its Subsidiaries is an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. SECTION 6.4. Validity, etc. This Agreement constitutes, and each other -------------- Loan Document executed by a Borrower will, on the due execution and delivery thereof, constitute, the legal, valid and binding obligations of such Borrower enforceable in accordance with their respective terms; and each Loan Document executed pursuant hereto by each other Obligor will, on the due execution and delivery thereof by such Obligor, be the legal, valid and binding obligation of such Obligor enforceable in accordance with its terms. SECTION 6.5. Financial Information. The consolidated balance sheet of ---------------------- SIHL and its Subsidiaries as at December 31, 2000, and the related consolidated statements of earnings and cash flow of SIHL and its Subsidiaries, have been prepared in accordance with GAAP consistently applied, and present fairly the consolidated financial condition of the corporations covered thereby as at the dates thereof and the results of their operations for the periods then ended. SECTION 6.6. No Material Adverse Change. Except for changes in the -------------------------- financial condition of SIHL and its Subsidiaries, taken as a whole, reflected in the Borrowers' projections dated October 19, 2001 (copies of which have been delivered to the Lenders), since September 30, 2001, there has been no material adverse change in the financial condition, operations, assets, business or properties of SIHL and its Subsidiaries, taken as a whole. SECTION 6.7. Litigation, Labor Controversies, etc. Except as disclosed ------------------------------------- in Item 6.7 ("Litigation") of the Disclosure Schedule, -------- (i) no labor controversy, litigation, arbitration or governmental investigation or proceeding is pending or, to the knowledge of any Borrower, threatened, against SIHL or any of its Subsidiaries which would reasonably be expected to materially adversely affect the financial condition, operations, assets, business or properties of SIHL and its Subsidiaries, taken as a whole, or which purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document; (ii) no development has occurred in any labor controversy, litigation, arbitration or governmental investigation or proceeding disclosed pursuant to clause (a) which would reasonably be expected to ---------- materially adversely affect the businesses, operations, assets, revenues or properties of SIHL and its Subsidiaries, taken as a whole; and (iii) no judgments or orders for the payment of money in excess of $5,000,000, individually or in the aggregate (to the extent not covered by insurance (other than self-insurance) from a carrier not contesting its obligations to make payment under the applicable insurance policy), has been rendered against SIHL or any of its Subsidiaries that is organized under the laws of The Commonwealth of The Bahamas. SECTION 6.8. Subsidiaries. SIHL does not have any Subsidiaries, except ------------ those Subsidiaries (a) which are identified in Item 6.8(a) ("Existing Subsidiaries") of ----------- the Disclosure Schedule; or (b) which are permitted to have been acquired in accordance with Section 7.2.5 or 7.2.10. ------- ----- ------ Significant Subsidiaries as of the Effective Date are identified with an asterisk on Item 6.8(a) of the Disclosure Schedule. Each Subsidiary as ----------- well as each Borrower that is executing a Pledge Agreement or a supplement to a Pledge Agreement is listed on Item 6.8(b) of the Disclosure Schedule. ----------- SECTION 6.9. Ownership of Properties. The Borrowers and each of their ----------------------- respective Significant Subsidiaries owns good and valid title to all of its material properties and assets, real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights), free and clear of all Liens, charges or claims (including infringement claims with respect to patents, trademarks, copyrights and the like) except as permitted pursuant to Section 7.2.3. ------------- SECTION 6.10. Taxes. The Borrowers and each of their respective ----- Significant Subsidiaries has filed all material tax returns and reports required by law to have been filed by it and has paid or will pay when due all material taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. SECTION 6.11. Pension and Welfare Plans. During the ------------------------- twelve-consecutive-month period prior to the date of the execution and delivery of this Agreement, and since such date and prior to the date of any Credit Extension hereunder, no steps have been taken to terminate any Pension Plan, and no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any Pension Plan which might result in the incurrence by SIHL or any member of its Controlled Group of any material liability, fine or penalty. Except as disclosed in Item 6.11 ("Employee Benefit Plans") of the Disclosure Schedule, --------- neither SIHL nor any member of its Controlled Group has any material contingent liability with respect to any post-retirement benefit under a Welfare Plan, other than liability for continuation coverage described in Part 6 of Title I of ERISA. SECTION 6.12. Environmental Warranties. Except as set forth in Item 6.12 ------------------------ --------- ("Environmental Matters") of the Disclosure Schedule: (a) all facilities and property (including underlying groundwater) owned or leased by SIHL or any of its Subsidiaries have been, and continue to be, owned or leased by SIHL and its Subsidiaries in material compliance with all Environmental Laws; (b) there are no pending and, to the knowledge of any Borrower, (i) there are no threatened and (ii) have been no past, (i) claims, complaints, notices or requests for information received by SIHL or any of its Subsidiaries with respect to any alleged violation of any Environmental Law, or (ii) complaints, notices or inquiries to SIHL or any of its Subsidiaries regarding potential material liability under any Environmental Law; (c) there have been no Releases of Hazardous Materials at, on or under any property now or, to the knowledge of any Borrower, previously owned or leased by SIHL or any of its Subsidiaries that, singly or in the aggregate, have, or would reasonably be expected to have, a material adverse effect on the financial condition, operations, assets, business or properties of SIHL and its Subsidiaries, taken as a whole; (d) SIHL and its Subsidiaries have been issued and are in material compliance with all permits, certificates, approvals, licenses and other authorizations relating to environmental matters which are necessary for their businesses; (e) no property now or previously owned or leased by SIHL or any of its Subsidiaries is listed or proposed for listing (with respect to owned property only) on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar list of sites requiring investigation or clean-up; (f) there are no underground storage tanks, active or abandoned, including petroleum storage tanks, on or under any property now or, to the knowledge of any Borrower, previously owned or leased by SIHL or any of its Subsidiaries that, singly or in the aggregate, have, or would reasonably be expected to have, a material adverse effect on the financial condition, operations, assets, business or properties of SIHL and its Subsidiaries, taken as a whole; (g) neither SIHL nor any Subsidiary of SIHL has directly transported or directly arranged for the transportation of any Hazardous Material to any location which is listed or proposed for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list or which is the subject of federal, state or local enforcement actions or other investigations which would reasonably be expected to lead to material claims against SIHL or such Subsidiary thereof for any remedial work, damage to natural resources or personal injury, including claims under CERCLA; (h) to the knowledge of the Borrowers, there are no polychlorinated biphenyls or friable asbestos present at any property now or previously owned or leased by SIHL or any Subsidiary of SIHL that, singly or in the aggregate, have, or would reasonably be expected to have, a material adverse effect on the financial condition, operations, assets, business or properties of SIHL and its Subsidiaries, taken as a whole; and (i) to the knowledge of the Borrowers, no conditions exist at, on or under any property now or previously owned or leased by SIHL or any of its Subsidiaries which, with the passage of time, or the giving of notice or both, would reasonably be expected to give rise to any material liability under any Environmental Law. SECTION 6.13. Regulations U and X. None of the Borrowers is engaged in ------------------- the business of extending credit for the purpose of purchasing or carrying margin stock, and no proceeds of any Credit Extensions will be used to purchase or carry margin stock or for a purpose which violates, or would be inconsistent with, F.R.S. Board Regulation U or X. Terms for which meanings are provided in F.R.S. Board Regulation U or X or any regulations substituted therefor, as from time to time in effect, are used in this Section with such meanings. SECTION 6.14. Accuracy of Information. All factual information furnished ----------------------- by or on behalf of SIHL or its Subsidiaries in writing to the Administrative Agent or any Lender for purposes of or in connection with this Agreement or any transaction contemplated hereby and all other such factual information hereafter furnished by or on behalf of SIHL or its Subsidiaries to the Administrative Agent or any Lender pursuant to the terms of this Agreement will be true and accurate in every material respect on the date as of which such information is dated or certified and as of the date of execution and delivery of this Agreement by the Administrative Agent and such Lender, and such information is not, or shall not be, as the case may be, incomplete by omitting to state any material fact necessary to make such information not misleading. Insofar as any of the factual information described above includes assumptions, estimates, projections or opinions, no representation or warranty is made herein with respect thereto; provided, however, that to -------- ------- the extent any such assumptions, estimates, projections or opinions are based on factual matters, SIHL or its Subsidiaries has reviewed such factual matters and nothing has come to its attention in the context of such review which would lead it to believe that such factual matters were not or are not true and correct in all material respects or that such factual matters omit to state any material fact necessary to make such assumptions, estimates, projections or opinions not misleading in any material respect. SECTION 6.15. Protection under Security Instruments. The Debentures, ------------------------------------- together with the financing statements (if any) filed with respect thereto, constitutes a valid, first mortgage lien on, and (where applicable), a valid perfected floating lien on and security interest in, the property subject thereto, subject only to Permitted Encumbrances and Liens permitted on such property by Section 7.2.3. ------------- SECTION 6.16. No Condemnation Proceedings. There is no action, suit or --------------------------- proceeding (including any proceeding in condemnation or eminent domain or under any Environmental Law) pending or, to the knowledge of any Borrower or any other Guarantor, threatened which adversely affects the title to, or the use, operation or value of, the hotel and casino operations that are subject to the Debentures. SECTION 6.17. Insurance. SIHL or its Subsidiaries have obtained or --------- caused to be obtained insurance coverage covering the Bahamas Property which meets in all respects the requirements of this Agreement, and such coverage is in full force and effect. SECTION 6.18. Seniority of Obligations, etc. Each Subordinated Debt ------------------------------ Issuer has (or will have) the power and authority to incur the Indebtedness (if any) evidenced by the Subordinated Notes as provided for under each Subordinated Note Indenture and has (or will have) duly authorized, executed and delivered each Subordinated Note Indenture, as applicable. Each Subordinated Debt Issuer has (or will have) issued, pursuant to due authorization, the Subordinated Notes under each Subordinated Note Indenture. Once executed and delivered by a Subordinated Debt Issuer, each Subordinated Note Indenture will constitute the legal, valid and binding obligation of such Subordinated Debt Issuer enforceable against such Subordinated Debt Issuer in accordance with its terms. The Subordination Provisions of the Subordinated Notes and contained in each Subordinated Note Indenture will be enforceable against the holders of the Subordinated Notes by the holder of any "Senior Indebtedness", "Senior Debt" or similar term referring to the Obligations, as applicable in such Subordinated Note Indenture, which has not effectively waived the benefits thereof. All monetary Obligations, including those to pay principal of and interest (including post-petition interest, whether or not permitted as a claim under applicable law) on the Loans and Reimbursement Obligations, and fees and expenses in connection therewith, constitute (or will constitute) "Senior Indebtedness", "Senior Debt" or similar term referring to the Obligations, as applicable in such Subordinated Note Indenture, and all such Obligations are (or will be) entitled to the benefits of the subordination created by such Subordinated Note Indenture. SIHL and each of its Subsidiaries acknowledges that each Lender Party is entering into this Agreement, and is extending its Commitments, in reliance upon the Subordination Provisions of (or to be contained in) each Subordinated Note Indenture, the Subordinated Notes and this Section. ARTICLE VII COVENANTS SECTION 7.1. Affirmative Covenants. Each of the Borrowers agrees with --------------------- the Agents, the Issuer and each Lender that, until all Commitments have terminated and all Obligations have been paid and performed in full, each of the Borrowers will perform the obligations set forth in this Section 7.1. ----------- SECTION 7.1.1. Financial Information, Reports, Notices, etc. SIHL will --------------------------------------------- furnish, or will cause to be furnished, to each Lender, the Issuer and the Administrative Agent copies of the following financial statements, reports, notices and information: (a) as soon as available and in any event within 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of SIHL, consolidated balance sheets of SIHL and its Subsidiaries and the SIBL Group (as applicable) as of the end of such Fiscal Quarter and consolidated statements of earnings and cash flow of SIHL and its Subsidiaries and the SIBL Group (as applicable), in each case for such Fiscal Quarter and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, certified by the chief financial Authorized Officer of SIHL; (b) as soon as available and in any event within 105 days after the end of each Fiscal Year of SIHL, a copy of the annual audit report for such Fiscal Year for SIHL and its Subsidiaries, including therein a consolidated balance sheet of SIHL and its Subsidiaries as of the end of such Fiscal Year and consolidated statements of earnings and cash flow of SIHL and its Subsidiaries for such Fiscal Year, in each case certified (without any Impermissible Qualification) by Arthur Andersen LLP or other independent public accountants acceptable to the Required Lenders, together with a certificate from such accountants containing a computation of, and showing compliance with, each of the financial ratios and restrictions contained in Section 7.2.4; ------------- (c) commencing with the period ending December 31, 2001, (A) as soon as available and in any event within the time periods set forth above in clauses (a) and (b) for the relevant Fiscal Quarter, a Compliance --------------------- Certificate, executed by the chief financial Authorized Officer of SIHL, (i) showing compliance with the financial covenants set forth in Section ------- 7.2.4, (ii) showing the amount of Capital Expenditures that were made ----- during such Fiscal Quarter, and (iii) certifying as to the absence of any Default and (B) within 60 days after the end of each Fiscal Year of SIHL, a certificate in substantially the form of Exhibit H from the chief ---------- financial Authorized Officer of SIHL showing the calculation (estimated in good faith, subject to adjustment upon delivery of the Compliance Certificate for such Fiscal Year end within 105 days after the end of such Fiscal Year) of the Total Leverage Ratio as of such Fiscal Year end; (d) as soon as possible and in any event within three days after an executive officer of SIHL knows of the occurrence of each Default, a statement of the chief financial Authorized Officer of SIHL setting forth details of such Default and the action which SIHL has taken and proposes to take with respect thereto; (e) as soon as possible and in any event within three days after an executive officer of SIHL knows of (x) the occurrence of any adverse development with respect to any litigation, action, proceeding, or labor controversy described in Section 6.7 or (y) the commencement of any labor ----------- controversy, litigation, action, proceeding of the type described in Section 6.7, notice thereof and copies of all documentation relating ------------ thereto; (f) promptly after the sending or filing thereof, copies of all reports which SIHL sends to any of its securityholders, and all reports and registration statements which SIHL or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange; (g) immediately upon becoming aware of the institution of any steps by any Borrower or any other Person to terminate any Pension Plan, or the failure to make a required contribution to any Pension Plan if such failure is sufficient to give rise to a Lien under section 302(f) of ERISA, or the taking of any action with respect to a Pension Plan which could result in the requirement that any Borrower furnish a bond or other security to the PBGC or such Pension Plan, or the occurrence of any event with respect to any Pension Plan which could result in the incurrence by any Borrower of any material liability, fine or penalty, or any material increase in the contingent liability of any Borrower with respect to any post-retirement Welfare Plan benefit, notice thereof and copies of all documentation relating thereto; (h) promptly following any amendment, waiver or other modification made to the Relinquishment Agreement or the Omnibus Termination Agreement, or delivery of any notice of default or termination of the Relinquishment Agreement or the Omnibus Termination Agreement, a copy of such amendment, waiver, modification or notice; (i) promptly following the delivery or receipt, as the case may be, of any written notice or communication pursuant to or in connection with any Subordinated Note Indenture or any of the Subordinated Notes, a copy of such notice or communication; and (j) such other information respecting the condition or operations, financial or otherwise, of SIHL or any of its Subsidiaries as the Issuer or any Lender through the Administrative Agent may from time to time reasonably request. SECTION 7.1.2. Compliance with Laws, etc. Each Borrower will, and will -------------------------- cause each of their respective Subsidiaries to, comply in all material respects with all applicable laws, rules, regulations and orders, such compliance to include (without limitation): (a) in the case of the Borrowers and their respective Significant Subsidiaries, the maintenance and preservation of its corporate existence (except as otherwise permitted by this Agreement) and qualification as a foreign corporation; and (b) the payment, before the same becomes delinquent, of all material taxes, assessments and governmental charges imposed upon it or upon its property except to the extent being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. SECTION 7.1.3. Maintenance of Properties. Each Borrower will, and will ------------------------- cause each of their respective Significant Subsidiaries to, maintain, preserve, protect and keep its properties in reasonably good repair, working order and condition, and make necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times unless SIHL determines in good faith that the continued maintenance of any of their respective properties (other than the Core Assets) is no longer economically desirable. SECTION 7.1.4. Insurance. (a) Each Borrower will, and will cause each of --------- their respective Significant Subsidiaries to, maintain or cause to be maintained with responsible insurance companies insurance with respect to its properties and business against such casualties and contingencies and of such types and in such amounts as is customary in the case of similar businesses, and will, upon request of the Administrative Agent, furnish to the Lender Parties at reasonable intervals a certificate of an Authorized Officer of SIHL setting forth the nature and extent of all insurance maintained by the Borrowers and their respective Significant Subsidiaries in accordance with this Section. (b) In addition, without limiting the foregoing, SIBL shall (and cause members of the SIBL Group to) comply with the following requirements: SIBL will, and will cause its Subsidiaries to, maintain (for so long as such property is subject to a lien in favor of the Secured Parties) insurance noting the Administrative Agent's interest as joint loss payee with SIBL (or such Subsidiary) on behalf of the Secured Parties (to the extent of their interest) against loss or damage by fire, hurricane, flood, windstorm, tempest, seawave, earthquake, riot, civil commotion, aircraft and articles dropped therefrom to the full value thereof (not subject to average) all buildings and the contents thereof, structures and erections situate upon any freehold or leasehold property of SIBL and its Subsidiaries, and in particular shall maintain with respect thereto: (i) "All Risks" insurance on the buildings situate thereon in an amount not less than the replacement building value; (ii) "All Risks" insurance on all inventory, furnishings, fittings and equipment situate thereon or in transit thereto; and (iii) "All Risks" public liability third party insurance in an amount as is usual for companies carrying on a similar business; (iv) and shall keep the Bahamas Property and all buildings and contents thereof and structures and erections so insured with an insurer approved by the Administrative Agent. Such insurance insuring the collateral in which the Lender Parties have a security interest shall include clauses in form satisfactory to the Administrative Agent; and (v) ensure that the relevant insurer undertakes to advise the Secured Parties promptly after acquiring knowledge: (A) of any cancellation of the insurance, at least 30 days before such cancellation is due to take effect; (B) of any alteration in or termination of or expiry of the insurance, at least 30 days before such alteration, termination or expiry is due to take effect; (C) of any delay or failure to pay any premium or to renew the insurance, at least 30 days prior to the date of renewal thereof; and (D) of any act or omission or any event of which the insurer has knowledge and which might invalidate or render unenforceable (as between SIHL, such Subsidiary and such insurer) in whole or in part such insurance. SECTION 7.1.5. Books and Records. Each Borrower will, and will cause each ----------------- of their respective Significant Subsidiaries to, keep books and records which accurately reflect all of their respective business affairs and transactions and permit the Administrative Agent, the Issuer and each Lender or any of their respective representatives, at reasonable times and intervals, to visit all of its offices, to discuss its financial matters with its officers and independent public accountant (and each Borrower hereby authorizes such independent public accountant to discuss its and such Subsidiaries' financial matters with each Lender or its representatives whether or not any representative of any Borrower or such Subsidiary is present) and to examine any of its books or other corporate records. Following the occurrence of an Event of Default, SIHL shall pay any fees of such independent public accountant incurred in connection with the Administrative Agent's, the Issuer's or any Lender's exercise of its rights pursuant to this Section. SECTION 7.1.6. Environmental Covenant. Each Borrower will, and will cause ---------------------- each of their respective Subsidiaries to, (a) use and operate all of its facilities and properties in material compliance with all Environmental Laws, keep all necessary permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in material compliance therewith, and handle all Hazardous Materials in material compliance with all applicable Environmental Laws; (b) immediately notify the Administrative Agent and provide copies upon receipt of all written claims, complaints, notices or inquiries relating to compliance with Environmental Laws; and (c) provide such information and certifications which the Administrative Agent may reasonably request from time to time to evidence compliance with this Section 7.1.6. ------------- SECTION 7.1.7. Future Investments in Significant Subsidiaries. To the ---------------------------------------------- extent permitted by this Agreement, (a) upon any Borrower or any Guarantor directly or indirectly acquiring additional capital stock of or other equity interests in any Person that constituted a Pledged Share Issuer (as defined in a Pledge Agreement); or (b) upon SIHL or any Subsidiary of SIHL directly or indirectly acquiring or otherwise having a Significant Subsidiary (including if a non-Significant Subsidiary becomes a Significant Subsidiary) following the Effective Date; or (c) upon SIHL or any of its Subsidiaries directly or indirectly making an Investment in a Person; SIHL shall notify the Administrative Agent of such acquisition, and shall cause any Significant Subsidiary acquired or designated after the Effective Date to execute and deliver a Security Agreement and, if such Person owns any real property with a fair market value in excess of $5,000,000, a Mortgage (or, if applicable, a supplement to an existing Mortgage), and any other instruments, documents or filings reasonably requested by the Administrative Agent to perfect its security interest in the collateral described in such Security Agreement and such Mortgage, and SIHL and each other Obligor shall, pursuant to a Pledge Agreement (as supplemented, if necessary, by a Foreign Pledge Agreement), pledge to the Administrative Agent, for its benefit and that of the Secured Parties, (i) in the case of clauses (a) and (b) above, ----------- --- all of the additional or outstanding capital stock or equity interests so acquired within 30 days of acquisition or (ii) in the case of clause (c) ---------- above, the promissory note, duly endorsed in favor of the Administrative Agent (if such Investment is by way of a loan or advance) or the capital stock, equity or other ownership interest in a Significant Subsidiary (if such Investment is in the form of other than a loan or advance), in each case made or issued by each Borrower and each Significant Subsidiary that is in the chain of ownership in connection with such Investment, and, in the case of clauses (a), (b) and (if applicable) (c) above, also deliver to the ----------- --- --- Administrative Agent undated stock powers for such certificates, executed in blank (or, if any such shares of capital stock or equity interests are uncertificated, confirmation and evidence satisfactory to the Administrative Agent that the security interest in such uncertificated securities or equity interests has been transferred to and perfected by the Administrative Agent, for the benefit of the Issuer and the Lenders, in accordance with Article 8 and Article 9 of the U.C.C. or any other analogous local law which may be applicable), and to the extent any Subsidiary designated as a Significant Subsidiary is not already a party to a Guaranty, such Significant Subsidiary shall execute and deliver to the Administrative Agent a Guaranty Supplement together with, if requested by the Administrative Agent, such opinions of legal counsel for the Obligors from counsel reasonably satisfactory to the Administrative Agent relating thereto, which legal opinions shall be in form and substance reasonably satisfactory to the Administrative Agent. Without limiting the foregoing requirements, SIHL agrees that it will cause each Subsidiary that is required to deliver a guaranty of any Subordinated Debt to also execute and deliver a Guaranty Supplement to the Administrative Agent prior to or contemporaneously delivering a guaranty of Subordinated Debt. SECTION 7.1.8. Use of Proceeds. The Borrowers shall apply the proceeds of --------------- each Credit Extension in accordance with the seventh recital; without --------------- limiting the foregoing, no proceeds of any Loan will be used to acquire any equity security of a class which is registered pursuant to Section 12 of the Securities Exchange Act of 1934 or any "margin stock", as defined in F.R.S. Board Regulation U other than shares of capital stock of SIHL. SECTION 7.1.9. Priority of Lenders' Liens. Each Borrower will, and will -------------------------- cause their Subsidiaries to, do all things necessary to ensure that at all times the claims of the Secured Parties against the Obligors under this Agreement and the other Loan Documents that provide for Collateral Documents are prior to and superior to the claims of all other creditors, except as expressly permitted in this Agreement. SECTION 7.1.10. Access to Property. Each Borrower shall permit the ------------------ Administrative Agent and its agents, consultants, employees and representatives access to inspect its material properties upon giving reasonable notice (except during the continuance of an Event of Default when no notice shall be required). SECTION 7.1.11. Other Amounts. SIHL shall maintain deposits in a ------------- collateral account with the Administrative Agent in an amount reasonably requested from time to time by, and on terms and conditions satisfactory to, the Administrative Agent sufficient to pay any duties that may become due with respect to the Loan Documents, which amount may be applied by the Administrative Agent to the payment of such duties at any time after the occurrence and during the continuance of an Event of Default. SECTION 7.2. Negative Covenants. Each of the Borrowers agrees with the ------------------ Agents, the Issuer and each Lender that, until all Commitments have terminated and all Obligations have been paid and performed in full, each of the Borrowers will perform the obligations set forth in this Section 7.2. ----------- SECTION 7.2.1. Business Activities. SIHL will not, and will not permit ------------------- any of its Subsidiaries to, engage in any business activity, except those described in the first recital, the development and sale of time sharing and ------------- resort home properties, and (in each case), such activities as may be incidental or related thereto. SECTION 7.2.2. Indebtedness. SIHL will not, and will not permit any of ------------ its Subsidiaries to, create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, other than, without duplication, the following: (a) Indebtedness of the Borrowers and the Guarantors in respect of the Credit Extensions and other Obligations; (b) unsecured Indebtedness of a Borrower owing to a Subsidiary of SIHL (including another Borrower), but only if such Borrower and such Subsidiary have executed and delivered to the Administrative Agent a Subordination Agreement and such Indebtedness shall be evidenced by a note (which shall, unless the Administrative Agent shall otherwise agree, be in the form of Exhibit A to a Pledge Agreement and shall, pursuant to a Pledge Agreement, be pledged to the Administrative Agent for its benefit and that of the Secured Parties); (c) Indebtedness which is identified in Item 7.2.2(c) ("Ongoing ------------- Indebtedness") of the Disclosure Schedule; (d) Indebtedness which is incurred by SIHL or any of its Subsidiaries to a vendor of any assets permitted to be acquired pursuant to Section 7.2.7 to finance its acquisition of such assets; ------------- (e) unsecured Indebtedness incurred in the ordinary course of business (including open accounts extended by suppliers on normal trade terms in connection with purchases of goods and services, but excluding Indebtedness of the types set forth in clauses (a), (b) and (c) of the ------------ --- --- definition of Indebtedness or Contingent Liabilities in respect of such types of Indebtedness); (f) Indebtedness in respect of Capitalized Lease Liabilities to the extent permitted in Section 7.2.7; ------------- (g) Indebtedness of Guarantors (other than a Borrower) owing to a Borrower; provided that such Indebtedness shall not result in such -------- Borrower being treated as a conduit entity within the meaning of U.S. Treasury regulations section 1.881-3(a)(2)(ii)(B)(2)(iii) and which shall be evidenced by a note (which shall, unless the Administrative Agent shall otherwise agree, be in the form of Exhibit A to the applicable Borrower Pledge Agreement and shall, pursuant to a Borrower Pledge Agreement, be pledged to the Administrative Agent for its benefit and that of the Secured Parties); (h) Indebtedness of a Guarantor (other than a Borrower) owing to another Guarantor (other than a Borrower); provided that such Indebtedness -------- shall not result in such Guarantor being treated as a conduit entity within the meaning of U.S. Treasury regulations section 1.881-3(a)(2)(ii)(B)(2)(iii) and which shall be evidenced by a note (which shall, unless the Administrative Agent shall otherwise agree, be in the form of Exhibit A to the Subsidiary Pledge Agreement) and shall, pursuant to a Subsidiary Pledge Agreement, be pledged to the Administrative Agent for its benefit and that of the Secured Parties; (i) unsecured Subordinated Debt of SIHL or its wholly-owned Subsidiaries; (j) Indebtedness of a Subsidiary (other than a Guarantor) owing to another Subsidiary that is not a Guarantor; (k) Indebtedness of SIHL or its Subsidiaries in the form of Contingent Liabilities of the obligations of third parties; (l) from and after July 1, 2002, unsecured Indebtedness evidenced by senior notes of SIHL and/or certain of its wholly-owned Subsidiaries in an aggregate principal amount not to exceed $300,000,000, so long as (i) the net proceeds thereof are used to retire Indebtedness outstanding hereunder or Subordinated Debt of SIHL and its Subsidiaries, (ii) as of the last day of the most recent Fiscal Quarter end preceding the incurrence of such Indebtedness, the Total Leverage Ratio was less than 4.5:1; (iii) both before and after the incurrence of such Indebtedness, no Default has occurred and is continuing or would result therefrom and (iv) the scheduled principal payments thereunder do not begin prior to November 1, 2007; and (m) other unsecured Indebtedness of SIHL and its Subsidiaries not to exceed $15,000,000; provided, however, that no Indebtedness otherwise permitted by clause (d) or -------- ------- ---------- clauses (f) through (and including) (m) shall be permitted if, either before ----------- --- or after giving effect to the incurrence of such Indebtedness, any Default under Section 7.2.4 has occurred and is then continuing or, on a pro forma ------------- --- ----- basis, would result therefrom. SECTION 7.2.3. Liens. SIHL will not, and will not permit any of its ----- Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of its property, revenues or assets, whether now owned or hereafter acquired, except: (a) Liens securing payment of the Obligations granted pursuant to any Loan Document and Permitted Encumbrances; (b) Liens described in Item 7.2.3(c) ("Existing Liens") of the -------------- --------------- Disclosure Schedule to secure payment of Indebtedness of the type permitted and described in clause (c) of Section 7.2.2; ---------- ------------- (c) Liens granted to secure payment of Indebtedness of the type permitted and described in clauses (d) or (f) of Section 7.2.2 and ------------ --- -------------- covering only those assets acquired with the proceeds of such Indebtedness; (d) Liens for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (e) Liens of carriers, warehousemen, mechanics, materialmen and landlords, and other similar Liens imposed by law, incurred in the ordinary course of business for sums not overdue or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (f) Liens incurred in the ordinary course of business in connection with workmen's compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (g) judgment Liens in existence less than 15 days after the entry thereof or with respect to which execution has been stayed or the payment of which is covered in full (subject to a customary deductible) by insurance maintained with responsible insurance companies; (h) Liens granted by SIHL or any of its Subsidiaries to other than Subordinated Noteholders (or trustees or representatives of Subordinated Noteholders) to secure other than Subordinated Debt, consisting of a security interest in cash, Cash Equivalent Investments and/or marketable securities to secure obligations of SIHL or such Subsidiaries which are incurred pursuant to clause (k) of Section 7.2.2; provided that, the ---------- -------------- Secured Parties hereby agree that the Lien in such cash, Cash Equivalent Investments and/or marketable securities created by the Loan Documents shall be automatically subordinated to any Lien permitted under this clause in respect of the Indebtedness incurred under clause (k) of Section ---------- ------- 7.2.2; ----- (i) Liens on deposits or similar payments made in connection with Investments permitted by Section 7.2.5 or the acquisition of assets -------------- permitted by the terms of this Agreement; provided that the maximum -------- aggregate amount of such deposits or similar payments shall not exceed $20,000,000; and (j) Liens incurred in connection with the extension, renewal or refinancing of Indebtedness secured by the Liens described in clauses (b) or (c) above; provided that any extension, renewal or replacement Lien -------- shall (i) be limited to the property covered by the existing Lien and (ii) secure Indebtedness which is no greater in amount and have material terms no less favorable to the Lenders than the Indebtedness secured by the existing Lien. SECTION 7.2.4. Financial Condition. SIHL will not permit: ------------------- (a) the Interest Coverage Ratio as of the last day of any Fiscal Quarter ending on or about a date set forth below to be less than the ratio set forth opposite such date: Fiscal Quarter Ending Interest Coverage Ratio --------------------- ----------------------- December 31, 2001 2.75:1 March 31, 2002 2.50:1 June 30, 2002 2.25:1 September 30, 2002 2.25:1 December 31, 2002 2.50:1 March 31, 2003 2.75:1 June 30, 2003 and thereafter 3.00:1 (b) Consolidated Net Worth as of the last day of any Fiscal Quarter to be less than an amount equal to the sum of (i) 90% of Consolidated Net Worth as of September 30, 2001, plus (ii) 75% of Net Income of SIHL and ---- its Subsidiaries for each of the preceding full Fiscal Quarters occurring from and after September 30, 2001 (without deduction for losses), plus ---- (iii) 50% of Net Equity Proceeds (if any) received by SIHL during each of the preceding full Fiscal Quarters occurring from and after September 30, 2001; (c) the Total Leverage Ratio as of the last day of any Fiscal Quarter ending on a date set forth below to be greater than the ratio set forth opposite such date: Fiscal Quarter Ending Total Leverage Ratio --------------------- -------------------- December 31, 2001 4.25:1 March 31, 2002 4.50:1 June 30, 2002 5.00:1 September 30, 2002 5.00:1 December 31, 2002 4.75:1 March 31, 2003 4.50:1 June 30, 2003 and thereafter 4.25:1 (d) the Senior Leverage Ratio as of the last day of any Fiscal Quarter to be greater than 2.75:1. SECTION 7.2.5. Investments. SIHL will not, and will not permit any of its ----------- Subsidiaries to, make, incur, assume or suffer to exist any Investment in any other Person, except (without duplication): (a) Investments identified in Item 7.2.5(a) ("Ongoing Investments") ------------- of the Disclosure Schedule; (b) Cash Equivalent Investments; (c) Investments permitted as Indebtedness pursuant to clause (b), ---------- clause (g), clause (h) and clause (j) of Section 7.2.2; ---------- ---------- ---------- ------------- (d) in the ordinary course of business, Investments by SIHL in the Guarantors, or by any Guarantor in any other Guarantor, by way of contributions to or purchases of capital to the extent that all capital stock of other equity interests evidencing such Investments are pledged to the Administrative Agent for the benefit of the Secured Parties pursuant to Section 7.1.7; ------------- (e) Investments made with Net Equity Proceeds by SIHL in an amount equal to the amount of such Net Equity Proceeds in a venture (or in a Person engaged in a venture) of the type permitted by Section 7.2.1, -------------- whether or not such Investment is in a Subsidiary of SIHL, or, after giving effect to such Investment, the Person in which such Investment is made becomes a Subsidiary of SIHL; and (f) subject to Section 7.2.1, (i) from the Effective Date until -------------- September 30, 2002, Investments in an aggregate amount not to exceed $75,000,000 and (ii) from and after October 1, 2002 and so long as the Total Leverage Ratio as of the last day of the most recent Fiscal Quarter end was less than 4.5:1, other Investments; provided, however, that -------- ------- (g) any Investment which when made complies with the requirements of the definition of the term "Cash Equivalent Investment" may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements; and (h) no Investment otherwise permitted by clause (f) shall be ----------- permitted to be made if, immediately before or after giving effect thereto, any Default of the type set forth in clauses (a) through (d) of ----------- --- Section 8.1.9 or any other Event of Default shall have occurred and be -------------- continuing or would result therefrom; and (i) notwithstanding anything to the contrary contained herein, an Investment or other acquisition of all or any portion of the capital stock or other equity interest in any Person permitted in this Section may be pursued or made only if such Investment or acquisition is not opposed by the board of directors (or equivalent managerial body) of such Person prior to the expenditure of any funds in connection therewith. SECTION 7.2.6. Restricted Payments, etc. SIHL will not, and will not ------------------------- permit any of the Subsidiaries to, (a) declare or make a Restricted Payment or make any deposit for any Restricted Payment; provided that notwithstanding the foregoing, SIHL -------- shall be permitted to declare or make a Restricted Payment if (w) as of the last day of the most recent Fiscal Quarter end, the Total Leverage Ratio was less than 4.5:1, (x) both before and after giving effect to such Restricted Payment, no Default has occurred and is continuing or would result therefrom, (y) SIHL shall have delivered a Compliance Certificate to the Administrative Agent certifying to that effect and evidencing, on a pro forma basis after giving effect to such Restricted Payment, compliance with each of the covenants set forth in Section 7.2.4, and (z) the -------------- aggregate amount of all Restricted Payments when aggregated with the principal amount of, and accrued interest (and premium, if any) on, any Subordinated Notes redeemed, purchased or defeased in accordance with clause (b)(ii) shall not exceed the Restricted Payment Amount; -------------- (b) (i) make any payment or prepayment of principal of, or interest on, any Subordinated Notes (A) on any day other than, in the case of interest only, the stated scheduled date for such payment of interest set forth in the applicable Subordinated Notes or in the applicable Subordinated Note Indenture, or (B) which would violate the terms of this Agreement or the Subordination Provisions of such Subordinated Note Indenture; or (ii) redeem, purchase or defease any Subordinated Notes; provided, that notwithstanding the foregoing, SIHL shall be permitted to -------- prepay, purchase, redeem or defease Subordinated Notes if (x) as of the last day of the most recent Fiscal Quarter end, the Total Leverage Ratio was less than 4.5:1, (y) both before and after giving effect thereto, no Default has occurred and is continuing or would result therefrom and (z) the principal amount so paid, prepaid, purchased, redeemed or defeased, when aggregated with the amount of Restricted Payments paid under clause ------ (a) does not exceed the Restricted Payment Amount; and --- (c) make any deposit for any of the foregoing purposes in excess of the amounts permitted by clause (a) or (b). ---------- --- SECTION 7.2.7. Capital Expenditures, etc. SIHL will not, and will not -------------------------- permit any of its Subsidiaries to, make or commit to make Capital Expenditures in connection with the maintenance of existing assets or to acquire fixed assets to replace other fixed assets no longer useful in the business of SIHL and its Subsidiaries which in any Fiscal Year aggregate in excess of $45,000,000; provided, however, that to the extent the amount of -------- ------- Capital Expenditures permitted to be made in any Fiscal Year without giving effect to this proviso (the "Base Amount") exceeds the aggregate amount of ----------- Capital Expenditures actually made during such Fiscal Year, such excess amount may be carried forward to (but only to) the next succeeding Fiscal Year (any such amount to be certified by SIHL to the Administrative Agent in the Compliance Certificate delivered for the last Fiscal Quarter of such Fiscal Year, and any such amount carried forward to a succeeding Fiscal Year shall be deemed to be used prior to SIHL and its Subsidiaries using the Base Amount for such succeeding Fiscal Year, without giving effect to such carry-forward); and provided, further, that in no event may the carry-forward -------- ------- of unused Capital Expenditures exceed $30,000,000 for any Fiscal Year. The Lenders acknowledge and agree that, except as to the limitations set forth above, SIHL and its Subsidiaries shall be permitted to make other Capital Expenditures. SECTION 7.2.8. Transactions with Affiliates. SIHL will not, and will not ---------------------------- permit any of its Subsidiaries to, enter into, or cause, suffer or permit to exist any arrangement or contract with any of its other Affiliates unless such arrangement or contract is fair and equitable to SIHL or such Subsidiary and is an arrangement or contract of the kind which would be entered into by a prudent Person in the position of SIHL or such Subsidiary with a Person which is not one of its Affiliates. SECTION 7.2.9. Restrictive Agreements, etc. The Borrowers will not, and ---------------------------- will not permit any of their respective Significant Subsidiaries to, enter into any agreement (excluding (i) this Agreement and any other Loan Document, (ii) in the case of clause (a)(i) below, any agreement governing any ------------- Indebtedness permitted by clauses (d) or (f) of Section 7.2.2 as to the ----------- ---- ------------- assets financed with the proceeds of such Indebtedness and (iii) in the case of clause (a) below, as required under applicable laws binding on SINA and ---------- its Subsidiaries) prohibiting (a) the (i) creation or assumption of any Lien upon its properties, revenues or assets, whether now owned or hereafter acquired, or (ii) ability of SIHL or any other Obligor to amend or otherwise modify this Agreement or any other Loan Document; or (b) the ability of the Borrowers or any of their respective Significant Subsidiaries to make any payments, directly or indirectly, to any Borrower by way of dividends, advances, repayments of loans or advances, reimbursements of management and other intercompany charges, expenses and accruals or other returns on Investments, or the ability of any Borrower or any such Significant Subsidiary to make any payment, directly or indirectly, to any Borrower. SECTION 7.2.10. Consolidation, Merger, etc. The Borrowers will not, and --------------------------- will not permit any of their respective Significant Subsidiaries to, liquidate or dissolve, consolidate with, or merge into or with, any other Person, or purchase or otherwise acquire all of the capital stock or all or substantially all of the assets of any Person (or of any division thereof) except (a) any wholly-owned Subsidiary that is a Guarantor may liquidate or dissolve voluntarily into, and may merge with and into, SIHL or any other wholly-owned Guarantor, and the assets or stock of any wholly-owned Subsidiary that is a Guarantor may be purchased or otherwise acquired by SIHL or any other wholly-owned Subsidiary that is a Guarantor; (b) so long as no Default of the type set forth in clauses (a) ------------ through (d) of Section 8.1.9 or any other Event of Default has occurred --- -------------- and is continuing or would occur as a result of, and after giving effect thereto, SIHL or any of its Subsidiaries may purchase all or substantially all of the assets or all of the capital stock of any Person if permitted (without duplication) by Section 7.2.7 to be made as a Capital Expenditure ------------- or if permitted as an Investment pursuant to clauses (e) or (f) of Section ----------- --- ------- 7.2.5; and ------ (c) any Subsidiary that is not a Guarantor, a Borrower nor a Significant Subsidiary may liquidate or dissolve voluntarily into, and may merge with and into, any other Subsidiary, a Guarantor or any other Person. SECTION 7.2.11. Asset Dispositions, etc. SIHL will not, and will not ------------------------ permit any of its Subsidiaries to sell, transfer, lease, contribute or otherwise convey, or grant options, warrants or other rights (collectively referred to as a "Disposition"), with respect to, any assets of SIHL or any ----------- Subsidiary (including accounts receivable and capital stock of Subsidiaries) to any Person, unless (a) such Disposition is of any Core Asset (or of any interest therein, including without limitation, the ownership interest in the Person holding title to such Core Asset or any real property upon which any Core Asset is situated) and the prior written consent of all Lenders (which may be granted or withheld in their sole discretion) shall have been obtained; (b) such Disposition is of the Relinquishment Agreement or the Omnibus Termination Agreement (or any interest therein, including without limitation, the ownership interest in the Person(s) holding title to the Relinquishment Agreement or the Omnibus Termination Agreement) and the prior written consent of the Required Lenders (which may be granted or withheld in their sole discretion) shall have been obtained (and in the event of such a Disposition, all representations, covenants and other provisions in this Agreement which relate to the agreements so disposed of will be deemed to be removed from this Agreement and the other Loan Documents); (c) such Disposition is of any real property contiguous to Core Assets (or of any interest therein, including without limitation, the ownership interest in the Person holding title to such real property or any real property upon which Core Assets are situated) and the terms of such Disposition do not contain any restrictions, agreements or covenants that will interfere in any material adverse respect with access to or the operations of any Core Assets; (d) such Disposition is not a disposition described in clauses (a) through (c) above; and (e) in the case of any Disposition (including without limitation those described in the preceding clauses (a) through (d)), the Net Cash Proceeds (as such term is defined in the Existing Indentures) thereof are applied in conformity with the provisions of the Existing Indentures and, to the extent applicable, Section 2.2.2. Notwithstanding the foregoing or any provision of ------------- this Agreement to the contrary, the Borrowers may consummate the transactions contemplated by the Trademark Agreement (including, without limitation, causing the names of the Borrowers and certain Subsidiaries to be changed). Upon a Disposition permitted by this Section the Lien in favor of the Secured Parties upon the assets so sold, transferred, leased, contributed or conveyed shall automatically terminate and be released. SECTION 7.2.12. Modification of Certain Agreements. SIHL will not, and ---------------------------------- will not permit any of its Subsidiaries to, agree to or, in the case of the Relinquishment Agreement, vote in favor of, any material amendment or other modification to the Relinquishment Agreement, the Omnibus Termination Agreement, or (to the extent not restricted by law) permit the Relinquishment Agreement or the Omnibus Termination Agreement to be materially amended without the prior written consent of the Required Lenders, which may be withheld in the sole discretion of the Required Lenders; it being acknowledged and agreed by the parties hereto that any amendment or other modification which would have the effect of (i) reducing any fees paid to SIHL or any Subsidiary under the Relinquishment Agreement, (ii) shortening the term of the Relinquishment Agreement or (iii) allowing the fees or other amounts payable under the Relinquishment Agreement to be paid to any Person or Persons other than TCA, SIHL or a Guarantor, shall, in each case, be deemed to be material. SECTION 7.2.13. Modification of Subordinated Debt Documents. (a) Without ------------------------------------------- the prior written consent of the Required Lenders, SIHL will not, and will not permit any of its Subsidiaries to, consent to any amendment, supplement or other modification of any of the terms or provisions contained in, or applicable to, any Subordinated Debt (including any Subordinated Note Indenture or any of the Subordinated Notes), or any guarantees delivered in connection with any Subordinated Debt (collectively, the "Restricted ----------- Agreements"), or make any payment in order to obtain an amendment thereof or ---------- change thereto, if the effect of such amendment, supplement, modification or change is to (i) increase the principal amount of, or increase the interest rate on, or add or increase any fee with respect to such Subordinated Debt or any such Restricted Agreement, advance any dates upon which payments of principal or interest are due thereon or change any of the covenants with respect thereto in a manner which is more restrictive to SIHL or any of its Subsidiaries or (ii) change any event of default or condition to an event of default with respect thereto, change the redemption, prepayment or defeasance provisions thereof or change the Subordination Provisions thereof. (b) Without the prior written consent of the Required Lenders, SIHL will not, and will not permit any of its Subsidiaries to, consent to any amendment, supplement or other modification of any of the terms or provisions contained in, or applicable to, any senior debt permitted under Section 7.2.2(l) or any guarantees delivered in connection with any such ----------------- senior debt if the effect of such amendment, supplement, modification or change is to advance any dates upon which payments of principal are due thereon to a date prior to November 1, 2007. SECTION 7.2.14. Rate Protection Agreements. SIHL will not, and will not -------------------------- permit any of its Subsidiaries to, enter into any Rate Protection Agreements with an aggregate notional principal amount of Indebtedness in excess of $350,000,000. SECTION 7.2.15. Assets/Revenues in Other than Significant Subsidiaries. ------------------------------------------------------ SIHL will not permit more than (i) 15% of the consolidated revenues of SIHL and its Subsidiaries during any Fiscal Quarter or (ii) 15% of the consolidated assets of SIHL and its Subsidiaries at the end of any Fiscal Quarter, to be generated or owned by other than the Borrowers or Significant Subsidiaries that are Guarantors. ARTICLE VIII EVENTS OF DEFAULT SECTION 8.1. Listing of Events of Default. Each of the following events ---------------------------- or occurrences described in this Section 8.1 shall constitute an "Event of ----------- --------- Default". ------- SECTION 8.1.1. Non-Payment of Obligations. Any Borrower shall default -------------------------- (i) in the payment or prepayment when due of any principal on any Credit Extension or repayment of any Reimbursement Obligation, or (ii) in the payment when due of any interest on any Credit Extension or any commitment fee (and such default shall continue unremedied for a period of three Business Days), or (iii) in the payment of any other Obligation (and such default shall continue unremedied for a period of 15 days following the submission of an invoice to the relevant Borrower and SIHL in respect of such other Obligation). SECTION 8.1.2. Breach of Warranty. The representations and warranties of ------------------ SIHL or any other Obligor made or deemed to be made hereunder or in any other Loan Document executed by it or any other writing or certificate furnished by or on behalf of any Obligor to the Administrative Agent, the Issuer or any Lender for the purposes of or in connection with this Agreement or any such other Loan Document (including any certificates delivered pursuant to Article V) is or shall be incorrect when made in any material respect. --------- SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations. Any ---------------------------------------------------- Borrower shall default in the due performance and observance of any of its obligations under Sections 7.1.1, 7.1.4, 7.1.6 or 7.1.7 or Section 7.2. -------------- ----- ----- ----- ----------- SECTION 8.1.4. Non-Performance of Other Covenants and Obligations. Any -------------------------------------------------- Obligor shall default in the due performance and observance of any other agreement contained herein or in any other Loan Document executed by it, and such default shall continue unremedied for a period of 15 days after notice thereof shall have been given to the relevant Obligor and SIHL by the Administrative Agent. SECTION 8.1.5. Default on Other Indebtedness. A default shall occur in ----------------------------- the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of any Indebtedness (other than Indebtedness described in Section 8.1.1) of any Borrower or any Significant Subsidiary ------------- having a principal amount, individually or in the aggregate, in excess of $7,500,000, or a default shall occur in the performance or observance of any obligation or condition with respect to such Indebtedness of any Borrower or any Significant Subsidiary which results in the acceleration of the maturity of any such Indebtedness or such default shall continue unremedied for any applicable period of time sufficient to permit the holder or holders of such Indebtedness of any Borrower or any Significant Subsidiary, or any trustee or agent for such holders, to cause such Indebtedness to become due and payable prior to its expressed maturity. SECTION 8.1.6. Judgments. Any judgment or order for the payment of money --------- in excess of $7,500,000 (to the extent not covered by insurance (other than self-insurance)) shall be rendered against any Borrower or any Significant Subsidiary 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 20 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. SECTION 8.1.7. Pension Plans. Any of the following events shall occur ------------- with respect to any Pension Plan (a) the institution of any steps by any Borrower, any member of their respective Controlled Group or any other Person to terminate a Pension Plan if, as a result of such termination, such Borrower or any such member could be required to make a contribution to such Pension Plan, or would reasonably expect to incur a liability or obligation to such Pension Plan, that would be secured under existing law or otherwise prior to or pari passu with the Secured Parties, in an amount in excess of $5,000,000; or (b) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA for an amount in excess of $5,000,000. SECTION 8.1.8. Change in Control. Any Change in Control shall occur. ----------------- SECTION 8.1.9. Bankruptcy, Insolvency, etc. Any Borrower or any of their ---------------------------- respective Significant Subsidiaries or any Obligor shall (a) become insolvent or generally fail to pay, or admit in writing its inability or unwillingness to pay, debts as they become due; (b) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for such Person or any property of any thereof, or make a general assignment for the benefit of creditors; (c) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for such Person or for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged within 60 days, provided that each such Person hereby expressly authorizes the Administrative Agent, the Issuer and each Lender to appear in any court conducting any relevant proceeding during such 60-day period to preserve, protect and defend their rights under the Loan Documents; (d) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of any such Person, and, if any such case or proceeding is not commenced by such Person, such case or proceeding shall be consented to or acquiesced in by such Person or shall result in the entry of an order for relief or shall remain for 60 days undismissed, provided that each such Person hereby expressly authorizes the Administrative Agent, the Issuer and each Lender to appear in any court conducting any such case or proceeding during such 60-day period to preserve, protect and defend their rights under the Loan Documents; or (e) take any action authorizing, or in furtherance of, any of the foregoing. SECTION 8.1.10. Impairment of Security, etc. Any Loan Document, or any ---------------------------- Lien granted thereunder, shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of any Obligor party thereto; SIHL or any other Obligor or any other party shall, directly or indirectly, contest in any manner such effectiveness, validity, binding nature or enforceability; or any Lien securing any Obligation shall, in whole or in part, cease to be a perfected first priority Lien, subject only to those exceptions expressly permitted by such Loan Document. SECTION 8.1.11. Amendments to, or Termination of, Certain Agreements. ---------------------------------------------------- Subject to Section 7.2.11(b), the Relinquishment Agreement or the Omnibus ----------------- Termination Agreement shall, in whole or in part, be amended, supplemented, modified, terminated, cease to be effective or cease to be the legally valid, binding and enforceable obligation of any party thereto, in each case if the effect of such amendment, supplement, modification, termination or other action, is materially adverse to the financial condition, operations, assets, business or properties of SIHL and its Subsidiaries, taken as a whole. SECTION 8.1.12. Loss of Bahamian Approvals. The approval of the Exchange -------------------------- Control of The Central Bank of The Commonwealth of The Bahamas with respect to this Agreement or the Notes delivered by SIBL or SIHL, and the undertaking to make available to SIBL or SIHL and the other Obligors such foreign exchange as may be necessary to enable SIBL or SIHL and the other Obligors to fulfill their payment obligations in Dollars, ceases to be in full force and effect and SIBL or SIHL shall fail to renew the same within 30 days or alternative arrangements shall not have been made by SIBL or SIHL for payment of the Obligations in Dollars. SECTION 8.1.13. Loss or Revocation of Casino License. Any Casino License ------------------------------------- is revoked, suspended, rescinded, denied or not renewed when required in accordance with its terms and as a result the casino or casinos governed thereby are not able to operate for a period of 14 or more days. SECTION 8.1.14. Loss of Property; Change in Management. SIBL or any of the -------------------------------------- Obligors or any material part of the revenues or assets of SIBL, the Obligors or the Bahamas Property (as the case may be) is seized, nationalized, expropriated or compulsorily purchased or any applicable authority resolves to make an order for such seizure, nationalization, expropriation or compulsory purchase or the management of SIBL or any Obligor is wholly or partially displaced or its authority in the conduct of its business is wholly or partially curtailed and such action would reasonably be expected to have a material adverse effect on the financial condition, operations, assets, business or properties of SIHL and its Subsidiaries, taken as a whole. SECTION 8.1.15. Failure of Subordination. The subordination provisions ------------------------ relating to any Subordinated Note Indenture or contained in any Subordinated Notes (the "Subordination Provisions") shall fail to be enforceable by the ------------------------ Lender Parties (which have not effectively waived the benefits thereof) in accordance with the terms thereof, or the principal or interest on any Loan, Reimbursement Obligation or other monetary Obligations shall fail to constitute Senior Indebtedness, "Senior Debt" or the same (or any other similar) term used to define the monetary Obligations; or any Subordinated Debt Issuer (or guarantor of any Subordinated Debt) shall, directly or indirectly, disavow or contest in any manner (i) the effectiveness, validity or enforceability of any of the Subordination Provisions, or (ii) that any of such Subordination Provisions exist for the benefit of the Lender Parties. SECTION 8.1.16. Redemption. Any judgment shall be entered in favor of a ---------- Subordinated Noteholder rescinding the Subordination Provisions of any Subordinated Debt or any event shall occur which, under the terms of or any other agreement or Subordinated Note Indenture, as the case may be, shall require any Subordinated Debt Issuer to purchase, redeem or otherwise acquire or offer to purchase, redeem or otherwise acquire all or any portion of the principal amount of any such Subordinated Debt prior to its final stated maturity date (other than as a result of the conversion of such Subordinated Debt into the equity of SIHL without the requirement of any monetary consideration being paid by or on behalf of SIHL). SECTION 8.2. Action if Bankruptcy. If any Event of Default described in -------------------- clauses (a) through (d) of Section 8.1.9 shall occur, the Commitments (if not ----------- --- ------------- theretofore terminated) shall automatically terminate and the outstanding principal amount of all outstanding Loans and all other Obligations shall automatically be and become immediately due and payable, without notice or demand. SECTION 8.3. Action if Other Event of Default. If any Event of Default -------------------------------- (other than any Event of Default described in clauses (a) through (d) of ----------- --- Section 8.1.9) shall occur for any reason, whether voluntary or involuntary, ------------- and be continuing, the Administrative Agent, upon the direction of the Required Lenders, shall by notice to the Borrowers declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable and/or the Commitments (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment, and/or, as the case may be, the Commitments shall terminate. ARTICLE IX THE ADMINISTRATIVE AGENT, CO-SYNDICATION AGENTS AND CO-DOCUMENTATION AGENTS SECTION 9.1. Actions. Each Lender and the Issuer hereby appoint CIBC as ------- its Administrative Agent under and for purposes of this Agreement and each other Loan Document. Each Lender and the Issuer authorize the Administrative Agent to act on behalf of the Issuer or Lender under this Agreement and each other Loan Document as Administrative Agent and, in the absence of other written instructions from the Required Lenders received from time to time by the Administrative Agent (with respect to which the Administrative Agent agrees that it will comply, except as otherwise provided in this Section or as otherwise advised by counsel), to exercise such powers hereunder and thereunder as are specifically delegated to or required of such Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto. Each Lender and the Issuer hereby indemnify (which indemnity shall survive any termination of this Agreement) the Administrative Agent according to such Lender's Percentage, from and against any and all liabilities, obligations, losses, damages, claims, costs or expenses of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against, the Administrative Agent in any way relating to or arising out of this Agreement and any other Loan Document, including reasonable attorneys' fees, and as to which the Administrative Agent is not reimbursed by an Obligor; provided, however, that no Lender or Issuer shall -------- ------- be liable for the payment of any portion of such liabilities, obligations, losses, damages, claims, costs or expenses which are determined by a court of competent jurisdiction in a final proceeding to have resulted solely from the Administrative Agent's gross negligence or willful misconduct. The Administrative Agent shall not be required to take, or omit to take, any action hereunder, under the Notes or under any other Loan Document, or to prosecute or defend any suit in respect of this Agreement or any other Loan Document, unless it is indemnified hereunder to its satisfaction. If any indemnity in favor of the Administrative Agent shall be or become, in the Administrative Agent's determination, inadequate, the Administrative Agent may call for additional indemnification from the Lenders and cease to do the acts indemnified against hereunder until such additional indemnity is given. SECTION 9.2. Funding Reliance, etc. Unless the Administrative Agent ---------------------- shall have been notified by telephone, confirmed in writing, by any Lender by 5:00 p.m., New York time, on the day prior to a Borrowing that such Lender will not make available the amount which would constitute its Percentage of such Borrowing on the date specified therefor, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent and, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. If and to the extent that such Lender shall not have made such amount available to the Administrative Agent, such Lender severally and each Borrower jointly and severally agree to repay the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date the Administrative Agent made such amount available to the applicable Borrower to the date such amount is repaid to the Administrative Agent, at the interest rate applicable at the time to Loans comprising such Borrowing. SECTION 9.3. Exculpation. Neither the Administrative Agent nor any of ----------- its directors, officers, employees or agents shall be liable to any Secured Party for any action taken or omitted to be taken by it under this Agreement or any other Loan Document, or in connection herewith or therewith, except for its own willful misconduct or gross negligence, nor responsible for any recitals or warranties herein or therein, nor for the effectiveness, enforceability, validity or due execution of this Agreement or any other Loan Document, nor for the creation, perfection or priority of any Liens purported to be created by any of the Loan Documents, or the validity, genuineness, enforceability, existence, value or sufficiency of any collateral security, nor to make any inquiry respecting the performance by any Obligor of its obligations hereunder or under any other Loan Document. Any such inquiry which may be made by the Administrative Agent shall not obligate it to make any further inquiry or to take any action. The Administrative Agent shall be entitled to rely upon advice of counsel concerning legal matters and upon any notice, consent, certificate, statement or writing which the Administrative Agent believes to be genuine and to have been presented by a proper Person. SECTION 9.4. Successor. The Administrative Agent may resign as such at --------- any time upon at least 60 days' prior notice to SIHL and all Lenders. If the Administrative Agent at any time shall resign, the Required Lenders may appoint another Lender as a successor Administrative Agent which, with the prior written consent of SIHL, not to be unreasonably withheld or delayed, shall thereupon become the Administrative Agent hereunder. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent's giving notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be one of the Lenders or a commercial banking institution organized under the laws of the U.S. (or any State thereof) or a U.S. branch or agency of a commercial banking institution, and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder, such successor Administrative Agent shall be entitled to receive from the retiring Administrative Agent such documents of transfer and assignment as such successor Administrative Agent may reasonably request, and shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent's resignation hereunder as the Administrative Agent, the provisions of (i) this Article IX shall inure to ---------- its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent under this Agreement and (ii) Section 10.3 and ------------ Section 10.4 shall continue to inure to its benefit. ------------ SECTION 9.5. Loans by Agents. Each Agent shall have the same rights and --------------- powers with respect to (x) the Credit Extensions made by either of them or any of their respective Affiliates, and (y) the Notes held by either of them or any of their respective Affiliates as any other Lender and may exercise the same as if it were not an Agent, as applicable. Each of Agent and their respective Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with any Borrower or any Subsidiary or Affiliate of SIHL as if such Agent were not an Agent hereunder, including being a counterparty to a Rate Protection Agreement. SECTION 9.6. Credit Decisions. Each Lender acknowledges that it has, ---------------- independently of each Agent and each other Lender, and based on such Lender's review of the financial information of the Borrowers, this Agreement, the other Loan Documents and such other documents, information and investigations as such Lender has deemed appropriate, made its own credit decision to extend its Commitment. Each Lender also acknowledges that it will, independently of each Agent and each other Lender, and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under this Agreement or any other Loan Document. SECTION 9.7. Copies, etc. The Administrative Agent shall give prompt ------------ notice to each Lender of each notice or request required or permitted to be given to such Agent by any Borrower pursuant to the terms of this Agreement unless concurrently delivered to the Lenders by a Borrower. The Administrative Agent will distribute to each Lender each document or instrument received for its account and copies of all other communications received by the Administrative Agent from each Borrower for distribution to the Lenders by such Agent in accordance with the terms of this Agreement. SECTION 9.8. Administrative Agent Independent Rights. Each of the --------------------------------------- parties hereto hereby agrees that (i) the Administrative Agent will be a joint and several creditor of each and every Obligation of each Borrower and the Obligors under the Credit Agreement and each other Loan Document, (ii) subject to the provisions hereof, the Administrative Agent shall have its own independent right to demand performance by a Borrower and each other Obligor of the Obligations under this Agreement and each other Loan Document and (iii) any payments made directly to the Administrative Agent in respect of the Obligations shall have been deemed to have been made by such Borrower or such other Obligor for the benefit of the Lender Parties. SECTION 9.9. The Co-Syndication Agents, the Co-Documentation Agents, the ------------------------------------------------------------ Co-Lead Arrangers and the Joint Book Runners. Notwithstanding anything else -------------------------------------------- to the contrary contained in this Agreement or any other Loan Document, none of the Co-Syndication Agents, the Co-Documentation Agents, the Co-Lead Arrangers or the Joint Book Runners, in such capacities, shall have any rights, duties or responsibilities under this Agreement or any other Loan Document, or any fiduciary relationship with any Secured Party, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any Loan Document or otherwise exist against any Co-Syndication Agent, Co-Documentation Agent, Co-Lead Arranger or Joint Book Runner in such capacity. ARTICLE X MISCELLANEOUS PROVISIONS SECTION 10.1. Waivers, Amendments, etc. The provisions of this Agreement ------------------------- and of each other Loan Document may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by the Borrowers and the Required Lenders; provided, however, that no such -------- ------- amendment, modification or waiver which would: (a) modify any requirement hereunder that any particular action be taken by all the Lenders shall be effective unless consented to by each Lender; (b) modify this Section 10.1, decrease the percentage contained in ------------ the definition of "Required Lenders", release (i) all or substantially all collateral security or (ii) a Guarantor from its obligations under a Guaranty or under Section 3.4, except as otherwise specifically provided ----------- in any Loan Document, or extend the Commitment Termination Date shall be made without the consent of each Lender (it being agreed that no consent need be obtained in the case of the release of collateral in accordance with Section 7.2.11); -------------- (c) increase the aggregate amount of Credit Extensions required to be made by or participated in by a Lender, reduce any fees described in Article III payable to a Lender, extend the due date for, or reduce the ------------ amount of, any scheduled repayment or prepayment of principal of or interest on any Loan (or reduce the principal amount of or rate of interest on any Loan) of a Lender shall be made without the consent of such adversely affected Lender; (d) increase the Stated Amount of any Letter of Credit unless consented to by the Issuer of such Letter of Credit; (e) affect adversely the interests, rights or obligations of any Agent in its capacity as an Agent or the Issuer in its capacity as the Issuer shall be made without consent of such Agent or the Issuer, as the case may be; or (f) waive payment defaults shall be made without the consent of each Lender. No failure or delay on the part of any Lender Party in exercising any power or right under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on any Borrower or any other Obligor in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by any Lender under this Agreement or any other Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder. SECTION 10.2. Notices. All notices and other communications provided to ------- any party hereto under this Agreement or any other Loan Document shall be in writing or by facsimile and addressed, delivered or transmitted to such party at its address or facsimile number set forth below its signature hereto or set forth in the Lender Assignment Agreement or at such other address or facsimile number as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any notice, if transmitted by facsimile, shall be deemed given when received. SECTION 10.3. Payment of Costs and Expenses. The Borrowers jointly and ----------------------------- severally agree to pay on demand all expenses of the Administrative Agent (including reasonable out-of-pocket expenses incurred by the Administrative Agent in connection with the reasonable fees and out-of-pocket expenses of counsel to the Administrative Agent and of local counsel, if any, who may be retained by counsel to the Administrative Agent) in connection with (a) the negotiation, preparation, execution and delivery of this Agreement and of each other Loan Document, including schedules and exhibits, and any amendments, waivers, consents, supplements or other modifications to this Agreement or any other Loan Document as may from time to time hereafter be required, whether or not the transactions contemplated hereby are consummated; (b) the filing, recording, refiling or rerecording of any Collateral Document and/or any Uniform Commercial Code financing statements relating thereto and all amendments, supplements and modifications to any thereof and any and all other documents or instruments of further assurance required to be filed or recorded or refiled or rerecorded by the terms hereof or of any Collateral Document or any other Loan Document; and (c) the preparation and review of the form of any document or instrument relevant to this Agreement or any other Loan Document. The Borrowers further jointly and severally agree to pay, and to save the Administrative Agent, the Issuer and the Lenders harmless from all liability for, any stamp or other taxes which may be payable in connection with the execution or delivery of this Agreement, the Credit Extensions hereunder, or the issuance of the Notes or any other Loan Documents. The Borrowers also jointly and severally agree to reimburse the Administrative Agent, the Issuer and each Lender upon demand for all reasonable out-of-pocket expenses (including attorneys' fees and legal expenses) incurred by the Administrative Agent, the Issuer or such Lender in connection with (x) the negotiation of any restructuring or "work-out", whether or not consummated, of any Obligations and (y) the enforcement of any Obligations. SECTION 10.4. Indemnification. In consideration of the execution and --------------- delivery of this Agreement by each Lender and the extension of the Commitment, the Borrowers hereby jointly and severally indemnify, exonerate and hold each of the Agents, the Issuer, the Co-Lead Arrangers, the Joint Book Runners and each Lender and each of their respective officers, directors, employees and agents (collectively, the "Indemnified Parties") ------------------- free and harmless from and against any and all actions, causes of action, suits, losses, costs, liabilities and damages, and expenses incurred in connection therewith (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys' fees and disbursements (collectively, the "Indemnified ------------ Liabilities"), incurred by the Indemnified Parties or any of them as a result ----------- of, or arising out of, or relating to (a) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Credit Extension; (b) the entering into and performance of this Agreement and any other Loan Document by any of the Indemnified Parties, so long as the same shall not have constituted a breach thereof by such Indemnified Party (including any action brought by or on behalf of any Borrower as the result of any determination by the Required Lenders pursuant to Article V --------- not to fund any Credit Extension); (c) any investigation, litigation or proceeding related to any acquisition or proposed acquisition by SIHL or any of its Subsidiaries of all or any portion of the stock or assets of any Person, whether or not such Agent, the Issuer or such Lender is party thereto; (d) any investigation, litigation or proceeding related to any environmental cleanup, audit, compliance or other matter relating to the protection of the environment or the Release by SIHL or any of its Subsidiaries of any Hazardous Material; or (e) the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission, discharging or releases from, any real property owned or operated by SIHL or any Subsidiary thereof of any Hazardous Material (including any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under any Environmental Law), regardless of whether caused by, or within the control of, SIHL or such Subsidiary, except for any such Indemnified Liabilities arising for the account of a particular Indemnified Party by reason of the relevant Indemnified Party's gross negligence or willful misconduct. If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Borrowers jointly and severally hereby agree to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. SECTION 10.5. Survival. The obligations of the Borrowers under Sections -------- --------- 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under --- --- --- --- ---- ---- Section 9.1, shall in each case survive any termination of this Agreement, ----------- the payment in full of all Obligations and the termination of all Commitments. The representations and warranties made by each Obligor in this Agreement and in each other Loan Document shall survive the execution and delivery of this Agreement and each such other Loan Document. SECTION 10.6. Severability. Any provision of this Agreement or any other ------------ Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or such Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 10.7. Headings. The various headings of this Agreement and of -------- each other Loan Document are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or such other Loan Document or any provisions hereof or thereof. SECTION 10.8. Execution in Counterparts, Effectiveness, etc. This ---------------------------------------------- Agreement may be executed by the parties hereto in several counterparts, each of which shall be executed by each Borrower and the Agents and be deemed to be an original and all of which shall constitute together but one and the same agreement. This Agreement shall become effective when (i) counterparts hereof executed on behalf of the Borrowers, the Issuer, the Agents and each Lender (or notice thereof satisfactory to the Administrative Agent) shall have been received by the Administrative Agent and notice thereof shall have been given by the Administrative Agent to SIHL and each Lender, (ii) the conditions precedent set forth in Section 5.1 shall have been satisfied or ----------- waived in full, and (iii) the Administrative Agent (or, in the case of amounts payable under the Fee Letters, the applicable Lender) shall have received for its own account, or for the account of such Lender, as the case may be, all fees, costs and expenses due and payable pursuant to Sections 3.3 ------------ and 10.3, if then invoiced. ---- SECTION 10.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES ------------------------------- AND EACH OTHER LOAN DOCUMENT (OTHER THAN THE FOREIGN PLEDGE AGREEMENTS, THE MORTGAGES AND THE DEBENTURES) SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement and the other Loan Documents (including the Fee Letters) constitute the entire understanding among the parties hereto with respect to the subject matter hereof and thereof and supersede any prior agreements, written or oral, with respect thereto. In the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of any Debentures or the Mortgages the terms and conditions of this Agreement shall prevail. SECTION 10.10. Successors and Assigns. This Agreement shall be binding ---------------------- upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that: -------- ------- (a) neither any Borrower nor any other Obligor may assign or transfer its rights or obligations hereunder without the prior written consent of all Lenders; and (b) the rights of sale, assignment and transfer of the Lenders are subject to Section 10.11. ------------- SECTION 10.11. Sale and Transfer of Loans and Note; Participations in ------------------------------------------------------- Loans and Note. Each Lender may assign, or sell participations in, its -------------- Loans, Letters of Credit participations and Commitment to one or more other Persons in accordance with this Section 10.11. ------------- SECTION 10.11.1. Assignments. ----------- (a) Each Commitment, Loan, Letter of Credit or participation therein, or other Obligation may (a) be assigned in any amount to another Lender or to an Affiliate or Approved Fund of the assigning Lender or another Lender with the giving of notice to the Borrowers and the Administrative Agent or (b) be assigned in an aggregate amount of not less than $5,000,000 (or such lesser amount as shall constitute the aggregate amount of the Commitments, Loans, Letters of Credit and participations therein, and other Obligations of the assigning Lender) to any other Eligible Assignee (treating any two or more Approved Funds with the same investment advisor as a single Eligible Assignee) (each such assignee in clauses (a) and (b) being an "Assignee Lender") with the giving of notice to the Borrowers and with the consent of the Borrowers (unless an Event of Default has occurred and is continuing) and the Administrative Agent (which consent of the Borrowers and the Administrative Agent shall not be unreasonably withheld or delayed), provided that, in the case of any -------- assignment to an Affiliate or Approved Fund of the assigning Lender, the Borrowers shall not be required to pay any amount under Sections 4.3, 4.4, ------------------ 4.5 or 4.6 that is greater than the amount which it would have been ---------- required to pay had no assignment to an Affiliate or Approved Fund been made. To the extent of any such assignment in accordance with either clause (a) or (b) above, the assigning Lender shall be relieved of its obligations with respect to its Commitments, Loans, Letters of Credit or participations therein, or other Obligations or the portion thereof so assigned. The parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, a Lender Assignment Agreement, together with a processing and recordation fee of $3,500 (provided that (i) no such processing and -------- recordation fee shall be payable if the Assignee Lender is an Affiliate of the assignor or a Person under common management with the assignor, and (ii) only one such fee shall be required in connection with a simultaneous assignment to a group of Approved Funds with the same investment advisor) and such forms (including an administrative questionnaire if the Assignee Lender was not previously a Lender), certificates or other evidence, if any, with respect to United States federal income tax withholding matters as the Assignee Lender under such Lender Assignment Agreement may be required to deliver to the Borrowers and the Administrative Agent pursuant to Section 4.6. Upon such execution, delivery, acceptance and recordation, ----------- from and after the effective date specified in such Lender Assignment Agreement, (y) the Assignee Lender thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Lender Assignment Agreement, shall have the rights and obligations of a Lender hereunder, and (z) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Lender Assignment Agreement, relinquish its rights (other than any rights which expressly survive the termination of this Agreement) and be released from its obligations under this Agreement (and, in the case of a Lender Assignment Agreement covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto; provided that, anything contained in any of the Loan Documents to the contrary notwithstanding, if such Lender is the Issuer with respect to any outstanding Letters of Credit such Lender shall continue to have all rights and obligations of the Issuer 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). The Commitments hereunder shall be modified to reflect the Commitment of such Assignee Lender and any remaining Commitment of such assigning Lender and the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes, if any, to Administrative Agent for cancellation, and thereupon new Notes shall, if so requested by the Assignee Lender and/or the assigning Lender, be issued to the Assignee Lender and/or the assigning Lender, to reflect the new Commitments and/or outstanding Loans of the Assignee Lender and/or the assigning Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section ------- 10.11.1(a) 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 10.11.2. --------------- (b) Upon its receipt of a Lender Assignment Agreement executed by an assigning Lender and an Assignee Lender representing that it is an Eligible Assignee, together with the processing and recordation fee (if so required) referred to in Section 10.11.1(a) and any forms, certificates or ------------------ other evidence with respect to United States federal income tax withholding matters that such Assignee Lender may be required to deliver to the Administrative Agent pursuant to Section 4.6, the Administrative ----------- Agent shall, if the Administrative Agent (and if necessary, the Borrower) has consented to the assignment evidenced thereby (in each case to the extent such consent is required pursuant to Section 10.11.1(a)), (a) -------------------- accept such Lender Assignment Agreement by executing a counterpart thereof as provided therein (which acceptance shall evidence any required consent of the Administrative Agent to such assignment), (b) record the information contained therein in the Register, and (c) give prompt notice thereof to the Borrowers. The Administrative Agent shall maintain a copy of each Lender Assignment Agreement delivered to and accepted by it as provided in this Section 10.11.1(b). ------------------ (c) If the consent of the Borrowers to an assignment or to an Eligible Assignee is required hereunder (including a consent to an assignment which does not meet the minimum assignment thresholds specified in Section 10.11.1(a)), the Borrowers shall be deemed to have given their ------------------ consent ten Business Days after the date notice thereof has been delivered by the assigning Lender (through the Administrative Agent) unless such consent is expressly refused by the Borrowers prior to such fifth Business Day. (d) Notwithstanding anything to the contrary set forth above, any Lender may (without requesting the consent of any Borrower or the Administrative Agent) pledge its Loans to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank. SECTION 10.11.2. Participations. Any Lender may at any time sell to one or -------------- more commercial banks or other financial institutions (each of such commercial banks and other financial institutions being herein called a "Participant") participating interests in any of the Loans, Loan Commitment, ------------ Letter of Credit Commitment and Letter of Credit Outstandings participated in by it, or other interests of such Lender hereunder; provided, however, that -------- ------- (a) no participation contemplated in this Section 10.11 shall -------------- relieve such Lender from its Commitment or its other obligations hereunder or under any other Loan Document; (b) such Lender shall remain solely responsible for the performance of its Commitment and such other obligations; (c) each Obligor and the Agents shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and each of the other Loan Documents; (d) no Participant, unless such Participant is an Affiliate of such Lender, or is itself a Lender, shall be entitled to require such Lender to take or refrain from taking any action hereunder or under any other Loan Document, and no Lender shall take or refrain from taking any action hereunder or under any other Loan Document upon the instruction or in accordance with the direction of any Participant except that such Lender may agree with any Participant that such Lender will not, without such Participant's consent, take any actions of the type described in clause ------ (b) or (c) of Section 10.1; and --- --- ------------ (e) no Obligor shall be required to pay any amount under Section ------- 4.3, 4.4, 4.5, or 4.6 that is greater than the amount which it would have ---------------------- been required to pay had no participating interest been sold. Each Obligor acknowledges and agrees that each Participant, for purposes of Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall be considered a ------------ --- --- --- --- --- ---- ---- Lender. SECTION 10.12. Other Transactions. Nothing contained herein shall ------------------ preclude any Agent, the Issuer or any other Lender from engaging in any transaction, in addition to those contemplated by this Agreement or any other Loan Document, with SIHL or any of its Affiliates in which SIHL or such Affiliate is not restricted hereby from engaging with any other Person. SECTION 10.13. Forum Selection and Consent to Jurisdiction. ANY ------------------------------------------- LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY AGENT, THE ISSUER, THE LENDERS, OR THE OBLIGORS SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK, COUNTY OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL -------- ------- OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, COUNTY OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH BORROWER HEREBY IRREVOCABLY APPOINTS CT CORPORATION SYSTEMS (THE "PROCESS AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT 111 EIGHTH ------------- AVENUE, 13th FLOOR, NEW YORK, NEW YORK 10011, UNITED STATES, AS ITS AGENT TO RECEIVE, ON SUCH PERSON'S BEHALF AND ON BEHALF OF SUCH PERSON'S PROPERTY, SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO SUCH PERSON IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS, AND EACH BORROWER HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. AS AN ALTERNATIVE METHOD OF SERVICE, EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT SUCH BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. SECTION 10.14. Waiver of Jury Trial. EACH AGENT, THE ISSUER, THE LENDERS, -------------------- EACH BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE ISSUER, THE LENDERS OR THE BORROWERS. EACH BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS, THE ISSUER, AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT. SECTION 10.15. Judgment Currency. The Obligations of each Borrower and ----------------- each other Obligor in respect of any sum due to any Lender or the Administrative Agent hereunder, under the Notes or under or in respect of any other Loan Document shall, notwithstanding any judgment in a currency (the "Judgment Currency") other than the currency in which such sum was originally ------------------ denominated (the "Original Currency"), be discharged only to the extent that ----------------- on the Business Day following receipt by such Lender or the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, such Lender or the Administrative Agent, in accordance with normal banking procedures, purchases the Original Currency with the Judgment Currency. If the amount of Original Currency so purchased is less than the sum originally due to such Lender or the Administrative Agent, each Borrower agrees as a separate obligation and notwithstanding any such judgment, to indemnify each Lender and the Administrative Agent, as the case may be, against such loss, and if the amount of Original Currency so purchased exceeds the sum originally due to such Lender and the Administrative Agent, as the case may be, each Lender and the Administrative Agent agree to remit any excess to the applicable Obligor. If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum due under any Loan Document in another currency into Dollars or into a Foreign Currency, as the case may be, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which, in accordance with normal banking procedures, the applicable Secured Party could purchase such other currency with Dollars or with such Foreign Currency, as the case may be, in New York City, at the close of business on the Business Day immediately preceding the day on which final judgment is given, together with any premiums and costs of exchange payable in connection with such purchase. SECTION 10.16. Confidentiality. Each of the Lenders and the Agents shall --------------- keep confidential all non-public information obtained pursuant to the requirements of or in connection with this Agreement which has been identified as such by SIHL in accordance with their customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices. Subject to Sections 10.11.1 and 10.11.2, such ---------------- ------- Lenders and Agents may make disclosure (i) to prospective Assignee Lenders or Participants in connection with the contemplated assignment or participation of all or any part of their Loans and Commitment so long as any such information so disclosed is identified as confidential and such prospective Assignee Lender or Participant is instructed to maintain the confidentiality thereof, (ii) to their examiners, Subsidiaries, outside auditors, counsel and other professional advisors in connection with this Agreement and (iii) as required or requested by any governmental authority or representative thereof or pursuant to legal process; provided that, unless specifically prohibited -------- by applicable law or court order, each Lender or Agent, as the case may be, shall endeavor to notify SIHL of any request by any governmental agency or representative thereof (other than any such request in connection with an examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information; and provided, further, that in no event shall any Lender -------- ------- be obligated or required to return any materials furnished by any Obligor. SECTION 10.17. Schedules. The information set forth in the Schedules --------- (including the Disclosure Schedule) to this Agreement is qualified in its entirety by reference to the specific provisions of this Agreement and is not intended to constitute, and shall not be construed as constituting, representations or warranties of the party to which such Schedules relate except as and to the extent provided in this Agreement. Inclusion of information in the Schedules shall not be construed as an admission that such information is material for purposes of the specific provisions of this Agreement to which such information relates. Information included in the Schedules that is not required to be so included under the specific provisions of this Agreement shall be deemed to be included for information purposes only and information of a similar nature need not be included elsewhere, at the discretion of the party providing such information. Any information disclosed by a party in any Schedule shall be deemed to be disclosed in all the Schedules of such party and for all purposes under this Agreement to the extent the specific provisions of this Agreement require such disclosure. SECTION 10.18. Replacement of Lenders. Each Lender or the ultimate parent ---------------------- company thereof may be rated by S&P, Moody's or Thompson's Bank Watch (or InsuranceWatch Ratings Service, in the case of Lenders that are insurance companies (or Best's Insurance Reports, if such insurance company is not rated by InsuranceWatch Ratings Service)). If a proposed Assignee Lender or its ultimate parent entity is not so rated, then the Borrowers may withhold their consent to any assignment to such Assignee Lender pursuant to Section 10.11.1. In the event that S&P, Moody's or Thompson's BankWatch (or InsuranceWatch Ratings Service, in the case of Lenders that are insurance companies (or Best's Insurance Reports, if such insurance company is not rated by InsuranceWatch Ratings Service)) shall downgrade the long-term certificate of deposit rating or long-term senior unsecured debt rating of any rated Lender or its ultimate parent company, and the resulting rating shall be below BBB-, Baa3 or C (or BB, in the case of Lender that is an insurance company (or B, in the case of an insurance company not rated by InsuranceWatch Ratings Service)), then the Issuer and SIHL shall have the right, but not the obligation, upon notice to such Lender and the Administrative Agent, to replace such Lender with an Assignee Lender in accordance with and subject to the restrictions contained in Section 10.11.1, --------------- and such Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in Section 10.11.1) --------------- all its interests, rights and obligations in respect of its Commitments, outstanding Loans and participating interest in Letter of Credit Outstanding under this Agreement to such Assignee Lender; provided, however, that (i) no -------- ------- such assignment shall conflict with any law, rule and regulation or order of any governmental authority, (ii) such Assignee Lender shall pay to such Lender in immediately available funds on the date of such assignment the principal of and interest and fees (if any) accrued to the date of payment on the Loans made, and Letters of Credit participated in, by such Lender hereunder and all other amounts accrued for such Lender's account or owed to it hereunder and (iii) SIHL and the Issuer agree that the certificate of deposit rating and long-term senior unsecured debt rating of each Lender or the ultimate parent company thereof that is a signatory to this Agreement on the Effective Date (or, if no such rating is available, the "individual" rating by IBCA Limited (and, if neither rating is available for such original Lender, then such rating of the parent holding company of such Lender)) is acceptable, and following the Effective Date such Lender shall be subject to this Section only if the applicable rating is downgraded below that in effect on the Effective Date. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written. SUN INTERNATIONAL BAHAMAS LIMITED By:_____________________________________ Title: Address: Executive Offices Coral Towers Paradise Island, The Bahamas Facsimile No.: (242) 363-3703 Attention: John R. Allison and Charles D. Adamo SUN INTERNATIONAL HOTELS LIMITED By:_____________________________________ Title: Address: Executive Offices Coral Towers Paradise Island, The Bahamas Facsimile No.: (242) 363-3703 Attention: John R. Allison and Charles D. Adamo 17013259 SUN INTERNATIONAL NORTH AMERICA, INC. By:_____________________________________ Title: Address: Executive Offices Coral Towers Paradise Island, The Bahamas Facsimile No.: (242) 363-3703 Attention: John R. Allison and Charles D. Adamo Table of Contents (continued) Page 17013259 -iv- Table of Contents Page 17013259 -i- ARTICLE I DEFINITIONS AND ACCOUNTING TERMS..............................2 SECTION 1.1. Defined Terms........................................2 SECTION 1.2. Use of Defined Terms................................27 SECTION 1.3. Cross-References....................................27 SECTION 1.4. Accounting and Financial Determinations.............27 ARTICLE II COMMITMENTS, BORROWING PROCEDURES, NOTES AND LETTERS OF CREDIT.......................................................27 SECTION 2.1. Amendment and Restatement; Commitments..............27 SECTION 2.2. Reduction/Increase of Commitment Amount.............29 SECTION 2.3. Borrowing Procedure.................................30 SECTION 2.4. Continuation and Conversion Elections...............31 SECTION 2.5. Funding.............................................31 SECTION 2.6. Issuance Procedures.................................31 SECTION 2.7. Currency Fluctuation, etc...........................35 SECTION 2.8. Notes...............................................35 SECTION 2.9. Register............................................35 ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES...................35 SECTION 3.1. Repayments and Prepayments..........................35 SECTION 3.2. Interest Provisions.................................36 SECTION 3.3. Fees................................................37 SECTION 3.4. Guaranty Provisions.................................38 ARTICLE IV CERTAIN LIBO RATE AND OTHER PROVISIONS.......................41 SECTION 4.1. LIBO Rate Lending Unlawful..........................41 SECTION 4.2. Deposits Unavailable................................41 SECTION 4.3. Increased LIBO Rate Loan Costs, etc.................41 SECTION 4.4. Funding Losses......................................42 SECTION 4.5. Increased Capital Costs.............................42 SECTION 4.6. Taxes...............................................43 SECTION 4.7. Payments, Computations, etc.........................44 SECTION 4.8. Sharing of Payments.................................45 SECTION 4.9. Setoff..............................................45 SECTION 4.10. Defaulting Lender...................................46 SECTION 4.11. Replacement Lender..................................46 ARTICLE V CONDITIONS TO EFFECTIVENESS..................................47 SECTION 5.1. Effectiveness.......................................47 SECTION 5.2. All Credit Extensions...............................50 ARTICLE VI REPRESENTATIONS AND WARRANTIES...............................51 SECTION 6.1. Organization, etc...................................51 SECTION 6.2. Due Authorization, Non-Contravention, etc...........51 SECTION 6.3. Government Approval, Regulation, etc................52 SECTION 6.4. Validity, etc.......................................52 SECTION 6.5. Financial Information...............................52 SECTION 6.6. No Material Adverse Change..........................52 SECTION 6.7. Litigation, Labor Controversies, etc................52 SECTION 6.8. Subsidiaries........................................53 SECTION 6.9. Ownership of Properties.............................53 SECTION 6.10. Taxes...............................................53 SECTION 6.11. Pension and Welfare Plans...........................53 SECTION 6.12. Environmental Warranties............................53 SECTION 6.13. Regulations U and X.................................55 SECTION 6.14. Accuracy of Information.............................55 SECTION 6.15. Protection under Security Instruments...............55 SECTION 6.16. No Condemnation Proceedings.........................55 SECTION 6.17. Insurance...........................................56 SECTION 6.18. Seniority of Obligations, etc.......................56 ARTICLE VII COVENANTS....................................................56 SECTION 7.1. Affirmative Covenants...............................56 SECTION 7.2. Negative Covenants..................................62 ARTICLE VIII EVENTS OF DEFAULT............................................70 SECTION 8.1. Listing of Events of Default........................70 SECTION 8.2. Action if Bankruptcy................................73 SECTION 8.3. Action if Other Event of Default....................74 ARTICLE IX THE ADMINISTRATIVE AGENT, CO-SYNDICATION AGENTS AND CO-DOCUMENTATION AGENTS......................................74 SECTION 9.1. Actions.............................................74 SECTION 9.2. Funding Reliance, etc...............................75 SECTION 9.3. Exculpation.........................................75 SECTION 9.4. Successor...........................................75 SECTION 9.5. Loans by Agents.....................................76 SECTION 9.6. Credit Decisions....................................76 SECTION 9.7. Copies, etc.........................................76 SECTION 9.8. Administrative Agent Independent Rights.............76 SECTION 9.9. The Co-Syndication Agents, the Co-Documentation Agents, the Co-Lead Arrangers and the Joint Book Runners........................................76 ARTICLE X MISCELLANEOUS PROVISIONS.....................................77 SECTION 10.1. Waivers, Amendments, etc............................77 SECTION 10.2. Notices.............................................78 SECTION 10.3. Payment of Costs and Expenses.......................78 SECTION 10.4. Indemnification.....................................78 SECTION 10.5. Survival............................................79 SECTION 10.6. Severability........................................79 SECTION 10.7. Headings............................................80 SECTION 10.8. Execution in Counterparts, Effectiveness, etc.......80 SECTION 10.9. Governing Law; Entire Agreement.....................80 SECTION 10.10. Successors and Assigns..............................80 SECTION 10.11. Sale and Transfer of Loans and Note; Participations in Loans and Note....................80 SECTION 10.12. Other Transactions..................................83 SECTION 10.13. Forum Selection and Consent to Jurisdiction.........83 SECTION 10.14. Waiver of Jury Trial................................84 SECTION 10.15. Judgment Currency...................................84 SECTION 10.16. Confidentiality.....................................85 SECTION 10.17. Schedules...........................................85 SECTION 10.18. Replacement of Lenders..............................86 Table of Contents (continued) SECTION PAGE ------- ---- 17013259 -iv- Table of Contents SECTION PAGE ------- ---- 17013259 -iv- SCHEDULE I - Disclosure Schedule SCHEDULE II - Debentures EXHIBIT A - Form of Note EXHIBIT B-1 - Form of Borrowing Request EXHIBIT B-2 - Form of Issuance Request EXHIBIT C - Form of Continuation/Conversion Notice EXHIBIT D - Form of Lender Assignment Agreement EXHIBIT E - Form of Borrower Effective Date Certificate EXHIBIT F - Form of Compliance Certificate EXHIBIT G Form of Perfection Certificate EXHIBIT H Form of Total Leverage Ratio Certificate

Exhibit 10.1 EMPLOYMENT AGREEMENT      This Key Employee Employment Agreement (“Agreement”) is entered this 23rd day of July, 2001, by and between Advanced Switching Communications, Inc. (“ASC” or “Employer”), a Delaware corporation with its principal place of business in Vienna, Virginia and Gary L. Wingo (“Employee”).      In consideration of the promises and mutual covenants contained in this Agreement and intending to be legally bound, Employer agrees to employ Employee, and Employee hereby agrees to such employment relationship with Employer, under the following terms and conditions: 1.     Employment. Employee accepts at will employment with ASC. Both Employee and Employer may terminate the employment relationship at any time, for any reason, with or without notice. In the event (A) ASC terminates Employee without cause (as hereafter defined); or (B) on the first anniversary of this Agreement in the event that Employee is not in breach of this Agreement and the Board of Directors does not appoint Employee as President and Chief Operating Officer of ASC, Employee may terminate this Agreement upon written notice to ASC no later than August 23, 2002; then ASC will pay Employee a lump sum equal to two times Employee’s base salary for the calendar year prior to termination within 30 days after the date of termination. For purposes of this Agreement, “cause” means: (i) any act or omission which constitutes a material breach by Employee of the terms of this Agreement, (ii) the conviction of a felony or commission of any act which would rise to the level of a felony, or the conviction or commission of a lesser crime, offense or act that adversely impacts upon the business or reputation of ASC, (iii) Employee’s willful or negligent failure to perform a substantial or material part of his duties, or (iv) Employee’s failure to meet minimum performance levels or goals established by mutual agreement between ASC and Employee. 2.     Duties. Employee’s duties will be as assigned by the Chief Executive Officer or Board of Directors and these duties may change from time to time. Employee agrees to devote his full time, attention and best efforts to the performance of these duties. Employee acknowledges that the effective performance of his/her duties may require Employee to work weekends and evenings from time to time. To avoid any conflict of interest while employed by ASC, Employee will not work for himself or herself or for other businesses or individuals, with or without compensation, without ASC’s written permission. This restriction is not intended to prevent Employee from engaging in social, community, charitable, political, family and other similar activities, so long as those activities are not adverse to the interests of ASC and do not interfere with the performance of Employee’s duties under this Agreement. Employee will comply with all published policies and procedures of ASC relating to his employment or the workplace.   -------------------------------------------------------------------------------- 3.     Compensation. While employed by ASC, Employee will receive the following compensation and benefits. Employer shall withhold from remuneration hereunder any federal, state or local income or payroll tax it deems necessary or appropriate to comply with applicable law.      a.     Base Salary. Employee’s initial base salary will be $25,000 monthly ($300,000 annually), which will be paid in arrears, according to ASC’s normal payroll practices. Such base salary shall be reviewed at least annually and may be adjusted upward in the discretion of ASC’s Chief Executive Officer or Board of Directors (or its delegate).      b.     Bonus Plan. Employee is eligible to receive bonuses in the discretion of ASC’s Chief Executive Officer or Board of Directors. This includes a one-time signing bonus of $150,000 payable in the first payroll cycle following Employee’s start date. In addition, Employee will be eligible to participate in ASC’s bonus plan with a target annual bonus of $200,000. This $200,000 bonus is guaranteed for his first year of employment, payable 1/2 on Employee’s six-month anniversary and 1/2 on his one-year anniversary with ASC, provided Employee is then in employment with ASC. Employee’s bonus may exceed $200,000 if Employee’s performance exceeds his mutually agreed to goals and objectives.      c.     Employee Benefits. Employee will be eligible to participate in such employee benefits and perquisites as are generally available to similarly situated employees of ASC from time to time. All benefits and perquisites provided under this Agreement are subject to the terms and conditions of the applicable benefit plans or programs. This includes eligibility to participate in ASC’s group life insurance program with the option to purchase additional life insurance up to a maximum of $300,000. In addition, Employee will accrue five weeks of vacation per year. Nothing in this Agreement shall limit ASC’s right to amend or terminate any employee benefit plan or program.      d.     Expense Reimbursement. Employee may be eligible for reimbursement for necessary business expenses incurred in the performance of his/her duties, including, by example, travel, meals, entertainment and related authorized expenses. Employee must submit itemized expense reports, receipts and other documentation that ASC may require.      e.     Stock Options. Subject to approval of such grant by ASC’s Board of Directors, Employee will be eligible for nonqualified options to purchase 1,000,000 shares of ASC’s common stock subject to the terms and conditions of the 2000 Stock Incentive Plan (the “Plan”) and the applicable option agreement. The vesting period for the options is 0% in the first year, 25% on the 1-year anniversary of the grant, with the remainder to vest ratably each month over the following 36 months. In the event of a Change in Control (as defined in the Plan), 50% of the unvested options will vest.   --------------------------------------------------------------------------------      f.     Loan. To assist Employee with establishing a residence in Virginia, ASC will provide Employee with an interest-free loan to be used for a down payment on a residence. The loan shall be in the amount of $200,000. This loan will be secured by a first or second mortgage on the residence. At ASC’s expense, Employee shall execute and deliver any and all documents as may be reasonably required by ASC to document the loan and the mortgage, including the written consent of the primary mortgagee to ASC’s mortgage. The loan will become due upon the earlier of the sale of the residence or 120 days after the termination of Employee’s employment with ASC for any reason. 4.     Special Covenants Regarding Work Product and Intellectual Property.      a.     Employee hereby assigns and transfers ownership to Employer of all inventions, discoveries, drawings, computer software, algorithms, improvements and devices conceived by Employee including intellectual property rights such as patents and copyrights (referred to as “work product”) developed or made by Employee, either alone or with others, in whole or in part during Employee’s employment by ASC, which (i) are useful in, or directly or indirectly related to ASC’s business or which relate to, or (ii) are conceived, developed or made in the course of, Employee’s employment, or (iii) which are developed or made from, or by reason of knowledge gained from such employment. Employer shall have the sole and exclusive right to use work product as described above, whether original or derivative, in any manner whatsoever, and Employee acknowledges that all work product described above shall be considered as “work for hire” belonging to ASC.      b.     Employee agrees to promptly disclose in writing all work product to ASC’s Chief Executive Officer or other designated ASC officers or representatives and assist ASC to protect any proprietary interest in work product as ASC may reasonably require. Employee shall execute all documents required by ASC to support and/or establish ASC’s ownership interest in this work product, and perform all lawful acts which ASC may deem necessary or advisable for the preparation, prosecution, procurement and maintenance of trademark, copyright and/or patent applications in the United States and/or foreign countries, whether before or after termination of employment. ASC agrees to bear all expenses in connection with establishing its ownership interest, but ASC has no obligation to protect by trademark, copyright, patent or otherwise such work product and may do so to the extent ASC deems desirable. These employee obligations are part of Employee’s general responsibilities and are included within the existing compensation being received with no additional compensation for these responsibilities. Employee agrees to keep such work product confidential and agrees not to disclose such work product without ASC’s written consent, except as required by, and during, his employment. 5.     Restrictive Covenants on Confidentiality, Nonsolicitation, Noncompetition.   --------------------------------------------------------------------------------      a.     Confidentiality. While employed with ASC, and because of the nature of Employee’s responsibilities, Employee will acquire valuable and confidential information and trade secrets regarding ASC’s business operations, including but not limited to, ASC’s existing and contemplated services and products, documentation, technical data, business and financial methods and practices and other confidential corporate information. Employee covenants and agrees that, while an ASC employee and following termination of that employment, all Corporate Information (as defined below) shall not be disclosed and shall be kept as confidential, proprietary, and in the nature of trade secrets, and Employee shall not disclose any Corporate Information to any person or use any Corporate Information for Employee’s own benefit or for the benefit of any other person without ASC’s written consent, except as required by, and during, his/her employment.      b.     Definition of Corporate Information. Any knowledge, information or documents regarding ASC or its affiliates, including, but not limited to, client lists, employee information, employee lists, prospective client lists, client contracts, information regarding clients or customers, processes, consulting and training methodologies, operational methods and procedures, work product (as defined in paragraph 4 above) business and marketing plans, product development ideas, designs of projects, research projects, products, systems, software, models, modules, templates, source code and object code, designs, business systems, consulting models, creative and graphical work, venture and business plans, programs, and financial plans, or improvements, modifications, components, prototypes or works thereof, pertaining to ASC’s business, ventures or its clients, and any information which has or may be derived or obtained from such information, shall constitute “Corporate Information”, whether or not reduced to tangible form or held electronically, and whether or not marked in physical writing or electronically as “confidential”. Corporate Information does not include any information made available by ASC in the normal course of its business to the general public. Employee acknowledges that such Corporate Information as is acquired and used by ASC or its affiliates is a special, valuable and unique asset. All records, files, materials and confidential information obtained by Employee in the course of his employment with ASC is confidential and proprietary and shall remain the exclusive property of ASC or its affiliates, as the case may be. However, this provision shall not preclude Employee from providing truthful information to the extent required by subpoena, court order, search warrant or other legal process, provided that Employee immediately notifies ASC of such request in order to provide ASC an opportunity to object to such request in the appropriate forum and to obtain a ruling on such objection.      c.     Return of Information. Upon termination of employment with Employer for any reason, or at any other time Employer demands, Employee shall deliver promptly to Employer all material and documentation relating to Employer or its clients, including without limitation, all memoranda, notes, records, reports, manuals, drawings, customer lists, referral source lists, vendor service lists, software   -------------------------------------------------------------------------------- programs, and any other documents, whether or not of a confidential nature, belonging to Employer, including all copies of such materials which Employee may then possess or have under his control. Employee further agrees that upon termination of employment, Employee shall not retain any document containing or pertaining to the Corporate Information.      d.     Noncompetition; Nonsolicitation.   (i)   During the term of the Employee’s employment by ASC and for a one (1)-year period commencing thereafter, the Employee shall not, without the prior written consent of ASC, directly or indirectly engage in any business or activity, whether as an employee, consultant, partner, principal, agent, representative or stockholder (other than as the holder of an interest of five percent (5%) or less in the equity of a publicly traded corporation) or render any services or provide any advice or substantial assistance to any business, person or entity, if such business, person or entity, directly or indirectly, competes (or, to the Employee’s knowledge after due inquiry, intends to compete or is preparing to compete during this one (1)-year period), in the United States with (i) ASC, (ii) any material product, service or business of ASC or (iii) any material product, service or business under serious consideration by ASC as of the Employee’s termination date or any time during the one-year prior period prior thereto. As used herein, a material product, service or business is under serious consideration by ASC if, at the time of Employee’s termination, it is included in a written business proposal, marketing plan or budget approved by, or intended to be submitted for approval by, the Chief Executive Officer or Chief Operating Officer of ASC, if Employee is, or would reasonably be expected to be, aware of such matter.     (ii)   During the term of the Employee’s employment by ASC and for a one (1)-year period commencing thereafter, the Employee shall not, directly or indirectly, divert, solicit or lure away the patronage of (i) any customer or business of ASC as of or any time prior to the Employee’s termination date, or (ii) any prospective customer or business of ASC. As used herein, “prospective customer” means any customer that ASC has actively and individually solicited within the one year period preceding the Employee’s termination date, or is seriously considering soliciting. As used herein, solicitation of a prospective customer is under serious consideration by ASC if, at the time of Employee’s termination, such solicitation is included in a written business proposal, marketing plan or budget approved by, or intended to be submitted for approval by, the Chief Executive Officer of ASC, if Employee is, or would reasonably be expected to be, aware of such matter.   --------------------------------------------------------------------------------   (iii)   In addition, the Employee shall not, without the prior express written consent of ASC, directly or indirectly, during the term of the Employee’s employment by ASC and for the one (1)-year period commencing thereafter, recruit, hire or assist others in recruiting or hiring, or otherwise solicit for employment, any employees of ASC or its customers or subcontractors.      The provisions of this Section 4(d) shall not be deemed to limit in any way the provisions of any other Section of this Agreement. In the event of Employee’s termination for cause, the provisions of section 4(d)(i) shall not apply to Employee. By entering into this Agreement, Employee acknowledges that these prohibitions are reasonable as to time, geographical area and scope of activity and do not impose a restriction greater than is necessary to protect ASC’s goodwill, proprietary information and business interests.      The Employee further acknowledges and agrees that, in the event of his termination of employment with Employer, the Employee’s experience and capabilities are such that the Employee can obtain employment in business activities which are of a different nature or are not in competition with Employee’s activities as an employee of Employer and that the enforcement of this Agreement shall not prevent the Employee from earning a reasonable livelihood.      Employee agrees that this Agreement provides enhanced protections and benefits to which he was not otherwise entitled prior to its execution and that such protections and benefits constitute valuable consideration sufficient to support the non-competition and non-solicitation obligations described above. 6.     Remedies.      a.     Employee agrees and acknowledges that a breach of paragraph 4 or 5 of this Agreement will result in damage or loss to ASC which cannot be reasonably or adequately compensated in damages and will cause ASC irreparable injury. In the event of such a breach or threatened breach of this Agreement by Employee, in addition to all other remedies otherwise available to ASC, ASC is entitled to an injunction, enjoining and restraining such breach or threatened or intended breach, and Employee hereby consents to the issuance of such injunction in any court of competent jurisdiction without proof of specific damages. Resort to such equitable relief shall not be construed to be a waiver of any other rights or remedies ASC may have for damages or otherwise.      b.     If either party enforces any part of this Agreement through legal proceedings and the other party is found to be in default or breach, the defaulting or breaching party agrees to pay the non-defaulting party any costs and attorneys’ fees reasonably incurred in such proceedings. 7.     Cumulative Rights. The parties’ rights and remedies in this Agreement are cumulative, and in addition to, any other rights, remedies or causes of action   -------------------------------------------------------------------------------- allowed at law and shall not exclude any other rights or remedies available to either party. 8.     Overpayment. From time to time, Employee may receive payments in advance for business expenses, payroll advancements or other payments or loans. Employee hereby authorizes ASC to deduct from Employee’s compensation, any amounts paid which are in excess of the amounts to which Employee is entitled by a deduction from monies or other compensation owed to Employee from ASC. Any overpayments or loans not otherwise recoverable by way of such deduction, are deemed payable in full on termination of employment for any reason or on demand, whichever is sooner 9.     Notices. Any notice required or permitted by this Agreement shall be sufficient if in writing, and sent by certified mail, or hand delivery through a company providing written receipt of delivery, to Employee’s last known residence or to Employer’s principal office (Attention: General Counsel) as the case may be. 10.     Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach by such party. 11.     Governing Law and Venue. This Agreement shall be governed by the law of the Commonwealth of Virginia, Employer’s principal place of business, without giving effect to Virginia’s conflict of laws. The parties agree that the proper venue for any dispute shall be the Fairfax County Circuit Court or the United States District Court for the Eastern District of Virginia, Alexandria Division and in the event that there is no other manner of service hereby appoint the Secretary of the Commonwealth of Virginia. 12.     Severability. If any part or portion hereof shall be determined to be invalid, illegal or unenforceable, in whole or in part, neither the validity of the remaining part or portion of such term nor the validity of any other term or provision of this Agreement shall in any way be affected thereby. 13.     Assignment. Employee’s rights and obligations under this Agreement are not assignable. ASC’s rights and obligations inure to the benefit of and shall be binding upon successors and assigns of ASC. 14.     Survival of Employee’s Obligations. The provisions of paragraphs 4, 5, 6, 7 and 8 of this Agreement, and any related provisions necessary to enforce such provisions, shall survive termination of Employee’s employment, and form a continuing obligation on the part of the parties hereto, which may not be waived except in writing by both parties to this Agreement. 15.     Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the matters contained herein. It may be modified, changed   -------------------------------------------------------------------------------- or altered only by an agreement in writing signed by all of the parties. The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any person. This Agreement may be executed in any number of counterparts. 16.     Employee’s Warranties. Employee warrants that his/her performance of this Agreement’s terms, and any services to be rendered as an ASC employee, do not and shall not breach any fiduciary or other duty or any covenant, agreement or understanding, including any agreement relating to any proprietary information, knowledge or data acquired by Employee in confidence or trust, prior to Employee’s employment by ASC, to which Employee is a party or by the terms of which Employee may be bound. Employee shall not disclose to ASC or its clients, or induce ASC to use, any such proprietary information, knowledge, or data belonging to any previous employer without such previous employer’s permission. Employee will disclose to ASC, as much as Employee is permitted to do, the terms and subject of any prior confidentiality, non-competition or invention agreement or agreements to which Employee is bound. 17.     Indemnification. Employee hereby agrees that if Employee intentionally breaches any agreement or understanding between him/her and another person or company, or intentionally wrongfully uses any confidential or proprietary information or trade secrets he has obtained from sources other than ASC without permission, then Employee will indemnify and hold ASC harmless from and against any and all damages, claims, costs and expenses, including without limitation attorneys’ fees and legal costs and expenses, based on or arising, directly or indirectly, from such intentional actions.      Witness our signatures and seals executed as of the day and year first written above.       ADVANCED SWITCHING COMMUNICATIONS, INC.       BY: /s/ Asghar Mostafa --------------------------------------------------------------------------------               Asghar Mostafa   (SEAL)       EMPLOYEE:       /s/ Gary L. Wingo -------------------------------------------------------------------------------- Gary L. Wingo 1385 Portmarnock Dr. Alpharetta, GA 30005   (SEAL)  

EXHIBIT 10.21         STOCK PURCHASE AGREEMENT   by and between   THE PURCHASERS SET FORTH ON EXHIBIT A,   SANTA BARBARA RESTAURANT GROUP, INC.,   AND   CKE RESTAURANTS, INC.   for the purchase of   189,900 shares of Common Stock of CKE Restaurants, Inc.         DATED AUGUST ______, 2001   THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into as of August ___, 2001 (the “Effective Date”), by and between the Purchasers set forth on Exhibit A hereto (each, a “Purchaser”), Santa Barbara Restaurant Group, Inc., a Delaware corporation (“SBRG”), and CKE Restaurants, Inc., a Delaware corporation (“CKE”).   RECITALS   A.            SBRG beneficially owns 189,900 shares of common stock, par value $0.01, of CKE (the “Shares”).   B.            Each of the Purchasers is a participant in CKE’s Employee, or Non-Employee Director, Stock Purchase Loan Plan (as applicable, the “Plan”), pursuant to which CKE provided loans to certain officers and directors of CKE for the purpose of purchasing shares of CKE common stock.   C.            CKE desires to provide loans to each Purchaser in the amounts set forth opposite such Purchaser’s name on Exhibit A, for the purpose of purchasing the number of Shares set forth opposite such Purchaser’s name on Exhibit A.   D.            SBRG desires to sell to the Purchasers, and each of the Purchasers desires to purchase from SBRG, the number of Shares set forth opposite such Purchaser’s name on Exhibit A, pursuant to the terms and conditions hereunder.   NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:   AGREEMENT   1.             PURCHASE AND SALE.  SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT AND THE PLAN, PURCHASER HEREBY PURCHASES FROM SBRG, AND SBRG HEREBY SELLS TO PURCHASER, THE NUMBER OF SHARES SET FORTH OPPOSITE PURCHASER’S NAME ON EXHIBIT A HERETO AT A PURCHASE PRICE OF FIVE DOLLARS AND SEVENTY-TWO CENTS ($5.72) PER SHARE.  CONCURRENTLY HEREWITH, CKE IS DELIVERING TO SBRG AN AGGREGATE OF $1,086,228.00 FOR THE PURCHASE OF ALL OF THE SHARES ON BEHALF OF THE PURCHASERS, AND SBRG IS DELIVERING TO CKE ON BEHALF OF THE PURCHASERS CERTIFICATES EVIDENCING THE SHARES, DULY ENDORSED FOR TRANSFER, RECEIPTS FOR WHICH ARE HEREBY ACKNOWLEDGED.   2.             ELECTION TO PARTICIPATE.  PURCHASER HEREBY AGREES TO BORROW FROM CKE THE AMOUNT SET FORTH OPPOSITE SUCH PURCHASER’S NAME ON EXHIBIT A HERETO, AND TO ENTER INTO A PROMISSORY NOTE FOR SUCH AMOUNT IN THE FORM ATTACHED HERETO AS EXHIBIT B, PURSUANT TO THE TERMS OF THE PLAN.   3.             REPRESENTATIONS AND WARRANTIES OF SBRG.  SBRG MAKES THE FOLLOWING REPRESENTATIONS AND WARRANTIES:   3.1           AUTHORIZATION.  SBRG HAS FULL POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT, AND THIS AGREEMENT HAS BEEN DULY AUTHORIZED BY ALL REQUISITE CORPORATE ACTION OF SBRG AND WILL NOT RESULT IN A BREACH, ACCELERATION OR VIOLATION OF ANY AGREEMENT TO WHICH SBRG IS A PARTY OR IS OTHERWISE BOUND.  THIS AGREEMENT WILL CONSTITUTE THE VALID AND LEGALLY BINDING OBLIGATION OF SBRG, ENFORCEABLE AGAINST SBRG IN ACCORDANCE WITH ITS TERMS EXCEPT (I) AS LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM, AND OTHER LAWS OF GENERAL APPLICATION AFFECTING ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY AND (II) AS LIMITED BY LAWS RELATING TO THE AVAILABILITY OF SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF, OR OTHER EQUITABLE REMEDIES.  SBRG HAS RECEIVED ALL CONSENTS, APPROVALS, ORDERS WAIVERS AND AUTHORIZATIONS, AND HAS PROVIDED ALL NOTICES, WHICH ARE NECESSARY IN CONNECTION WITH THE VALID EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE SALE OF THE SHARES.   (A)           THE SHARES ARE VALIDLY ISSUED AND ARE FULLY PAID AND NONASSESSABLE.   (B)           SBRG HOLDS OF RECORD AND BENEFICIALLY OWNS THE SHARES FREE AND CLEAR OF ALL LIENS, CHARGES, CLAIMS, ENCUMBRANCES, WARRANTS, SECURITY INTERESTS, EQUITIES, RESTRICTIONS ON TRANSFER, RIGHT OF FIRST REFUSAL, PREEMPTIVE RIGHTS OR OTHER DEFECTS IN TITLE OF ANY KIND OR DESCRIPTION (COLLECTIVELY, “ENCUMBRANCES”), AND IS OFFERING, SELLING AND TRANSFERRING THE SHARES FREE AND CLEAR OF ENCUMBRANCES, OTHER THAN SUCH RESTRICTIONS IMPOSED BY THIS AGREEMENT AND UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS.  THERE IS NO ACTION, SUIT, CLAIM, INVESTIGATION OR PROCEEDING, WHETHER AT LAW OR IN EQUITY, AGAINST SBRG OR CLAIM OR COUNTER-CLAIM INITIATED BY SBRG, THAT IS PENDING, OR TO SBRG’S KNOWLEDGE, THREATENED (COLLECTIVELY, “PROCEEDINGS”), THAT COULD REASONABLY BE EXPECTED TO AFFECT ADVERSELY SBRG’S OWNERSHIP AND SALE OF THE SHARES FREE AND CLEAR OF ENCUMBRANCES, OR TO OTHERWISE PERFORM ANY OF ITS OBLIGATIONS HEREUNDER.   (C)           SBRG IS NOT A PARTY TO ANY OPTION, WARRANT, PURCHASE RIGHT, OR OTHER CONTRACT OR COMMITMENT THAT COULD REQUIRE IT TO SELL, TRANSFER, OR OTHERWISE DISPOSE OF ANY CAPITAL STOCK OF CKE (OTHER THAN THIS AGREEMENT).  SBRG IS NOT A PARTY TO ANY VOTING TRUST, PROXY, OR OTHER AGREEMENT OR UNDERSTANDING WITH RESPECT TO THE VOTING OF ANY CAPITAL STOCK OF CKE, INCLUDING, WITHOUT LIMITATION, THE SHARES.   4.             PURCHASER INVESTMENT REPRESENTATIONS.  EACH PURCHASER MAKES THE FOLLOWING REPRESENTATIONS AND WARRANTIES:   4.1           PURCHASER UNDERSTANDS THAT THE SHARES ARE NOT REGISTERED UNDER THE SECURITIES ACT AND ARE NOT QUALIFIED OR REGISTERED UNDER BLUE SKY LAWS PURSUANT TO EXEMPTIONS FROM REGISTRATION OR QUALIFICATION CONTAINED IN THE SECURITIES ACT AND IN THE BLUE SKY LAWS.  PURCHASER UNDERSTANDS THAT THE SHARES MUST BE HELD INDEFINITELY UNLESS SUBSEQUENTLY REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT AND UNDER THE BLUE SKY LAWS UNLESS EXEMPTIONS FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS UNDER THE SECURITIES ACT AND UNDER THE BLUE SKY LAWS ARE AVAILABLE IN CONNECTION WITH ANY PROPOSED TRANSFER OF THE SHARES BY PURCHASER.   4.2           PURCHASER AGREES THAT NONE OF THE SHARES, NOR ANY INTEREST IN SUCH SHARES, WILL BE RESOLD OR OTHERWISE TRANSFERRED BY PURCHASER WITHOUT REGISTRATION OR QUALIFICATION UNDER THE SECURITIES ACT AND THE BLUE SKY LAWS UNLESS EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS ARE AVAILABLE.   4.3           PURCHASER IS AWARE OF CKE’S BUSINESS AFFAIRS AND FINANCIAL CONDITION AND HAS ACQUIRED SUFFICIENT INFORMATION ABOUT CKE TO REACH AN INFORMED AND KNOWLEDGEABLE DECISION REGARDING THE MERITS AND RISKS OF INVESTING IN THE SHARES.  PURCHASER HAS HAD AMPLE OPPORTUNITY TO REVIEW INFORMATION REGARDING CKE AND TO ASK QUESTIONS OF CKE AND ITS REPRESENTATIVES AND TO SEEK INDEPENDENT INVESTMENT, TAX, AND LEGAL ADVICE PRIOR TO INVESTING IN THE SHARES.   4.4           THE SHARES ARE BEING ACQUIRED FOR PRIVATE INVESTMENT FOR PURCHASER’S OWN ACCOUNT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION OF SUCH SHARES.   4.5           The sale of the Shares to Purchaser was not accompanied by the publication of any written or printed communication or any communication by means of recorded telephone messages or spoken on radio, television, or similar communications media.   4.6           PURCHASER IS AN “ACCREDITED INVESTOR” AS DEFINED UNDER SECTION 501(A) OF THE SECURITIES ACT.   4.7           PURCHASER ACKNOWLEDGES THAT THE CERTIFICATES REPRESENTING THE SHARES WILL BEAR THE LEGENDS SET FORTH HEREIN:   THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.   4.8           PURCHASER UNDERSTANDS THAT THE SHARES CONSTITUTE “RESTRICTED SECURITIES” FOR THE PURPOSES OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT.   4.9           PURCHASER UNDERSTANDS THAT SBRG WILL RELY UPON THE FOREGOING FOR THE PURPOSES OF TRANSFERRING THE SHARES HEREUNDER.  PURCHASER HEREBY AGREES TO INDEMNIFY SBRG AND ITS RESPECTIVE OFFICERS, DIRECTORS, AGENTS, AND COUNSEL AND HOLD THEM HARMLESS FROM AND AGAINST ANY AND ALL DAMAGES SUFFERED AND LIABILITIES INCURRED BY THEM (INCLUDING COSTS OF INVESTIGATION, DEFENSE, AND ATTORNEYS’ FEES) ARISING OUT OF ANY BREACH BY PURCHASER OF THE AGREEMENTS OR INACCURACY IN THE REPRESENTATIONS AND WARRANTIES WHICH PURCHASER HAS MADE HEREIN.   5.             REPRESENTATIONS AND WARRANTIES OF CKE.  CKE MAKES THE FOLLOWING REPRESENTATIONS AND WARRANTIES:   5.1           AUTHORIZATION. CKE HAS FULL POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND MAKE THE LOANS TO PURCHASERS, AND SUCH ACTIONS HAVE BEEN DULY AUTHORIZED BY ALL REQUISITE CORPORATE ACTION OF CKE AND WILL NOT RESULT IN A BREACH, ACCELERATION OR VIOLATION OF ANY AGREEMENT TO WHICH CKE IS A PARTY OR IS OTHERWISE BOUND.  THIS AGREEMENT, WHEN EXECUTED AND DELIVERED, WILL CONSTITUTE A VALID AND LEGALLY BINDING OBLIGATION OF CKE, ENFORCEABLE AGAINST CKE IN ACCORDANCE WITH ITS TERMS EXCEPT (I) AS LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM, AND OTHER LAWS OF GENERAL APPLICATION AFFECTING ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY AND (II) AS LIMITED BY LAWS RELATING TO THE AVAILABILITY OF SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF, OR OTHER EQUITABLE REMEDIES.  CKE HAS RECEIVED ALL CONSENTS, APPROVALS, ORDERS WAIVERS AND AUTHORIZATIONS, AND HAS PROVIDED ALL NOTICES, WHICH ARE NECESSARY IN CONNECTION WITH THE VALID EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE DELIVERY OF THE PURCHASE PRICE ON BEHALF OF THE PURCHASERS.   6.             MISCELLANEOUS.   6.1           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES.   6.2           Binding Effect.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.   6.3           COUNTERPARTS.  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 DOCUMENT.   6.4           TITLES AND SUBTITLES.  THE TITLES AND SUBTITLES USED IN THIS AGREEMENT ARE USED FOR CONVENIENCE ONLY AND ARE NOT TO BE CONSIDERED IN CONSTRUING OR INTERPRETING THIS AGREEMENT.   6.5           NOTICES.  UNLESS OTHERWISE PROVIDED, ALL NOTICES AND OTHER COMMUNICATIONS REQUIRED OR PERMITTED UNDER THIS AGREEMENT SHALL BE IN WRITING AND SHALL BE MAILED BY UNITED STATES FIRST-CLASS MAIL, POSTAGE PREPAID, SENT BY FACSIMILE OR DELIVERED PERSONALLY BY HAND OR BY A COURIER ADDRESSED TO THE PARTY TO BE NOTIFIED AT THE ADDRESS OR FACSIMILE NUMBER BELOW, OR AT SUCH OTHER ADDRESS OR FACSIMILE NUMBER AS SUCH PARTY MAY DESIGNATE BY TEN (10) DAYS’ ADVANCE WRITTEN NOTICE TO THE OTHER PARTIES HERETO.   If to SBRG, to:               Attn:         with a copy to:   Stradling Yocca Carlson & Rauth     660 Newport Center Dr., Suite 1600     Newport Beach, California 92660     Attn:  C. Craig Carlson, Esq.       If to CKE, to:   401 W. Carl Karcher Way     Anaheim, California  92801     Attn:  Michael Murphy   6.6           FINDER’S FEES.  EACH PARTY REPRESENTS THAT IT NEITHER IS NOR WILL BE OBLIGATED FOR ANY FINDER’S FEE OR COMMISSION IN CONNECTION WITH THIS TRANSACTION.  EACH PARTY AGREES TO SEVERALLY INDEMNIFY AND TO HOLD HARMLESS THE OTHER PARTY FROM ANY LIABILITY FOR ANY COMMISSION OR COMPENSATION IN THE NATURE OF A FINDER’S FEE (AND THE COST AND EXPENSES OF DEFENDING AGAINST SUCH LIABILITY OR ASSERTED LIABILITY) FOR WHICH SUCH INDEMNIFYING PARTY OR ANY OF ITS OFFICERS, PARTNERS, EMPLOYEES, OR REPRESENTATIVES IS RESPONSIBLE.   6.7           EXPENSES.  EACH PARTY SHALL PAY ITS OWN COSTS AND EXPENSES WITH RESPECT TO THE NEGOTIATION, EXECUTION, DELIVERY, AND PERFORMANCE OF THIS AGREEMENT.   6.8           ATTORNEYS’ FEES.  IF ANY ACTION AT LAW OR IN EQUITY IS NECESSARY TO ENFORCE OR INTERPRET THE TERMS OF THIS AGREEMENT, THE PREVAILING PARTY SHALL BE ENTITLED TO REASONABLE ATTORNEYS’ FEES, COSTS, AND DISBURSEMENTS IN ADDITION TO ANY OTHER RELIEF TO WHICH SUCH PARTY MAY BE ENTITLED.   6.9           AMENDMENTS AND WAIVERS.  ANY TERM OF THIS AGREEMENT MAY BE AMENDED AND THE OBSERVANCE OF ANY TERM OF THIS AGREEMENT MAY BE WAIVED (EITHER GENERALLY OR IN A PARTICULAR INSTANCE AND EITHER RETROACTIVELY OR PROSPECTIVELY), ONLY WITH THE WRITTEN CONSENT OF THE PARTIES HERETO.   6.10         Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.   6.11         DISPUTE RESOLUTION.  IF THERE ARISES A DISPUTE BETWEEN ANY PARTY TO THIS AGREEMENT AND ANY OTHER PARTY TO THIS AGREEMENT REGARDING THIS AGREEMENT, THOSE PARTIES AGREE TO NEGOTIATE IN GOOD FAITH TO RESOLVE THE DISPUTE BETWEEN THEM REGARDING THIS AGREEMENT.  IF THE NEGOTIATIONS DO NOT RESOLVE THE DISPUTE TO THE REASONABLE SATISFACTION OF BOTH PARTIES, THEN EACH PARTY SHALL NOMINATE ONE PARTNER, MEMBER OR SENIOR OFFICER OF THE RANK OF VICE PRESIDENT OR HIGHER AS ITS REPRESENTATIVE.  THESE REPRESENTATIVES SHALL, WITHIN THIRTY (30) DAYS OF A WRITTEN REQUEST BY EITHER PARTY TO CALL SUCH A MEETING, MEET IN PERSON AND ALONE (EXCEPT FOR ONE ASSISTANT FOR EACH PARTY) AND SHALL ATTEMPT IN GOOD FAITH TO RESOLVE THE DISPUTE.  IF THE DISPUTES CANNOT BE RESOLVED BY SUCH SENIOR MANAGERS IN SUCH MEETING, THE PARTIES AGREE THAT THEY SHALL, IF REQUESTED IN WRITING BY EITHER PARTY, MEET WITHIN THIRTY (30) DAYS AFTER SUCH WRITTEN NOTIFICATION FOR ONE DAY WITH AN IMPARTIAL MEDIATOR AND CONSIDER DISPUTE RESOLUTION ALTERNATIVES OTHER THAN LITIGATION.  IF ANY ALTERNATIVE METHOD OF DISPUTE RESOLUTION IS NOT AGREED UPON WITHIN THIRTY (30) DAYS AFTER THE ONE DAY MEDIATION, EITHER PARTY MAY BEGIN LITIGATION PROCEEDINGS.  THIS PROCEDURE SHALL BE A PREREQUISITE BEFORE TAKING ANY ADDITIONAL ACTION HEREUNDER.   IN WITNESS THEREOF, the parties hereto have executed this Stock Purchase Agreement as of the Effective Date.   Santa Barbara Restaurant Group, Inc.,   CKE Restaurants, Inc., a Delaware corporation   a Delaware corporation             By:     By:           Name:     Name:           Title:     Title:         Purchaser           By:               Print Name:         Exhibit A   Name   Number of Shares Amount             Bryon Allumbaugh   6,126   $ 35,040   Peter Churm   6,126   35,040   Carl L. Karcher   6,126   35,040   Daniel D. Lane   6,126   35,040   Daniel E. Ponder, Jr.   6,126   35,040   Frank P. Willey   6,126   35,040   William P. Foley, II   67,383   385,434   Andrew F. Puzder   67,383   385,434   Carl N. Karcher   6,126   35,040   E. Michael Murphy   6,126   35,040   Dennis J. Lacey   6,126   35,040     Exhibit B   Form of Promissory Note   [See Attached]

EXHIBIT 10 SEVERANCE AND CONSULTING AGREEMENT     This Severance and Consulting Agreement ("Agreement") is entered into and effective as of March 21, 2001, between The Newhall Land and Farming Company (a California Limited Partnership) ("NLF") and Thomas L. Lee ("Lee"). NLF's ultimate managing general partner is Newhall Management Corporation ("NMC") and where appropriate will be referred together with NLF as the "Company." The Company and Lee are referred to in this Agreement as the "Parties." RECITALS WHEREAS, Lee is currently employed as the Company's and NMC's Chief Executive Officer and Chairman of the Board of Directors ("Board"); WHEREAS, Lee has decided to retire and to voluntarily resign his employment with the Company as well as all of the positions he holds with the Company, including those specifically mentioned above; WHEREAS, the Company has agreed to accept Lee's resignation and wishes to retain his services thereafter on a consulting basis; WHEREAS, Lee has agreed to perform services for NLF on a consulting basis; and WHEREAS, the Parties wish to set forth in this Agreement all of the terms and conditions of Lee's severance, his subsequent retention as a Consultant and all other matters of every nature whatsoever between them; NOW, THEREFORE, the Parties, in consideration of the mutual covenants contained herein, and for other valuable consideration received, hereby agree as follows: 1)Resignation and Execution of Addendums A, B and C: a)Lee hereby resigns his employment with the Company along with all of the positions that he holds or will hold with the Company or any of its affiliated entities, partnerships or divisions, including specifically: Chief Executive Officer of NLF and NMC, Chairman and Member of the Board of NMC, Member of the Company's Management Committee, Director in the Valencia Town Center Hotel Company and Director in the TP Golf Company. In addition, Lee will sell or exchange his partnership and membership interests, as the case may be, in NMC and its affiliated entities, including but not limited to Valencia Town Center Hotel Company, TP Golf Company, Newhall General Partnership, and Newhall Management Limited Partnership, under the terms of the respective shareholder agreements, partnership agreements or other governing documents. Lee agrees to execute whatever documents are necessary to effect his resignation from all of those positions as well as any other positions that he holds with the Company or any affiliated entities, partnerships, or divisions. Lee's letter of resignation, which is attached hereto as Addendum A and by this reference incorporated herein, is accepted by the Company with respect to the positions listed 1 -------------------------------------------------------------------------------- hereinafter to be effective at the close of business on the date listed next to the applicable position or positions: Resigned Positions --------------------------------------------------------------------------------   Effective Date of Resignation -------------------------------------------------------------------------------- (1) Chief Executive Officer   March 21, 2001 (2) Employee, Chairman of the Board, Member of the Company's Management Committee, Director in the Valencia Town Center Hotel Company, Director in the TP Golf Company as well as any and all other positions held   March 31, 2001 (3) Member of the Board   July 18, 2001 Until those dates and times, Lee will continue to perform the duties called for by the positions he holds and will continue to receive his current salary and benefits, except as otherwise provided in the Agreement. On the last day of his employment as an employee of the Company, Lee shall be paid any and all accrued unused vacation time as reflected on the Company's records. Lee shall receive no compensation for his continued service as Member of the Board for the period commencing on April 1, 2001 through July 18, 2001. b)In further consideration for the compensation provided for in Paragraph 3(a) of this Agreement and as a condition precedent to receipt of the Lump Sum Payment provided for therein, Lee agrees to execute a document that conforms exactly to Addendum B which is attached hereto and by this reference incorporated herein ("Mutual General Releases"). If Lee fails to execute the Mutual General Releases on March 31, 2001, or any other subsequent date mutually agreed to by the Parties, then this Agreement and the Consulting Agreement shall become null and void and non-enforceable and Lee shall not be entitled to nor shall he be paid any of the benefits provided for in this Agreement, including specifically, the Lump Sum Payment provided in Paragraph 3(a) of this Agreement. c)At the time Lee executes the Agreement, he will execute a document that conforms exactly to the terms set forth in Addendum C, which is attached hereto and by this reference and incorporated herein ("Consulting Agreement"). The Agreement shall not become effective until the Parties also have fully executed the Consulting Agreement. 2)Consulting Agreement: Lee will commence his duties as a consultant in accordance with the terms provided in the Consulting Agreement on April 1, 2001, or any subsequent date mutually agreed to by the Parties in writing. The Lump Sum Payment provided in Paragraph 3(a) of this Agreement, shall constitute all of the compensation, of whatever nature whatsoever, to be paid to Lee for all of his services as a consultant, except as otherwise provided in the Consulting Agreement. 3)Severance Compensation: Upon execution of this Agreement and Addendums A, B and C as provided hereinabove, Lee shall be entitled to receive the following severance benefits commencing on or after April 1, 2001 unless otherwise provided hereinafter in this Paragraph 3: a)Lump Sum Payment. Within five (5) business days of the lapse of the seven (7) day revocation period provided in Paragraph 11 of the Mutual General Releases, the Company shall pay Lee a lump sum payment equal to three times: (i) Lee's current yearly base salary; plus (ii) an amount equal to the average of the bonuses paid to Lee pursuant to the NLF Executive Incentive Compensation Plan for the fiscal years ending 1998, 1999 and 2000, less applicable withholding taxes ("Lump Sum Payment"). The Lump Sum Payments shall be deemed to have been made under this Paragraph 3 on the date the payment is tendered to Lee. The Company and Lee shall mutually agree on the method and timing of the Lump Sum Payment delivery to Lee. 2 -------------------------------------------------------------------------------- b)Bonus: The Company paid to Lee a bonus, less applicable withholding taxes, for the Company's fiscal year ending December 31, 2000, based on the applicable formula for the CEO category contained in NLF's Executive Incentive Compensation Plan ("Bonus"). The Bonus was calculated on the basis of the salary being paid to Lee during that year and was paid to Lee at the same time that bonuses are paid to other Company executives for the same fiscal year. In no event will any bonus, whatsoever, be earned or be payable to Lee for the first quarter of the Company's fiscal year ending December 31, 2001 (e.g., January through March 31, 2001). c)Unit Options and other Unit-Based Rights: (i)Lee will not be granted any additional Unit options or Unit-based rights beyond those granted through March 21, 2001. Any existing options or Unit-based rights, including any granted to Lee prior to March 21, 2001, will be exercisable or distributed as the case may be, in accordance with the respective Unit options or Unit-based rights agreements and the Company's 1995 Option/Award Plan, except as otherwise provided in (ii) of this Paragraph 3(c). Any Unit options or Unit-based rights granted to Lee prior to March 21, 2001 that are not 100% vested on March 31, 2001, shall become 100% vested upon the fifth day following the seven day revocation period in Paragraph 11 of the Mutual General Releases. (ii)The following option agreements were granted to Lee pursuant to the Newhall Land and Farming Company Option, Appreciation Rights and Restricted Plan, as amended: Option Agreement dated July 17, 1991; Option Agreement dated July 15, 1992; Option Agreement dated July 21, 1993; Option Agreement dated January 19, 1994; and Option Agreement dated July 20, 1994 ("Option Agreements"). The Parties agree that the exercise period for those options will be extended from one (1) year to three (3) years but in no event shall Lee's right to exercise those options extend beyond the expiration date provided in the Option Agreements. d)Retirement/Savings Plans: Any benefits or payments due Lee under the NLF Retirement Plan, the NLF Pension Restoration Plan ("Pension Restoration Plan"), the NFL Employee Savings Restoration Plan, the NLF Employee Savings Plan and any employee benefit plans qualified under Section 401(a) of the Internal Revenue Code will be paid in accordance with the provisions contained in each of those plans. As a means of funding the benefits under the Pension Restoration Plan, the Company purchased two life insurance policies on the life of Lee ("Policies"). Those Policies are subject to the terms of a Split-Dollar Insurance Agreement between Lee and the Company. e)Lease of Car: Lee will have the option to lease on a month-to-month basis from the Company his current Company car for a period not to exceed three months. If Lee does not exercise this option on or before March 31, 2001, or any other subsequent date agreed to by the Parties in writing, then it shall expire and Lee shall immediately return the car and the keys to the car to the Company. At the end of the short-term lease period, Lee shall return the car and the keys to the car to the Company. f)No Other Payments or Benefits: Except as otherwise provided in the Consulting Agreement or Paragraph 3 of the Agreement, Lee shall not earn or be entitled to receive any other wages and/or benefits whatsoever after March 31, 2001, including services rendered in Lee's capacity as Member of the Board. Benefits payable under this Paragraph 3 will terminate, supersede and be in lieu of any severance pay benefits, change of control benefits or any other wage and/or benefits provided for in any employment agreement, change of control agreement, severance policy or benefit agreement between Lee and the Company or any other policy, agreement, practice or plan of the Company. 3 -------------------------------------------------------------------------------- (g)Medical Benefits: As part of Company's early retirement benefits for which Lee is eligible on and after March 31, 2001, the Company's medical and dental HMO plans will be provided at no cost to Lee and his eligible dependents until Lee's sixty-fifth (65th) birthday. If Lee selects a medical plan other than the HMO plan, he and his eligible dependents will pay the difference between the amount of the premiums charged for the coverage selected and the premiums for the same coverage under the Company's HMO plan. Should Lee die before age 65, his surviving spouse and eligible dependents will continue to receive the medical benefits until the date Lee would have reached age sixty-five (65). 4)Recitals: The Recital's stated above are incorporated herein by this reference as part of the Agreement. 5)General Release: Lee, for himself and for his heirs, spouse, executors, administrators and assigns, acknowledges complete satisfaction of and unconditionally releases and forever discharges the Company and any and all of its respective affiliated companies, subsidiaries, divisions, affiliated entities, partnerships, successors and assigns, and any and all of its past, present and/or future officers, directors, members, shareholders, partners, unitholders, agents, employees, administrators and assigns (hereinafter collectively referred to as "Company Releasees"), from any and all claims, demands, causes of action, costs, charges, fees and liabilities of any kind whatsoever, whether known or unknown, unsuspected or latent, which Lee or any of his heirs, guardians, administrators, executors, successors in interest, and/or assigns have incurred or expect to incur, or now own or hold or have at any time heretofore owned or held, or may at any time own, hold or claim by reason of any matter or thing against Company Releasees, and each of them, arising from or by reason of any actual or alleged act, omission, transaction, practice, conduct or occurrence, or any other matter whatsoever on or prior to the date of Lee's execution of this Agreement. Without limiting the generality of the foregoing, Lee specifically waives and fully releases Company Releasees, and each of them, from any and all claims arising out of Lee's employment with the Company and/or the termination of his employment, any positions Lee held or services Lee rendered, as well as Lee's resignation of all positions held with Company, including but not limited to: (a) any claim under the Americans with Disabilities Act, the California Fair Employment and Housing Act, the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967 or the Older Workers Benefit Protection Act, the Employee Retirement Income Security Act of 1974; (b) any other claim of employment discrimination (whether based on federal, state or local, statutory or decisional law; (c) any claim arising out of the terms and conditions of Lee's employment and/or any of the events relating directly or indirectly to or surrounding the termination of his employment; (d) any claims for severance, pension, bonuses, profit sharing or severance/termination payments; (e) any claim regarding any claimed employment or benefit agreement or contract whether written or oral; (f) any claim for any alleged injuries incurred during Lee's employment with the Company including any claims for rehabilitation; and (g) any other matter or claim whatsoever between the Parties (jointly "Claims"). These releases do not include or release Company Releases or any of them, from providing the benefits or making the payments provided for in Paragraph 3 of this Agreement. 6)Release of Unknown Claims: Lee intends and expressly agrees that this Agreement and the releases contained herein shall be a bar to the Claims and shall be effective as a full and complete accord and satisfaction and general release of and for all liabilities, disputes, claims and matters, known or unknown, suspected or unsuspected, arising from any cause whatsoever on or prior to the date of Lee's execution of this Agreement. In furtherance of that intent and agreement, Lee acknowledges that he is familiar with Section 1542 of the Civil Code of the State of California, which provides as follows: "A general release does not extend to claims which creditor does not know or suspect to exist in this favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." 4 -------------------------------------------------------------------------------- Lee waives and relinquishes any right or benefit which he has or may have under Section 1542 of the Civil Code of the State of California or any other similar provision or non-statutory law of this or any other jurisdiction to the full extent that he may lawfully waive all such rights and benefits pertaining to the subject matter of this Agreement. In connection with such waiver and relinquishment, Lee acknowledges that he is aware that any legal counsel that he may retain hereafter may discover claims or facts in addition to or different from those which he now knows or believes to exist with respect to the subject matter of this Agreement, but that it is his intention hereby to fully and forever settle and release all the released matters, known or unknown, suspected or unsuspected, which now exist, may exist, or heretofore have existed, between the Parties. 7)Indemnification Agreement: So as to avoid any doubt, the foregoing releases by Lee in Paragraphs 5 and 6, do not in any manner amend the terms of, or affect NLF's obligations, under that certain amended Indemnification Agreement dated November 14, 1990 between Lee and NLF. 8)Attorney Consultation: Lee acknowledges that he has been advised to consult with an attorney before signing this Agreement, and that he has voluntarily and knowingly executed this Agreement after having had the opportunity to consult with an attorney. Lee further acknowledges that he has had an adequate opportunity to consult with an attorney and that he has had an adequate opportunity to make whatever investigation or inquiry he or his counsel may deem necessary or desirable in conjunction with the subject matter of this Agreement prior to signing it. Lee further acknowledges that he has been advised that he may consider the terms of this Agreement for twenty-one (21) days before signing it. This Agreement was provided to Lee on March 21, 2001. Accordingly, Lee has until April 11, 2001 to decide whether he will sign the Agreement. To the extent that Lee takes less than twenty-one (21) days to consider this Agreement prior to signing it, he acknowledges that he has had sufficient time to consult with an attorney and that he does not desire additional time. 9)Revocation Period: This Agreement is revocable by Lee for a period of seven (7) days following execution and return of the Agreement to the Company. The revocation must be in writing, must specifically revoke this Agreement, and must be delivered to Gary Cusumano, President, at The Newhall Land and Farming Company, 23823 Valencia Boulevard, Valencia, California, 91355, prior to the end of the seventh (7th) day following execution and delivery of this Agreement to Company. Upon expiration of the seven (7) day period, this Agreement becomes effective, enforceable and irrevocable. If he has not so delivered a written revocation of this Agreement to Company within that seven (7) day period, he shall receive the payments and other consideration described in Paragraph 3 above. 10)Mediation/Arbitration: a)Lee and the Company agree that any Arbitrable Claims that arise between them will be submitted first to mediation and then to binding arbitration. Lee and the Company further agree that neither of them will commence any demand for arbitration without first submitting a formal written demand to the other Party for mediation of the dispute. When such a demand is made, the dispute will be submitted to mediation before a mutually agreeable mediator in the Los Angeles area. The cost of the mediation shall be borne equally by the parties. b)Any controversy, dispute or claim between the Parties which may arise from, out of, or relate to this Agreement, or its subject matter or the Addendums, including the validity, enforceability, construction or application of any of the terms, provisions, or conditions of this Agreement or the arbitrability of any such matter (collectively referred to herein as "Arbitrable Claims") shall be submitted: (i) first to Mediation under Paragraph 10(a), and if it is not resolved through Mediation, then (ii) to final and binding arbitration in Los Angeles, 5 -------------------------------------------------------------------------------- California, or such other location as the Parties shall mutually agree in writing under the auspices of the American Arbitration Association ("AAA"). The Parties agree that neither of them may initiate in any way or prosecute any claim, charge, lien, demand, right of action or cause of action of any nature whatsoever arising out of or related to this Agreement before any court, tribunal, or administrative agency against the other Party, and that they each acknowledge that their agreement to the mediation/arbitration provisions under this Paragraph 10 shall constitute an effective waiver of any right to have any Arbitrable Claims determined by judge or jury. The Parties further agree to be bound by the Employment Dispute Resolution Rules of AAA ("Rules") and that all Arbitrable Claims will be heard by the AAA pursuant to those Rules. The Parties further agree that in the event this Agreement, or any part thereof is not enforceable, all other provisions shall remain in force. c)The arbitrator shall have jurisdiction to determine all Arbitrable Claims and may grant any relief authorized in law or equity for such claim. However, the arbitrator may not modify or change the terms of this Agreement or the Addendums. The Parties agree that the decision of the arbitrator shall not be appealable and that judgment upon an award rendered by the arbitrator may be entered for enforcement in any court of competent jurisdiction. All Arbitrable Claims must be submitted to mediation within thirty (30) days of the date such claim first arose to be arbitrable. d)Except as otherwise stated above, neither Party may initiate in any way or prosecute any claim, charge, lien, demand, right of action or cause of action of any nature whatsoever arising out of or related to this Agreement or the Addendums before any court, tribunal or administrative agency against the other Party. A Party who initiates litigation or asserts Arbitrable Claims in any court or before any tribunal or administrative body, shall pay all reasonable attorneys' fees and costs incurred by the opposing Party in defending such litigation and/or claims. 11)Termination: This Agreement and Lee's employment shall be subject to termination on or before March 31, 2001 as follows: a)Death: This Agreement, including the severance compensation provided for in Paragraph 3, will terminate upon the death of Lee. In such event, the Company will pay to Lee's estate or other authorized representative, his salary for the month in which he dies, as well as any other Company benefits, including bonuses, retirement payments, medical benefits, and accrued but unused vacation due him or his spouse through the date of his death in accordance with the terms and conditions of applicable Company policies and/or plans. Thereafter, the Company will have no further obligation whatsoever to his estate or other authorized representative. b)Disability: This Agreement, including the severance compensation provided for in Paragraph 3, will terminate upon Lee's disability. Unless otherwise prohibited by any State or Federal law, this Agreement and Lee's employment hereunder will terminate on the date that he, is determined, as defined by reference to the Company's Long-Term Disability Plan ("LTD Plan"), then in effect, to be "disabled" from performing any material portion of his current duties, due to physical or mental illness or injury. In such event, Lee will be solely compensated in accordance with the LTD Plan and any other applicable Company policies and/or plans. c)Termination for Cause: This Agreement, including the severance compensation provided for in Paragraph 3, and Lee's employment may be terminated for cause in accordance with the Company's established policies and practices ("Termination for Cause"). If Termination for Cause occurs, then the Company will pay Lee his salary for the month in which termination occurs, any accrued but unused vacation and any other Company benefits that are due him 6 -------------------------------------------------------------------------------- under applicable Company policies or plans through the end of the month of his termination. Thereafter, the Company will have no further obligations whatsoever to Lee. 12)Confidential Information: a)Lee shall not (nor will Lee assist any other person to do so) during or after the termination of his employment with the Company as an employee or consultant, directly or indirectly reveal, report, publish or disclose Confidential Information to any person, firm or corporation not expressly authorized by the Company to receive such Confidential Information, or use (or assist any person to use) such Confidential Information except for the benefit of the Company. This provision shall not preclude disclosures required by law, nor shall it apply to information which has entered the public domain other than by reason of the action of Lee. The term "Confidential Information," as used herein, means all information or material not generally known by non-Company personnel which (i) gives the Company some competitive business advantage or the opportunity of obtaining such advantage or the disclosure of which could be detrimental to the interests of the Company; (ii) which is owned by the Company or in which the Company has an interest in; and (iii) which is either marked "Confidential Information," "Proprietary Information," or other similar marking, known by Lee to be considered confidential and proprietary by the Company or from all the relevant circumstances should reasonably be assumed by Lee to be confidential and proprietary to the Company. Confidential Information includes, but is not limited to, the following types of information and other information of a similar nature (whether or not reduced to writing): trade secrets, inventions, drawings, file data, documentation, diagrams, specifications, know how, processes, formulas, models, flow charts, software in various stages of development, source codes, object codes, research and development procedures, research or development and test results, marketing techniques and materials, marketing and development plans, price lists, pricing policies, business plans, information relating to customers and/or suppliers' identities, characteristics and agreements, financial information and projections, and employee files. Confidential Information also includes any information described above which the Company obtains from another party and which the Company treats as proprietary information or designates as Confidential Information, whether or not owned or developed by the Company. Notwithstanding the above, however, no information constitutes Confidential Information if it is generic information or general knowledge which Lee would have learned in the course of similar employment elsewhere in the trade or if it is otherwise publicly known and in the public domain. b)To the extent that Lee has not already done so, he shall on or before March 31, 2001 surrender to the Company all notes, data, sketches, drawings, manuals, documents, records, data bases, programs, blueprints, memoranda, specifications, customer lists, financial reports, equipment and all other physical forms of expression incorporating or containing any Confidential Information, it being distinctly understood that all such writings, physical forms of expression and other things are the exclusive property of the Company. Lee acknowledges that the unauthorized taking of any of the Company's trade secrets is a crime under California Penal Code Section 499(c) and is punishable by imprisonment. Lee further acknowledges that such unauthorized taking of the Company's trade secrets could also result in civil liability under California Civil Code Section 3426, and that willful misappropriation may result in an award against him for triple the amount of the Company's damages and the Company's attorneys fees in collecting such damages. The Parties agree that Lee shall have the right to retain and use the contact information contained on his Company Rolodex as well as Lee's contacts file maintained on the Company's software systems for personal purposes as long as those purposes are not inconsistent with Lee's obligations under this Paragraph 12, the Agreement or the Addendums. 7 -------------------------------------------------------------------------------- c)If Lee breaches, or threatens to commit a breach of, any of these non-disclosure provisions (collectively, the "Restrictive Covenants"), the Company shall have the following rights and remedies, each of which shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity: the right and remedy to have the Restrictive Covenants specifically enforced or to have any actual or threatened breach thereof enjoined by any court having equity jurisdiction, all without the need to prove any amount of actual damage or that monetary damages would not provide an adequate remedy, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that monetary damages will not provide an adequate remedy to the Company; and the right and remedy to require Lee to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by him or any associated party deriving such benefits as a result of any such breach of the Restrictive Covenants. d)Nothing in this Agreement or any other agreement between Lee and the Company shall prohibit or impede or be construed to prohibit or impede Lee from lawfully competing with the Company, lawfully working for any competitor of Company or otherwise lawfully pursuing his career in the residential and commercial development industry, so long as Lee complies with these non-disclosure provisions. The Parties agree that these non-disclosure provisions shall continue in effect after Lee's employment with the Company as an employee and/or consultant has terminated and notwithstanding any termination of this Agreement. 13)Non-Solicitation of Employees or Customers: For a period of one (1) year following the last date of Lee's employment with the Company as an employee or consultant, Lee agrees not to solicit or induce any employee or supplier of the Company to terminate his/her employment or relationship with the Company or to, directly or indirectly, solicit the trade of or otherwise do business with any customer or supplier of the Company and/or any one of its affiliated entities so as to offer or sell any product or service which would be competitive with any product or service sold by the Company or its affiliates during that period. 14)Employee Benefit Plans: Except as otherwise specifically provided in this Agreement to the contrary, all of the health and other employee benefit or compensation plans or programs referred to and contemplated by this Agreement (collectively referred to as "Plans') shall be governed solely by the terms of the underlying plan documents and by applicable law. Except as otherwise specifically provided in this Agreement to the contrary, nothing in this Agreement shall impair the Company's right to amend, modify, replace, and/or terminate any and all such Plans in its sole discretion or in accordance with the terms thereof. This Agreement is for the sole benefit of Lee and the Company, and is not intended to create a Plan, or, except as otherwise provided herein, to modify the terms of existing Plans. Also, any payments made pursuant to this Agreement shall not be taken into account (i.e., as "compensation") for purposes of determining the amount of benefits payable under any other Plans. 15)Entire Agreement: This Agreement is the only agreement and understanding between the Parties pertaining to the subject matter hereof, and supercedes and nullifies all prior agreements, summaries of agreement, descriptions of compensation packages, discussions, negotiations, understandings, representations or warranties, whether verbal or written between the Parties pertaining to such subject matter. This Agreement is binding on Lee's heirs and shall not be assignable by Lee for any purpose. This Agreement will be binding on any successors and assigns of the Company. 16)Severability: If any provision of this Agreement or any portion of such provision is held to be invalid or unenforceable, the remaining provisions or portions shall nevertheless be given effect. It is the intent of the Parties that all provisions shall be construed so as to be valid and enforceable, and if it should be determined that any provision is not valid and enforceable, a provision which 8 -------------------------------------------------------------------------------- would effectuate the intent of the Parties and would be valid and enforceable shall be substituted for the invalid and unenforceable provision. 17)Amendment and Waiver: This Agreement may be amended, modified or supplemented only by a writing executed by Lee and the President of the Company. Either Party may, in writing, waive any provision of this Agreement to the extent that such provision is for the benefit of the waiving Party. No waiver by either Party of a breach of any provision of this Agreement shall be construed as a waiver of any subsequent or different breach, and no forbearance by a Party to seek a remedy for non-compliance or breach by the other Party shall be construed as a waiver of any right or remedy with respect to such non-compliance and/or breach. 18)Construction and Applicable Law: The language of this Agreement and the Addendums have been approved by the Parties after the opportunity to consult with legal counsel and the language of these documents shall be construed as a whole according to their fair meaning and not strictly for or against either Party. This Agreement and the Addendums shall in all respects be interpreted, enforced and governed by and under the laws of the State of California. WHEREFORE, the Parties have executed this Agreement on the dates provided hereinafter.                     DATED: March 22, 2001   EMPLOYEE:     /s/ THOMAS L. LEE     --------------------------------------------------------------------------------     Thomas L. Lee DATED: March 22, 2001   THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership)     By:   Newhall Management Limited Partnership, its Managing General Partner     By:   Newhall Management Corporation, its Managing General Partner     By:   /s/ GARY M. CUSUMANO         --------------------------------------------------------------------------------         Gary M. Cusumano, President 9 -------------------------------------------------------------------------------- [NEWHALL LAND LETTERHEAD] ADDENDUM A                 , 2001 PERSONAL AND CONFIDENTIAL Gary Cusumano President The Newhall Land and Farming Company and Newhall Management Corporation 23823 Valencia Boulevard Valencia, California 91355     Re: Resignation Dear Gary: I hereby tender to you my resignation of employment along with my resignation of the following positions to be effective at the close of business on the date listed next to the applicable position or positions: Resigned Positions --------------------------------------------------------------------------------   Effective Date of Resignation -------------------------------------------------------------------------------- (1) Chief Executive Officer   March 21, 2001 (2) Employee, Chairman of the Board, Member of the Company's Management Committee, Director in the Valencia Town Center Hotel Company, Director in the TP Golf Company as well as any and all other positions held   March 31, 2001 (3) Member of the Board   July 18, 2001 Your acceptance of this letter will confirm your acceptance of my resignation of those positions and my employment effective those dates. Should you need me to sign any additional documents or paperwork to cause the foregoing to be completed, I will be happy to do so.           Very truly yours,               -------------------------------------------------------------------------------- Thomas L. Lee 1 -------------------------------------------------------------------------------- ADDENDUM B MUTUAL GENERAL RELEASES     This Addendum to the Severance and Consulting Agreement of Thomas L. Lee ("Agreement") is made and entered into this 31st day of March 2001 by and between Thomas L. Lee ("Lee"), and The Newhall Land and Farming Company (a California Limited Partnership) ("Company"). Lee and the Company are hereinafter sometimes referred to collectively as "the Parties." This agreement ("Mutual General Releases") is made for the purpose of settling and compromising all of the claims, disputes and controversies between the Parties arising from any cause whatsoever on or prior to the date of Lee's execution of the Mutual General Releases. So as to avoid any doubt, the mutual releases contained herein, do not in any manner amend the terms of, or affect the Company's obligations, under that certain amended Indemnification Agreement dated November 14, 1990 between Lee and the Company. NOW, THEREFORE, the Parties hereto for the consideration set forth in the Agreement, which is by this reference incorporated herein, mutually agree as follows: 1.Consideration. In consideration of the benefits provided for in the Agreement as well as the Mutual General Releases and, for other good and valuable consideration, the Parties give the releases, promises and commitments contained herein. 2.Scope of Settlement. The compensation and benefits provided for in the Agreement are in full and complete settlement of all of Lee's Claims against Company Releasees and fully compensates Lee for any and all such Claims. Lee further acknowledges that he has received all wages and benefits due him through the last date of his employment with the Company, except as otherwise provided in Paragraph 3 of the Agreement. 3.General Release of Company Releasees. Lee, for himself and for his heirs, spouse, executors, administrators and assigns, acknowledges complete satisfaction of and unconditionally releases and forever discharges the Company and any and all of its respective affiliated companies, subsidiaries, divisions, affiliated entities, shareholders, partnerships, successors and assigns, and any and all of its past, present and/or future officers, directors, members, partners, unitholders, agents, employees, administrators and assigns (hereinafter collectively referred to as "Company Releasees"), from any and all claims, demands, causes of action, costs, charges, fees and liabilities of any kind whatsoever, whether known or unknown, unsuspected or latent, which Lee or any of his heirs, guardians, administrators, executors, successors in interest, and/or assigns have incurred or expect to incur, or now own or hold or have at any time heretofore owned or held, or may at any time own, hold or claim by reason of any matter or thing against Company Releasees, and each of them, arising from or by reason of any actual or alleged act, omission, transaction, practice, conduct or occurrence, or any other matter whatsoever on or prior to the date of Lee's execution of the Mutual General Releases. Without limiting the generality of the foregoing, Lee specifically waives and fully releases Company Releasees, and each of them, from any and all claims arising out of Lee's employment with the Company and/or the termination of that employment, any positions Lee held or services Lee rendered as well as Lee's resignation of all positions held with the Company, including but not limited to: (a) any claim under the Americans with Disabilities Act, the California Fair Employment and Housing Act, the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967 or the Older Workers Benefit Protection Act; the Employee Retirement Income Security Act of 1974; (b) any other claim of employment discrimination (whether based on federal, state or local, statutory or decisional law; (c) any claim arising out of the terms and conditions of Lee's employment and/or any of the events relating directly or indirectly to or surrounding the termination of his employment; (d) any claims for severance, pension, bonuses, profit sharing or severance/termination payments; (e) any claim regarding any claimed employment or benefit agreement or contract whether written or oral; (f) any claim for any alleged injuries incurred during Lee's employment with the Company 1 -------------------------------------------------------------------------------- including any claims for rehabilitation; and (g) any other matter or claim whatsoever between the Parties (jointly "Claims"). These releases do not include or release Company Releases or any of them, from providing the benefits or making the payments provided for in Paragraph 3 of the Agreement. 4.General Release of Lee's Releasees. The Company fully releases and discharges forever Lee and his spouse, children, agents, heirs and administrators and assigns ("Lee Releasees") from any and all liabilities, claims, causes of action, charges, complaints, obligations, costs, losses, damages, injuries and attorneys' fees, of any form whatsoever, whether known or unknown, unsuspected or latent, which the Company or any of its officers, employees, agents, administrators, successors in interest, and/or assigns have incurred or expect to incur, or now own or hold, or have at any time heretofore owned or held, or may at any time own, hold, or claim to hold by reason of any matter or thing, arising from any cause whatsoever on or prior to the date of Company's execution of the Mutual General Releases. Without limiting the generality of the foregoing, the Company fully releases and discharges each and all of Lee's Releasees from any and all claims, demands and causes of action in connection with any and all matters pertaining to Lee's employment by the Company, including, but not limited to, any and all damages of every kind whatsoever, express or implied duties or obligations, express or implied covenants, and promises on any and all of the above, any other matter between the Parties, and any claims relating to and arising out of Lee's performance of his duties as an officer of the Company or a member of the Company's Board of Directors. 5.Non-Admission of Liability. This Agreement shall not in any way be construed as an admission by either Party of any liability whatsoever, or as an admission by either Party of any illegal or improper act or acts, of any kind or nature whatsoever, against the other Party. 6.Releases Include Unknown Claims. It is the intention of the Parties in executing the Mutual General Releases and in paying and receiving the monetary and other consideration called for by the Agreement that the Mutual General Releases shall be effective as a full and final accord and satisfaction and general release of and from all liabilities, disputes, claims and matters, known or unknown, suspected or unsuspected arising from any cause whatsoever on or prior to the date of Lee's execution of the Mutual General Releases. In furtherance of this intention, the Parties, and each of them, acknowledge that they are familiar with Section 1542 of the Civil Code of the State of California, which provides as follows: "A general release does not extend to claims which the creditor does now 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 Parties, and each of them, waive and relinquish any right or benefit which they have or may have under Section 1542 of the Civil Code of the State of California or any similar provision of statutory or non-statutory law of this or any other jurisdiction to the full extent that they may lawfully waive all such rights and benefits pertaining to the subject matter of the Agreement and the Mutual General Releases. In connection with such waiver and relinquishment, the Parties, and each of them, acknowledge that they are aware that any legal counsel that they may retain may hereafter discover claims or facts in addition to or different from those which they now know or believe to exist with respect to the subject matter of the Mutual General Releases, but that it is their intention hereby to fully, finally and forever settle and release all the released matters, disputes and differences, known and unknown, suspected or unsuspected, which now exist, may exist, or heretofore has existed, between them. In furtherance of this intention, the releases herein given shall be and remain in effect as full and complete general releases notwithstanding the discovery and existence of any such additional or different claims or facts. 2 -------------------------------------------------------------------------------- 7.Successors and Assigns. This Agreement shall bind, and inure to the benefit of, the respective heirs, legal representatives, successors, and assigns of the Parties hereto. 8.Covenant Not to Sue. The Parties, and each of them, represent and warrant that they have no action, claim, charge or lawsuit intended, filed, prepared or pending against the other Party or their respective released parties and that they will not individually or as a member of any class file any action, claim, charge or lawsuit against the other Party, or any of their respective released parties, concerning the subject matter of the Agreement, the Mutual General Releases and/or any of the claims released under the Mutual General Releases. 9.Construction. The language of the Mutual General Releases has been approved by all Parties after the opportunity to consult with legal counsel and the language of the Mutual General Releases shall be construed as a whole according to its fair meaning and not strictly for or against either Party. 10.Entire Agreement and Governing Law. The Mutual General Releases shall in all respects be interpreted, enforced, and governed by and under the laws of the State of California. The Mutual General Releases constitutes the entire agreement between the Parties and supercedes all prior agreements, whether verbal or written, between the Parties pertaining to the subject matter hereof. 11.Legal Consultation and Revocability Periods. The Parties expressly intend, and Lee acknowledges and agrees, that as part of the potential claims released in Paragraphs 3 and 4 of the Mutual General Releases, Lee is herein releasing the Company Releasees from any claims that he has or may have under the Age Discrimination in Employment Act of 1967, 29 U.S § 621 et seq. Accordingly, Lee has been advised to review the Mutual General Releases and represents and agrees: (a) that he has been advised to consult with an attorney prior to executing the Mutual General Releases; (b) that he has had up to twenty-one (21) days to consider executing the Mutual General Releases and that he is knowingly and voluntarily entering into the Mutual General Releases; (c) that he received a copy of the Mutual General Releases on December, 2001; (d) that he has seven (7) days from the date of execution of the Mutual General Releases to rescind it by doing so in writing addressed to the President of the Company, Gary M. Cusumano, at its corporate headquarters located at The Newhall Land and Farming Company, 23823 Valencia Boulevard, Valencia, California 91355; and (e) that the Mutual General Releases will not be effective until the end of the seven (7) day revocation period.                     DATED:            ,   EMPLOYEE:           --------------------------------------------------------------------------------     Thomas L. Lee DATED:            ,   THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership)     By:   Newhall Management Limited Partnership, its Managing General Partner     By:   Newhall Management Corporation, its Managing General Partner     By:             --------------------------------------------------------------------------------         Gary M. Cusumano, President 3 -------------------------------------------------------------------------------- ADDENDUM C CONSULTING AGREEMENT OF THOMAS L. LEE     This Consulting Agreement is made and entered into on April 1, 2001 by and between Thomas L. Lee ("Consultant") and The Newhall Land and Farming Company (a California Limited Partnership) ("Company"). Consultant and the Company are hereinafter sometimes referred to collectively as "the Parties." This Consulting Agreement is being entered into as an addendum to the Severance and Consulting Agreement of Thomas L. Lee ("Agreement"). RECITALS WHEREAS, Consultant was employed by the Company for many years and was its Chief Executive Officer and Chairman of the Board of Directors of The Newhall Management Corporation, its ultimate managing general partner; WHEREAS, on or before March 31, 2001, Consultant resigned his employment and positions with the Company; and WHEREAS, the Company desires to take advantage of Consultant's extensive experience and retain him as a consultant. NOW, THEREFORE, in consideration of the foregoing, the terms and covenants set forth herein, and the benefits provided in the Agreement, the Company and Consultant hereby agree as follows: 1.Retention of Consultant. The Company hereby retains Consultant and Consultant hereby agrees to render services to the Company as a Consultant for a period commencing April 1, 2001 through December 31, 2001 ("Consulting Period"). Consultant will hold himself available during the Consulting Period to render consultation and advice to the Company as requested by its President and/or Chief Executive Officer. Consultant will remain available for consultation and advice on all aspects of the Company's business, by telephone and correspondence or, if requested by the Company's President and/or Chief Executive Officer, in person at the Company's principal offices (or at other locations by mutual agreement) during reasonable business hours. During the Consulting Period, Consultant shall be entitled to engage in consulting work for other companies and entities as long as that work does not interfere with Consultant's obligations hereunder. Consultant, however, agrees that he will not during the Consulting Period perform any work on any basis for any person or entity (including any entity established by him) that is in competition with the Company or any of its subsidiaries, partnerships or divisions. 2.Compensation. (a)Consultant's sole compensation for any consulting services rendered to the Company during the Consulting Period shall be the payment of the Lump Sum Payment provided for in Paragraph 3(a) of the Agreement. Consultant acknowledges that he has received payment of the Lump Sum Payment and further acknowledges that the amount of that payment includes compensation for all services to be rendered by Consultant hereunder. No other compensation, wages or benefits of any kind whatsoever shall be earned by or paid to Consultant by the Company under this Consulting Agreement, except as the Parties may otherwise agree in writing during the term of the Consulting Period. (b)The Company agrees to provide Consultant with secretarial support at the Company during the term of the Consulting Period. The Company further agrees to make an office available for your use along with your current telephone extension, your current e-mail address and the ability to access it within and without the Company as well as your currently assigned personal computer during the term of the Consulting Period. 3.Independent Contractor. It is agreed that Consultant will be an independent contractor and not an employee in the performance of the Consulting Services rendered during the Consulting Period. To 1 -------------------------------------------------------------------------------- the extent that Consultant receives any compensation from the Company as a result of any written agreement between the Parties executed as an exception under Paragraph 2 of this Consulting Agreement, then, no normal payroll withholding shall be deducted from any amounts due Consultant. Consultant represents and warrants that he will pay all taxes due with respect to any such payments received from the Company and will indemnify and hold the Company harmless from any and all claims, causes of action, expenses, lawsuits or any other costs incurred by the Company as a result of any failure of Consultant to do so. 4.Confidential Information. (a)Lee shall not (nor will Lee assist any other person to do so) during or after the termination of his employment with the Company as an employee or consultant, directly or indirectly reveal, report, publish or disclose Confidential Information to any person, firm or corporation not expressly authorized by the Company to receive such Confidential Information, or use (or assist any person to use) such Confidential Information except for the benefit of the Company. This provision shall not preclude disclosures required by-law, nor shall it apply to information which has entered the public domain other than by reason of the action of Lee. The term "Confidential Information," as used herein, means all information or material not generally known by non-Company personnel which (a) gives the Company some competitive business advantage or the opportunity of obtaining such advantage or the disclosure of which could be detrimental to the interests of the Company; (b) which is owned by the Company or in which the Company has an interest in; and (c) which is either marked "Confidential Information," "Proprietary Information:" or other similar marking, known by Lee to be considered confidential and proprietary by the Company or from all the relevant circumstances should reasonably be assumed by Lee to be confidential and proprietary to the Company. Confidential Information includes, but is not limited to, the following types of information and other information of a similar nature (whether or not reduced to writing): trade secrets, inventions, drawings, file data, documentation, diagrams, specifications, know how, processes, formulas, models, flow charts, software in various stages of development, source codes, object codes, research and development procedures, research or development and test results, marketing techniques and materials, marketing and development plans, price lists, pricing policies, business plans, information relating to customers and/or suppliers' identities, characteristics and agreements, financial information and projections, and employee files. Confidential Information also includes any information described above which the Company obtains from another party and which the Company treats as proprietary information or designates as Confidential Information, whether or not owned or developed by the Company. Notwithstanding the above, however, no information constitutes confidential information if it is generic information or general knowledge which Lee would have learned in the course of similar employment elsewhere in the trade or if it is otherwise publicly known and in the public domain. (b)To the extent that Lee has not already done so, he shall on or before March 31, 2001 surrender to the Company all notes, data, sketches, drawings, manuals, documents, records, data bases, programs, blueprints, memoranda, specifications, customer lists, financial reports, equipment and all other physical forms of expression incorporating or containing any Confidential Information, it being distinctly understood that all such writings, physical forms of expression and other things are the exclusive property of the Company. Lee acknowledges that the unauthorized taking of any of the Company's trade secrets is a crime under California Penal Code Section 499(c) and is punishable by imprisonment. Lee further acknowledges that such unauthorized taking of the Company's trade secrets could also result in civil liability under California Civil Code Section 3426, and that willful misappropriation may result in an award against him for triple the amount of the Company's damages and the Company's attorneys fees in collecting such damages. The Parties agree that Lee shall have the right to 2 -------------------------------------------------------------------------------- retain and use the contact information contained on his Company Rolodex as well as Lee's contacts file maintained on the Company's software systems for personal purposes as long as those purposes are not inconsistent with Lee's obligations under this Section 4, the Agreement or the Addendums. (c)If Lee breaches, or threatens to commit a breach of, any of these non-disclosure provisions (collectively, the "Restrictive Covenants"), the Company shall have the following rights and remedies, each of which shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity: the right and remedy to have the Restrictive Covenants specifically enforced or to have any actual or threatened breach thereof enjoined by any court having equity jurisdiction, all without the need to prove any amount of actual damage or that monetary damages would not provide an adequate remedy, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that monetary damages will not provide an adequate remedy to the Company; and the right and remedy to require Lee to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by him or any associated party deriving such benefits as a result of any such breach of the Restrictive Covenants. (d)Nothing in this Agreement or any other agreement between Lee and the Company shall prohibit or impede or be construed to prohibit or impede Lee from lawfully competing with the Company, lawfully working for any competitor of Company or otherwise lawfully pursuing his career in the residential and commercial development industry, so long as Lee complies with these non-disclosure provisions. The Parties agree that these non-disclosure provisions shall continue in effect after Lee's employment with the Company as an employee and/or consultant has terminated and notwithstanding any termination of this Agreement. 5.Non-Solicitation of Employees or Customers. For a period of one (1) year following the last date of Lee's employment with the Company as an employee or consultant, Lee agrees not to solicit or induce any employee of the Company to terminate his/her employment with the Company or to, directly or indirectly, solicit the trade of or otherwise do business with any customer of the Company and/or any one of its affiliated entities so as to offer or sell any product or service which would be competitive with any product or service sold by the Company or its affiliates during that period. 6.Miscellaneous. (a)The Parties to this Consulting Agreement each acknowledge that they have read the Consulting Agreement, have had it explained to them by counsel of their choice, are aware of the contents and legal effects thereof, and in entering into this Consulting Agreement are acting on the advise of counsel of their choice. (b)The Parties each further acknowledge that no representation, promise or inducement has been made other than as set forth in this Consulting Agreement, and that the Parties do not enter into this Consulting Agreement in reliance of any representation, promise or inducement not set forth herein. (c)This Consulting Agreement contains all of the terms and provisions of the agreement between the Parties with respect to the subject matter hereof. There are no oral understandings, statements or stipulations bearing upon the effect of this Consulting Agreement which have not been incorporated herein. (d)All notices and other communications desired or required to be given under this Consulting Agreement shall be in writing and shall be deemed adequately given for purposes hereof upon delivery in person, or on the day mailed by first class mail, postage prepaid, to such address as either Party may give to the other Party in writing. 3 -------------------------------------------------------------------------------- (e)Any provision of this Agreement that is invalid, prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Consulting Agreement. To the extent permitted by applicable law, the Company and Consultant hereby waive any provision of law that renders any portion of this Consulting Agreement prohibited or unenforceable in any respect. (f)This Agreement may not be amended, modified or terminated orally, and no obligation hereunder may be waived orally. No amendment, modification, termination or waiver shall be effective for any purpose unless it is in writing and signed by the Party against whom enforcement thereof is sought. (g)The provisions of this Consulting Agreement shall be binding upon, and shall enure to the benefit of, the Parties and their respective heirs, executors, administrators, successors and assigns. (h)This Consulting Agreement shall be governed by and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, the Parties hereto have executed this Consulting Agreement as of the day and year first above written.                         THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership)     By:   NEWHALL MANAGEMENT LIMITED CONSULTANT:       PARTNERSHIP, its Managing General Partner     By:   NEWHALL MANAGEMENT         CORPORATION, its Managing General Partner     By:     --------------------------------------------------------------------------------       -------------------------------------------------------------------------------- Thomas L. Lee       Gary M. Cusumano, President 4 --------------------------------------------------------------------------------

STANDBY PURCHASE AND NOTE SUPPORT AGREEMENT     This Standby Purchase and Note Support Agreement (this "Agreement") is made and entered into as of August 16, 1999 by and among Louisiana-Pacific Corporation, a Delaware Corporation ("L-P"), Bank of America, N.A., a national banking association ("BofA"), and Canadian Imperial Bank of Commerce, a Canadian chartered bank ("CIBC"). RECITALS:     A.  As described in an Offer and Circular (the "Circular"), dated August 16, 1999, Louisiana-Pacific Acquisition Inc., a wholly owned subsidiary of L-P ("L-P Acquisition"), is making a tender offer (the "Offer") for all of the outstanding shares of capital stock (the "Shares") of Le Groupe Forex Inc. ("Forex"). Each of BofA and CIBC acknowledges that it has received and reviewed a copy of the Circular.     B.  Pursuant to the terms of the Offer, each holder of Shares may elect to receive the purchase price for his or her Shares in cash, installment notes issued by L-P Acquisition and guaranteed by L-P (the "Installment Notes"), or a combination of cash and Installment Notes. However, as described in the Circular, all Installment Notes that would otherwise be issuable to holders of Shares who are Non-Canadian Shareholders (as such term is defined in the Circular) in accordance with the terms of the Offer will instead be issued and delivered to the Depositary (as such term is defined in the Circular), and are to be pooled and sold by the Depositary to BofA.     C.  Subsequent to the date of the Circular, BofA and CIBC determined that it would be desirable for them to purchase any Installment Notes to be sold by the Depositary as described above.     D.  L-P, BofA and CIBC desire to set forth herein the terms of any such purchases of Installment Notes by BofA and CIBC from the Depositary and certain other matters.     NOW, THEREFORE, in consideration of the foregoing and the representations, warranties and covenants contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:     1.  Standby Purchase.  BofA and CIBC shall purchase from the Depositary, at a purchase price equal to the principal amount thereof and no later than three business days after L-P Acquisition has taken up and paid for the Shares pursuant to the Offer, all Installment Notes which are to be pooled and sold by the Depositary in accordance with the terms of the Offer as described in the recitals to this Agreement. BofA and CIBC each acknowledges that it has received and reviewed a copy of the Circular.     (a)  Representations of BofA and CIBC; Resale by BofA or CIBC.  Each of BofA and CIBC, severally and not jointly, represents and warrants to L-P that it is (i) an entity not formed for the specific purpose of acquiring Installment Notes and has total assets in excess of $5 million or (ii) otherwise an "accredited investor" within the meaning of Regulation D under the Securities Act of 1933 (the "Securities Act") and that any Installment Notes purchased by it pursuant to Paragraph 1 of this Agreement shall be so purchased for its own account. Each of BofA and CIBC, severally and not jointly, acknowledges that the Installment Notes have not been registered under the Securities Act. Each of BofA and CIBC, severally and not jointly, agrees that it will not sell, transfer or otherwise dispose of any Installment Notes except in a transaction registered or exempt from registration under the Securities Act and in compliance with applicable state securities laws.     2.  Note Support.  If BofA (or any entity controlled by, controlling, or under common control with BofA) or CIBC shall at any time become the holder or otherwise directly or indirectly be in possession of any Installment Notes, whether pursuant to Paragraph 1 of this Agreement or otherwise, the -------------------------------------------------------------------------------- following provisions of this Paragraph 2 shall apply for so long as BofA or CIBC holds any Installment Notes:     (a)  Compliance with Certain Covenants.  L-P shall comply with all of the covenants set forth under the headings "Affirmative Covenants" and "Negative Covenants" in the Credit Agreement, dated as of January 31, 1997, among L-P, Louisiana-Pacific Canada Ltd., the several financial institutions from time to time party thereto (collectively, the "Banks") and BofA, as agent for the Banks (such Credit Agreement, as the same has been amended or otherwise modified prior to the date hereof being referred to herein as the "Credit Agreement"), subject in each case to any applicable grace periods provided for in the Credit Agreement. The covenants described in the immediately preceding sentence, as from time to time constituted pursuant to the immediately preceding sentence, are incorporated herein by this reference with the same force and effect as though they were set forth herein in their entirety, and shall be effective for purposes of this Agreement irrespective of any further amendment, expiration, termination, invalidity or unenforceability of the Credit Agreement.     (b)  Representations of L-P.  L-P represents and warrants to BofA and CIBC that, as of the date hereof, the representations and warranties made by L-P set forth under the heading "Representations and Warranties" in the Credit Agreement (exclusive of the last two sentences of Section 5.13 of the Credit Agreement) are true and correct.     (c)  Payment of Interest.  L-P shall cause the interest on any Installment Notes held directly or indirectly by BofA or CIBC to be paid in full within five business days after the due date therefor, irrespective of any longer grace period provided for in the indenture under which such Installment Notes shall have been issued.     (d)  Remedies.  If (i) L-P shall breach or default under any covenant incorporated herein by reference pursuant to subparagraph (a) of this Paragraph 2 and such breach or default shall continue for 30 days after written notice thereof to L-P by BofA or CIBC, (ii) any representation or warranty incorporated herein by reference to subparagraph (b) of this Paragraph 2 shall prove to have been false or misleading in any material respect when made or when deemed to have been made, (iii) L-P shall breach or default under its covenant set forth in subparagraph (c) of this Paragraph 2 or fail to make any payment of principal on any Installment Note when due or (iv) an "Event of Default" under and as defined in the Credit Agreement shall occur, then L-P shall, upon demand by BofA, purchase from BofA (or any entity controlled by, controlling, or under common control with BofA), and upon demand by CIBC, purchase from CIBC, all Installment Notes held by, or otherwise in the direct or indirect possession of, such entity for a purchase price equal to the principal amount thereof plus accrued and unpaid interest to the date of such purchase.     3.  General Provisions.  (a) Rights and Obligations Several. The rights and obligations of each of BofA and CIBC under this Agreement shall be several and not joint.     (b)  Amendments and Waivers.  This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. No waiver of any provision of this Agreement and no consent with respect to any departure therefrom by any party hereto shall be effective unless the same shall be in writing and signed by the party granting such waiver or consent. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.     (c)  Notices.  All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally or sent by 2 -------------------------------------------------------------------------------- overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):     (i)   if to L-P, to         Louisiana-Pacific Corporation 111 SW Fifth Avenue, #-4200 Portland, Oregon 97204 Attention: Mr. Curt Stevens Vice President and Chief Financial Officer Telecopy: (503) 821-5319     (ii)   if to BofA         Bank of America, N.A. Paper and Forest Products #9973 555 California Street; 41st Floor San Francisco, California 94104 Attention: Mr. Michael J. Balok Telecopy: (415) 622-458     (iii)   if to CIBC         Canadian Imperial Bank of Commerce BCE Place, P.O. Box. 500 161 Bay Street; 8th Floor Toronto, Ontario M5J 258 Attention: Managing Director, Global Paper and Forest Products Telecopy: (416) 594-8347     (d)  Third-Party Beneficiaries.  This Agreement is not intended to confer upon any person (including without limitation any holder of Installment Notes other than BofA or CIBC and any trustee under the indenture under which the Installment Notes shall have been issued), other than the parties hereto, any rights or remedies.     (e)  Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of California, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.     (f)  Assignment.  Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by any of the parties without the prior written consent of all of the other parties, and any such assignment without such prior written consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.     (g)  Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.     (h)  Inconsistency With Other Documents.  With respect to the parties hereto, to the extent the terms of this Agreement are inconsistent with the terms of any Installment Note or the indenture under which such Installment Notes were issued, the provisions of this Agreement shall supersede and control such other inconsistent terms. [signature page follows] 3 --------------------------------------------------------------------------------     IN WITNESS WHEREOF, L-P, BofA and CIBC have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above.   LOUISIANA-PACIFIC CORPORATION   By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: --------------------------------------------------------------------------------   BANK OF AMERICA, N.A.   By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: --------------------------------------------------------------------------------   CANADIAN IMPERIAL BANK OF COMMERCE   By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: -------------------------------------------------------------------------------- 4 -------------------------------------------------------------------------------- WAIVER AND FIRST AMENDMENT TO STANDBY PURCHASE AND NOTE SUPPORT AGREEMENT     THIS WAIVER AND FIRST AMENDMENT (this "Waiver and Amendment"), dated as of July 18, 2001, is entered into by and among LOUISIANA-PACIFIC CORPORATION, a Delaware Corporation ("L-P"), BANK OF AMERICA, N.A., a national banking association ("BofA"), and CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian chartered bank ("CIBC"). RECITALS:     A.  L-P, BofA and CIBC are parties to a Standby Purchase and Note Support Agreement, dated as of August 16, 1999 (the "Agreement"), pursuant to which BofA and CIBC purchased certain Installment Notes from the Depositary (as such terms are defined therein).     B.  Section 2(a) of the Agreement requires that L-P comply with the negative covenant (Funded Debt to Net Worth) set forth in Section 7.01 of the Credit Agreement (as defined in the Agreement) as originally executed. L-P has informed BofA and CIBC that as of the end of the fiscal quarter ended June 30, 2001 as well as as of the end of certain prior fiscal quarters, but for the Waiver and Second Amendment to Credit Agreement dated as of February 16, 2001 among L-P, BofA for itself and the banks party thereto, and the other parties thereto, L-P would be in breach of such covenant under the Credit Agreement. L-P has requested that BofA and CIBC waive any breach or default under Section 2(a) of the Agreement that has arisen by reason of a failure to comply with the covenant set forth in Section 7.01 of the Credit Agreement as originally executed and incorporated into Section 2(a) of the Agreement by reference (the "Funded Debt to Net Worth Covenant"), and that BofA and CIBC agree to certain amendments of the Agreement. BofA and CIBC have agreed to do so subject to the terms and conditions of this Waiver.     NOW, THEREFORE, the parties hereto hereby agree as follows:     1.  Defined Terms.  Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in the Agreement.     2.  Waiver.  L-P acknowledges that it has failed to comply with the Funded Debt to Net Worth Covenant. Subject to the terms and conditions hereof, BofA and CIBC hereby agree to waive any breach or default arising out of such failure (the "Existing Defaults"). Nothing contained herein shall be deemed a waiver of (or otherwise affect BofA's or CIBC's ability to enforce) any breach or default of the Agreement other than the Existing Defaults.     3.  Amendment to Agreement.  The Agreement shall be amended by inserting the following sentence at the end of Section 2(a) thereof: Notwithstanding the foregoing, the amendments with respect to Section 7.01 of the Credit Agreement set forth in Sections 3(a) and 3(d) of the Waiver and Second Amendment to Credit Agreement, dated as of February 16, 2001, shall be given effect for the purposes of this Section 2(a).     4.  Representations and Warranties.  L-P hereby represents and warrants as follows:     (a) Other than the Existing Defaults, no breach or default has occurred and is continuing under the Agreement.     (b) The execution, delivery and performance of this Waiver and Amendment by L-P have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any person (including any governmental agency) in order to be effective and enforceable. The Agreement, as amended by this Waiver and Amendment, constitutes the legal, valid and binding obligation of L-P, enforceable against L-P in accordance with its respective terms, without defense, counterclaim or offset. --------------------------------------------------------------------------------     (c) All its representations and warranties contained in the Agreement are true and correct as though made on and as of the Effective Date (except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct as of such earlier date).     (d) It is entering into this Waiver and Amendment on the basis of its own investigation and for its own reasons, without reliance upon BofA or CIBC (except for compliance with the terms of this Waiver and Amendment) or any other person.     5.  Effective Date.  This Waiver and Amendment will become effective as of date (the "Effective Date") on which BofA and CIBC have received from L-P an original or facsimile of this Waiver and Amendment, duly executed by BofA, CIBC and L-P.     6.  Reservation of Rights.  L-P acknowledges and agrees that neither BofA's nor CIBC's execution and delivery of this Waiver and Amendment shall be deemed to create a course of dealing or otherwise obligate BofA or CIBC to execute similar waivers under the same or similar circumstances in the future.     7.  Miscellaneous.       (a) Except as expressly set forth herein, this Waiver and Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights or remedies of BofA or CIBC under the Agreement or any related documents, and shall not alter, modify, amend, or in any way affect the terms, conditions, obligations, covenants, or agreements contained in the Agreement or any related documents, all of which are hereby ratified and affirmed in all respects and shall continue in full force and effect.     (b) This Waiver and Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns. No third party beneficiaries are intended in connection with this Waiver and Amendment.     (c) This Waiver and Amendment shall be governed by and construed in accordance with the law of the State of California (without regard to principles of conflicts of laws).     (d) This Waiver and Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.     (e) This Waiver and Amendment, together with the Agreement, contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein and therein. This Waiver and Amendment supersedes all prior drafts and communications with respect thereto. This Waiver and Amendment may not be amended except in accordance with the provisions of Section 3(b) of the Agreement.     (f)  If any term or provision of this Waiver and Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Waiver and Amendment or the Agreement, respectively.     (g) L-P hereby covenants to pay or to reimburse BofA and CIBC, upon demand, for all reasonable costs and expenses (including reasonable attorney fees and expenses) incurred in connection with the development, preparation, negotiation, execution and delivery of this Waiver and Amendment and any other amendments or other documents relating thereto. --------------------------------------------------------------------------------     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Waiver and Amendment as of the date first above written.   LOUISIANA-PACIFIC CORPORATION   By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: --------------------------------------------------------------------------------   BANK OF AMERICA, N.A.   By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: --------------------------------------------------------------------------------   CANADIAN IMPERIAL BANK OF COMMERCE   By: --------------------------------------------------------------------------------   Name: --------------------------------------------------------------------------------   Title: -------------------------------------------------------------------------------- --------------------------------------------------------------------------------

Exhibit 10.39   EMB-135 FINANCING LETTER OF AGREEMENT March 23, 2000 This Letter of Agreement ("LOA" or "Agreement") dated March 23, 2000, is an agreement among Continental Express, Inc. ("Coex" [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]), with its principal place of business at 1600 Smith Street, Houston, Texas; Continental Airlines, Inc. ("Continental" or [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]), with its principal place of business at 1600 Smith Street, Houston, Texas; and Embraer-Empresa Brasileira de Aeronautica S.A. ("Embraer"), with its principal place of business at São José dos Campos, São Paulo, Brazil, as it relates to Purchase Agreement DCT-054/98 dated as of December 23, 1998 (the "Purchase Agreement") of up to seventy-five (75) EMB-135 aircraft each equipped with Rolls-Royce Allison AE3007A1/3 engines, to be delivered therewith consisting of twenty-five (25) firm order aircraft (the "Firm Aircraft") and up to fifty (50) additional aircraft to be delivered at Coex's option (the "Option Aircraft"). This LOA sets forth certain agreements among Coex, Continental and Embraer (the "Parties") with respect to the first 25 Firm Aircraft and first 25 Option Aircraft ("Aircraft"). In case of any conflict between this LOA and the Purchase Agreement, this LOA shall govern. WHEREAS, the Parties propose to enter into certain lease financing transactions relating to the Aircraft; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:   1. General [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]   2. Certain Definitions [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]   Owner Participant: Embraer, or its successor, designee, or transferee, provided any such designee or transferee has a consolidated net worth of not less than twenty-five million dollars (USD25,000,000). [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Manufacturer: Embraer - Empresa Brasileira de Aeronautica S.A., a Brazilian corporation. Engine Manufacturer: Allison Engine Company, Inc., a Delaware corporation. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]   3. Aircraft, [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] and Delivery Date. Aircraft: Each Embraer EMB-135 aircraft together with two Rolls-Royce Allison AE3007A1/3 engines originally delivered therewith pursuant to the Purchase Agreement and any replacement engines therefor (the "Engines"). The Aircraft without the Engines is sometimes referred to as the "Airframe." [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Delivery Date: The date on which an Aircraft is delivered to and accepted by Lessee under a Lease. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]   8. Miscellaneous: Closing Conditions: The obligations of the Lessor to consummate the proposed transaction will be subject to the following conditions to closing : (i) the absence of any material adverse change from the financial condition of the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] as reflected in the Annual Report on Form 10-K for the year ended [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] filed by the [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] with the Securities and Exchange Commission; (ii) the absence of any default of [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]; and (iii) delivery of customary and satisfactory certificates and legal opinions by [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT].   Governing Law: New York [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Confidentiality: The Lease and related documentation will be considered confidential and will not be disclosed to third parties, subject to customary exceptions. Any documents required to be publicly filed shall have all proprietary and confidential information redacted to the extent permitted by law. The Manufacturer and the Lessee may, however, issue customary press releases with respect to the transaction, provided that neither the Manufacturer nor the Lessee shall issue any such press release without the review of the other. [Signature page follows.] IN WITNESS WHEREOF, the parties hereto have caused this LOA to be duly executed and delivered by their proper and authorized officers and to be effective as of the day and year first above written.   CONTINENTAL EXPRESS, INC. CONTINENTAL AIRLINES, INC.   By: /s/ Frederick S. Cromer By: /s/ Gerald Laderman Name: Frederick S. Cromer Name: Gerald Laderman Title: VP Finance & CFO Title: Senior Vice President - Finance   Witness: /s/ James von Atzingen Witness: /s/ James von Atzingen Name: James von Atzingen Name: James von Atzingen     EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A By: /s Frederico Fleury Curado By: /s/ Flavio Rimoli Name: Frederico Fleury Curado Name: Flavio Rimoli Title: Executive Vice President Commercial Title: Director of Contracts   Witness: /s/ H. M. Olivero Witness: /s/ Brasil E. Areco Name: H. M. Olivero Name: Brasil E. Areco ANNEX A   CONTINENTAL EXPRESS, INC. [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] ANNEX B   [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Attachment 1   [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]      

QuickLinks -- Click here to rapidly navigate through this document 2001 EMPLOYMENT AGREEMENT     THIS 2001 EMPLOYMENT AGREEMENT (hereinafter referred to as the "Agreement") is made effective as of             , 200  by and between WESTERN GAS RESOURCES, INC., a Delaware corporation, (hereinafter referred to as the "Corporation"), and            (hereinafter referred to as the "Employee"). WITNESSETH:     WHEREAS, the Corporation, its subsidiaries and affiliates (the "Western Companies") acquire, design, construct and operate natural gas gathering and processing facilities, market, store and transport natural gas, natural gas liquids and sulphur, market electrical power and explore for, develop, and produce oil and gas.     WHEREAS, employee has substantial experience in the Corporation's business and is currently the Corporation's            .     WHEREAS, prior hereto, the Corporation and the Employee have entered into that certain Employment Agreement, dated            , 200  , which shall be terminated upon execution of this,Agreement and further, shall be replaced in its entirety by this Agreement.     NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:     1.  Employment.  Corporation hereby employs the Employee and the Employee hereby accepts such employment with the Corporation upon the terms and conditions hereinafter set forth. The Employee's employment shall continue until it is terminated in accordance with the provisions of paragraph 12 hereof.     2.  Powers, Duties and Responsibilities.   (a)Employee shall devote his full time, attention and effort to the business of the Western Companies during the Corporation's normal business hours and during such other times as are reasonably necessary for the proper performance of his responsibilities hereunder. (b)Employee's primary duties shall be to act as            . Employee shall have such powers, duties and responsibilities, and shall perform such other functions in connection with the business of the Companies, as may be assigned from time to time by the Corporation. At all times during Employee's employment under this Agreement (including employment following a Change of Control of the Corporation as hereinafter described), Employee shall be employed in the Corporation's offices in Denver, Colorado.     3.  Compensation and Bonus.  For all of the services rendered by Employee pursuant to this Agreement, the Corporation shall pay the Employee his or her current annual base salary. In no event shall Employee's current annual base salary be decreased, but it may, from time to time be increased at the discretion of Employer during the term of this Agreement (hereinafter referred to as Compensation), payable in accordance with the Corporation's normal pay practices during the term of Employee's employment. In addition, the Corporation may pay Employee a bonus, as may be determined pursuant to any bonus plan applicable to the Employee for such year, if any, approved by the Corporation's Board of Directors from time-to-time in its sole and absolute discretion. Employee may provide a written election to have any bonus due in December of any year paid in January of the following year.     4.  Officer Insurance Coverage—Costs of Defense.  During the term of Employee's employment and for two (2) years thereafter, to the extent the Corporation maintains an insurance policy or policies providing directors' and officers' liability insurance, Employee 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 Corporation officer. Such coverage shall provide to Employee officer liability insurance coverage to cover any claims that may be made arising from his past, present, or future activities on behalf of the Western Companies, in the same manner as such insurance is provided to the other officers of the Corporation, provided that such insurance coverage is available to the Corporation at a reasonable cost. Employee hereby represents that to his knowledge no investigation, claim, or litigation is currently pending or threatened against him at this time relating to or arising out of his activities as an employee of any Western Company.     5.  Cooperation With Respect to Investigations, Claims or Litigation.  During the term of Employee's employment and at all times thereafter, should a Western Company become involved in any investigation, claim, or litigation relating to or arising out of Employee's past, present, or future duties with a Western Company or with respect to any matters which the Employee has knowledge, Employee agrees to fully, and in good faith, cooperate with the Corporation with respect to such investigation, claim, or litigation. The Corporation shall reimburse Employee for any and all expenses (including attorneys' fees) and, if requested by Employee shall (within two business days of such request) advance such expenses to Employee, which are incurred by Employee in connection with any action for (i) indemnification or advance payment of expenses by the Corporation under this Agreement or any other agreement or Corporation Bylaw now or hereafter in effect relating to claims and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Corporation, regardless of whether Employee ultimately in determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be.     6.  Indemnification Agreement.  Exhibit "A", attached hereto and incorporated herein by reference is an Indemnification Agreement by and between the Corporation and the Employee. The Corporation and the Employee each agree to execute and deliver such Indemnification Agreement concurrently with the execution and delivery of this Agreement. To the extent any provision set forth in the Indemnification Agreement is in conflict with any provision set forth in this Agreement, the provision set forth in the Indemnification Agreement shall govern.     7.  Employee Benefits.  During the term of employment, Employee shall be eligible to participate in the employee benefit plans provided by the Corporation in which the Employee participates as of the date hereof, as such plans may be changed from time to time, in accordance with the provisions of such plans, including, but not limited to, the Corporation's qualified retirement plans, the Corporation's Stock Option Plan(s), and the Corporation's loan plan to acquire stock. The Employee hereby agrees and acknowledges that nothing in this Agreement guarantees him the right to any grant of stock options under any Stock Option Plan, or loan under any loan plan and that the Board of Directors, in its sole and absolute discretion, in accordance with the terms of such plans, as they may be modified from time to time, determines whether and when any stock options are granted or loans extended.     8.  Confidential Information.  Employee acknowledges that pursuant to the employment hereunder, Employee occupies a position of trust and confidence. Accordingly, in order to facilitate the performance of this Agreement and the activities contemplated by this Agreement, the Western Companies may disclose to Employee or Employee may develop or obtain certain proprietary or confidential information of the Western Companies. During Employee's employment hereunder and for a period of one (1) year thereafter (which may be increased to two (2) years thereafter pursuant to Section 14(a)(ii) or (v) hereof), Employee hereby agrees not to use or to disclose to any person, other than in the discharge of his duties under this Agreement, any "proprietary or confidential" information of the Western Companies, including, but not limited to, any information concerning the business operations, business strategies, or internal structure of the Western Companies; the customers or clients of the Western Companies; any acquisition strategies of the Western Companies; the gas and other products' marketing or transportation strategies of the Western Companies, its subsidiaries or affiliates; the terms of any gas gathering, processing, marketing, or transportation contracts entered into by the Western Companies; past, present or future research done by the Western Companies respecting the business or operations of the Western Companies, or customers or clients or potential customers or clients of the Western Companies; personnel data of the Western Companies, product or process knowledge; the Employee's work performed for, or relating to or for, any customer or client of any Western Company or the gas or other product pricing for any customer or client of any Western Company; any method or procedure relating or pertaining to projects developed by any Western Company or contemplated by any Western Company to be developed; or any gas gathering, processing, drilling, marketing, transportation project which any Western Company is developing; or any plans or strategy related to the foregoing which is not generally available or disclosed to the public.     If the Employee violates this agreement of confidentiality, the Corporation shall, in addition to any other remedy provided by law, be permitted to pursue an action for injunctive relief, monetary damages, or both. The Employee acknowledges that all such information constitutes confidential and/or proprietary information of the Western Companies and agrees that such information shall be kept confidential; such information shall be used solely for the purpose of performing the obligations hereunder or activities contemplated by this Agreement; and that he shall not otherwise disclose or make use of such information, except in response to a court order.     9.  Non-Solicitation.  During Employee's employment hereunder and for a period of three years thereafter, Employee shall not engage in any of the following: (i)Hire, offer to hire (or participate in the hiring or offer to hire of) any officer or employee of any Western Company; or (ii)directly or indirectly, solicit, divert or take away or attempt to solicit, divert or take away any business any Western Company has enjoyed or solicited prior to the date hereof or at any time during Employee's term of employment with the Corporation.     This provision, however, shall not be construed to require the Employee to violate any law forbidding anti-competitive practices or any law regarding anti-trust.     In addition, nothing contained herein shall prevent Employee from hiring any officer or employee of any Western Company as a result of a general solicitation in a publicly available publication. In the event Employee violates this non-solicitation provision, the Western Company shall, in addition to any other remedy provided by law, be permitted to pursue an action for injunctive relief, monetary damages, or both.     10.  Ownership of Documents.  All information, drawings, documents and materials whether in writing, on computer disks, computer hard drive, on magnetic tape or otherwise prepared by the Employee in connection with his employment, or which Employee obtains in the course of or as result of his employment by the Corporation shall be the sole and exclusive property of the Corporation and will be delivered to the Corporation by the Employee on the earlier of a demand by the Corporation or promptly after termination of his employment hereunder, together with all written, computer, magnetic tape or other evidence of the information, drawings, document and materials, if any, furnished by any Western Company to the Employee in connection with the Employee's employment.     11.  Agreement Not To Compete.  The parties hereto recognize that the Employee is retained by the Corporation as part of a professional, management and executive staff of the Corporation whose duties include the formulation and execution of management policy. Therefore, except in the event of termination which would entitle Employee to payments pursuant to paragraphs 14 (a) (ii), or 14 (a) (v) in which case the terms of this provision shall not apply, the Employee hereby agrees that during the term of his employment hereunder and for a period of one (1) year after the termination of employment, he shall not act or engage in material competition with the activities of or plans of any Western Company as they exist up to the time of the Employee's termination of employment. Material competition by the Employee shall mean that the Employee is involved in any business or investment activity, in any capacity including but not limited to an employee, consultant, advisor, agent, shareholder, independent contractor, investor, partner, member, owner or otherwise, which activity directly competes with or has a material adverse economic effect on any of the business activities or business plans of any Western Company. Examples of such material competition include, but shall not be limited to an activity involving the gathering and processing business within 25 miles of one of the Western Companies' existing or planned gathering, processing or generation facilities; an activity involving the storage or hub business for natural gas or natural gas liquids within 100 miles of an existing or planned storage facility of any Western Company; and/or an activity involving the purchase of oil or gas leases, the farming-in of such leases or any similar arrangement, within five (5) miles of the boundaries of an existing oil or gas lease of any Western Company. In the event the Employee violates this agreement not to compete, the Corporation shall, in addition to any other remedies provided by law, be permitted to pursue an action for injunctive relief (preliminary or permanent), monetary damages, or both.     12.  Termination of Employment.  Employee's employment pursuant to this Agreement shall terminate upon the first to occur of the following events: (a)The Employee's death. (b)The Employee's disability as that term is defined pursuant to the Corporation's disability insurance plan covering its officers. (c)The Employee's written election to terminate employment, to be effective ninety (90) days thereafter unless an earlier effective date is specified by the Corporation. (d)The Corporation's written election to terminate Employee's employment without "cause." (e)The Corporation's written election to terminate the Employee's employment "for cause." (f)In the event of a Change of Control (as hereinafter defined), Employee's employment is terminated without cause or upon the expiration of six (6) months following a Change of Control, whichever is earlier.     For purposes of this Agreement, the Corporation may elect to terminate Employee's employment "for cause" if: (i) Employee shall have committed a felony, fraud, theft or embezzlement involving the assets of any Western Company; (ii) Employee violates or causes any Western Company to violate, in a material respect, any statute, law, ordinance, rule or regulation relating to such Western Company, which violation results in a material adverse effect to the Corporation's business or financial condition; (iii) Employee engages in any activity which is outside the scope of the Employee's authority and detrimental to any Western Company's business; (iv) Employee fails to comply with the provisions of this Agreement and Employee has either (x) not diligently commenced to correct such detrimental activity; or (y) failed to comply after ten (10) days' written notice from the Corporation, which notice provides a detailed description thereof; or (v) Employee intentionally fails or refuses to perform his obligations or responsibilities hereunder, or to carry out any reasonable and lawful direction of the Corporation with respect to such obligations or responsibilities.     13.  Employee's Rights and Obligations Upon Death or Disability.  If the Employee's employment is terminated as a result of death or disability, then the Employee shall be entitled to the following in full satisfaction of all of his rights under this Agreement or at law: (i)Employee's Right to Compensation and Benefits. Employee shall be entitled to the pro-rata share of Compensation and employee benefits, if any, which have been earned but not paid through the date of Employee's death or disability. Employee shall only be entitled to such additional bonus, if any, which has been previously authorized by the Board of Directors, but has not been paid as of the date of Employee's death or disability. (ii)Employee's Obligations. Notwithstanding such termination of employment, if the Employee is terminated as a result of disability, Employee shall remain bound by the provisions of paragraphs 5, 8, 9, 10 and 11 hereof.     14.  Employee's Rights and Obligations Upon Termination of Employment By the Corporation Without Cause.  If Employee's employment is terminated by the Corporation without cause pursuant to Section 12(d) herein, then Employee shall be entitled to the following in full satisfaction of his rights under this Agreement or at law: (a)Severance Pay. (i)Employee shall be entitled to severance pay in an amount equal to the annual Compensation. Such severance pay will be payable in accordance with the Corporation's normal pay practices over the 12 months following such termination of employment. (ii)Notwithstanding anything else contained herein, in the event of a Change of Control of the Corporation (as hereinafter defined) or after the sale of substantially all the assets of the Corporation, upon the earlier of a) Employee's employment is terminated without cause after a Change of Control of the Corporation or b) upon the expiration of six (6) months following said Change of Control, then the Employee shall be entitled to severance pay equal to two (2) times the annual Compensation of Employee. Severance pay pursuant to this paragraph shall be paid to the Employee either a) over a 24-month period or b) in a one-time lump sum payment, at Employee's option. If the Employee elects payment over a 24 month period, then monthly installments shall commence on the first day of the calendar month following the date of termination of employment or the first day of the calendar month following the expiration of six (6) months after a Change of Control. If the Employee elects payment in a one-time lump sum payment, then said payment shall be made within thirty (30) days of the date of termination of employment or within thirty (30) days after the expiration of the six (6) months after a Change of Control. In the event that the Employee is entitled to the severance pay pursuant to this sub-section, the obligation of the Employee not to use or to disclose any "proprietary or confidential information" set forth in Section 8 hereof shall apply for two (2) years following such Change of Control of the Corporation or such sale of substantially all the assets of the Corporation. (iii)The severance pay provisions of this Section 14(a) (ii) are not additive and in no event shall the Employee be entitled to receive severance pay greater than two (2) times the annual Compensation. (iv)Notwithstanding anything else contained herein, in the event of a Change of Control of the Corporation (as hereinafter defined) or after the sale of substantially all the assets of the Corporation, upon the earlier of a) Employee's employment is terminated without cause after a Change of Control of the Corporation or b) upon the expiration of six (6) months following said Change of Control, then Employee shall receive either of the following for unvested stock options previously granted to Employee: A)in the event of a Change of Control in which the Corporation is acquired in a cash purchase, then Employee shall receive a lump sum payment constituting the positive difference between the exercise price of unvested stock options previously granted to Employee and the transaction price of common stock; or B)in the event of a Change of Control in which the Corporation is acquired in a stock purchase, then Employee's stock options which have not vested prior to termination without cause shall be converted to an amount of unqualified vested options of the acquiring corporation's stock at the original grant price to Employee based upon the conversion rate of the acquiring corporation's stock on the acquisition date. (v)Notwithstanding anything else contained herein, in the event Employee's employment is terminated without cause within sixty (60) days prior to the release of a press release regarding a Change of Control of the Corporation, then the Employee shall be entitled to severance pay equal to two (2) times the annual Compensation of Employee. Severance pay pursuant to this paragraph shall be payable to the Employee either a) over a 24 month period or b) in a one-time lump sum payment, at Employee's option. If the Employee elects payment over a 24-month period, then monthly installments shall commence on the first day of the calendar month following Employee's election for payment. If the Employee elects payment in a one-time lump sum payment, then said payment shall be made within thirty (30) days of the date of Employee's election for payment. In addition, for any unvested stock options previously granted to Employee, Employee shall be entitled to either payment or conversion of such unvested stock options as described in paragraph 14 (a) (iv). In the event that the Employee is entitled to the severance pay pursuant to this sub-section, the obligation of the Employee not to use or to disclose any "proprietary or confidential information" set forth in Section 8 hereof shall apply for two (2) years following the, earlier of such termination or such Change of Control of the Corporation. (vi)For purposes of this Agreement, "Change of Control of the Corporation" means the acquisition by any person or persons acting in concert (including corporations, partnerships, associations or unincorporated organizations), of legal ownership or beneficial ownership (within the meaning of Rule 13d-3, promulgated by the Securities and Exchange Commission and now in effect under the Securities Exchange Act of 1934 (s amended), of a number of voting shares of capital stock of the Corporation greater than the number of voting shares of capital stock of the Corporation which are then owned, both legally and beneficially (as defined above), by Brion G. Wise, Bill M. Sanderson, Walter L. Stonehocker, Dean Phillips, Ward Sauvage, their immediate families and the companies through which they and their immediate families hold ownership in the Corporation ("the Founders"). None of the Founders shall be counted among those persons acting in concert to acquire ownership unless such Founder, acting in concert with an acquiring person or group (an "Acquiring Group Founder"), votes against the other Founders in an election for the Board of Directors or the modification of the Corporation's certificate of incorporation or by-laws or in the vote to accept or reject a plan of merger, sale of substantially all of the assets of the Corporation or similar proposal. The shares of an Acquiring Group Founder shall be counted in the acquiring group's shares and shall not be counted in the shares of the Founders who are not Acquiring Group Founders. (b)Employee's Right to Compensation and Benefits. Employee shall be entitled to the pro-rata share of Compensation and employee benefits, if any, which have been earned but not paid through the date of termination of employment. Employee shall only be entitled to such additional bonus, if any, which has been previously authorized by the Board of Directors, but has not been paid as of the date of termination of employment. (c)Payment of Excise Taxes. The Corporation shall be responsible for the payment of any and all excise taxes including any increase in income taxes resulting from such payment, which may result or be assessed to the Employee in connection with payments, whether in cash, stock or benefits received by the Employee under this paragraph 14 of this Agreement. In addition, the Corporation shall defend, indemnify, save and hold the Employee harmless from any and all claims for excise taxes which are due or may become due or which arise or result from any dispute with a Federal, state or local taxing authority in connection with this paragraph 14. (d)Employee's Obligations. Notwithstanding such termination of employment, Employee shall remain bound by the provisions of paragraphs 5, 8, 9, 10 and 11 hereof.     15.  Employee's Rights and Obligations Upon Termination of Employment by the Corporation With Cause.  If Employee's employment is terminated by the Corporation with cause pursuant to paragraph 12(e) herein, then the Employee shall be entitled to the following in full satisfaction of all of his rights under this Agreement or at law: (i)Severance Pay. Employee shall not be entitled to any severance pay. (ii)Employee's Right to Compensation and Benefits. Employee shall only be entitled to the pro-rata share of Compensation and employee benefits, if any, earned but not paid through the date of termination of employment. Employee shall only be entitled to such additional bonus, if any, which has been previously authorized by the Board of Directors, but has not been paid as of the date of termination of employment. (iii)Employee's Obligations. Notwithstanding such termination of employment, Employee shall remain bound by the provisions of paragraphs 5, 8, 9, 10 and11 hereof.     16.  Employee's Rights and Obligations Upon Termination of Employment By Employee.  If Employee's employment is terminated by the Employee pursuant to paragraph 12(c) herein, then the Employee shall be entitled to the following in full satisfaction of all of his rights under this Agreement or at law: (i)Severance Pay. Employee shall be entitled to no severance pay. (ii)Employee's Rights to Compensation and Benefits. Employee shall be entitled to the pro-rata share of Compensation and Employee Benefits, if any, which have been earned but not paid through the effective date of such termination of employment. Employee shall only be entitled to such additional bonus, if any, which has been previously authorized by the Board of Directors, but has not been paid as of the date of termination of employment. (iii)Employee's Obligations. Notwithstanding such termination of employment, Employee shall remain bound by the provisions of paragraphs 5, 8, 9, 10 and 11 hereof.     17.  Benefit.  This Agreement shall inure to the benefit of and be binding upon the Corporation, its successors and assigns, including, but not limited to (i) any entity which may acquire all or substantially all of the Corporation's assets and business, (ii) any entity with or into which the Corporation may be consolidated or merged, or (iii) any entity that is the successor corporation in a share exchange, and the Employee, his heirs, guardians and personal and legal representatives. The Employee and the Corporation also agree that each Western Company shall be deemed to be a third-party beneficiary to this Agreement.     18.  Notices.  All notices and communications hereunder shall be in writing and shall be deemed given when sent postage prepaid by registered or certified mail, return receipt requested, and, if intended for the Corporation, shall be addressed to it, to the attention of its President, at: Western Gas Resources, Inc. 12200 North Pecos Street Denver, Colorado 80234 or at such other address which the Corporation shall have given notice to the Employee in the manner herein provided, and if intended for the Employee, shall be addressed to him at his last known residence, or at such other address at which the Employee shall have given notice to the Corporation in the manner provided herein:                                                              19.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado.     20.  Severability.  In the event one or more of the provisions contained in this Agreement, or any application thereof, shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or any other application or modification thereof, shall not in any way be affected or impaired. The parties further agree that any such invalid, illegal or unenforceable provision or restriction shall be deemed modified so that it shall be enforced to the greatest extent permissible under law, and to the extent that any court of competent jurisdiction determines any provision or restriction herein to be overly broad, or unenforceable, such court is hereby empowered and authorized to limit such provisions or restriction so that it is enforceable for the longest duration of time, within the largest geographical area and with the broadest scope.     21.  Miscellaneous.   (a)Counterparts. This Agreement may be executed in more than one copy, each copy of which shall serve as an original for all purposes, but all copies shall constitute but one and the same Agreement. (b)Assignment. Except as provided in paragraph 17, this Agreement is personal to each of the parties hereto, and neither party may assign nor delegate any of such party's rights or obligations hereunder without first obtaining the written consent of the other party. (c)Headings. All headings set forth in this Agreement are intended for convenience only and shall not control or affect the meaning, construction or effect of this Agreement or of any of the provisions hereof. (d)Gender, Plurals and Pronouns. Throughout this Agreement, the masculine gender shall include the feminine and neuter, and the singular shall include the plural and vice versa, wherever the context and facts require such construction. (e)Binding Arbitration, Attorney's Fees and Expenses. Except for disputes arising or resulting from the provisions contained in paragraph 14 of this Agreement, if any dispute arises between the parties to this Agreement (but not as to whether the Corporation is obligated to provide legal representation to the Employee pursuant to Section 4 hereof), then both parties shall submit the dispute to binding arbitration. Both parties agree to be bound by the decision of such arbitration. The obligation to submit to binding arbitration shall not prevent either party from seeking a court order or an injunction enforcing the term of this Agreement. In the event of any binding arbitration between the parties, or any litigation to enforce any provision (except for disputes arising or resulting from the provision contained in paragraph 14) of this Agreement or any right of either party, the unsuccessful party to such arbitration or litigation shall pay the successful party all costs and expenses, including reasonable attorneys' fees, incurred. In the event a dispute arises or results from the provisions of paragraph 14 of this Agreement, then both parties shall submit the dispute to binding arbitration under the foregoing provisions, except that all costs and expenses, including reasonable attorneys' fees, incurred shall be solely borne by the Corporation. (f)Waiver of Breach. The waiver by any party hereto of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by any party. (g)Entire Agreement. Except for the Indemnification Agreement, this Agreement contains all agreements, understandings, and arrangements between the parties hereto and no other exists. Except for the Indemnification Agreement, all previous agreements, understandings, and arrangements between the parties relating to employment are terminated by this Agreement. This Agreement may be amended, waived, changed, modified, extended or rescinded only by a writing signed by the party against whom such amendment, waiver, change, modification, extension or rescission is sought.     IN WITNESS WHEREOF, the parties have hereunto set their hands as of the date first written above.     WESTERN GAS RESOURCES, INC.     By: -------------------------------------------------------------------------------- Name: Title:     EMPLOYEE     By: -------------------------------------------------------------------------------- Name: QuickLinks 2001 EMPLOYMENT AGREEMENT

STANDARD OFFICE LEASE              THIS LEASE is made and entered into as of this ____ day of April, 2001 (“Effective Date”) by and between PACIFIC CORPORATE TOWERS LLC, a Delaware limited liability company (“Landlord”), and EN POINTE TECHNOLOGIES, INC., a Delaware corporation (“Tenant”).              Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the premises consisting of a portion of the ninth (9th) floor (“Ninth Floor Premises”), more particularly described on Exhibit “A-1” attached hereto, and the entire nineteenth (19th) floor (“Nineteenth Floor Premises”), more particularly described in Exhibit “A-2” attached hereto, of that building whose address is 100 N. Sepulveda Blvd., El Segundo, California (“Building”) (the Ninth Floor Premises and the Nineteenth Floor Premises are hereafter collectively referred to as the “Premises”).  The Building is part of that certain office building project known as Pacific Corporate Towers, which includes building(s), parking structure(s), land and any other land or improvements surrounding the buildings which are designated from time to time by Landlord as appurtenant to or servicing the building(s) (“Project”).  Tenant hereby leases the Premises for the term and upon the terms and conditions hereinafter set forth, and Landlord and Tenant hereby agree as follows: ARTICLE 1 BASIC LEASE PROVISIONS 1.1 Term.           (a) Early Occupancy Date:  June 1, 2001.         (b) Commencement Date:  July 1, 2001.         (c) Scheduled Expiration Date:  June 30, 2006.       1.2 Rentable Square Footage: Approximately Thirty-six Thousand Ninety (36,090).       1.3 Basic Rental:     Lease Month Base Annual Rent   Monthly Installments   Monthly. Rental Rates   -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   --------------------------------------------------------------------------------   --------------------------------------------------------------------------------   1–30         $    1,082,700.00           $      90,225.00           $      2.50/RSF   31–60         $    1,126,008.00           $      93,834.00           $      2.60/RSF     1.4 Base Year: 2001       1.5 Tenant’s Proportionate Share: Three and Seven one tenths percent (3.7%) of Phase I.     1.6 Security Deposit:  Cash in the amount of Ninety-three Thousand Eight Hundred Thirty-four Dollars ($93,834.00), subject to Article 4 hereof.           1.7 Permitted Use: General office           1.8 Brokers: CB Richard Ellis, Inc. for Landlord and The Seeley Company for Tenant           1.9 Parking Spaces: One Hundred Forty-four (144) unreserved, subject to Article 23.           1.10 Parking Charge: See Article 23           1.11 Tenant Address Prior to Lease Commencement Date:   EN POINTE TECHNOLOGIES, INC. 100 N. Sepulveda Boulevard, Suite 1900 El Segundo, CA 90245 ARTICLE 2 TERM              2.1        Lease Term.  The term of this Lease (“Lease Term”) shall be for a period of five (5) years (“Lease Term”) and shall commence (the “Commencement Date”) on the date set forth in Article 1.1(b) of the Basic Lease Provisions and shall end on the expiration date set forth in Article 1.1(c) of the Basic Lease Provisions.  Notwithstanding the foregoing, Tenant shall have the right to occupy the Premises for a period of thirty (30) days prior to the Commencement Date (“Early Occupancy Period”) commencing upon the date set forth in Article 1.1 (a) of the Basic Lease Provisions (“Early Occupancy Date”).  Tenant’s occupancy of the Premises during the Early Occupancy Period shall be without payment of Basic Rental and Tenant’s Proportionate Share of Direct Costs, but otherwise subject to all of the terms and conditions of this Lease.  Tenant hereby acknowledges that Tenant is currently in possession and occupancy of the Premises pursuant to that certain Sublease (“Original Sublease”), dated August 30, 1996, entered into by and between Tenant, as subtenant, and NCR International, Inc., as sublandlord, as amended by that certain First Amendment to Sublease (“First Amendment”), dated January 23, 1997, and as further amended by that certain Second Amendment to Sublease (“Second Amendment”), dated May 28, 1997 (the Original Sublease, First Amendment and Second Amendment shall hereinafter collectively be referred to as the “Sublease”).  Tenant shall continue in possession and occupancy of the Premises upon termination of the Sublease and hereby acknowledges that the Premises shall be accepted by Tenant on the Early Occupancy Date in “as-is” condition “with all faults,” and “without representation or warranties.”  At any time during the Lease Term, Landlord may deliver to Tenant a notice in the form as set forth in Exhibit “D” attached hereto, which Tenant shall execute and return to Landlord within ten (10) days of receipt thereof.              2.2        Measurement of Premises.  Prior to the Effective Date, Landlord caused the actual rentable square footage of the Premises (“Actual RSF”) to be determined by Landlord’s architect, Pace, in accordance with the BOMA-1996 Standard Method for  Measuring Floor Area in Office Buildings, and certified to both Landlord and Tenant.  The Actual RSF as certified by Pace shall be conclusive and binding on Landlord and Tenant. ARTICLE 3 RENTAL              3.1        Basic Rental. Tenant agrees to pay to Landlord during the term hereof, at Landlord’s office or to such other person or at such other place as directed from time to time by written notice to Tenant from Landlord, the monthly and annual sums as set forth in Article 1.3 of the Basic Lease Provisions, payable in advance on the first day of each calendar month, without demand, setoff or deduction, and in the event this Lease commences or the date of expiration of this Lease occurs other than on the first day or last day of a calendar month, the rent for such month shall be prorated.  Notwithstanding the foregoing, Tenant shall pay to Landlord concurrently with the execution of this Lease the amount of Two Hundred Seventy Thousand Six Hundred Seventy-five Dollars ($270,675.00), representing the monthly installments of Basic Rental due for the first (1st), second (2nd) and third (3rd) months of the Lease Term and such amounts shall be applied against the respective months of the Lease Term to which said amounts correspond.              3.2        Increase in Costs.  The term “Base Year” means the calendar year set forth in Article 1.4 of the Basic Lease Provisions.  If, in any calendar year during the term of this Lease commencing with the calendar year immediately after the Base Year (each such year a “Comparison Year”), (i) the “Tax Costs” (as hereinafter defined) paid or incurred by Landlord shall be higher than the Tax Costs for the Base Year, (ii) the “Operating Costs” (as hereinafter defined) paid or incurred by Landlord shall be higher than the Operating Costs for the Base Year, or (iii) the “Insurance Costs” (as hereinafter defined) paid or incurred by Landlord shall be higher than the Insurance Costs for the Base Year, Tenant shall pay Landlord as Additional Rent Tenant’s Proportionate Share (as provided in Article 1.5 of the Basic Lease Provisions) of such increase in the amount by which the respective Tax Costs, Operating Costs and Insurance Costs, paid or incurred by Landlord in such Comparison Year exceed the respective Tax Costs, Operating Costs and Insurance Costs incurred or paid by Landlord for the Base Year.  In the event either the Premises and/or the Project is expanded or reduced, then Tenant’s Proportionate Share shall be appropriately adjusted, and as to the calendar year in which such change occurs, Tenant’s Proportionate Share for such year shall be determined on the basis of the number of days during that particular calendar year that each such Tenant’s Proportionate Share was in effect.  In the event this Lease shall terminate on any date other than the last day of a calendar year, Tenant’s Proportionate Share of Tax Costs, Operating Costs and Insurance Costs for such calendar year in which this Lease terminates shall be prorated on the basis of the relationship which the number of days which have elapsed from the commencement of said calendar year to and including said date on which this Lease terminates bears to three hundred sixty (360).  Any and all amounts due and payable by Tenant pursuant to Articles 3.2, 3.3 and 3.4 hereof shall be deemed “Additional Rent” and Landlord shall be entitled to exercise the same rights and remedies upon default in these payments.              3.3        Definitions.  As used herein, the following terms shall have the following meanings:              (a)         “Tax Costs” shall mean any and all real estate taxes and other similar charges on real property or improvements, assessments, water and sewer charges, and all other charges assessed or levied upon the Project and appurtenances thereto and the parking or other facilities thereof, or the real property (the “Property”) thereunder (collectively the “Real Property”) or attributable thereto or on the rents, issues, profits or income received or derived therefrom which are assessed or levied by the United States, the State of California or any local government authority or agency or any political subdivision thereof, and shall include Landlord’s reasonable legal fees, costs and disbursements incurred in connection with proceedings for reduction of Tax Costs or any part thereof; provided, however, if at any time after the date of this Lease the methods of taxation now prevailing shall be altered so that in lieu of or as a supplement to or a substitute for the whole or any part of any Tax Costs, there shall be assessed or levied (a) a tax, assessment, levy, imposition or charge wholly or partially as a net income, capital or franchise levy or otherwise on the rents, issues, profits or income derived therefrom, or (b) a tax, assessment, levy (including but not limited to any municipal, state or federal levy), imposition or charge measured by or based in whole or in part upon the real property and imposed upon Landlord, or (c) a license fee measured by the rent payable under this Lease, then all such taxes, assessments or levies or the part thereof so measured or based, shall be deemed to be included in the term “Tax Costs”.  Except as otherwise provided in the preceding sentence, “Tax Costs” shall not include (i) estate, inheritance, transfer, gift, or franchise taxes of Landlord or the Federal or State net income tax imposed on Landlord’s net income (as opposed to rents, receipts or income attributable to operations at the Building or Project) or (ii) any items included as Operating Costs.  If Landlord receives a refund of Tax Costs applicable to any Comparison Year and Tenant shall have paid its Proportionate Share of the increase in Tax Costs for such Comparison Year, then Landlord shall pay to Tenant, within a reasonable time, a sum equal to Tenant’s Proportionate Share of (i) the Tax Costs refunded, less (ii) all costs incurred by Landlord in connection with the refund; provided, however, any such refund shall in no event exceed Tenant’s Proportionate Share of the increase in Tax Costs for such Comparison Year.              (b)        “Operating Costs” shall mean all costs, expenses and amounts of every kind and nature incurred by Landlord in connection with the maintenance, operation, replacement, ownership and repair of the Project, the equipment, adjacent walks, malls and landscaped and common areas and the parking structure, areas and facilities of the Project, including, but not limited to, salaries, wages, medical, surgical and general welfare benefits and pension payments, payroll taxes, fringe benefits, employment taxes, workers’ compensation, uniforms and dry cleaning thereof for all persons who perform duties connected with the operation, maintenance and repair of the Project, its equipment and the adjacent walks and landscaped areas, including janitorial, gardening, security, parking, operating engineer, elevator, painting, plumbing, electrical, carpentry, heating, ventilation, air conditioning, window washing, hired services (but excluding persons performing services not uniformly available to or performed for the benefit of substantially all building tenants) (except that such salaries, wages, medical, surgical, and general welfare benefits and pension payments, payroll taxes, fringe benefits, employment taxes, worker’s compensation, uniform costs and dry cleaning costs shall be reasonably allocated to the Project in the proportion that the time spent by such persons in connection with the Project bears to the total time spent by such persons on the Project and other projects), a reasonable allowance for depreciation of the cost of acquiring or the rental expense of personal property used in the maintenance, operation and repair of the Project, accountant’s fees incurred in the preparation of rent adjustment statements, legal fees, real estate tax consulting fees, personal property taxes on property used in the maintenance and operation of the Project, capital expenditures incurred (i) to effect economies of operation, (ii) for capital repairs and replacements incurred in connection with the operation and maintenance of the Project, and (iii) to make alterations, additions or improvements to the Project required by government regulations, laws, or ordinances; the cost of all charges for electricity, gas, water and other utilities furnished to the Project, including any taxes thereon; the cost of all building and cleaning supplies and materials; the cost of all charges for cleaning, maintenance and service contracts and other services with independent contractors (including property management fees and administrative fees; provided, however, property management and administrative fees included in Operating Costs shall be consistent with property management fees and administrative fees charged at Class “A” office building projects in the City of El Segundo); the cost of operation of any airport shuttle service provided by the Project; and license, permit and inspection fees relating to the Project.  In the event, during any calendar year, the Project is less than one hundred percent (100%) occupied at all times, the Operating Costs shall be adjusted to reflect the Operating Costs of the Project as though one hundred percent (100%) occupied at all times, and the increase or decrease in rent shall be based upon such Operating Costs as so adjusted.  Operating Costs shall also include all management fees and administrative fees.  Landlord shall have the right, from time to time, to equitably allocate some or all of the Operating Costs among different tenants of the Project (i.e. office space and retail space tenants of the Project).  In no event shall Landlord be entitled to collect more than one hundred percent (100%) of the Operating Costs incurred by Landlord in any Comparison Year without giving consideration to the base year in any tenant’s lease.              Operating Costs shall not include: (i) mortgage interest, debt service or ground rent on the Project; (ii) the cost of repairs, replacements and general maintenance to the extent Landlord receives reimbursement for such costs in the same Comparison Year as incurred from insurance proceeds, warranties, guaranties or third parties (provided, however, if any such reimbursement is not received in the Comparison Year when such expense was incurred, the reimbursement shall be applied to Operating Costs for the Comparison Year in which such reimbursement is received); (iii) the cost of renovating or otherwise improving space for individual tenants of the Project; (iv) depreciation of the Project; (v) marketing costs, leasing commissions or fees in lieu of commissions or other costs incurred in procuring tenants; (vi) advertising and promotional expenses and costs of signs in or on the Building identifying the owner of the Building; (vii) the cost of any alterations, additions or changes to the Project required to be made to comply with applicable governmental regulations, laws, or ordinances to the extent such compliance is required prior to the Effective Date; (viii) tax penalties incurred as a result of Landlord’s failure to make payments and/or to file any tax or informational returns when due; (ix) costs arising from Landlord’s charitable or political contributions; (x) costs, other than those incurred in ordinary maintenance and repair, for sculpture, paintings, fountains or other objects of art, except if such art is required by law; (xi) costs, including attorneys’ fees and costs of settlement, judgments and payments in lieu thereof, arising from claims, disputes or potential disputes with individual tenants; (xii) costs associated with the operation of the business of the person or entity which constitutes Landlord (as the same are distinguished from the costs of operation of the Project); and (xiii) any “finders’ fees,” brokerage commissions or job placement costs.              (c)         “Insurance Costs” shall mean the cost of all charges for fire and extended coverage, commercial liability and all other insurance for the Project required to be carried by Landlord under the Lease or now or hereafter maintained by Landlord with respect to the Project.              (d)        “Direct Costs” as used herein shall mean the Tax Costs, Operating Costs, and Insurance Costs.              (e)         “Phase I” shall mean the portion of the Project consisting of the buildings commonly known as 100 and 200 North Sepulveda Boulevard ("Phase I Buildings") together with the Phase I Buildings' percentage share (based on a fraction, the numerator of which is the rentable square footage of the Phase I Buildings and the denominator of which is the entire rentable square footage of the Project) in the common facilities of the Project, such as the parking structure, land and other improvements comprising the Project.  Landlord allocates Direct Costs either (i) to Phase I, in which case all of the allocated Direct Costs benefit and are paid by the tenants of Phase I or (ii) to the Project as a whole, in which case all of the allocated Direct Costs benefit and are paid by the tenants of the entire Project.  If a Direct Cost is allocated to Phase I, Tenant’s share of such Direct Cost shall be equal to a fraction, the numerator of which is the rentable square footage in the Premises and the denominator of which is the total rentable square footage of the Phase I Buildings.  If a Direct Cost is allocated to the Project as a whole, then Tenant pays its proportionate share of the Phase I portion of such Direct Cost.  Tenant’s share of the Phase I portion of a Direct Cost is equal to a fraction, the numerator of which is the rentable square footage in the Premises and the denominator of which is the total rentable square footage of the Phase I Buildings.  For purposes hereof, the rentable square footage of Phase I is approximately nine hundred seventy-six thousand three hundred four (976,304) and the rentable square footage of the Project is approximately one million five hundred forty-two thousand two hundred seventy (1,542,270).              3.4        Determination of Payment  Landlord shall, prior to the commencement of each Comparison Year, furnish to Tenant a written estimate showing in reasonable detail Landlord’s estimated Direct Costs for the next following Comparison Year and the amount of Tenant’s Proportionate Share of the increase in Tax Costs, Operating Costs and Insurance Costs appropriately prorated on a monthly basis for such Comparison Year.  Thereafter, on each monthly rental payment date, Tenant shall pay to Landlord the monthly amount of Tenant’s Proportionate Share of the estimated increase in Direct Costs as shown in said written estimate.  Landlord reserves the right to revise any estimate of Direct Costs if actual or projected Tax Costs, Operating Costs or Insurance Costs show an increase or decrease from any earlier estimate for the same Comparison Year.  If Landlord delivers such revised estimate to Tenant at any time during the Comparison Year, Tenant shall commence payment of such estimated amount on the next monthly rental payment as shown in the revised estimate.  Neither Landlord’s failure to deliver nor the late delivery of such estimate shall constitute a default by Landlord hereunder or a waiver of Landlord’s right to receive Tenant’s Proportionate Share of the estimated increase in Direct Costs and Tenant shall continue to pay on the basis of the most recent estimate until Landlord delivers a new estimate of Direct Costs to Tenant. Within one hundred eighty (180) calendar days following the close of each Comparison Year during the term hereof, Landlord shall endeavor to furnish to Tenant a written statement (the “Reconciliation”) showing in reasonable detail Landlord’s actual Tax Costs, Operating Costs and Insurance Costs for the relevant Comparison Year, together with a full statement of any adjustments necessary to reconcile any sums paid (or credited) hereunder as Tenant’s Proportionate Share of Tax Costs, Operating Costs and Insurance Costs during such Comparison Year with those sums actually payable and due hereunder for such Comparison Year as set forth in the Reconciliation.  If the Reconciliation shows that additional sums are due from Tenant hereunder, Tenant shall pay such sums to Landlord within thirty (30) days of receipt of the Reconciliation.  If the Reconciliation shows that a credit is due Tenant, such credit shall be credited against the next sums becoming due from Tenant hereunder. After the Reconciliation is delivered, Landlord may not bill Tenant for Tenant’s Proportionate Share of Direct Costs incurred in a Comparison Year after the delivery of the Reconciliation for such Comparison Year, but Landlord may include Direct Costs applicable to such prior Comparison Year in the Direct Costs for a subsequent Comparison Year to the extent Landlord receives an invoice in the subsequent Comparison Year for Direct Costs applicable to the prior Comparison Year.  Notwithstanding that the term of this Lease has expired and Tenant has vacated the Premises, Tenant shall pay to Landlord any additional sums due Landlord and Landlord shall rebate to Tenant the amount of any credit due Tenant, as set forth in the Reconciliation for the Comparison Year in which the Lease Term expired.              3.5        Review of Direct Expenses.  In the event of any dispute as to any Direct Costs payable by Tenant as shown in a Reconciliation for a Comparison Year, Tenant shall have the right, within one hundred eighty (180) days after the date of Tenant’s receipt of such Reconciliation and after reasonable notice and at reasonable times, to inspect Landlord’s records pertaining to Direct Costs for the Comparison Year in question at Landlord’s regional accounting office or at the Project.  Tenant’s failure to exercise its right to inspect records pertaining to Direct Costs for any Comparison Year within one hundred eighty (180) days after the date of Tenant’s receipt of the Reconciliation for such Comparison Year shall be deemed Tenant’s waiver of its right to inspect Landlord’s records for such Comparison Year and acceptance of the Direct Costs paid by Tenant for such Comparison Year.  If, after such inspection, Tenant still disputes the Direct Costs paid by Tenant for such Comparison Year, Tenant may have a certification as to Tenant’s proportionate share of Direct Costs for such Comparison Year made by an independent certified public accountant who is a member of one of the “Big-Five” national accounting firms.  The accounting firm retained by Tenant shall be subject to the prior written approval of Landlord, which approval shall not be unreasonably withheld.  It shall not be unreasonable for Landlord to withhold its consent if the accounting firm has any conflict of interest with respect to Landlord, as determined by Landlord, or is then involved in a dispute which also involves Landlord.  In no event, however, shall Tenant retain an independent certified public accountant whose compensation is based on a percentage of any savings to Tenant of Direct Costs resulting from such certification.  Promptly upon receipt of the certification from its accountant, Tenant shall deliver a copy of the certification to Landlord.  When a final determination has been made as to the amount in dispute, Landlord shall pay the amount determined to be owed to Tenant, or Tenant shall pay the amount determined to be owed to Landlord, as applicable, within thirty (30) days after the date of the final determination.  As a condition precedent to its exercise of its rights of dispute as set forth herein, Tenant shall timely pay to Landlord all amounts set forth in the Reconciliation which Tenant wishes to dispute. ARTICLE 4 SECURITY DEPOSIT              Tenant has deposited with Landlord cash in the amount of Ninety-three Thousand Eight Hundred Thirty-four Dollars ($93,834.00) as security for the full and faithful performance of every provision of this Lease to be performed by Tenant.  If Tenant breaches any provision, covenant or condition of this Lease, including but not limited to the payment of Basic Rental or Additional Rent, Landlord may (but shall not be required to) use all or any part of this Security Deposit for the payment of any sums in default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s default.  If any portion of said Security Deposit is so used or applied, Tenant shall, within ten (10) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount and Tenant’s failure to do so shall be an Event of Default.  Landlord shall not be required to keep this Security Deposit separate from its general funds and Tenant shall not be entitled to interest on such deposit.  Within thirty (30) days after the expiration of the Lease Term, and provided there exists no default by Tenant hereunder, the Security Deposit or any balance thereof shall be returned to Tenant (or, at Landlord’s option, to Tenant’s assignee), provided that subsequent to the expiration of this Lease, Landlord may retain from said Security Deposit (a) any and all amounts permitted by California Civil Code § 1950.7 but not limited to this section and (b) such sums as Landlord reasonably estimates will thereafter become due under this Lease.  Should Landlord sell its interest in the Premises during the term hereof, and if Landlord deposits with the purchaser thereof the then unappropriated funds deposited by Tenant as aforesaid, Landlord shall be discharged from any liability with respect to such Security Deposit. ARTICLE 5 HOLDING OVER              Should Tenant, with Landlord’s written consent, hold over after termination of this Lease, Tenant shall become a tenant from month to month only upon each and all of the terms herein provided as may be applicable to a month to month tenancy and any such holding over shall not constitute an extension of this Lease.  During the first (1st) month of any such holding over with consent, Tenant shall pay in advance, monthly, a rental rate equal to one hundred twenty-five percent (125%), and thereafter, one hundred fifty percent (150%) of the Basic Rental in effect for the last month of the term of this Lease, in addition to, and not in lieu of, all other payments required to be made by Tenant hereunder including but not limited to Tenant’s Proportionate Share of Direct Costs.  If Tenant holds over after termination of this Lease without the express written consent of Landlord, Tenant shall become a tenant at sufferance only.  Tenant agrees that the reasonable value of the use of the Premises during any holding over without consent shall be two hundred percent (200%) of the Basic Rental in effect upon the date of such termination (pro rated on a daily basis).  Acceptance by Landlord of rent after such termination shall not constitute a hold over hereunder or result in a renewal.  If Tenant fails to surrender the Premises upon the expiration or termination of this Lease, Tenant shall indemnify, defend and hold Landlord harmless from all costs, losses, expenses or liabilities, including without limitation, costs and reasonable attorney fees. ARTICLE 6 PERSONAL PROPERTY              Tenant shall pay, prior to delinquency, all taxes assessed against or levied upon fixtures, furnishings, equipment and all other personal property of Tenant located in the Premises.  In the event any or all of Tenant’s fixtures, furnishings, equipment and other personal property shall be assessed and taxed with property of Landlord, Tenant shall pay to Landlord its share of such taxes within thirty (30) days after delivery to Tenant by Landlord of a statement in writing setting forth the amount of such taxes applicable to Tenant’s property.  Tenant shall assume and pay to Landlord at the time of paying Basic Rental any excise, sales, use, rent, occupancy, garage, parking, gross receipts or other taxes (other than net income taxes) which may be imposed on or on account of letting of the Premises or the payment of Basic Rental or any other sums due or payable hereunder, and which Landlord may be required to pay or collect under any law now in effect or hereafter enacted.  Tenant shall pay directly to the party or entity entitled thereto all business license fees, gross receipts taxes and similar taxes and impositions which may from time to time be assessed against or levied upon Tenant, as and when the same become due and before delinquency.  Notwithstanding anything to the contrary contained herein, any sums payable by Tenant under this Article 6 shall not be included in the computation of “Tax Costs.” ARTICLE 7 USE              Tenant shall use and occupy the Premises only for the use set forth in Article 1.7 of the Basic Lease Provisions and shall not use or occupy the Premises or permit the same to be used or occupied for any other purpose without the prior written consent of Landlord, and Tenant agrees that it will use the Premises in such a manner so as not to interfere with or infringe upon the rights of other tenants in the Project.  Tenant shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances and governmental regulations or requirements now in force or which may hereafter be in force relating to or affecting the condition, use or occupancy of the Premises or the Project.  Tenant shall, at its sole cost and expense, make any and all alterations, improvements or structural changes, that are required by laws, statutes, ordinances and governmental regulations or requirements as a result of Tenant’s particular use of the Premises or any alterations, additions or improvements made by Tenant.  Any other alterations, improvements or structural changes to the Premises or the Project that are required by laws, statutes, ordinances and governmental regulations or requirements, and not due to Tenant’s particular use of the Premises or Tenant’s alterations, additions or improvements, shall be made by Landlord, and the cost thereof shall be an Operating Cost.  Tenant shall not do or permit to be done anything which will invalidate or increase the cost of any fire and extended coverage insurance policy covering the Project and/or the property located therein and Tenant shall comply with all rules, orders, regulations and requirements of any organization which sets out standards, requirements or recommendations commonly referred to by major fire insurance underwriters.  Tenant shall promptly upon demand reimburse Landlord for any additional premium charges for such policy by reason of Tenant’s failure to comply with the provisions of this Article. ARTICLE 8 CONDITION OF PREMISES              Tenant acknowledges that Tenant is currently in possession and occupancy of the Premises and hereby agrees that the Premises shall be taken in “as is” condition, “with all faults”, “without any representations or warranties”.  Tenant hereby agrees and warrants that it is familiar with the condition of the Premises and the suitability of same for Tenant’s purposes, and Tenant does hereby waive and disclaim any objection to, cause of action based upon, or claim that its obligations hereunder should be reduced or limited because of the condition of the Premises or the Project or the suitability of same for Tenant’s purposes.  Tenant further acknowledges that Landlord has no obligation to alter or improve the Premises for Tenant’s use or benefit other than to make the Allowance available to Tenant for Tenant’s construction of the Tenant Work pursuant to the Work Letter Agreement attached hereto as Exhibit “C” (“Work Letter Agreement”).  Tenant hereby acknowledges that pursuant to a separate agreement Landlord intends to acquire title to certain furniture and equipment currently used by Tenant in the Premises, and more particularly described in Exhibit “F” attached hereto (“Existing Furniture”).  Subject to Landlord’s acquisition of title to the Existing Furniture, promptly after the Commencement Date, Landlord shall transfer title to the Existing Furniture to Tenant pursuant to a bill of sale.  Tenant hereby acknowledges and agrees that neither Landlord nor any agent or employee of Landlord has made any representations or warranty with respect to the Existing Furniture and that said Existing Furniture shall be taken in “as is” condition, “with all faults”, “without any representations or warranties” and that Landlord shall have no duty to repair or maintain said Existing Furniture.  Tenant acknowledges that neither Landlord nor any agent nor any employee of Landlord has made any representations or warranty with respect to the Premises or the Project or with respect to the suitability of either for the conduct of Tenant’s business.  The taking of possession of the Premises by Tenant shall conclusively establish that the Premises and the Project were at such time in satisfactory condition.  Tenant hereby waives and releases its right to make repairs at Landlord’s expense pursuant to Sections 1941 and 1942 of the Civil Code of California or under any similar law, statute or ordinance now or hereafter in effect. ARTICLE 9 REPAIRS AND ALTERATIONS              9.1        Tenant Repairs.  Except for matters which are Landlord’s responsibility under Article 9.2, Tenant shall keep the Premises in good condition and repair.  Tenant shall, at Tenant’s sole cost and expense, maintain and repair the Existing Furniture.  All damage or injury to the Premises or the Project caused by the act or negligence of Tenant, its employees, agents or visitors, guests, invitees or licensees shall be promptly repaired by Tenant, at its sole cost and expense, to the reasonable satisfaction of Landlord.  Landlord may make any repairs which are not made by Tenant within ten (10) days after Landlord’s notice of Tenant’s failure to repair (provided, however, no notice shall be required in the event of an emergency) and charge Tenant for the cost thereof, which cost shall be paid by Tenant within ten (10) days from invoice from Landlord.  Tenant shall be responsible for the design and function of all non-standard improvements of the Premises, whether or not installed by Landlord at Tenant’s request.  Tenant waives all rights to make repairs at the expense of Landlord, or to deduct the cost thereof from the rent.              9.2        Landlord Repairs.         Landlord shall be responsible for performing all maintenance, repairs or replacements of (i) Building-wide mechanical systems, including electrical (to the connection with the circuit breakers for the Premises), plumbing (to the point where the Building plumbing system ties into any plumbing located in the Premises), water (except any alterations or additions to such system made by Tenant), sanitary sewer, heating, ventilating and air conditioning, including chilled water (but not any supplemental heating, ventilating and air conditioning unit servicing the Premises), telephone (to the main point of entry for the Premises) and life safety systems (all such systems are hereafter referred to as “Building Systems”); provided, however, Landlord shall not be responsible for maintenance, repair or replacement of any alteration made to the Building Systems as part of the Tenant Work or any alterations made by Tenant; (ii) the roof, structural components of the Building, foundation, support columns, windows, window frames and all exterior and common area glass; (iii) the restrooms; and (iv) the common areas of the Project, including without limitation, the parking structure, landscaping, walkways, common entrances, corridors, windows, loading docks, stairways and similar facilities.  If the need for any repairs or maintenance to any of the foregoing is made necessary by the negligence or willful misconduct of Tenant, its employees, agents, or contractors, or visitors, guests, invitees or licensees, then Tenant shall pay Landlord the cost of such repair, maintenance or replacement within five (5) days after receipt of Landlord’s invoice therefor.  Except for maintenance, repairs or replacement made necessary by the negligence or willful misconduct of Tenant, its employees, agents or contractors, or visitors, guests, invitees or licensees, as provided in this Article 9.2, all costs incurred by Landlord pursuant to this Article 9.2 shall be Operating Costs.              9.3        Alterations.      Tenant shall make no alterations, changes or additions in or to the Premises without Landlord’s prior written consent,which consent shall not be unreasonably withheld (except that it shall be deemed reasonable for Landlord to withhold consent to non-standard office alterations or alterations that are structural or affect the Building Systems or exterior, or are visible from the exterior of the Premises), and then only by contractors or mechanics approved by Landlord and upon the approval by Landlord of fully detailed and dimensioned plans and specifications pertaining to the work in question, to be prepared and submitted by Tenant at its sole cost and expense.  Tenant shall at its sole cost and expense obtain all necessary approvals and permits pertaining to any work approved by Landlord.  If Landlord, in approving any work, specifies a commencement date therefor, Tenant shall not commence any work prior to such date.  Tenant hereby indemnifies and agrees to defend and hold Landlord free and harmless from all liens and claims of lien, and all other liability, claims and demands arising out of any work done or material supplied to the Premises by or at the request of Tenant.  If permitted alterations, changes, or additions are made, they shall be made at Tenant’s expense and shall be and become the property of Landlord, except that Landlord may, by written notice to Tenant given at the time Landlord consents to such alteration, addition or improvement, require Tenant, at Tenant’s expense, to promptly both remove any such alteration, change or addition and repair counters, railings and the like installed by Tenant, and to repair any damage to the Premises caused by such removal and restore the Premises to the condition that existed prior to such alteration in accordance with all applicable laws, statutes, building codes and regulations in effect as of the date of such restoration.  With regard to repairs, alterations or any  other work arising from or related to this Article 9, Landlord shall be entitled to receive an administrative/supervision fee of fifteen percent (15%) of the total cost of all (i) work performed; (ii) materials, plans and drawings furnished; and (iii) all other costs and expenses related to such repairs, alterations or other work. ARTICLE 10 LIENS              Tenant shall keep the Premises, Building and Project free from any mechanics’ liens, vendors liens or any other liens arising out of any work performed, materials furnished or obligations incurred by Tenant, and Tenant shall defend, indemnify and hold harmless Landlord from and against any such lien, claim, liability or action thereon, together with costs of suit and reasonable attorneys’ fees incurred by Landlord in connection with any such lien, claim, liability or action.  Before commencing any work of alteration, addition or improvement to the Premises, Tenant shall give Landlord at least ten (10) business days’ written notice of the proposed commencement of such work (to afford Landlord an opportunity to post appropriate notices of non-responsibility) and shall secure, at Tenant’s own cost and expense, a completion and lien indemnity bond, reasonably satisfactory to Landlord, for said work.  In the event that there shall be recorded against the Premises or the Building or the property of which the Premises is a part any claim or lien arising out of any such work performed, materials furnished or obligations incurred by Tenant and such claim or lien shall not be removed or discharged within ten (10) days of filing, Landlord shall have the right but not the obligation to pay and discharge said lien without regard to whether such lien shall be lawful or correct or to require that Tenant deposit with Landlord in cash, lawful money of the United States, one hundred fifty percent (150%) of the amount of such claim, which sum may be retained by Landlord until such claim shall have been removed of record or until judgment shall have been rendered on such claim and such judgment shall have become final, at which time Landlord shall have the right to apply such deposit in discharge of the judgment on said claim and any costs, including attorneys’ fees incurred by Landlord, and shall remit the balance thereof to Tenant.  If Landlord pays and discharges said lien, then Tenant shall reimburse Landlord for all costs and expenses incurred by Landlord in discharging such lien, including attorneys’ fees, within ten (10) days after the date of receipt of Landlord’s invoice therefor. ARTICLE 11 PROJECT SERVICES              11.1      Building Hours   Landlord agrees to furnish to the Premises from 8:00 a.m. to 6:00 p.m. Mondays through Fridays and 9:00 a.m. to 1:00 p.m. on Saturdays, local and national holidays excepted (“Building Hours”), air conditioning and heat, elevator service, electric current (subject to Article 11.2) for normal lighting and fractional horsepower for office machines and, on the same floor as the Premises, water for lavatory and drinking purposes, all in such reasonable quantities as in the judgment of Landlord is reasonably necessary for the comfortable occupancy of the Premises.  Janitorial and maintenance services will be furnished five (5) days per week.  Such janitorial service shall be provided in accordance with standards for comparable class “A” office buildings in the City of El Segundo.  Tenant shall comply with all rules and regulations which Landlord may reasonably establish for the proper functioning and protection of the air conditioning, heating, elevator, electrical and plumbing systems.  Landlord shall not be liable for, and there shall be no rent abatement as a result of, any stoppage, reduction or interruption of any such services caused by governmental rules, regulations or ordinances, riot, strike, labor dispute, breakdowns, accidents, necessary repairs or any other cause.  Except as specifically provided in this Article 11, Tenant agrees to pay for all utilities and other services utilized by Tenant for all overtime or additional building services furnished to Tenant not uniformly furnished to all tenants of the Project at Landlord’s expense. Landlord’s obligation to render to the Premises services during non-Building Hours or above-standard building services shall be conditioned upon the payment by Tenant of all sums charged by Landlord for such services pursuant to this Article 11.              11.2      Electricity Use.  Landlord shall supply electricity to the Premises during Building Hours in an amount sufficient to support a peak electrical demand in the Premises, inclusive of lighting, heating, ventilation and air conditioning and receptacle load (“Peak Demand”), in the amount of four (4) watts per usable square foot in the Premises.  Tenant shall not, without the prior written consent of Landlord, use electricity in the Premises that would cause the Peak Demand in the Premises to exceed four (4) watts per usable square foot in the Premises.  If Tenant shall require electric current to support a Peak Demand in excess of four (4) watts per usable square foot in the Premises, Tenant shall first obtain the written consent of Landlord.  Landlord may withhold consent or withdraw consent to a request for additional electricity in the Premises if (i) Landlord would be required to modify or increase the electrical capacity of the Building or Project to supply such additional electricity as a result of current or future tenant needs, or (ii) if as a result of supplying such excess electricity to Tenant, Landlord would be unable to furnish the other current or future tenants in the Building similar electric capacity as supplied to Tenant.              Tenant shall install, as part of the Tenant Work, a separate meter to measure electricity supplied to the Premises.  Tenant shall pay to Landlord, within thirty (30) days after the date of Landlord’s invoice, the cost for all electricity supplied to the Premises during Building Hours in excess of a Peak Demand of four (4) watts per usable square foot as shown by said meter at the rate charged for such service by Landlord’s electricity provider, plus any reasonable additional expense incurred by Landlord in keeping account of the electricity so consumed.  The cost of electricity furnished to Tenant during Building Hours that does not exceed a Peak Demand of four (4) watts per usable square foot in the Premises shall be included within Operating Costs.  The cost of electricity furnished to Tenant during non-Building Hours that does not exceed one (1) watt per usable square foot in the Premises (excepting non-Building Hours lighting and heating, ventilation and air conditioning as set forth in Article 11.4 hereof) shall be included within Operating Costs.  Subject to Article 11.4 hereof, Tenant shall pay for the cost of electricity in excess of one (1) watt per rentable square foot in the Premises supplied to the Premises during non-Building Hours as measured by the separate meter at the rates charged for such service by Landlord’s electricity provider, plus any reasonable additional expense incurred by Landlord in keeping account of the electricity so consumed.              Notwithstanding the foregoing, if Tenant installs a computer room, supplemental heating, ventilation and air conditioning units, or any equipment or special alterations in the Premises that use substantial amounts of electricity (collectively, “Supplemental Equipment”), all electricity supplied to such Supplemental Equipment shall be separately metered (as set forth below).  Tenant shall install a separate meter to measure the electricity supplied to the Supplemental Equipment and the cost of any such separate meter and the installation, maintenance and repair thereof shall be paid by Tenant.  The electricity supplied to the Supplemental Equipment shall be included in the four (4) watts per usable square foot of electricity supplied to the Premises during Building Hours and the one (1) watt per usable square foot of electricity supplied to the Premises during non-Building Hours and Tenant shall pay all costs of electricity supplied to the Supplemental Equipment in excess of four (4) watts per usable square foot in the Premises during Building Hours and one (1) watt per usable square foot in the Premises during non-Building Hours in accordance with the preceding paragraph.              11.3      Heat Generating Machines.  If any lights, machines or equipment (including but not limited to computers) are used by Tenant in the Premises which materially affect the temperature otherwise maintained by the air conditioning system, or generate substantially more heat in the Premises than would be generated by the building standard lights and usual fractional horsepower office equipment, Landlord shall have the right to install any machinery and equipment which Landlord reasonably deems necessary to restore temperature balance, including but not limited to modifications to the standard air conditioning equipment, and the cost thereof, including the cost of installation and any additional cost of operation and maintenance occasioned thereby, shall be paid by Tenant to Landlord upon demand by Landlord.  Landlord shall not be liable under any circumstances for loss of or injury to property, however occurring, through or in connection with or incidental to failure to furnish any of the foregoing.              11.4      After-Hours HVAC/Lighting.   If Tenant requires heating, ventilation and/or air conditioning during non-Building Hours, Tenant shall give Landlord such advance notice as Landlord shall reasonably require and shall pay Landlord for the use of such equipment and service at Landlord’s prevailing rate, currently Thirty-eight Dollars ($38) per hour, which rate may change from time to time during the Lease Term.  Anything to the contrary contained in this Article 11 notwithstanding, if Tenant requires lighting in the Premises during non-Building Hours, Tenant shall give Landlord such advance notice as Landlord shall reasonably require and shall pay Landlord for the use of such electrical service at Landlord’s prevailing rate, currently Five Dollars ($5) per hour, which rate may change from time to time during the Lease Term.              11.5      Recurrent Utility Use  Landlord may impose a reasonable charge for any utilities or services, including without limitation electric current, required to be provided by Landlord by reason of any substantial recurrent use of the Premises other than during the times provided in Article 11.1 above. ARTICLE 12 RIGHTS OF LANDLORD              Landlord and its agents shall have the right to enter the Premises at all reasonable times, upon twenty-four (24) hours notice (except no notice shall be required for entry for janitorial service or in case of emergency), for the purpose of cleaning the Premises, examining or inspecting the same, serving or posting and keeping posted thereon notices as provided by law, or which Landlord deems necessary for the protection of Landlord or the Project, showing the same to prospective tenants or purchasers of the Project, and for making such alterations, repairs, improvements or additions to the Premises or to the Project as Landlord may deem necessary or desirable.  If Tenant shall not be personally present to open and permit an entry into the Premises at any time when such an entry by Landlord is necessary or permitted hereunder, Landlord may enter by means of a master key or may enter forcibly, without liability to Tenant except for any failure to exercise due care for Tenant’s property, and without affecting this Lease. ARTICLE 13 INDEMNITY, EXEMPTION OF LANDLORD FROM LIABILITY              13.1      Indemnity  Tenant shall indemnify, defend and hold Landlord harmless from and against any and all claims arising from Tenant’s use of the Premises or from the conduct of its business or from any activity, work or thing which may be permitted or suffered by Tenant in or about the Premises or arising out of the use thereof and shall further indemnify, defend and hold Landlord harmless from and against any and all claims arising from any breach or default in the performance of any obligation on Tenant’s part to be performed under this Lease or arising from any negligence of Tenant or any of its agents, contractors, employees or invitees, patrons, customers or members and from any and all costs, attorneys’ fees, expenses and liabilities incurred in the defense of any claim or any action or proceeding brought thereon, including negotiations in connection therewith; provided, however, the foregoing indemnity shall not apply to liability to the extent caused by the gross negligence or willful misconduct of Landlord.  Tenant hereby assumes all risk of damage to property or injury to persons in or about the Premises from any cause, and Tenant hereby waives all claims in respect thereof against Landlord.              13.2      Exemption of Landlord from Liability  Landlord shall not be liable for injury to Tenant’s business, or loss of income therefrom, or for damage that may be sustained by the person, goods, wares, merchandise or property of Tenant, its employees, invitees, customers, agents, or contractors, or any other person in, on or about the Premises directly or indirectly caused by or resulting from fire, steam, electricity, gas, water, or rain which may leak or flow from or into any part of the Premises, or from the breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air conditioning, light fixtures, or mechanical or electrical systems, whether such damage or injury results from conditions arising upon the Premises or upon other portions of the Building or from other sources or places and regardless of whether the cause of such damage or injury or the means or repairing the same is inaccessible to Tenant.  Landlord shall not be liable to Tenant for any damages arising from any act or neglect of any other tenant of the Project.              Tenant acknowledges that Landlord’s election to provide mechanical surveillance or to post security personnel in the Building is solely within Landlord’s discretion; Landlord shall have no liability in connection with the decision whether or not to provide such services and Tenant hereby waives all claims based thereon.  Landlord shall not be liable for losses due to theft, vandalism, or like causes.  Tenant shall defend, indemnify, and hold Landlord harmless from any such claims made by any employee, licensee, invitee, contractor, agent, or other person whose presence in, on or about the Premises or the Building is attendant to the business of Tenant. ARTICLE 14 INSURANCE              14.1      Tenant's Insurance  Tenant, shall at all times during the Lease Term, and at its own cost and expense, procure and continue in force the following insurance coverage:  (i) Commercial General Liability Insurance with a combined single limit for bodily injury and property damage of not less than Three Million Dollars ($3,000,000) per occurrence and Five Million Dollars ($5,000,000) in the annual aggregate, including products liability coverage if applicable, covering the use of the Premises and the performance of Tenant of the indemnity agreements set forth in Article 13 hereof; (ii) a policy of standard fire, extended coverage and special extended coverage insurance (all risks), including a vandalism and malicious mischief endorsement, and sprinkler leakage coverage (Tenant shall not be required to maintain earthquake coverage with respect to Tenant’s personal property, furniture and equipment) in an amount equal to the full replacement value new (or, with respect to Tenant’s personal property, furniture and equipment, “like-new”) without deduction for depreciation of all fixtures, furniture, and leasehold improvements installed by or at the expense of Tenant; and (iii) insurance on all plate or tempered glass in or enclosing the Premises; for the replacement cost of such glass.              14.2      Form of Policies  The aforementioned minimum limits of policies shall in no event limit the liability of Tenant hereunder.  Such insurance shall name Landlord and such other persons or firms with insurable interests, as Landlord specifies from time to time, as additional insureds with an appropriate endorsement to the policy(s) and shall be with companies having a rating of not less than A-VIII in Best’s Insurance Guide.  Tenant shall furnish to Landlord, from the insurance companies, or cause the insurance companies to furnish, certificates of coverage.  No such policy shall be cancelable or subject to reduction of coverage or other modification or cancellation except after thirty (30) days prior written notice to Landlord by the insurer.  All such policies shall be endorsed to agree that Tenant’s policy is primary and that any insurance covered by Landlord is excess and not contributing with any insurance requirement hereunder.  Tenant shall, at least twenty (20) days prior to the expiration of such policies, furnish Landlord with renewals or binders.  Tenant agrees that if Tenant does not take out and maintain such insurance or furnish Landlord with renewals or binders, Landlord may (but shall not be required to) procure said insurance on Tenant’s behalf and charge Tenant the cost thereof, which amount shall be payable by Tenant upon demand with interest from the date such sums are expended.              Additionally, Tenant shall maintain Worker’s Compensation required by law and shall provide Landlord with evidence of coverage.  Said evidence shall be in the form of a certificate of insurance and shall provide for Landlord to receive thirty (30) days notice of cancellation from the insurer.              14.3      Landlord's Insurance  Landlord shall, at Landlord’s expense, procure and maintain at all times during the Lease Term, a policy or policies of insurance covering loss or damage to the Building in the amount of the full replacement cost new without deduction for depreciation thereof (exclusive of Tenant’s trade fixtures, inventory, personal property and equipment), providing protection against all perils included within the classification of fire and extended coverage, vandalism coverage and malicious mischief, sprinkler leakage, water damage, and special extended coverage on building.  Additionally, Landlord may (but shall not be required to) carry:  (i) Bodily Injury and Property Damage Liability Insurance and/or Excess Liability Coverage Insurance; (ii)  Earthquake and/or Flood Damage Insurance; or (iii) Rental Income Insurance at its election or if required by its lender from time to time during the term hereof, in such amounts and with such limits as Landlord or its lender may deem appropriate.  The costs of all such insurance shall be included in Insurance Costs.              14.4      Waiver of Subrogation  The parties release each other and their respective authorized representatives from any claims for damage to the Premises, and to the fixtures, personal property, improvements, and alterations of either Landlord or Tenant, in or on the Premises, Building or Project, that are caused by or result from risks insured against under any insurance policies carried by the parties and in force at the time of any such damage.  Any policy or policies of fire, extended or similar casualty insurance which either party obtains in connection with the Premises shall include a clause or endorsement denying the insurer any rights of subrogation against the other party to the extent any rights have been waived by the insured prior to the occurrence of injury of loss.              14.5      Compliance with Law.  Tenant agrees that it will not, at any time, during the Lease Term, carry any stock of goods or do anything in or about the Premises that will in any way tend to increase the insurance rates upon the Building.  Tenant agrees to pay Landlord forthwith upon demand the amount of any increase in premiums for insurance against loss by fire that may be charged during the Lease Term on the amount of insurance to be carried by Landlord on the Building resulting directly from the foregoing, or from Tenant doing any act in or about said Premises that does so increase the insurance rates, whether or not Landlord shall have consented to such act on the part of Tenant.  If Tenant installs upon the Premises any electrical equipment which constitutes an overload of electrical lines of the Premises, Tenant shall at its own expense make whatever changes are necessary to comply with requirements of the insurance underwriters and any governmental authority having jurisdiction thereover, but nothing herein contained shall be deemed to constitute Landlord’s consent to such overloading.  Tenant shall, at its own expense, comply with all requirements of the insurance authority having jurisdiction over the Project necessary for the maintenance of reasonable fire and extended coverage insurance for the Premises, including without limitation thereto, the installation of fire extinguishers or an automatic dry chemical extinguishing system. ARTICLE 15 ASSIGNMENT AND SUBLETTING              Except as provided in Articles 15(g) and 15(h) below, Tenant shall not and have no power to, either voluntarily or by operation of law, sell, assign, transfer or hypothecate this Lease, or sublet the Premises or any part thereof, or permit the Premises or any part thereof to be occupied by anyone other than Tenant or Tenant’s employees without the prior written consent of Landlord, which consent shall not be unreasonably withheld, subject to compliance with this Article 15.  If Tenant is a corporation, limited liability company, unincorporated association or partnership, the sale, assignment, transfer or hypothecation of any stock, membership or other ownership interest in such corporation, limited liability company, association or partnership in the aggregate of fifty percent (50%) or more shall be deemed a prohibited assignment within the meaning and provisions of this Article 15.  Tenant may transfer its interest pursuant to this Lease upon the following express conditions:              (a)         That the proposed transferee shall be subject to the prior written consent of Landlord, which consent shall not be unreasonably withheld; provided, however, without limiting the generality of the foregoing, it shall be reasonable for Landlord to deny such consent if any of the following are applicable:                          (i)         The use to be made of Premises by the proposed transferee is (a) not generally consistent with the character and nature of all other tenancies in the Building or Project, or (b) a use which conflicts with any so-called “exclusive” then in favor of, or for any use which is the same as that stated in any percentage lease to, another tenant of the Building or Project, or (c) a use which would be prohibited by any other portion of this Lease (including but not limited to any Rules and Regulations then in effect);                          (ii)        The character, reputation or financial responsibility of the proposed transferee is not reasonably satisfactory to Landlord or in any event not at least equal to those which were possessed by Tenant as of the date of execution of this Lease;                          (iii)       The transferee is either a governmental agency or instrumentality thereof;                          (iv)      The proposed transfer would cause Landlord to be in violation of another lease or agreement to which Landlord is a party, or would give an occupant of the Building a right to cancel its lease;                          (v)       The terms of the proposed transfer will allow the transferee to exercise a right of renewal, right of expansion, right of first offer, or other similar right held by Tenant (or will allow the transferee to occupy space leased by Tenant pursuant to any such right); or                          (vi)      Either the proposed transferee, or any person or entity which directly or indirectly, controls, is controlled by, or is under common control with, the proposed transferee, (i) occupies space in the Project at the time of the request for consent, (ii) is negotiating with Landlord to lease space in the Project at such time, or (iii) has negotiated with Landlord during the six (6) month period immediately preceding the request for consent notice from Tenant.             (b)       That Tenant shall pay Landlord’s standard processing fee (currently Five Hundred Dollars ($500), which fee may change from time to time during the Lease Term) and attorneys’ fees incurred in connection with the review of the request for consent to transfer, regardless of whether Landlord consents thereto;             (c)        That the proposed transferee shall execute an agreement pursuant to which it shall agree to perform faithfully and be bound by all of the terms, covenants, conditions, provisions and agreements of this Lease;             (d)       That an executed duplicate original of said assignment and assumption agreement or other transfer on Landlord’s then standard form, shall be delivered to Landlord within five (5) days after the execution thereof.  Such transfer shall not be binding upon Landlord until the delivery thereof to Landlord and the execution and delivery of Landlord’s consent thereto.  It shall be a condition to Landlord’s consent to any subleasing, assignment or other transfer of part or all of Tenant’s interest in the Premises (hereinafter referred to as a “Transfer”) that (i) Tenant shall be required to pay Landlord’s reasonable attorneys’ fees and other costs incurred in connection with the review and execution thereof; (ii) upon Landlord’s consent to any Transfer, Tenant shall pay and continue to pay as Additional Rent to Landlord over the term of such Transfer fifty percent (50%) of any sums or other economic consideration received by Tenant as a result of such Transfer, whether denominated rentals or otherwise which exceed (a) the costs of all tenant improvements made by Tenant for the transferee and amount of all tenant improvement allowances actually provided to and used by the transferee (amortized over the term of the Transfer); (b) the amount of brokerage fees actually paid by Tenant in connection with the Transfer (amortized over the term of the Transfer); and (c) the sums which Tenant is obligated to pay Landlord under this Lease; (iii) any sublessee of part or all of Tenant’s interest in the Premises shall agree that in the event Landlord gives such sublessee notice that Tenant is in default under this Lease, such sublessee shall thereafter make all sublease or other payments directly to Landlord, which will be received by Landlord without any liability whether to honor the sublease or otherwise (except to credit such payments against sums due under this Lease), and any sublessee shall agree to attorn to Landlord or its successors and assigns at their request should this Lease be terminated for any reason, except that in no event shall Landlord or its successors or assigns be obligated to accept such attornment; (iv) any such Transfer and consent shall be effected on forms supplied or approved by Landlord and/or its legal counsel; (v) Landlord may require that an Event of Default not then exist hereunder; and (vi) Tenant or the proposed subtenant or assignee shall agree to pay Landlord, upon demand, as additional rent, a sum equal to the additional costs, if any, incurred by Landlord for maintenance and repair as a result of any change in the nature of occupancy caused by such subletting or assignment.  If Landlord consents to a requested assignment or sublease, Tenant hereby agrees that (i) it shall thereupon be deemed, automatically and irrevocably to have assigned to Landlord as additional security for the performance and observance of Tenant’s obligations and covenants under this Lease, all rent or other sums received or to be received by Tenant in connection therewith and (ii) Landlord as assignee and as attorney-in-fact of Tenant, or a receiver for Tenant whether or not appointed on Landlord’s application, may collect such rent or other sums and apply the same toward Tenant’s obligations under this Lease.  Such power of attorney is a right coupled with an interest and is irrevocable.  Notwithstanding the foregoing, Tenant shall have the right to collect such rent and other sums unless and until Tenant commits any act of default hereunder.  Tenant hereby agrees and acknowledges that the above conditions imposed upon the granting of Landlord’s consent to any proposed Transfer by Tenant are reasonable.  If Tenant notifies Landlord of its desire to assign this Lease or any interest herein, to sublet all or any part of the Premises for more than fifty percent (50%) of the remainder of the Lease Term, or to sublet more than fifty percent (50%) of the Premises for any period, then in lieu of giving consent thereto, Landlord may, at Landlord’s option, elect to terminate this Lease as to the portion of the Premises to be sublet or assigned as of the proposed effective date of any proposed assignment or any such subletting.  Any sale, assignment, hypothecation, transfer or subletting of this Lease which is not in compliance with the provisions of this Article 15 shall be void and shall be an Event of Default hereunder.  In no event shall the consent by Landlord to an assignment or subletting be construed as relieving Tenant, any assignee, or sublessee from obtaining the express written consent of Landlord to any further assignment or subletting or as releasing Tenant from any liability or obligation hereunder whether or not then accrued and Tenant shall continue to be fully liable therefor.  No collection or acceptance of rent by Landlord from any person other than Tenant shall be deemed a waiver of any provision of this Article 15 or the acceptance of any assignee or subtenant hereunder, or a release of Tenant (or of any successor of Tenant or any subtenant holding theretofore or thereafter accruing);                          (e)            Tenant shall not enter into any sublease or assignment in which any of the following is applicable:                                         (i)          The determination of the amount of rent is expressed in whole or in part as a percentage of the income or profits derived by the tenant or subtenant or assignee from the space leased (other than an amount based on a fixed percentage or percentages of gross receipts or gross sales);                                         (ii)         More than ten percent (10%) of rent is expressly attributable to personal property, determined at the time the personal property is placed in service and by reference to relative fair market values of the personal and other property of the tenant, subtenant or assignee (and not by reference to any allocation contained in the sublease or assignment documents); or                                         (iii)        Services are expressly required to be rendered to a tenant or occupant unrelated to subtenant’s or assignee’s use of the space and primarily for its convenience and which are other than those usually or customarily rendered in connection with the rental of space for occupancy only; and                            (f)         In any sublease or assignment in which the amount of rent is determined in whole or in part by reference to the gross sales or receipts of the subtenant or assignee such sublease or assignment shall contain a provision which prohibits subleasing or assigning or if subleasing or assigning is permitted it shall prohibit the tenant or any successor in interest from subleasing all or any portion of its leasehold interest for an amount of rent determined in whole or in part from the income or profits derived by any person from such interest (other than an amount based in a fixed percentage or percentages of receipts or sales).                            (g)        Notwithstanding anything contained in this Article 15, so long as no Event of Default by Tenant then exists under this Lease, and En Pointe Technologies, Inc., a Delaware corporation (“EPT”), is the Tenant hereunder, and subject to the satisfaction of the conditions set forth in this Article 15(g), Tenant shall have the right to assign this Lease or sublet all or a portion of the Premises to an Affiliate of EPT at any time, without the prior written consent of Landlord but otherwise subject to all of the terms of this Article 15  except for Article 15(d)(ii) and except that Landlord shall not have any recapture right with respect to such assignment or subletting.  Notwithstanding the foregoing, such assignment or sublease shall not be effective until Tenant has given Landlord all of the following at least thirty (30) days prior to the effective date of such assignment or sublease; (i) written notice of such assignment or sublease, (ii) the identity of the assignee or subtenant, (iii) an executed copy of the assignment or sublease (which shall include an undertaking by the assignee or subtenant to assume, perform and be bound by all of the obligations of Tenant under this Lease with respect to the portion of the Premises assigned or subleased and which shall specify that such assignment or sublease is not effective until the conditions in this Article 15(g) have been satisfied), and (iv) such financial information with respect to the assignee or subtenant as Landlord may reasonably request.  In no event shall such assignment or subletting release EPT as Tenant from its primary liability under this Lease.  As used herein, “Affiliate” shall mean any entity controlling, controlled by or under common control with EPT.  The term “control” shall mean the ownership of fifty-one percent (51%) or more of the ownership and/or economic interest of an entity.  The rights granted to EPT hereunder to assign or sublet the Premises to an Affiliate of EPT may not be transferred or assigned to any third party.  Any additional assignment or subletting by Tenant’s Affiliates shall be subject to all of the terms and conditions of this Article 15.                            (h)        Notwithstanding anything to the contrary contained in this Article 15, so long as no Event of Default by Tenant then exists under this Lease and EPT is the Tenant hereunder, and subject to the satisfaction of the conditions set forth in this Article 15(h), Tenant shall have the right to assign this Lease without Landlord’s consent to any entity resulting from a merger or consolidation of EPT with another entity or the acquisition by another entity of all or substantially all of the assets of EPT, provided:  (i) such entity has a net worth immediately after such merger, consolidation or acquisition of at least Fifty Million Dollars ($50,000,000.00); (ii) Tenant gives Landlord at least thirty (30) days’ prior written notice of such transfer identifying the surviving entity of such merger or consolidation, or the entity acquiring all or substantially all of the assets of EPT, as applicable; (iii) Tenant provides Landlord with such financial information as Landlord may reasonably require to verify that the applicable assignee satisfies the net worth requirement set forth herein; and (iv) in the case of any transfer of all or substantially all of the assets of Tenant to another entity, the transferee promptly executes and delivers to Landlord an assumption of all of Tenant’s obligations under this Lease.  Notwithstanding any assignment of the Lease pursuant to this Article 15(h), all of the terms of the Lease shall remain in full force and effect and EPT shall not be released from its obligations and primary liability under this Lease.  The rights granted to EPT under this Article 15(h) are personal to EPT and may not be transferred or assigned to any third party. ARTICLE 16 DAMAGE OR DESTRUCTION              Except as provided in Article 9, if the Project is damaged by fire or other insured casualty and the insurance proceeds have been made available therefor by the holder or holders of any mortgages or deeds of trust covering the Premises or the Project, the damage shall be repaired by and at the expense of the Landlord to the extent such insurance proceeds are available therefor and provided such repairs can, in Landlord’s reasonable opinion, be made within ninety (90) days after the occurrence of such damage without the payment of overtime or other premiums, and until such repairs are completed rent shall be abated in proportion to the part of the Premises which is unusable by Tenant in the conduct of its business (but there shall be no abatement of rent by reason of any portion of the Premises being unusable for a period equal to one (1) day or less).  If the damage is due to the fault or neglect of Tenant or its employees, agents or visitors, there shall be no abatement of rent.  If repairs cannot, in Landlord’s reasonable opinion, be made within ninety (90) days after the occurrence of the damage, Landlord may, at its option, make them within a reasonable time and in such event this Lease shall continue in effect and the rent shall be abated in the manner provided in this Article 16.  Landlord’s election to make such repairs must be evidenced by written notice to Tenant within thirty (30) days after the learning of the occurrence of the damage.  If Landlord does not so elect within such thirty (30) day period to make such repairs which cannot be made within ninety (90) days, then either party may, by written notice to the other, cancel this Lease as of the date of the occurrence of such damage.  A total destruction of the Project shall automatically terminate this Lease.  Except as provided in this Article, there shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business or property arising from such damage or destruction or the making of any repairs, alterations or improvements in or to any portion of the Project or the Premises or in or to fixtures, appurtenances and equipment therein.  Tenant understands that Landlord will not carry insurance of any kind for Tenant’s furniture, furnishings, fixtures or equipment, and that Landlord shall not be obligated to repair any damage thereto or replace the same.  With respect to any damage which Landlord is obligated to repair or elects to repair, Tenant, as a material inducement to Landlord entering into this Lease, irrevocably waives and releases its rights under the provisions of Sections 1932(2) and 1933(4) of the California Civil Code. ARTICLE 17 SUBORDINATION              As of the date of this Lease, the Project is not encumbered by any ground lease, mortgage or deed of trust.  Landlord shall have the right to cause this Lease to be and become and remain subject and subordinate to any and all ground or underlying leases, mortgages or deeds of trust which may hereafter be executed covering the Premises or the Project or any renewals, modifications, consolidations, replacements or extensions thereof, for the full amount of all advances made or to be made thereunder and without regard to the time or character of such advances, together with interest thereon and subject to all the terms and provisions thereof; provided, however, that any such ground lessor, beneficiary or mortgagee agrees in its standard institutional subordination, non-disturbance and attornment agreement (“SNDA”) not to disturb Tenant as long as Tenant is not in default under this Lease.  The SNDA shall provide, without limitation, that such ground lessor, beneficiary or mortgagee shall not (i) be bound by any payment of rent or additional rent for more than one (1) month in advance, except advance rental payments expressly provided in this Lease; (ii) be liable for any act or omission of Landlord; or (iii) be subject to any offset or defense arising prior to the date such ground lessor terminates Landlord’s leasehold estate or such mortgagee or beneficiary acquires title to the Project as applicable.  Tenant agrees to execute and deliver to Landlord the SNDA from Landlord’s ground lessor, beneficiary or mortgagee within ten (10) days after receipt thereof from Landlord.  If any such mortgagee or beneficiary elects to make this Lease superior to such mortgage or deed of trust, Tenant shall, within ten (10) days after Landlord’s request, execute any certificate or instrument confirming the same.  In the event of the enforcement by the mortgagee or beneficiary under any such mortgage or deed of trust of the remedies provided for by law or by such mortgage or deed of trust, Tenant will, at the option of any person or party succeeding to the interest of Landlord as a result of such enforcement, attorn to and automatically become the Tenant of such successor-in-interest without change in the terms or other provisions of this Lease; provided, however, that such successor-in-interest shall not be bound by (a) any payment of rent or additional rent for more than one (1) month in advance, except advance rental payments expressly provided for in this Lease; (b) any modification to this Lease made without the written consent of such mortgagee or beneficiary or such successor-in-interest; (c) liable for any act or omission of Landlord; or (d) subject to any offset or defense arising prior to the date such successor-in-interest acquired title to the Project or Building.  Upon request by any mortgagee or beneficiary, Tenant shall execute and deliver an instrument or instruments confirming the attornment provided for herein. ARTICLE 18 EMINENT DOMAIN              If the whole of the Premises or so much thereof as to render the balance unusable by Tenant shall be taken under power of eminent domain, or is sold, transferred or conveyed in lieu thereof, this Lease shall automatically terminate as of the date of such condemnation, or as of the date possession is taken by the condemning authority, at Landlord’s option.  No award for any partial or entire taking shall be apportioned, and Tenant hereby assigns to Landlord any award which may be made in such taking or condemnation, together with any and all rights of Tenant now or hereafter arising in or to the same or any part thereof; provided, however, that nothing contained herein shall be deemed to give Landlord any interest in or to require Tenant to assign to Landlord any award made to Tenant for the taking of personal property and fixtures belonging to Tenant and removable by Tenant at the expiration of the term hereof as provided hereunder or for loss of goodwill or the interruption of, or damage to, Tenant’s business.  In the event of a partial taking, or a sale, transfer or conveyance in lieu thereof, which does not result in a termination of this Lease, the rent shall be apportioned according to the ratio that the part of the Premises remaining useable by Tenant bears to the total area of the Premises. ARTICLE 19 DEFAULT              Each of the following acts or omissions of Tenant or of any guarantor of Tenant’s performance hereunder, or occurrences, shall constitute an “Event of Default”:                            (a)         Failure or refusal to pay Basic Rental, Additional Rent or any other amount provided hereunder within five (5) calendar days after the date of Tenant’s receipt of written notice from Landlord that the same is delinquent; provided, however, that if Landlord gives Tenant written notice of Tenant’s failure to pay Basic Rental, Additional Rent or any other amount provided hereunder once in any calendar year, then no further notice of any delinquency by Tenant in making any such payment shall be required for the balance of such calendar year and Tenant’s failure to pay Basic Rental, Additional Rent or any other sum due under this Lease within five (5) calendar days after the same becomes due or payable during the remainder of such calendar year shall be an Event of Default;                            (b)        Failure to perform or observe any other covenant or condition of this Lease to be performed or observed within thirty (30) days following written notice to Tenant of such failure;                            (c)         Abandonment or vacating or failure to accept tender of possession of the Premises or any significant portion thereof;                            (d)        The taking in execution or by similar process or law (other than by eminent domain) of the estate hereby created;                            (e)         To the extent permitted by law, the filing by Tenant or any guarantor hereunder in any court pursuant to any statute of a petition in bankruptcy or insolvency or for reorganization or arrangement of for the appointment of a receiver of all or a portion of Tenant’s property; the filing against Tenant or any guarantor hereunder of any such petition, or the commencement of a proceeding for the appointment of a trustee, receiver or liquidator for Tenant, or for any guarantor hereunder, or of any of the property of either, or a proceeding by any governmental authority for the dissolution or liquidation of Tenant or any guarantor hereunder, if such proceeding shall not be dismissed or trusteeship discontinued within sixty (60) days after commencement of such proceeding or the appointment of such trustee or receiver; or the making by Tenant or any guarantor hereunder of an assignment for the benefit of creditors.  Tenant hereby stipulates to the lifting of the automatic stay in effect and relief from such stay for Landlord in the event Tenant files a petition under the United States Bankruptcy laws, for the purpose of Landlord pursuing its rights and remedies against Tenant and/or a guarantor of this Lease;                            (f)         Tenant’s failure to cause to be released any mechanics liens filed against the Premises or the Project within twenty (20) days after the date the same shall have been filed or recorded; and                            (g)        The occurrence of any event defined elsewhere in this Lease as an Event of Default. ARTICLE 20 REMEDIES                            (a)         In the event of a breach of or default under this Lease as provided in Article 19 hereof, Landlord may exercise all of its remedies as may be permitted by law, including but not limited to the remedy provided by Section 1951.4 of the California Civil Code, and including, terminating this Lease, reentering the Premises and removing all persons and property therefrom, which property may be stored by Landlord at a warehouse or elsewhere at the risk, expense and for the account of Tenant.  If Landlord elects to terminate this Lease, Landlord shall be entitled to recover from Tenant the aggregate of all amounts permitted by law, including but not limited to, the cost of recovering the Premises and including (i) the worth at the time of award of the unpaid rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; (iii) the worth at the time of the award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; and (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of events would be likely to result therefrom.  The “worth at the time of award” of the amounts referred to in (i) and (ii) above is computed by allowing interest at the rate of ten percent (10%) per annum.  The “worth at the time of award” of the amount referred to in (iii) above shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).  Further, Tenant shall be liable for all leasing commissions paid by or owing by Landlord arising from this Lease and any extensions thereof.                            (b)        Nothing in this Article 20 shall be deemed to affect Landlord’s right to indemnification for liability or liabilities arising prior to the termination of this Lease for personal injuries or property damage under the indemnification clause or clauses contained in this Lease.                            (c)         Notwithstanding anything to the contrary set forth herein, Landlord’s re-entry to perform acts of maintenance or preservation of or in connection with efforts to relet the Premises or any portion thereof, or the appointment of a receiver upon Landlord’s initiative to protect Landlord’s interest under this Lease shall not terminate Tenant’s right to possession of the Premises or any portion thereof and, until Landlord does elect to terminate this Lease, this Lease shall continue in full force and effect and Landlord shall enforce all of Landlord’s rights and remedies hereunder including, without limitation, the right to recover from Tenant as it becomes due hereunder all Basic Rental, Additional Rent and other charges required to be paid by Tenant under the terms hereof.                            (d)        All rights, powers and remedies of Landlord hereunder and under any other agreement now or hereafter in force between Landlord and Tenant shall be cumulative and not alternative and shall be in addition to all rights, powers and remedies given to Landlord by law, and the exercise of one or more rights or remedies shall not impair Landlord’s right to exercise any other right or remedy.                            (e)         Any amount due from Tenant to Landlord hereunder which is not paid when due shall bear interest at the lower of eighteen percent (18%) per annum or the maximum lawful rate of interest from the due date until paid, unless otherwise specifically provided herein, but the payment of such interest shall not excuse or cure any default by Tenant under this Lease.  In addition to such interest:  (a) if Basic Rental is not paid within five (5) days after the same is due, a late charge equal to one and one half percent (1 1/2%) of the amount overdue or One Hundred Dollars ($100), whichever is greater, shall be assessed and shall accrue for each calendar month or part thereof until such rental, including the late charge, is paid in full, which late charge Tenant hereby agrees is a reasonable estimate of the damages Landlord shall suffer as a result of Tenant’s late payment and (b) an additional charge of Twenty-five Dollars ($25) shall be assessed for any check given to Landlord by or on behalf of Tenant which is not honored by the drawee thereof; which damages include Landlord’s additional administrative and other costs associated with such late payment and unsatisfied checks and the parties agree that it would be impracticable or extremely difficult to fix Landlord’s actual damage in such event.  Such charges for interest and late payments and unsatisfied checks are separate and cumulative and are in addition to and shall not diminish or represent a substitute for any or all of Landlord’s rights or remedies under any other provision of this Lease.                            (f)         Tenant shall be liable for any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease, or which in the ordinary course of things would be likely to result therefrom. ARTICLE 21 TRANSFER OF LANDLORD'S INTEREST              Landlord shall have the right to transfer and assign, in whole or in part, all its rights and obligations hereunder and in the Project and any other property referred to herein, and in such event and upon such transfer (any such transferee to have the benefit of, and be subject to, the rights and obligations of Landlord hereunder), Landlord shall be released from any further obligations hereunder and Tenant agrees to look solely to such successor-in-interest of Landlord for the performance of such obligations. ARTICLE 22 BROKERS              Each party represents and warrants to the other party that it has not had dealings in any manner with any real estate broker, finder or other person with respect to the Premises and the negotiation and execution of this Lease except CB Richard Ellis, Inc. and The Seeley Company.  Except as to commissions and fees to be paid as provided in this Article 22, Tenant shall indemnify, defend and hold harmless Landlord from all damage, loss, liability and expense (including attorneys’ fees and related costs) arising out of or resulting from any claims for commissions or fees that may or have been asserted against Landlord by any broker, finder or other person with whom Tenant has or purportedly has dealt with in connection with the Premises and the negotiation and execution of this Lease.  Landlord shall pay broker leasing commissions to CB Richard Ellis, Inc. in connection with the negotiation and execution of this Lease pursuant to a separate agreement, and CB Richard Ellis, Inc. shall pay The Seeley Company a portion of such broker leasing commissions.  Landlord and Tenant agree that Landlord shall not be obligated to pay any broker leasing commissions, consulting fees, finder fees or any other fees or commissions arising out of or relating to any extended term of this Lease or to any expansion or relocation of the Premises at any time. ARTICLE 23 PARKING              Tenant shall be entitled to use of the number of unreserved parking spaces set forth in Article 1.9 of Basic Lease Provisions.  Tenant shall pay the prevailing monthly parking charges for the use of such unreserved parking spaces, which rates may change from time to time during the Lease Term.  As of the date of this Lease, the prevailing monthly parking charge for unreserved parking spaces is Fifty Five Dollars ($55) per month.  Such parking shall be available upon reasonable terms and conditions to be established from time to time by Landlord or Landlord’s operator of such parking facilities.  Tenant agrees not to overburden the parking facility and agrees to cooperate with Landlord’s other tenants in the use of the parking facilities.  Landlord reserves the right to determine, in its reasonable discretion, whether the parking facilities are becoming overburdened and allocate assigned parking spaces among Tenant and the other tenants.  All visitor parking shall be in parking areas designated by Landlord upon terms and conditions to be established from time to time by Landlord or Landlord’s operator of such parking facilities. ARTICLE 24 WAIVER              No waiver by Landlord of any provision of this Lease shall be deemed to be a waiver of any other provision hereof or of any subsequent breach by Tenant of the same or any other provision.  No provision of this Lease may be waived, except by an instrument in writing executed by the waiving party.  Landlord’s consent to or approval of any act by Tenant requiring Landlord’s consent or approval shall not be deemed to render unnecessary the obtaining of Landlord’s consent to or approval of any subsequent act of Tenant, whether or not similar to the act so consented to or approved.  No act or thing done by Landlord or Landlord’s agents during the term of this Lease shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such surrender shall be valid unless in writing and signed by Landlord.  Any payment by Tenant or receipt by Landlord of an amount less than the total amount then due hereunder shall be deemed to be in partial payment only thereof and not a waiver of the balance due or an accord and satisfaction, notwithstanding any statement or endorsement to the contrary on any check or any other instrument delivered concurrently therewith or in reference thereto.  Accordingly Landlord may accept any such amount and negotiate any such check without prejudice to Landlord’s right to recover all balances due and owing and to pursue its other rights against Tenant under this Lease, regardless of whether Landlord makes any notation on such instrument of payment or otherwise notifies Tenant that such acceptance or negotiation is without prejudice to Landlord’s rights. ARTICLE 25 ESTOPPEL CERTIFICATE              Tenant shall, at any time and from time to time, upon not less than ten (10) days’ prior written notice from Landlord, execute, acknowledge and deliver to Landlord a statement in writing certifying the following information, (but not limited to the following information in the event further information is requested by Landlord): (i) that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as modified, is in full force and effect); (ii) the dates to which the rental and other charges are paid in advance, if any; (iii) the amount of Tenant’s Security Deposit, if any; (iv) acknowledging that there are not, to Tenant’s knowledge, any uncured defaults on the part of Landlord hereunder, and no events or conditions then in existence which, with the passage of time or notice or both, would constitute a default on the part of Landlord hereunder, or specifying such defaults, events or conditions, if any are claimed; and (v) such other information regarding the Lease as may be requested by Landlord.  It is expressly understood and agreed that any such statement may be relied upon by any prospective purchaser or encumbrancer of all or any portion of the Real Property.  Tenant’s failure upon Landlord’s reasonable request to deliver such statement within such time shall, at the option of Landlord, constitute an Event of Default under this Lease.  Furthermore, Tenant’s failure to deliver such statement within such time shall constitute an admission by Tenant that all statements contained therein are true and correct.  Tenant agrees to execute all documents required in accordance with this Article 25 within ten (10) days after delivery of said documents. ARTICLE 26 LIABILITY OF LANDLORD              The liability of Landlord, any agent of Landlord, or any of the respective officers, directors, shareholders, or employees to Tenant for or in respect of any default by Landlord under the terms of this Lease or in respect of any other claim or cause of action shall be limited to the interest of Landlord in the Project.  Tenant agrees to look solely to Landlord’s interest in the Project for the recovery and satisfaction of any judgment against Landlord, and any agent of the Landlord, or any of their respective officers, directors, shareholders and employees. ARTICLE 27 INABILITY TO PERFORM              This Lease and the obligations of Tenant hereunder shall not be affected or impaired because Landlord is unable to fulfill any of its obligations hereunder or is delayed in doing so, if such inability or delay is caused by reason of unavailability of materials, strike or other labor troubles or any other cause previously or at such time beyond the reasonable control of anticipation of Landlord. ARTICLE 28 HAZARDOUS MATERIALS              28.1      Environmental Law Compliance  During the term of this Lease, Tenant shall comply with all Environmental Laws and Environmental Permits (each as defined in Article 28.4 hereof) applicable to the operation or use of the Premises, will cause all other persons occupying or using the Premises to comply with all such Environmental Laws and Environmental Permits, and will immediately pay or cause to be paid all costs and expenses incurred by reason of such compliance.              28.2      Prohibition  Tenant shall not generate, use, treat, store, handle, release or dispose of, or permit the generation, use, treatment, storage, handling, release or disposal of Hazardous Materials (as defined in Article 28.4 hereof) on the Premises, or the Project, or transport or permit the transportation of Hazardous Materials to or from the Premises or the Project except for limited quantities used or stored at the Premises and required in connection with the routine operation and maintenance of the Premises, and then only upon the written consent of Landlord and in compliance with all applicable Environmental Laws and Environmental Permits.              28.3      Indemnity  Tenant agrees to defend, indemnify and hold harmless Landlord from and against all obligations (including removal and remedial actions), losses, claims, suits, judgments, liabilities, penalties, damages (including consequential and punitive damages), costs and expenses (including attorneys’ and consultants’ fees and expenses) of any kind or nature whatsoever that may at any time be incurred by, imposed on or asserted against Landlord directly or indirectly based on, or arising or resulting from (a) the actual or alleged presence of Hazardous Materials on the Project which is caused or permitted by Tenant and (b) any Environmental Claim relating in any way to Tenant’s operation or use of the Premises (the “Hazardous Materials Indemnified Matters”).  The provisions of this Article 28 shall survive the expiration or sooner termination of this Lease.              28.4      Definitions  As used herein, the following terms shall have the following meanings:  “Hazardous Materials” means (i) petroleum or petroleum products, natural or synthetic gas, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, and radon gas; (ii) any substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “contaminants” or “pollutants,” or words of similar import, under any applicable Environmental Law; and (iii) any other substance exposure to which is regulated by any governmental authority.  “Environmental Law(s)” means any federal, state or local statute, law, rule, regulation, ordinance, code, policy or rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, health, safety or Hazardous Materials, including without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801 et seq.; the Clean Water Act, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.; the Atomic Energy Act, 42 U.S.C. §§ 2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; the Occupational Safety and Health Act, 29 U.S.C. §§ 651 et seq.  “Environmental Claims” means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigations, proceedings, consent orders or consent agreements relating in any way to any Environmental Law or any Environmental Permit, including without limitation (i) any and all Environmental Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (ii) any and all Environmental Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment.  “Environmental Permits” means all permits, approvals, identification numbers, licenses and other authorizations required under any applicable Environmental Law. ARTICLE 29 SURRENDER OF PREMISES; REMOVAL OF PROPERTY              29.1      No Merger.  The voluntary or other surrender of this Lease by Tenant to Landlord, or a mutual termination hereof, shall not work a merger, and shall at the option of Landlord, operate as an assignment to it of any or all subleases or subtenancies affecting the Premises.              29.2      Surrender.  Upon the expiration of the Lease Term, or upon any earlier termination of this Lease, Tenant shall quit and surrender possession of the Premises to Landlord in as good order and condition as the same are now and hereafter may be improved by Landlord or Tenant, reasonable wear and tear and repairs (including those necessitated by damage from casualty or condemnation) which are Landlord’s obligation excepted, and shall, without expense to Landlord, remove or cause to be removed from the Premises all debris and rubbish, all furniture, equipment, business and trade fixtures, including, without limitation the Existing Furniture, free-standing cabinet work, moveable partitioning and other articles of personal property owned by Tenant or installed or placed by Tenant at its own expense in the Premises, and all similar articles of any other persons claiming under Tenant unless Landlord exercises its option to have any subleases or subtenancies assigned to it, and Tenant shall repair all damage to the Premises resulting from the installation and removal of such items to be removed and restore such areas to the condition that existed prior to the installation thereof in accordance with all applicable laws, statutes, building codes and regulations in effect as of the date of such repair and restoration.              29.3      Disposition of Personal Property.  Whenever Landlord shall reenter the Premises as provided in Article 12 hereof, or as otherwise provided in this Lease, any property of Tenant not removed by Tenant upon the expiration of the Lease Term (or within forty-eight (48) hours after a termination by reason of Tenant’s default), as provided in this Lease, shall be considered abandoned and Landlord may remove any or all of such items and dispose of the same in any manner or store the same in a public warehouse or elsewhere for the account and at the expense and risk of Tenant, and if Tenant shall fail to pay the cost of storing any such property after it has been stored for a period of ninety (90) days or more, Landlord may sell any or all of such property at public or private sale, in such manner and at such times and places as Landlord, in its sole discretion, may deem proper, without notice or to demand upon Tenant, for the payment of all or any part of such charges or the removal of any such property, and shall apply the proceeds of such sale:  first, to the cost and expense of such sale, including reasonable attorneys’ fees for services rendered; second, to the payment of the cost of or charges for storing any such property; third, to the payment of any other sums of money which may then or thereafter be due to Landlord from Tenant under any of the terms hereof; and fourth, the balance, if any, to Tenant.              29.4      Removal of Alterations  All fixtures, equipment, alterations, additions, improvements and/or appurtenances attached to or built into the Premises prior to or during the Lease Term, whether by Landlord or Tenant and whether at the expense of Landlord or Tenant, or of both, shall be and remain part of the Premises and shall not be removed by Tenant at the end of the Lease Term unless otherwise expressly provided for in this Lease or unless such removal is required by Landlord pursuant to the provisions of Article 9 above.  Such fixtures, equipment, alterations, additions, improvements and/or appurtenances shall include but not be limited to:  all floor coverings, drapes, paneling, built-in cabinetry, molding, doors, vaults (including vault doors), plumbing systems, electrical systems, lighting systems, silencing equipment, communication systems, all fixtures and outlets for the systems mentioned above and for all telephone, radio, telegraph and television purposes, and any special flooring or ceiling installations. ARTICLE 30 MISCELLANEOUS              30.1      Mortgage Protection  Upon any default on the part of Landlord, Tenant shall give notice by registered or certified mail to any beneficiary of a deed of trust or mortgagee of a mortgage covering the Premises who has provided Tenant with notice of their interest together with an address for receiving notice, and shall offer such beneficiary or mortgagee a reasonable opportunity to cure the default (which in no event shall be less than ninety (90) days), including time to obtain possession of the Premises by power of sale or judicial foreclosure if such should prove necessary to effect a cure.  Tenant agrees that each lender to whom this Lease has been assigned by Landlord is an express third party beneficiary hereof.  Tenant shall not make any prepayment of monthly rent more than one (1) month in advance without the prior written consent of each such lender.  Tenant waives the collection of any security deposit from such lender(s) or any purchaser at a foreclosure sale of such lender(s) deed of trust unless the lender(s) or such purchaser shall have actually received and not refunded the security deposit.  Tenant agrees to make all payments under the Lease to the lender with the most senior encumbrance upon receiving a direction, in writing, to pay said amounts to such lender.  Tenant shall comply with such written direction to pay without determining whether an event of default exists under such lender’s loan to Landlord.              30.2      Recording  Neither Landlord nor Tenant shall record this Lease or a short form memorandum thereof without the consent of the other.              30.3      Financial Statements  At any time during the term of this Lease, Tenant shall, upon ten (10) days’ prior written notice from Landlord in connection with a proposed sale or financing of the Project, provide Landlord with a current financial statement and, if available, financial statements of the two (2) years prior to the year of the current financial statement.  Such statement shall be prepared in accordance with generally accepted accounting principles and, if such is the normal practice of Tenant, shall be audited by an independent certified public accountant.              30.4      Severability; Entire Agreement  Any provision of this Lease which shall prove to be invalid, void, or illegal shall in no way affect, impair or invalidate any other provision hereof and any such other provisions shall remain in full force and effect.  This Lease and the Exhibits constitute the entire agreement between the parties hereto with respect to the subject matter hereof, and no prior agreement or understanding pertaining to any such matter shall be effective for any purpose.  No provision of this Lease may be amended or supplemented except by an agreement in writing signed by the parties hereto or their successor in interest.  This Lease shall be governed by and construed in accordance with the laws of the State of California.              30.5      Attorneys' Fees                            (a)         If Tenant or Landlord shall bring any action for any relief against the other, declaratory or otherwise, arising out of or under this Lease, including any suit by Landlord for the recovery of rent or possession of the Premises, the losing party shall pay the successful party a reasonable sum for attorneys’ fees in such suit and such attorneys’ fees shall be deemed to have accrued on the commencement of such action and shall be paid whether or not such action is prosecuted to judgment.                            (b)        Should Landlord, without fault on Landlord’s part, be made a party to any litigation instituted by Tenant or by any third party against Tenant, or by or against any person holding under or using the Premises by license of Tenant, or for the foreclosure of any lien for labor or material furnished to or for Tenant or any such other person or otherwise arising out of or resulting from any act or transaction of Tenant or of any such other person, Tenant covenants to indemnify, defend and hold Landlord harmless from any judgment, claim or liability rendered against Landlord or the Premises or any part thereof and from all costs and expenses, including reasonable attorneys’ fees incurred by Landlord in connection with such litigation.                            (c)         Reasonable attorneys’ fees shall include fees for services rendered prior to the commencement of any such action or litigation and, when legal services are rendered by an attorney at law who is an employee of a party, shall be determined as to amount, including overhead, by consideration of the same factors, including but not limited by, the importance of the matter, time applied, difficulty and results, as are considered when an attorney not in the employ of a party is engaged to render such service.              30.6      Time of Essence  Each of Tenant’s covenants herein is a condition and time is of the essence with respect to the performance of every provision of this Lease and the strict performance of each shall be a condition precedent to Tenant’s right to remain in possession of the Premises or to have this Lease continue in effect.              30.7      Headings  The article headings contained in this Lease are for convenience only and do not in any way limit or amplify any term or provision hereof.  The terms “Landlord” and “Tenant” as used herein shall include the plural as well as the singular, the neuter shall include the masculine and feminine genders and the obligations herein imposed upon Tenant shall be joint and several as to each of the persons, firms or corporations of which Tenant may be composed.              30.8      Reserved Area  Tenant hereby acknowledges and agrees that the exterior walls of the Premises and the area between the finished ceiling of the Premises and the slab of the floor of the Building thereabove have not been demised hereby and the use thereof together with the right to install, maintain, use, repair and replace pipes, ducts, conduits and wires leading through, under or above the Premises in locations which will not materially interfere with Tenant’s use of the Premises and serving other parts of the Project are hereby excepted and reserved unto Landlord.              30.9      No Option  The submission of this Lease by Landlord, its agent or representative for examination or execution by Tenant does not constitute an option or offer to lease the Premises upon the terms and conditions contained herein or a reservation of the Premises in favor of Tenant, it being intended hereby that this Lease shall only become effective upon the execution hereof by Landlord and delivery of a fully executed counterpart hereof to Tenant.              30.10    Use of Project Name; Improvements   Tenant shall not be allowed to use the name, picture or representation of the Project, or words to that effect, in connection with any business carried on in the Premises or otherwise (except as Tenant’s address) without the prior written consent of Landlord.  In the event that Landlord undertakes any additional improvements on the real property including but not limited to new construction or renovation or additions to the existing improvements, Landlord shall not be liable to Tenant for any noise, dust, vibration or interference with access to the Premises or disruption in Tenant’s business caused thereby and rental hereunder shall under no circumstances be abated; provided, however, that Landlord shall use reasonable efforts to perform such construction in a manner that does not materially interfere with Tenant’s use of the Premises.              30.11    Rules and Regulations  Tenant shall observe faithfully and comply strictly with the Rules and Regulations attached to this Lease as Exhibit “B” and made a part hereof, and such other rules and regulations as Landlord may from time to time reasonably adopt for the safety, care and cleanliness of the Project, the facilities thereof, or the preservation of good order therein.  Landlord shall not be liable to Tenant for violation of any such Rules and Regulations, or for the breach of any covenant or condition in any lease by any other tenant in the Project.  A waiver by Landlord of any Rule or Regulation for any other tenant shall not constitute nor be deemed a waiver of the Rule or Regulation for this Tenant.              30.12    Quiet Possession  Upon Tenant’s paying the Basic Rental, Additional Rent and other sums provided hereunder and observing and performing all of the covenants, conditions and provisions on Tenant’s part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the entire term hereof, subject to all of the provisions of this Lease.              30.13    Additional Rent  All amounts which Tenant is required to pay hereunder (other than Basic Rental) and all damages, costs and expenses which Landlord may incur by reason of any default by Tenant shall be deemed to be “Additional Rent” hereunder, whether or not described or designated as such.  Upon Tenant’s non payment of any Additional Rent, Landlord shall have all the rights and remedies with respect thereto as Landlord has for the non-payment of Basic Rental.              30.14    Substitute Premises  With respect to the Ninth Floor Premises, Landlord shall have the right at any time during the Lease Term, upon giving Tenant not less than sixty (60) days prior written notice, to provide and furnish Tenant with space elsewhere in the Building (provided that such space shall be located on or above the ninth (9th) floor of the Building) of approximately the same size and containing the same tenant improvements (which tenant improvements shall be constructed by Landlord at Landlord’s sole cost and expense) as the Ninth Floor Premises and remove and place Tenant in such space, with Landlord to pay all verified and previously approved costs and expenses incurred as a result of such removal of Tenant, exclusive of the cost of replacing Tenant’s existing supply of stationery and business cards.  Should Tenant refuse to permit Landlord to move Tenant to such new space at the end of said sixty (60) day period, Landlord shall have the right to cancel and terminate this Lease with respect to the Ninth Floor Premises and Tenant’s prospective obligations hereunder with respect to the Ninth Floor Premises effective ninety (90) days after the date of Landlord’s original notification to Tenant of its intent to relocate Tenant.  If Landlord moves Tenant to such new space, this Lease and each and all of its terms, covenants and conditions shall remain in full force and effect and shall be deemed applicable to such new space and such new space shall thereafter be deemed to be the “Substituted Ninth Floor Premises” as though Landlord and Tenant had entered into an express written amendment of this Lease with respect thereto.              30.15    Successors and Assigns  Subject to the provisions of Article 15 hereof, all of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns.              30.16    Notices  Any notice required or permitted to be given hereunder shall be in writing and may be given by personal service evidenced by a signed receipt or sent by registered or certified mail, return receipt requested, addressed to Tenant at the Premises or to Landlord at the address of the place from time to time established for the payment of rent and which shall be effective upon proof of delivery.  Either party may by notice to the other specify a different address for notice purposes except that, upon Tenant’s taking possession of the Premises, the Premises shall constitute Tenant’s address for notice purposes.  A copy of all notices to be given to Landlord hereunder shall be concurrently transmitted by Tenant to such party hereafter designated by notice from Landlord to Tenant.              30.17    Persistent Delinquencies  In the event that Tenant shall be delinquent by more than fifteen (15) days in the payment of rent on three (3) separate occasions in any twelve (12) month period, Landlord shall have the right to require Tenant to pay Basic Rental and Additional Rent in advance on a quarterly basis.              30.18    Right of Landlord to Perform  All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any abatement of rent.  If Tenant shall fail to pay any sum of money, other than rent, required to be paid by it hereunder or shall fail to perform any other act on its part to be performed hereunder, and such failure shall continue beyond any applicable period of notice and cure period set forth in this Lease, Landlord may, but shall not be obligated so to do, and without waiving or releasing Tenant from any obligations of Tenant, make any such payment or perform any such other act on Tenant’s part to be made or performed as is in this Lease provided.  All sums so paid by Landlord and all reasonable incidental costs, together with interest thereon at the rate of ten percent (10%) per annum from the date of such payment by Landlord, shall be payable to Landlord on demand and Tenant covenants to pay any such sums, and Landlord shall have (in addition to any other right or remedy of Landlord) the same rights and remedies in the event of the nonpayment thereof by Tenant as in the case of default by Tenant in the payment of the rent.              30.19    Access, Changes in Project, Facilities, Name                            (a)         Every part of the Project except the inside surfaces of all walls, windows and doors bounding the Premises (including exterior building walls, core corridor walls and doors and any core corridor entrance), and any space in or adjacent to the Premises used for shafts, stacks, pipes, conduits, fan rooms, ducts, electric or other utilities, sinks or other building facilities, and the use thereof, as well as access thereto through the Premises for the purposes of operation, maintenance, decoration and repair, are reserved to Landlord.                            (b)        Tenant shall permit Landlord to install, use and maintain pipes, ducts and conduits within the walls, bearing columns and ceilings of the Premises.                            (c)         Landlord reserves the right, without incurring any liability to Tenant therefor, to make such changes in or to the Building and the fixtures and equipment thereof, as well as in or to the street entrances, halls, passages, elevators, stairways and other improvements thereof, as it may deem necessary or desirable; provided, however, Landlord shall use reasonable efforts to perform such modifications in a manner that does not materially interfere with Tenant’s use of or access to the Premises.                            (d)        Landlord may adopt any name for the Project and Landlord reserves the right to change the name or address of the Building at any time upon notice to Tenant.              30.20    Corporate Authority  If Tenant is a corporation, each individual executing this Lease on behalf of said corporation represents and warrants that he is duly authorized to execute and deliver this Lease on behalf of said corporation in accordance with a duly adopted resolution of the Board of Directors of said corporation or in accordance with the By-laws of said corporation, and that this Lease is binding upon said corporation in accordance with its terms.  Concurrently with the execution of this Lease, Tenant shall provide to Landlord a copy of such resolution of the Board of Directors authorizing the execution of this Lease on behalf of such corporation, which copy of resolution shall be duly certified by the secretary or an assistant secretary of the corporation to be a true copy of a resolution duly adopted by the Board of Directors of said corporation, or other written evidence satisfactory to Landlord showing the authority of the individuals executing this Lease on behalf of Tenant to execute this Lease and bind the corporation.              30.21    Identification of Tenant             (a)                   If more than one person executes this Lease as Tenant, (i) each of them shall be jointly and severally liable for the keeping, observing and performing of all of the terms, covenants, conditions and provisions of this Lease to be kept, observed and performed by Tenant, (ii) the term “Tenant” as used in this Lease shall mean and include each of them jointly and severally, and (iii) the act of or notice from, or notice or refund to, or the signature of, any one or more of them, with respect to the tenancy of this Lease, including, but not limited to, any renewal, extension, expiration, termination or modification of this Lease, shall be binding upon each and all of the persons executing this Lease as Tenant with the same force and effect as if each and all of them had so acted or so given or received such notice or refund or so signed.             (b)                   If Tenant is a partnership (or is comprised of two or more persons, individually and as co-partners of a partnership) or if Tenant’s interest in this Lease shall be assigned to a partnership (or to two or more persons, individually and as co-partners of a partnership) pursuant to Article 15 hereof (any such partnership and such persons hereinafter referred to in this Article 30.21 as “Partnership Tenant”), the following provisions of this Lease shall apply to such Partnership Tenant:                         (i)        The liability of each of the parties comprising Partnership Tenant shall be joint and several.                         (ii)       Each of the parties comprising the Partnership Tenant hereby consents in advance to, and agrees to be bound by, any written instrument which may hereafter be executed, changing, modifying or discharging this Lease, in whole or in part, or surrendering all or any part of the Premises to the Landlord, and by notices, demands, requests or other communication which may hereafter be given, by Partnership Tenant or any of the parties comprising Partnership Tenant.                         (iii)      Any bills, statements, notices, demands, requests or other communications given or rendered to Partnership Tenant or to any of the parties comprising Partnership Tenant shall be deemed given or rendered to Partnership Tenant and to all such parties and shall be binding upon Partnership Tenant and all such parties.                         (iv)      If Partnership Tenant admits new partners, all of such new partners shall, by their admission to Partnership Tenant, be deemed to have assumed performance of all of the terms, covenants and conditions of this Lease on Tenant’s part to be observed and performed.                         (v)       Partnership Tenant shall give prompt notice to Landlord of the admission of any such new partners, and, upon demand of Landlord, shall cause each such new partner to execute and deliver to Landlord an agreement in form reasonably satisfactory to Landlord, wherein each such new partner shall assume performance of all of the terms, covenants and conditions of this Lease on Partnership Tenant’s part to be observed and performed (but neither Landlord’s failure to request any such agreement nor the failure of any such new partner to execute or deliver any such agreement to Landlord shall violate the provisions of clause (iv) of this Article 30.21 or relieve any such new partner of his obligations thereunder).              30.22    Building Codes  Any and all costs attributable to or related to the applicable building codes of the City of El Segundo (or any other authority having jurisdiction over the Project) arising from Tenant’s plans, specifications, improvements, alterations or otherwise shall be paid by Tenant at its sole cost and expense.              30.23    Transportation and Energy Management  Tenant shall fully comply with all present and future programs intended to manage parking, transportation, traffic, energy or any other programs affecting the Project.              30.24    ERISA Certificate  Concurrently with the execution and delivery of this Lease, Tenant shall execute and deliver to Landlord an ERISA Certificate in the form attached hereto as Exhibit “E”.              30.25    Exhibits  The Exhibits attached hereto are incorporated herein by this reference as if fully set forth herein.              30.26    Waiver of Jury Trial  LANDLORD AND TENANT HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LEASE OR ANY DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF EITHER PARTIES ARISING OUT OF OR RELATED IN ANY MANNER WITH THE PREMISES (INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS LEASE OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS LEASE WAS FRAUDULENTLY INDUCED OR OTHERWISE VOIDABLE).  THIS WAIVER IS A MATERIAL INDUCEMENT FOR LANDLORD TO ENTER INTO AND TO ACCEPT THIS LEASE. ARTICLE 31 OPTION TO EXTEND              31.1      Grant of Option  Landlord hereby grants to Tenant two (2) options (the “Options”) to extend the initial Lease Term (“Initial Term”) for additional periods of five (5) years each (each, an “Option Term”) upon and subject to the terms and conditions set forth in this Lease.  The first Option Term shall commence upon the expiration of the Initial Term and the second Option Term shall commence upon the expiration of the first Option Term.  Tenant may not exercise the second Option if Tenant has not exercised the first Option.  Tenant shall have no right to extend the Initial Term except as provided herein.  The Options shall be personal to En Pointe Technologies, Inc. and shall not be transferable or assignable to any assignee of the Lease.  Each Option shall be exercised, if at all, by Tenant’s delivery of written notice of exercise to Landlord no later than nine (9) months nor earlier than twelve (12) months prior to the expiration date of the Initial Term, with respect to the first Option, or the first Option Term, with respect to the second Option.  The Basic Rental to be paid during each Option Term shall be the Prevailing Market Rental, as hereinafter defined.  As used herein, the term “Prevailing Market Rental” shall mean the rental and all other monetary payments and escalations that Landlord could obtain from a third party tenant comparable to Tenant desiring to lease the Premises for the applicable Option Term, taking into account the age of the Project, the size of the Premises, the type and quality of tenant improvements, the location and floor levels of the Premises, the quality of construction of the Project and the Premises, the services provided under the terms of the Lease, the rental and brokers commissions then being paid for the renewal of leases of space comparable to the Premises in the City of El Segundo and all other factors that would be relevant to a third party in determining the rental such party would be willing to pay to lease the Premises for the applicable Option Term (including any concessions then being offered); provided, however, in no event shall the Prevailing Market Rental be less than the Basic Rental payable by Tenant to Landlord at the expiration of the Initial Term, with respect to the first Option, or the first Option Term, with respect to the second Option.  Tenant’s exercise of an Option shall be of no force and effect if Tenant is in default under any of the terms, covenants or conditions of this Lease at the time of Tenant’s exercise of the applicable Option; provided, however, Tenant may still exercise the applicable Option if Tenant cures such default within the applicable cure period and exercises such Option prior to the expiration of the time period set forth above for such exercise.  If (i) an Event of Default occurs at any time after Tenant exercises the applicable Option or (ii) Tenant does not occupy all of the Premises, either at the time Tenant exercises the applicable Option or at any time thereafter prior to the commencement date of the applicable Option Term (each, an “Option Commencement Date”), then, in each case, Tenant’s exercise of the applicable Option shall be of no force and effect and Tenant shall have no rights hereunder to extend the term of this Lease for the applicable Option Term.              31.2      Determination of Prevailing Market Rental  On or before five (5) days after Tenant provides Landlord with notice of Tenant’s exercise of an Option, Landlord and Tenant shall commence negotiations to agree upon the Prevailing Market Rental applicable thereto.  If Landlord and Tenant are unable to reach agreement on the Prevailing Market Rental within ten (10) days after the date negotiations commence, then the Prevailing Market Rental shall be determined as follows:                            (a)         If Landlord and Tenant are unable to agree on the Prevailing Market Rental within said ten (10) day period, then, within five (5) days thereafter, Landlord and Tenant shall each simultaneously submit to the other in a sealed envelope its good faith estimate of the Prevailing Market Rental.  If the higher of such estimates is not more than one hundred five percent (105%) of the lower of such estimates, then the Prevailing Market Rental shall be the average of the two estimates; provided, however, in no event shall the Prevailing Market Rental be less than the Basic Rental payable by Tenant to Landlord at the expiration of the Initial Term, with respect to the first Option, or the first Option Term, with respect to the second Option.                            (b)        If the matter is not resolved by the exchange of estimates as provided in subparagraph (a) above, then either Landlord or Tenant may, by written notice to the other on or before five (5) days after the exchange of such estimates, require that the disagreement be resolved by arbitration.  Within seven (7) days after such notice, the parties shall select as an arbitrator a mutually acceptable MAI appraiser with experience in real estate activities, including at least ten (10) years’ experience in appraising office space in the County of Los Angeles, California.  If the parties cannot agree on an appraiser, then, within a second period of seven (7) days, each party shall select an independent MAI appraiser meeting the aforementioned criteria and, within a third period of seven (7) days, the two appointed appraisers shall select a third appraiser meeting the aforementioned criteria and the third appraiser shall determine the Prevailing Market Rental pursuant to subparagraph (c) below.  If one party shall fail to make such appointment within said second seven (7) day period, then the appraiser chosen by the other party shall be the sole arbitrator.                            (c)         Once the arbitrator has been selected as provided for in subparagraph (b) above, then, as soon as practicable but in any case within fourteen (14) days thereafter, the arbitrator shall select one of the two estimates of the Prevailing Market Rental submitted by Landlord and Tenant, which estimate shall be the one that is closer to the Prevailing Market Rental as determined by the arbitrator; provided, however, in no event shall the Prevailing Market Rental be less than the Basic Rental payable by Tenant to Landlord at the expiration of the Initial Term, with respect to the first Option, or the first Option Term, with respect to the second Option.  The arbitrator’s selection shall be rendered in writing to both Landlord and Tenant and shall be final and binding upon them and shall not be subject to appeal.  If the arbitrator believes that expert advice would materially assist such arbitrator, then the arbitrator may retain one or more qualified persons, including, but not limited to, legal counsel, brokers, architects or engineers, to provide such expert advice.  The party whose estimate is not chosen by the arbitrator shall pay the costs of the arbitrator and of any experts retained by the arbitrator; provided, however, that any fees of any counsel or expert engaged directly by Landlord or Tenant shall be borne by the party retaining such counsel or expert. ARTICLE 32 SIGNAGE              Tenant shall not place any sign upon the Premises, the Building or the Project or conduct any auction thereon without Landlord’s prior written consent, which consent may be withheld by Landlord in its sole and absolute discretion.  Promptly following the Commencement Date, Landlord shall install Tenant’s name on the directory of the Building lobby in accordance with Landlord’s sign criteria.  Tenant shall pay Landlord’s standard charges for installation for Tenant’s directory sign.              IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date set forth above.   TENANT:           EN POINTE TECHNOLOGIES, INC.,  a Delaware corporation           By:         --------------------------------------------------------------------------------     Its:         --------------------------------------------------------------------------------     By:         --------------------------------------------------------------------------------     Its:         --------------------------------------------------------------------------------     LANDLORD:           PACIFIC CORPORATE TOWERS LLC, a Delaware limited liability company           By: GE Capital Investment Advisors, Inc., its manager           By:     --------------------------------------------------------------------------------      Vice President   EXHIBIT “A-1” NINTH FLOOR PREMISES EXHIBIT “A-2” NINETEENTH FLOOR PREMISES EXHIBIT “B” RULES AND REGULATIONS              1.          No sign, advertisement or notice shall be displayed, printed or affixed on or to the Premises or to the outside or inside of the Building or so as to be visible from outside the Premises or Building without Landlord’s prior written consent.  Landlord shall have the right to remove any non-approved sign, advertisement or notice, without notice to and at the expense of Tenant, and Landlord shall not be liable in damages for such removal.  All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Tenant by Landlord or by a person selected by Landlord and in a manner and style acceptable to Landlord.              2.          Tenant shall not obtain for use on the Premises ice, drinking water, waxing, cleaning, interior glass polishing, rubbish removal, towel or other similar services, or accept barbering or bootblackening, or coffee cart services, milk, soft drinks or other like services on the Premises, except from persons authorized by Landlord and at the hours and under regulations fixed by Landlord.  No vending machines or machines of any description shall be installed, maintained or operated upon the Premises without Landlord’s prior written consent.              3.          The sidewalks, hall, passages, exits, entrances, elevators and stairways shall not be obstructed by Tenant or used for any purpose other than for ingress and egress from Tenant’s Premises.              4.          Toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than for which they were constructed and no foreign substance of any kind whatsoever shall be thrown therein.              5.          Tenant shall not overload the floor of the Premises or mark, drive nails, screw or drill into the partitions, ceilings or floor or in any way deface the Premises; provided, however, the foregoing shall not prohibit the hanging of pictures or wall decorations.              6.          In no event shall Tenant place a load upon any floor of the Premises or portion of any such flooring exceeding the floor load per square foot of area for which such floor is designed to carry and which is allowed by law, or any machinery or equipment which shall cause excessive vibration to the Premises or noticeable vibration to any other part of the Building.  Prior to bringing any heavy safes, vaults, large computers or similarly heavy equipment into the Building, Tenant shall inform Landlord in writing of the dimensions and weights thereof and shall obtain Landlord’s consent thereto, which consent Landlord shall have the right to deny.  Such consent shall not constitute a representation or warranty by Landlord that the safe, vault or other equipment complies, with regard to distribution of weight and/or vibration, with the provisions of this Rule 6 nor relieve Tenant from responsibility for the consequences of such noncompliance, and any such safe, vault or other equipment which Landlord determines to constitute a danger of damage to the Building or a nuisance to other Tenants, either alone or in combination with other heavy and/or vibrating objects and equipment, shall be promptly removed by Tenant upon Landlord’s written notice of such determination and demand for removal thereof.              7.          Tenant shall not use or keep in the Premises or Project any kerosene, gasoline or inflammable, explosive or combustible fluid or material, or use any method of heating or air-conditioning other than that supplied by Landlord.              8.          Tenant shall not lay linoleum, tile, carpet or other similar floor covering so that the same shall be affixed to the floor of the Premises in any manner except as approved by Landlord.              9.          Tenant shall not install or use any blinds, shades, awnings or screens in connection with any window or door of the Premises and shall not use any drape or window covering facing any exterior glass surface other than the standard drapes, blinds or other window covering established by Landlord.              10.        Tenant shall cooperate with Landlord in obtaining maximum effectiveness of the cooling system by closing drapes when the sun’s rays fall directly on windows of the Premises.  Tenant shall not obstruct, alter, or in any way impair the efficient operation of Landlord’s heating, ventilating and air-conditioning system.  Tenant shall not tamper with or change the setting of any thermostats or control valves.              11.        The Premises shall not be used for manufacturing or for the storage of merchandise except as such storage may be incidental to the permitted use of the Premises.  Tenant shall not, without Landlord’s prior written consent, occupy or permit any portion of the Premises to be occupied or used for the manufacture or sale of liquor or tobacco in any form, or a barber or manicure shop, or as an employment bureau.  The Premises shall not be used for lodging or sleeping or for any improper, objectionable or immoral purpose.  No auction shall be conducted on the Premises.              12.        Tenant shall not make, or permit to be made, any unseemly or disturbing noises, or disturb or interfere with occupants of Building or neighboring buildings or premises or those having business with it by the use of any musical instrument, radio, phonographs or unusual noise, or in any other way.              13.        No bicycles, vehicles or animals of any kind shall be brought into or kept in or about the Premises, and no cooking shall be done or permitted by any tenant in the Premises, except that the re-heating of food and the preparation of coffee, tea, hot chocolate and similar items for tenants, their employees and visitors shall be permitted.  No tenant shall cause or permit any unusual or objectionable odors to be produced in or permeate from or throughout the Premises.              14.        The sashes, sash doors, skylights, windows and doors that reflect or admit light and air into the halls, passageways or other public places in the Building shall not be covered or obstructed by any tenant, nor shall any bottles, parcels or other articles be placed on the window sills.              15.        No additional locks or bolts of any kind shall be placed upon any of the doors or windows by any tenant, nor shall any changes be made in existing locks or the mechanisms thereof unless Landlord is first notified thereof, gives written approval, and is furnished a key therefor.  Each tenant must, upon the termination of his tenancy, give to Landlord all keys of stores, offices, or toilets or toilet rooms, either furnished to, or otherwise procured by, such tenant, and in the event of the loss of any keys so furnished, such tenant shall pay Landlord the cost of replacing the same or of changing the lock or locks opened by such lost key if Landlord shall deem it necessary to make such change.              16.        Landlord shall have the right to prohibit any advertising by any tenant which, in Landlord’s opinion, tend to impair the reputation of the Building or its desirability as an office building and upon written notice from Landlord any tenant shall refrain from and discontinue such advertising.              17.        Landlord reserves the right to control access to the Building by all persons after reasonable hours of generally recognized business days and at all hours on Sundays and legal holidays.  Each tenant shall be responsible for all persons for whom he requests after hours access and shall be liable to Landlord for all acts of such persons.  Landlord shall have the right from time to time to establish reasonable rules pertaining to freight elevator usage, including the allocation and reservation of such usage for tenants’ initial move-in to their premises, and final departure therefrom.              18.        Any person employed by any tenant to do janitorial work shall, while in the Building and outside of the Premises, be subject to and under the control and direction of the office of the Building (but not as an agent or servant of Landlord, and the tenant shall be responsible for all acts of such persons).              19.        All doors opening on to public corridors shall be kept closed, except when being used for ingress and egress.              20.        The requirements of tenants will be attended to only upon application to the Office of the Building.              21.        Canvassing, soliciting and peddling in the Building are prohibited and each tenant shall cooperate to prevent the same.              22.        All office equipment of any electrical or mechanical nature shall be placed by tenants in the Premises in settings reasonably approved by Landlord, to absorb or prevent any vibration, noise or annoyance.              23.        No air conditioning unit or other similar apparatus shall be installed or used by any tenant without the prior written consent of Landlord.  Tenant shall pay the cost of all electricity used for air conditioning in the Premises if such electrical consumption exceeds normal office requirements, regardless of whether additional apparatus is installed pursuant to the preceding sentence.              24.        There shall not be used in any space, or in the public halls of the Building, either by any tenant or others, any hand trucks except those equipped with rubber tires and side guards.              25.        All electrical ceiling fixtures hung in offices or spaces along the perimeter of the Building must be florescent and/or of a quality, type, design and bulb color approved by Landlord.  Tenant shall not permit the consumption in the Premises of more than 2 1/2 watts per net usable square foot in the Premises in respect of office lighting nor shall Tenant permit the consumption in the Premises of more than 1 1/2 watts per net usable square foot of space in the Premises in respect of the power outlets therein, at any one time.  In the event that such limits are exceeded, Landlord shall have the right to remove any lighting fixture of any florescent tube or bulb therein as it deems necessary and/or to charge Tenant for the cost of the additional electricity consumed.              26.        Parking                            (a)         The parking garage shall be staffed from 5:00 a.m. to 8:00 p.m., Monday through Friday, state and federal holidays excepted, as revised from time to time by Landlord.                            (b)        Automobiles must be parked entirely with the stall lines on the floor.                            (c)         All directional signs and arrows must be observed.                            (d)        The speed limit shall be 5 miles per hour.                            (e)         Parking is prohibited in areas not striped for parking.                            (f)         Parking cards or any other device or form of identification supplied by Landlord (or its operator) shall remain the property of Landlord (or its operator).  Such parking identification device must be displayed as requested and may not be mutilated in any manner.  The serial number of the parking identification device may not be obliterated.  Devices are not transferable or assignable and any device in the possession of an unauthorized holder will be void.  There will be a replacement charge to the Tenant or person designated by Tenant of $25.00 for loss of any parking card.                            (g)        The monthly rate for parking is payable one (1) month in advance and must be paid by the third business day of each month.  Failure to do so will automatically cancel parking privileges and a charge at the prevailing daily rate will be due.  No deductions or allowances from the monthly rate will be made for days parker does not use Parking Facilities.                            (h)        Tenant may validate visitor parking by such method or methods as the Landlord may approve, at the validation rate from time to time generally applicable to visitor parking.                            (i)          Landlord (and its operator) may refuse to permit any person who violates the within rules to park in the garage, and any violation of the rules shall subject the automobile to removal from the garage at the parker’s expense.  In either of said events, Landlord (or its operator) shall refund a prorata portion of the current monthly parking rate and the sticker or any other form of identification supplied by Landlord (or its operator) will be returned to Landlord (or its operator).                            (j)          Garage managers or attendants are not authorized to make or allow any exceptions to these Rules and Regulations.                            (k)         Every parker is required to park and lock his own automobile.  All responsibility for any loss or damage to automobiles or any personal property therein is assumed by the parker.                            (l)          Loss or theft of parking identification devices from automobiles must be reported to the garage manager immediately, and a lost or stolen report must be filed by the parker at that time.                            (m)        The Parking Facilities are for the sole purpose of parking one automobile per space.  Washing, waxing, cleaning or servicing of any vehicles by the parker or his agents is prohibited.                            (n)        Landlord (and its operator) reserves the right to refuse the issuance of monthly stickers or other parking identification devices to any Tenant and/or its employees who refuse to comply with the above Rules and Regulations and all posted and unposted City, State or Federal ordinances, laws or agreements.                            (o)        Tenant agrees to acquaint all employees with these Rules and Regulations.              27.        Smoking is expressly prohibited in the Premises and any and all enclosed areas within the Building or Project, including without limitation, the lobbies, restrooms and interior common areas. EXHIBIT “C” WORK LETTER AGREEMENT              This Work Letter Agreement supplements the Standard Office Lease (the “Lease”) dated as of this ___ day of April, 2001 executed concurrently herewith by and between Landlord and Tenant, covering certain premises described in the Lease (the “Premises”).  All terms not defined herein shall have the same meaning as set forth in the Lease.              1.          Plans and  Drawings for Premises.                            1.1        Space Plans                            Tenant shall cause Tenant’s architect to furnish for Landlord’s approval preliminary space plans sufficient to convey the architectural design of the tenant improvements required by Tenant in the Premises (“Space Plans”).  If Landlord shall disapprove of any part of the Space Plans, Landlord shall, within five (5) days after receipt thereof, advise Tenant in writing of Landlord’s objections thereto.  Landlord and Tenant shall thereafter negotiate in good faith to revise the Space Plans to remove Landlord’s objections.  After Landlord and Tenant have reached such agreement, Tenant shall furnish to Landlord for review and approval in accordance with the foregoing procedure a revision of the Space Plans incorporating the revisions agreed to by Landlord and Tenant.  Landlord and Tenant shall each indicate their reasonable approval of the Space Plans by initialing the same.                            1.2        Final Working Drawings.                            Tenant shall cause Tenant’s architect to prepare from the approved Space Plans and furnish to Landlord and Tenant for review and approval, complete architectural plans, drawings and specifications and complete engineered mechanical, structural and electrical Working Drawings for (i) all of the Premises, showing the demising plan, improvements, and Tenant’s design work, (ii) Tenant’s electrical, plumbing and lighting requirements, and (iii) any internal or external communications or special utility facilities (collectively “Final Working Drawings and Specifications”; the work shown thereon being called the “Tenant Work”), all in such form and in such detail as may be reasonably required by Landlord.  Concurrently with the delivery of the Final Working Drawings and Specifications to Landlord for its approval, Tenant shall cause Tenant’s architect to deliver to Landlord and Tenant for review and approval: (i) a schedule of values allocating costs to the various portions of the work involved in the construction and installation of the improvements required by the Final Working Drawings and Specifications (“Schedule of Values”), (ii) an estimate of the total Work Cost (“Work Cost Estimate”) for the Tenant Work to which the Final Working Drawings and Specifications relate, and (iii) a tentative construction schedule for the Tenant Work represented by the Final Working Drawings and Specifications showing the anticipated commencement date and projected completion date (“Tentative Construction Schedule”).  Tenant’s architect and/or contractor shall provide all services necessary for the preparation of the Final Working Drawings and Specifications, Schedule of Values, Work Cost Estimate and Tentative Construction Schedule and for securing such permits and approvals as, by reason of the nature of the Tenant Work, shall be required from any governmental authority having jurisdiction over such work or for compliance with applicable statutes, codes, ordinances, rules or regulations deemed necessary by Landlord in connection with the Tenant Work, including, without limitation, OSHA and CAL-OSHA, life-safety and sprinklers.                            If Landlord shall disapprove of any part of the Final Working Drawings and Specifications, Schedule of Values, Work Cost Estimate or Tentative Construction Schedule, Landlord shall, within five (5) days after receipt thereof, advise Tenant in writing of the reasons therefore and the modifications that are required by Landlord to approve the Final Working Drawings and Specifications, Schedule of Values, Work Cost Estimate and Tentative Construction Schedule.  Landlord and Tenant shall thereafter meet with Tenant’s architect and/or contractor and negotiate in good faith to modify the Final Working Drawings and Specifications, Schedule of Values, Work Cost Estimate and/or Tentative Construction Schedule to remove Landlord’s objections.  Once the parties have agreed on such modifications, Tenant shall cause Tenant’s architect and/or contractor to revise the Final Working Drawings and Specifications, Schedule of Values, Work Cost Estimate or Tentative Construction Schedule to incorporate the agreement of the parties and submit such revisions to Landlord for approval in accordance with the foregoing procedure.  The Final Working Drawings and Specifications shall comply with all conditions set forth in Section 1.3 below.  As soon as Landlord approves the Final Working Drawings and Specifications, Schedule of Values, Work Cost Estimate and Tentative Construction Schedule, Landlord and Tenant shall each sign the same.  As hereinafter used in this Work Letter Agreement, the term “Final Working Drawings and Specifications” shall mean the Final Working Drawings and Specifications (as defined hereinabove), Schedule of Values, Work Cost Estimate and Tentative Construction Schedule approved by Landlord, together with any Change Orders approved pursuant to Section 1.4 below.  All architectural and engineering fees and consultant fees incurred by Landlord in connection with Landlord’s review and approval of the Space Plans, Schedule of Values, Work Cost Estimate, Final Working Drawings and Specifications and Tentative Construction Schedule shall be deducted from the Allowance.                            1.3        Requirements of Final Working Drawings and Specifications.                            The Final Working Drawings and Specifications shall: (i) be in conformance with the base Building shell and with the design, construction and equipment of the Building and with Building standards and specifications in effect for the Project; (ii) comply with all applicable laws and ordinances, and the rules and regulations of all governmental authorities having jurisdiction, including, without limitation, all rules, regulations, ordinances or laws governing asbestos-containing material, hazardous waste, the Americans with Disabilities Act, OSHA, CAL-OSHA, life-safety, and sprinklers; (iii) comply with all applicable insurance regulations for fire resistive Class A Buildings; and (iv) include locations and complete and exact dimensions.                            1.4        Changes at Tenant's Expense.                            Once approved by Landlord, there shall be no change to the Final Working Drawings and Specifications approved by Landlord without the prior written consent of Landlord.  If Tenant desires to makes any changes to the Final Working Drawings and Specifications after approval thereof by Landlord, or if the Final Working Drawings and Specifications or any amendment thereof or supplement thereto shall require changes in the Building shell or base Building systems, the increased cost of the Building shell work or base Building systems work caused by such changes shall (to the extent such increase is in excess of the Allowance) be paid by Tenant, including without limitation, the cost of permits, consultants, mitigation fees, surcharges, additional supervisory fees, administrative fees, and all direct architectural and/or engineering fees and expenses, including the fees of Landlord’s architect and/or engineer incurred in reviewing any such changes, amendments or supplements to the Final Working Drawings and Specifications.  All Change Orders requested by Tenant shall be made in writing, shall include detailed plans and specifications therefor prepared by Tenant’s architect and shall specify the estimated amount of any added or reduced cost resulting therefrom.  Within five (5) business days following delivery of a Change Order, Landlord shall approve or disapprove the work contained in the Change Order.  If Landlord disapproves any Change Order, Landlord shall, within five (5) business days after receipt thereof, advise Tenant in writing of such revisions and the reasons therefor as are reasonably required by Landlord to approve the Change Order.  Landlord’s approval of a Change Order shall not be unreasonably withheld; provided, however, it shall not be deemed unreasonable for Landlord to withhold consent to any Change Order that requires changes in the Building shell and/or base Building systems.  If Landlord delivers written notice of disapproval of a Change Order, Landlord and Tenant shall thereafter negotiate in good faith to reach agreement upon revisions to the Change Order to remove Landlord’s objections thereto.  Change Orders may be approved orally by Landlord’s designated representative with written confirmation to be delivered to Landlord within five (5) business days thereafter.  If any such change, deletion or addition increases the cost of construction and installation of the Tenant Work in excess of the Allowance, Tenant shall pay the amount of the increase.              1.5        No Representations or Warranties Regarding Plans.                             In no event shall the approval by Landlord of the Space Plans and/or the Final Working Drawings and Specifications, or any Change Order constitute a representation or warranty by Landlord of (i) the accuracy or completeness thereof, (ii) the absence of design defects or construction flaws therein, or (iii) compliance thereof with applicable statutes, laws and ordinances and Tenant agrees that Landlord shall incur no liability by reason of such approval.              2.          Selection of Contractor.                            2.1        Contractors.                            At such time as Landlord and Tenant have approved the Final Working Drawings and Specifications, Tenant shall request bids for the installation of the Tenant Work from three contractors selected by Tenant from Landlord’s list of approved contractors and Tenant shall select a contractor (“Contractor”) from the bids received.  Thereafter, Tenant shall submit to Landlord, for Landlord’s approval, Tenant’s construction contract with its Contractor.  Such construction contract shall be consistent with the terms of this Work Letter Agreement.  Within five (5) business days following the delivery of the construction contract, Landlord shall either approve such contract or deliver to Tenant written objections thereto.  If Landlord disapproves the construction contract or any part thereof, then Landlord and Tenant shall negotiate in good faith to reach agreement as expeditiously as possible on such disapproved items and any necessary amendments to the contract.  Following Landlord’s approval, Tenant shall not amend or consent to the amendment of the construction contract without Landlord’s prior written approval.  Prior to commencement of construction of the Tenant Work, Tenant shall submit to Landlord a list of subcontractors to be used by Contractor in the construction of the Tenant Work.  Any of the subcontractors on such list may be used unless Landlord provides written notice of Landlord’s reasonable disapproval (together with an explanation therefor) of one or more subcontractors to Tenant within ten (10) days after receipt of such list.  Once the Final Working Drawings and Specifications are complete, Tenant’s architect and/or Contractor shall obtain a building permit from the City of El Segundo for the portion of the Tenant Work to which such Final Working Drawings and Specifications are applicable. Tenant shall not commence construction or installation of the Tenant Work until all necessary permits and approvals required for the construction and installation of the Tenant Work have been obtained and a copy of all such permits, licenses, and approvals has been provided to Landlord.              3.          Construction                            3.1        Tentative Construction Commencement and Completion of Construction.                            At such time that Tenant’s architect and/or Contractor has obtained a building permit and all other necessary approvals for construction of the Tenant Work and Tenant and its Contractor(s) have delivered certificates of insurance for the insurance required by this Work Letter Agreement, Tenant may commence construction of the Tenant Work in accordance with the Final Working Drawings and Specifications, and, once commenced, shall pursue the same diligently to completion.  Promptly upon the commencement of the Tenant Work, Tenant shall furnish Landlord with a revised Tentative Construction Schedule setting forth the anticipated commencement date and projected completion date of the Tenant Work.  Tenant shall give Landlord at least ten (10) days prior written notice of commencement of any construction to enable Landlord to post in the Building a notice of non-responsibility respecting the Tenant Work.  Tenant shall minimize any disturbance to other tenants of the Project caused by such construction.  All work done in connection with the Tenant Work shall be performed in compliance with the Project’s construction rules and regulations and all applicable laws, ordinances, rules, orders, and regulations of all federal, state, county and municipal governments or agencies and with all directives, rules, and regulations of the fire marshal, health officer, building inspector, or other proper officers of any governmental agency now having or hereafter acquiring jurisdiction over the Premises.  In particular, Tenant shall, as part of the Tenant Work, make any and all improvements to the Premises that are necessary to cause the same to comply with the Americans With Disabilities Act and all other regulations promulgated thereunder.                            3.2        Building Systems.                            If any shutdown of plumbing or electrical equipment becomes necessary during the course of construction of any of the Tenant Work, Tenant shall notify Landlord and Landlord will determine when such shutdown may be made.  Landlord may require that any such shutdown shall be made only if an agent or employee of Landlord is present.  Tenant shall repair any damage to the Building or Project arising out of the construction of the Tenant Work to the extent caused by Tenant, its agents, Contractor(s), subcontractors, or material suppliers.  All such repairs shall be made at Tenant’s sole cost and expense.                            3.3        Inspections.                            In addition to any right of Landlord under the Lease and this Work Letter Agreement to enter the Premises for the purpose of posting notices of nonresponsibility, and the right of Landlord’s construction manager to enter the Premises to supervise the Tenant Work, Landlord, its officers, agents, and/or employees shall have the right upon reasonable notice at all reasonable times during the construction period to enter upon the Premises and inspect the Tenant Work to determine that the same is in conformity with the Final Working Drawings and Specifications and all requirements of this Work Letter Agreement.  The foregoing notwithstanding, Landlord is under no obligation to supervise, inspect or inform Tenant of the progress of construction and Tenant shall not rely upon Landlord therefor.                            3.4        Walk-Through of Tenant Improvements.                            Within ten (10) days following the completion of the Tenant Work (subject to minor punchlist items), Tenant shall notify Landlord of the completion thereof and shall provide Landlord an opportunity to inspect the same.  Within ten (10) days following Tenant’s notice, Landlord (or its representative) shall walk-through and inspect the Tenant Work, and shall either approve such work or advise Tenant in writing of any defects or uncompleted items. Tenant shall promptly repair such defects or uncompleted items to Landlord’s reasonable satisfaction.  Landlord’s approval of the Tenant Work, or Landlord’s failure to advise Tenant of any defects or uncompleted items in the Tenant Work, shall not relieve Tenant of responsibility for constructing and installing the Tenant Work substantially in accordance with the Final Working Drawings and Specifications, the Schedule of Values, this Work Letter Agreement, and in conformance with all applicable laws, statutes and ordinances.                            3.5        Completion of Tenant Improvements.                            Upon completion of the Tenant Work, Tenant shall:  (a) obtain and deliver to Landlord a certificate of occupancy for the Tenant Work from the governmental agency having jurisdiction thereof, if applicable; (b) make available to Landlord receipted invoices (or invoices with canceled checks attached) from Tenant’s Contractor(s) showing evidence of full payment for such portion for the Tenant Work; (c) deliver to Landlord a full set of reproducible as-built computer-aided-design (also known as “CAD”) drawings for the Tenant Work (including all Change Orders) to the extent applicable, including, without limitation, architectural drawings, structural drawings, mechanical drawings, including plumbing, fire sprinkler, electrical and life safety; (d) a copy of the building permit or permits for the Tenant Work with final sign-off by the City of El Segundo; (e) complete Landlord’s punch list items provided by Landlord to Tenant in accordance with Section 3.4 above; and (f) deliver to Landlord copies of all written construction and equipment warranties related to the portions of the Tenant Work involving Building systems or those portions of the Premises Landlord is required to maintain or repair under the Lease.  Tenant shall make such receipted invoices (or invoices with canceled checks attached) from Tenant’s Contractor(s) available to Landlord for a period of one (1) year following completion of the Tenant Work.                            3.6        Protection Against Lien Claims.                            Tenant agrees to fully pay and discharge all claims for labor done and materials and services furnished in connection with the construction of the Tenant Work, to diligently file or procure the filing of a valid notice of completion within twenty (20) days following completion of construction of the Tenant Work, to diligently file or procure the filing of a notice of cessation upon a cessation of labor of the Tenant Work for a continuous period of thirty (30) days or more, and to take all steps to forestall the assertion of claims of lien against the Project or any part thereof or right or interest appurtenant thereto by contractors retained by Tenant in connection with the Tenant Work.  In the event that there shall be recorded against the Premises or Building or the property of which the Premises is a part any claim or lien arising out of the Tenant Work, and such claim or lien shall not be removed from title or discharged within the time period specified in Article 10 of the Lease, then Landlord may exercise its right to remove said liens in accordance with Article 10 of the Lease.                            3.7        Additional Work.  As part of the Tenant Work, Tenant shall disconnect any supplemental heating, ventilating and air conditioning units (“Supplemental HVAC Units”) located in the Premises that are currently connected to condenser water system provided by NCR International, Inc. under its sublease of the Premises and, if Tenant intends to use such Supplemental HVAC Units during the Lease Term, to cause the same to be connected to the condenser water system operated by Landlord.  In addition, Tenant shall, as part of the Tenant Work, install a synergistic meter to measure the electricity supplied to any such Supplemental HVAC Units in the Premises.  Tenant shall pay for electricity supplied to any Supplemental HVAC Units in accordance with Article 11.2 of the Lease.              4.          Allowance and Work Cost.                            4.1        Allowance.                            Subject to the terms and conditions set forth in this Work Letter Agreement, Landlord shall reimburse Tenant for Work Cost (defined below) incurred by Tenant in constructing and installing the Tenant Work (as defined in this Work Letter Agreement) in an amount not to exceed Two Hundred Seventy Thousand Six Hundred Seventy-five Dollars ($270,675.00) ($7.50/rentable square foot x 36,090 rentable square feet) (the “Allowance”).                            4.2        Work Cost.                            “Work Cost” means: (i) all design, architectural and engineering fees and consultant fees incurred by Tenant and Landlord in connection with the preparation, review and approval of the Space Plans and Working Drawings and Final Working Drawings and Specifications, Schedule of Values, Work Cost Estimate and Tentative Construction Schedule; (ii) governmental agency plan check, permit and other fees; (iii) sales and other taxes; (iv) Title 24 fees; (v) inspection costs; (vi) the actual costs and charges for material and labor, Contractor’s profit and general overhead incurred by Tenant for the Tenant Work and the Additional Work; and (vii) Landlord’s construction manager’s fee.                            4.3        Disbursement of Allowance.                            Commencing on June 1, 2002, Tenant may request disbursements from the Allowance.  Landlord shall not be obligated to make any disbursements of the Allowance so long as an Event of Default by Tenant exists under the Lease.  No disbursements shall be made until the Final Working Drawings and Specifications, Tenant’s Work Cost Estimate and Schedule of Values are approved by Landlord.  Each request for disbursement shall be accompanied by:  (i) a written request for disbursement itemizing each category of cost for which payment is requested, in form and content reasonably acceptable to Landlord; (ii) conditional lien releases, in a form and content satisfactory to Landlord, from all persons and entities providing work or materials covered by such request; (iii) unconditional lien releases from all persons or entities providing work or materials who were paid out of the prior disbursement; and (iv) invoices, vouchers, statements, affidavits and/or other documents in a form reasonably acceptable to Landlord which substantiate and justify the disbursement requested.  Within thirty (30) days after Landlord’s receipt of each fully completed disbursement request, Landlord shall pay ninety percent (90%) of the portion of the Allowance sought to be disbursed (or one hundred percent (100%) of that amount if the Tenant has requested only ninety percent (90%) of the value of the work completed) directly to the Tenant, or to the Contractor(s) and the subcontractors, laborers, or suppliers entitled thereto; provided, however, Landlord reserves the right to reasonably disapprove some or all of the matters disclosed by such disbursement request which are not items included within the definition of Work Cost and to withhold the amounts relating to the disapproved matters from the disbursement.  The ten percent (10%) remaining after any of the above disbursements shall be paid by Landlord within thirty-five (35) days after all of the following have occurred: (i) Tenant has submitted a final request for disbursement in accordance with the procedure set forth in this Section 4.3, (ii) a notice of completion has been recorded with respect to the Tenant Work, and (iii) no lien claim shall have been recorded within the thirty (30) day period following such recordation (or if there be a lien claim, such lien shall have been removed).  If the approved Schedule of Values exceeds the Allowance, then each disbursement shall be in an amount equal to the proportion of the Tenant Work completed and covered by the disbursement request, as determined under the approved Schedule of Values, multiplied by a fraction, the numerator of which is the Allowance, and the denominator of which is the approved Schedule of Values.  In such event, Tenant shall pay to the Contractor and all persons entitled thereto any portions of the Work Cost not paid through the Allowance.  Notwithstanding the foregoing, Landlord shall have no obligation to disburse any amounts from the Allowance after December 1, 2002.                            5.          Authorized Representatives.                            Tenant shall furnish Landlord with a written list of Tenant’s authorized construction representatives for the Tenant Work.  Only such construction representatives are authorized to execute Change Orders or other documents on behalf of Tenant related to the Tenant Work, and without the signature of such authorized construction representative, no such document shall be binding upon Tenant.  Tenant may from time to time change or add to the list of authorized construction representatives by giving Landlord written notice of the addition or change.              6.          Indemnity and Insurance.                            6.1        Indemnity.                            Tenant shall indemnify and hold harmless Landlord against any and all liability, claims, mechanics liens, judgments, or demands, including demands arising from injuries to or death of persons (Tenant’s employees, Tenant’s Contractor, employees of Tenant’s Contractor(s) and employees of all subcontractors and sub-subcontractors of Tenant’s Contractor included) and damage to property, or any other loss, loss of rent, damage, or expense, arising directly or indirectly out of the obligations herein undertaken or out of the operations conducted by Tenant and/or its Contractor(s), subcontractors or sub-subcontractors, including those in part due to the negligence of Landlord save and except liability, claims, judgments or demands arising through the sole negligence or sole willful misconduct of Landlord and will make good to and reimburse Landlord for any expenditures, including actual attorneys’ fees, which Landlord may incur by reason of such matters and, if requested by Landlord will defend any such suits at the sole cost and expense of Tenant.                            6.2        Insurance.                            Tenant shall, at its sole expense, be responsible for the securing of insurance by Tenant’s Contractor and for the maintenance of same by Tenant’s Contractor until completion and final acceptance of the work.  Certificates of insurance affording evidence of same shall be obtained from Tenant’s Contractor by the Tenant and delivered to the Landlord prior to the commencement of any work by Tenant’s Contractor.  The required insurance coverage is as follows:   1. Worker’s Compensation and Employers’ Liability Insurance including coverage under the U.S. Longshoremen’s and Harborworkers’ Act and affording 30 days written notice of cancellation to Contractor.  The Employers’ Liability minimum limits required are as follows: Bodily Injury by accident        $100,000            each accident Bodily Injury by disease          $500,000            policy limit Bodily Injury by disease          $100,000            each employee   2. General Liability Insurance on an Occurrence basis for an amount of $5,000,000 each occurrence and including the following coverage:                                                      (a)         Premises and Operations coverage.                                                      (b)        Owners and Contractors Protective coverage.                                                      (c)         Products and Completed Operations coverage.                                                      (d)        Blanket Contractual coverage, including both oral and written contracts.                                                      (e)         Personal Injury coverage.                                                      (f)         Broad Form Property Damage coverage, including completed operations.                                                      (g)        An endorsement naming Landlord as additional insured.                                                      (h)        An endorsement affording 30 days written notice to Landlord in event of cancellation                                         or material reduction in coverage.                                                      (i)          An endorsement providing that such insurance as is afforded under the policy of Tenant’s                                          Contractor is primary insurance as respects Landlord and that any other insurance maintained by Landlord is                                          excess and noncontributing with the insurance required hereunder.              No endorsement limiting or excluding a required coverage is permitted.  CLAIMS-MADE COVERAGE IS NOT ACCEPTABLE. 3.          Business Auto Liability Insurance for an amount of $5,000,000 combined single limit for bodily injury and/or property damage liability including:                                                      (a)         Owned Autos,                                                      (b)        Hired or Borrowed Autos,                                                      (c)         Nonowned Autos, and                                                      (d)        An endorsement affording 30 days written notice of cancellation to Landlord in event of                                         cancellation or material reduction in coverage. A certificate and endorsements affording evidence of the above requirements must be delivered to Landlord before Tenant’s Contractor performs any work at or prepares or delivers materials to the site of construction. Tenant shall require its Contractor to require its subcontractors to provide insurance where Tenant’s Contractor would be required to carry insurance under this insurance section and to be responsible for obtaining the appropriate certificates or other evidence of insurance. Tenant’s Contractor shall maintain all of the foregoing insurance coverage in force until the work under this agreement is fully completed and accepted except as to 2c (Products and Completed Operation Coverage), which is to be maintained for one (1) year following  completion of the work and acceptance by Landlord and Tenant. All insurance, except Workers’ Compensation, maintained by Tenant’s Contractor and its subcontractors shall preclude subrogation claims by the insurer against anyone insured thereunder. The requirements for the foregoing insurance shall not derogate from the provisions for indemnification of Landlord by Tenant under the “indemnity” paragraph of this agreement. If the Tenant fails to secure and maintain the required insurance from Tenant’s Contractor, the Landlord shall have the right (without any obligation to do so, however) to secure same in the name and for the account of the Tenant’s Contractor(s) in which event Tenant shall pay the cost thereof and shall furnish upon demand, all information that may be required in connection therewith.  Further, such failure to secure and maintain the required insurance shall constitute a default under the Lease and Landlord shall be entitled to immediately have all Tenant Work cease.              7.          Miscellaneous                            (a)         Tenant and Tenant’s Contractor shall abide by all safety and construction rules and regulations of Landlord, and all work and deliveries shall be scheduled through Landlord.  Entry by Tenant’s Contractor shall be deemed to be under all the terms, covenants, provisions and conditions of said Lease except the covenant to pay Basic Rental and Additional Rent.  All Tenant’s materials, work, installations and decorations of any nature brought upon or installed in the Premises by Tenant shall be at Tenant’s risk, and neither Landlord nor any party acting on Landlord’s behalf shall be responsible for any damage thereto or loss or destruction thereof.  Tenant shall award its contracts and conduct its activities hereunder in a manner consistent with Landlord’s contractor’s labor agreement affecting the Building.                            (b)        Tenant shall reimburse Landlord for any extra expenses incurred by Landlord by reason of faulty work done by Tenant or its Contractor, or by reason of delays in such work caused by Tenant or its Contractor, or by reason of cleanup which fails to comply with Landlord’s rules and regulations.                            (c)         Tenant’s Contractor shall not post any signs other than those required by law in connection with the construction on any part of the Project or Premises.              8.          Incorporation.              This Work Letter Agreement is hereby incorporated into this Lease executed between Landlord and Tenant concurrently herewith.   TENANT:           EN POINTE TECHNOLOGIES, INC., a Delaware corporation           By:     --------------------------------------------------------------------------------     Its:     --------------------------------------------------------------------------------     By:     --------------------------------------------------------------------------------     Its:     --------------------------------------------------------------------------------           LANDLORD:           PACIFIC CORPORATE TOWERS LLC, a Delaware limited liability company           By: GE Capital Investment Advisors, Inc., its     manager           By:     --------------------------------------------------------------------------------       Vice President EXHIBIT “D” NOTICE OF LEASE TERM DATES TO:     --------------------------------------------------------------------------------   --------------------------------------------------------------------------------   --------------------------------------------------------------------------------   -------------------------------------------------------------------------------- RE:       Standard Office Lease dated April  _, 2001 between PACIFIC CORPORATE TOWERS LLC, a Delaware limited liability company (“Landlord”) and EN POINTE TECHNOLOGIES, INC., a Delaware corporation (“Tenant”), concerning Suite 9__ on the ninth (9th) floor and Suite 1900 on the Nineteenth (19th) floor of the office building located at 100 N. Sepulveda Blvd., El Segundo, California. Dear Tenant:              In accordance with the Standard Office Lease (the “Lease”), we wish to advise you and/or confirm as follows:   1. The Lease Term shall commence on or has commenced on July 1, 2001 for a term of five (5) years ending on June 30, 2006.   2. Rent commenced or will commence to accrue on July 1, 2001, in the amount of ________________.   3. If the Lease Commencement Date is other than the first day of the month, the first billing will contain a pro rata adjustment.  Each billing thereafter, with the exception of the final billing, shall be for the full amount of the monthly installment as provided for in the Lease.   4. Your rent checks should be made payable to ________________________ at _______________________________________.   5. The approximate number of rentable square feet within the Premises is thirty-six thousand ninety (36,090) square feet.   EXHIBIT “E” ERISA CERTIFICATE              THIS ERISA CERTIFICATE is made as of April ____, 2001, by EN POINTE TECHNOLOGIES, INC., a Delaware corporation, having offices at 100 N. Sepulveda Boulevard, Suite 1900, El Segundo, CA 90245 (“Lessee”), in favor of Pacific Corporate Towers LLC, a Delaware limited liability company (“Lessor”) and The General Motors Hourly Rate Employees Pension Trust and The General Motors Salaried Pension Trust, its shareholder/interestholder, c/o GE Capital Investment Advisors, Inc., 125 Summer Street, Suite 1270, Boston, MA 02110. WITNESSETH:              WHEREAS, Lessor and Lessee anticipate entering into an Agreement for Lease (the “Lease Agreement”), pursuant to which Lessor shall lease to Lessee, and Lessee shall lease from Lessor, certain real property, known as and located at Suite 9___ and Suite 1900 100 North Sepulveda Boulevard, El Segundo, CA 90245.              WHEREAS, Lessor is in need of certain information regarding Lessee so that it may proceed with the Lease Agreement.              NOW, THEREFORE, Lessee hereby certifies, represents, warrants and covenants to Lessor that as of the date hereof:              Representation 1.         Type of Lessee (check applicable boxes)              o         Lessee is not an “employee benefit plan” (“Plan”) as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which is subject to Title 1 of ERISA.              o         Lessee is not a “governmental plan” within the meaning of Section 3(32) of ERISA.              Representation 2.         Complete if Lessee is not a Plan and Has Shareholders or Interestholders (check applicable boxes)              One or more of the following circumstances also is true:              o         Equity interests in Lessee are publicly offered securities within the meaning of 29 C.F.R. Section 2510.2-101(b)(2);              o         Less than 25 percent of all equity interests in Lessee are held by “benefit plan investors, ” which are defined as: (i)  any employee benefit plan, whether or not subject to Title 1 of ERISA; (ii)  any plan described in Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended; and (iii) any entity whose underlying assets include plan assets by reason of a plan’s investment in the entity; or              o         Lessee is a corporation that qualifies as an “operating company,” a “venture capital operating company,” or a “real estate operating company” within the meaning of 29 C.F.R. Section 1510.3-101(c), (d) and (e) (each, an “Operating Company”).              Representation 3.         Lessee’s relation to Lessor and Lessor’s Shareholders/Interestholders (check applicable boxes.)              Lessee is not a party in interest as defined in section 3(14) of ERISA with respect to Lessor or its shareholders or interestholders, the General Motors Hourly Rate Employees Pension Trust and the General Motors Salaried Pension Trust, because Lessee is not:              o         a fiduciary (including, but not limited to, any administrator, officer, trustee or custodian), counsel, or employee of Lessor or its shareholders or interestholders (“Fiduciary”);              o         a person providing services to Lessor or its shareholders or interestholders (“Service Provider”);              o         an employer any of whose employees are provided employment benefits by Lessor or its shareholders or interestholders (“Employer”);              o         an employee organization any of whose members are provided employment benefits coverage by Lessor or its shareholders or interestholders (“Employee Organization”);              o         an owner, direct or indirect, of 50 percent or more of (i) the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of a corporation, (ii) the capital interest or the profits interest of a partnership, or (iii) the beneficial interest of a trust or unincorporated enterprise, which is an Employer or an Employee Organization (“Owner”);              o         a spouse, ancestor, lineal descendant, or spouse of a lineal descendant of a Fiduciary, Service Provider, Employer, or an Owner;              o         a corporation, partnership, or trust or estate of which (or in which) 50 percent or more of (i) the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of such corporation, (ii) the capital interest or profits interest of such partnership, or (iii) the beneficial interest of such trust or estate is owned directly or indirectly, or held by a Fiduciary, Service Provider, Employer, Employee Organization, or Owner (“Corporate Owner”);              o         an employee, officer, director (or an individual having powers or responsibilities similar to those of officers or directors), or a 10 percent or more shareholder directly or indirectly, of a Service Provider, Employer, Employee Organization, Owner, or a Corporate Owner; or              o         a 10 percent or more (directly or indirectly in capital or profits) partner or joint venturer of a Service Provider, Employer, Employee Organization, Owner, or a Corporate Owner.              Representation 4.         Indemnity, Guaranty              Lessee shall indemnify Lessor and defend and hold Lessor harmless from and against all loss, cost, damage and expense (including, without limitation, attorneys' fees and costs incurred in the investigation, defense and settlement of claims and losses incurred in correcting any prohibited transaction, and in obtaining any individual prohibited transaction exemption under ERISA that may be required, in Lessor's sole discretion) that Lessor may incur, directly or indirectly, as a result of the Lessee’s representation contained in this certificate.              Representation 5.         Survival              Lessee represents that the certifications, representations, warranties and covenants contained herein shall remain true and correct throughout the term of the Lease Agreement.   EN POINTE TECHNOLOGIES, INC.,   a Delaware corporation        BY: --------------------------------------------------------------------------------    NAME: --------------------------------------------------------------------------------    ITS: -------------------------------------------------------------------------------- EXHIBIT “F” EXISTING FURNITURE TABLE OF CONTENTS ARTICLE 1.  BASIC LEASE PROVISIONS   1.1  Term   ARTICLE 2.  TERM   ARTICLE 3.  RENTAL   3.1  Basic Rental   3.2  Increase in Costs   3.3  Definitions   3.4  Determination of Payment   ARTICLE 4.  SECURITY DEPOSIT   ARTICLE 5.  HOLDING OVER   ARTICLE 6.  PERSONAL PROPERTY   ARTICLE 7.  USE   ARTICLE 8.  CONDITION OF PREMISES   ARTICLE 9.  REPAIRS AND ALTERATIONS   ARTICLE 10.  LIENS   ARTICLE 11.  PROJECT SERVICES   11.1  Building Hours   11.2  Electricity Use   11.3  Heat Generating Machines   11.4  After-Hours HVAC   11.5  Recurrent Utility Use   ARTICLE 12.  RIGHTS OF LANDLORD   ARTICLE 13.  INDEMNITY, EXEMPTION OF LANDLORD FROM LIABILITY   13.1  Indemnity   13.2  Exemption of Landlord from Liability   ARTICLE 14.  INSURANCE   14.1  Tenant's Insurance   14.2  Form of Policies   14.3  Landlord's Insurance   14.4  Waiver of Subrogation   14.5  Compliance with Law   ARTICLE 15.  ASSIGNMENT AND SUBLETTING   ARTICLE 16.  DAMAGE OR DESTRUCTION   ARTICLE 17.  SUBORDINATION   ARTICLE 18.  EMINENT DOMAIN   ARTICLE 19.  DEFAULT   ARTICLE 20.  REMEDIES   ARTICLE 21.  TRANSFER OF LANDLORD'S INTEREST   ARTICLE 22.  BROKERS   ARTICLE 23.  PARKING   ARTICLE 24.  WAIVER   ARTICLE 25.  ESTOPPEL CERTIFICATE   ARTICLE 26.  LIABILITY OF LANDLORD   ARTICLE 27.  INABILITY TO PERFORM   ARTICLE 28.  HAZARDOUS MATERIALS   28.1  Environmental Law Compliance   28.2  Prohibition   28.3  Indemnity   28.4  Definitions   ARTICLE 29.  SURRENDER OF PREMISES; REMOVAL OF PROPERTY   29.1  No Merger   29.2  Surrender   29.3  Disposition of Personal Property   29.4  Removal of Alterations   ARTICLE 30.  MISCELLANEOUS   30.1  Mortgage Protection   30.2  Recording   30.3  Financial Statements   30.4  Severability; Entire Agreement   30.5  Attorneys' Fees   30.6  Time of Essence   30.7  Headings   30.8  Reserved Area   30.9  No Option   30.10  Use of Project Name; Improvements   30.11  Rules and Regulations   30.12  Quiet Possession   30.13  Additional Rent   30.14  Substitute Premises   30.15  Successors and Assigns   30.16  Notices   30.17  Persistent Delinquencies   30.18  Right of Landlord to Perform   30.19  Access, Changes in Project, Facilities, Name   30.20  Corporate Authority   30.21  Identification of Tenant   30.22  Building Codes   30.23  Transportation and Energy Management   30.24  ERISA Certificate   30.25  Exhibits   30.26  Waiver of Jury Trial   ARTICLE 31.  OPTION TO EXTEND   31.1  Grant of Option   31.2  Determination of Prevailing Market Rental   ARTICLE 32.  SIGNAGE    

Exhibit 10.1 ENDOCARDIAL SOLUTIONS, INC. AMENDED AND RESTATED 1993 LONG-TERM INCENTIVE AND STOCK OPTION PLAN (AS AMENDED MAY 15, 2001) Section 1.  Purpose of Plan.                            Purpose.  This Plan shall be known as the “ENDOCARDIAL SOLUTIONS, INC. AMENDED AND RESTATED 1993 LONG-TERM INCENTIVE AND STOCK OPTION PLAN” and is hereinafter referred to as the “Plan.”  The purpose of the Plan is to aid in maintaining and developing personnel capable of assuring the future success of Endocardial Solutions, Inc., a Delaware corporation (the “Company”), to offer such personnel additional incentives to put forth maximum efforts for the success of the business, and to afford them an opportunity to acquire a proprietary interest in the Company through stock options and other long-term incentive awards as provided herein.  Options granted under this Plan may be either incentive stock options (Incentive Stock Options”) within the meaning of Section 422 of the Internal Revenue Code of 1986 (the “Code”), or options that do not qualify as Incentive Stock Options.  Awards granted under this Plan shall be SARs, restricted stock or performance awards as hereinafter described.  With respect to outstanding Incentive Stock Options at the time of amendment of this Plan, such options shall continue to be governed by the terms of the Plan prior to this amendment. Section 2.  Stock Subject to Plan.                            Subject to the provisions of Section 15 hereof, the stock to be subject to options or other awards under the Plan shall be the Company’s authorized but unissued shares of Common Stock, $.01 par value (the “Common Shares”).  Such shares shall be authorized but unissued shares.  Subject to adjustment as provided in Section 15 hereof, the maximum number of shares on which options may be exercised or other awards issued under this Plan shall be 2,550,000 shares.  If an option or award under the Plan expires, or for any reason is terminated or unexercised with respect to any shares, such shares shall again be available for options or awards thereafter granted during the term of the Plan. Section 3.  Administration of Plan.                            (a)         The Plan shall be administered by the Board of Directors of the Company or a committee thereof.  The members of any such committee shall be appointed by and serve at the pleasure of the Board of Directors.  (The group administering the Plan shall hereinafter be referred to as the “Committee.”)                            (b)        The Committee shall have plenary authority in its discretion, but subject to the express provisions of the Plan: (i) to determine the purchase price of the Common Shares covered by each option or award, (ii) to determine the employees to whom and the time or times at which such options and awards shall be granted and the number of shares to be subject to each, (iii) to determine the form of payment to be made upon the exercise of an SAR or in connection with performance awards, either cash, Common Shares of the Company or a combination thereof, (iv) to determine the terms of exercise of each option and award, (v) to accelerate the time at which all or any part of an option or award may be exercised, (vi) to amend or modify the terms of any option or award with the consent of the optionee, (vii) to interpret the Plan, (viii) to prescribe, amend and rescind rules and regulations relating to the Plan, (ix) to determine the terms and provisions of each option and award agreement under the Plan (which agreements need not be identical), including the designation of those options intended to be Incentive Stock Options, and (x) to make all other determinations necessary or advisable for the administration of the Plan, subject to the exclusive authority of the Board of Directors under Section 16 herein to amend or terminate the Plan.  The Committee’s determinations on the foregoing matters, unless otherwise disapproved by the Board of Directors of the Company, shall be final and conclusive.                            (c)         The Committee shall select one of its members as its Chair and shall hold its meetings at such times and places as it may determine.  A majority of its members shall constitute a quorum.  All determintations of the Committee shall be made by not less than a majority of its members.  Any decision or determination reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority vote at a meeting duly called and held.  The grant of an option or award shall be effective only if a written agreement shall have been duly executed and delivered by and on behalf of the Company following such grant.  The Committee may appoint a Secretary and may make such rules and regulations for the conduct of its business as it shall deem advisable. Section 4.  Eligibility and Grant.                            (a)         Eligibility.  Incentive Stock Options may only be granted under this Plan to any full or part-time employee (which term as used herein includes, but is not limited to, officers and directors who are also employees) of the Company and of its present and future subsidiary corporations within the meaning of Section 424(f) of the Code (herein called “subsidiaries”).  Full or part-time employees, officers, consultants, directors (including directors who are not employees of the Company) or independent contractors of the Company or one of its subsidiaries shall be eligible to receive options which do not qualify as Incentive Stock Options and awards.  In determining the persons to whom options and awards shall be granted and the number of shares subject to each, the Committee may take into account the nature of services rendered by the respective employees or consultants, their present and potential contributions to the success of the Company and such other factors as the Committee in its discretion shall deem relevant.                            (b)        Grant of Additional Options.  A person who has been granted an option or award under this Plan may be granted additional options or awards under the Plan if the Committee shall so determine; provided, however, that for Incentive Stock Options to the extent the aggregate fair market value (determined at the time the Incentive Stock Option is granted) of the Common Shares with respect to which all Incentive Stock Options are exercisable for the first time by an employee during any calendar year (under all plans described in subsection (d) of Section 422 of the Code of his or her employer corporation and its parent and subsidiary corporations) exceeds $100,000, such options shall be treated as options that do not qualify as Incentive Stock Options.  Nothing in the Plan or in any agreement thereunder shall confer on any employee any right to continue in the employ of the Company or any of its subsidiaries or affect, in any way, the right of the Company or any of its subsidiaries to terminate his or her employment at any time. Section 5.  Price.                            The option price for all Incentive Stock Options granted under the Plan shall be determined by the Committee but shall not be less than 100% of the fair market value of the Common Shares at the date of grant of such option.  The option price for options granted under the Plan that do not qualify as Incentive Stock Options and, if applicable, the price for all awards shall also be determined by the Committee.  For purposes of the preceding sentence and for all other valuation purposes under the Plan, the fair market value of the Common Shares shall be as reasonably determined by the Committee.  If on the date of grant of any option or award hereunder the Common Shares are not traded on an established securities market, the Committee shall make a good faith attempt to satisfy the requirements of this Section 5 and in connection therewith shall take such action as it deems necessary or advisable. Section 6.  Term.                            Each option and award and all rights and obligations thereunder shall expire on the date determined by the Committee and specified in the option or award agreement.  The Committee shall be under no duty to provide terms of like duration for options or awards granted under the Plan, but the term of an Incentive Stock Option may not extend more than ten (10) years form the date of grant of such option and the term of options granted under the Plan which do not qualify as Incentive Stock Options may not extend more than fifteen (15) years from the date of granting of such option. Section 7.  Exercise of Option or Award.                            (a)         Exercisability.  The Committee shall have full and complete authority to determine whether an option or award will be exercisable in full at any time or from time to time during the term thereof, or to provide for the exercise thereof in such installments, upon the occurrence of such events (such as termination of employment for any reason) and at such times during the term of the option as the Committee may determine and specify in the option or award agreement.                            (b)        No Violation of State or Federal Laws.  The exercise of any option or award granted hereunder shall only be effective at such time that the sale of Common Shares pursuant to such exercise will not violate any state or federal securities or other laws.                            (c)         Method of Exercise.  An optionee or grantee electing to exercise an option or award shall give written notice to the Company of such election and of the number of shares subject to such exercise.  The full purchase price of such shares shall be tendered with such notice of exercise.  Payment shall be made to the Company in cash (including bank check, certified check, personal check, or money order), or, at the discretion of the Committee and as specified by the Committee, (i) by delivering certificates for the Company’s Common Shares already owned by the optionee or grantee having a fair market value as of the date of grant equal to the full purchase price of the shares, or (ii) by delivering the optionee’s or grantee’s promissory note, which shall provide for interest at a rate not less than the minimum rate required to avoid the imputation of income, original issue discount or a below-market-rate loan pursuant to Sections 483, 1274 or 7872 of the Code or any successor provisions thereof, or (iii) a combination of cash, the optionee’s or grantee promissory note and such shares.  The fair market value of such tendered shares shall be determined as provided in Section 5 herein.  The optionee’s or grantee’s promissory note shall be a full recourse liability of the optionee and may, at the discretion of the Committee, be secured by a pledge of the shares being purchased.  Until such person has been issued the shares subject to such exercise, he or she shall possess no rights as a shareholder with respect to such shares. Section 8.  Stock Appreciation Rights.                            (a)         Grant.  At the time of grant of an option or award under the Plan (or at any other time), the Committee, in its discretion, may grant a Stock Appreciation Right (“SAR”) evidenced by an agreement in such form as the Committee shall from time to time approve.  Any such SAR may be subject to restrictions on the exercise thereof as may be set forth in the agreement representing such SAR, which agreement shall comply with and be subject to the following terms and conditions and any additional terms and conditions established by the Committee that are consistent with the terms of the Plan.                            (b)        Exercise.  An SAR shall be exercised by the delivery to the Company of a written notice which shall state that the holder thereof elects to exercise his or her SAR as to the number of shares specified in the notice and which shall further state what portion, if any, of the SAR exercise amount (hereinafter defined) the holder thereof requests is to be paid in cash and what portion, if any, is to be paid in Common Shares of the Company.  The Committee promptly shall cause to be paid to such holder the SAR exercise amount either in cash, in Common Shares of the Company, or any combination of cash and shares as the Committee may determine.  Such determination may be either in accordance with the request made by the holder of the SAR or in the sole and absolute discretion of the Committee.  The SAR exercise amount is the excess of the fair market value of one share of the Company’s Common Shares on the date of exercise over the per share exercise price in respect of which the SAR was granted, multiplied by the number of shares as to which the SAR is exercised.  For the purposes hereof, the fair market value of the Company’s shares shall be determined as provided in Section 5 herein. Section 9.  Restricted Stock Awards.                            Awards of Common Shares subject to forfeiture and transfer restrictions may be granted by the Committee.  Any restricted stock award shall be evidenced by an agreement in such form as the Committee shall from time to time approve, which agreement shall comply with and be subject to the following terms and conditions and any additional terms and conditions established by the Committee that are consistent with the terms of the Plan:                            (a)         Grant of Restricted Stock Awards.  Each restricted stock award made under the Plan shall be for such number of Common Shares as shall be determined by the Committee and set forth in the agreement containing the terms of such restricted stock award.  Such agreement shall set forth a period of time during which the grantee must remain in the continuous employment of the Company in order for the forfeiture and transfer restrictions to lapse.  If the Committee so determines, the restrictions may lapse during such restricted period in installments with respect to specified portions of the shares covered by the restricted stock award.  The agreement may also, in the discretion of the Committee, set forth performance or other conditions that will subject the Common Shares to forfeiture and transfer restrictions.  The Committee may, at its discretion, waive all or any part of the restrictions applicable to any or all outstanding restricted stock awards.                            (b)        Delivery of Common Shares and Restrictions.  At the time of a restricted stock award, a certificate representing the number of Common Shares awarded thereunder shall be registered in the name of the grantee.  Such certificate shall be held by the Company or any custodian appointed by the Company for the account of the grantee subject to the terms and conditions of the Plan, and shall bear such a legend setting forth the restrictions imposed thereon as the Committee, in its discretion, may determine.  The grantee shall have all rights of a shareholder with respect to the Common Shares, including the right to receive dividends and the right to vote such shares, subject to the following restrictions: (i) the grantee shall not be entitled to delivery of the stock certificate until the expiration of the restricted period and the fulfillment of any other restrictive conditions set forth in the restricted stock agreement with respect to such Common Shares; (ii) none of the Common Shares may be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of during such restricted period or until after the fulfillment of any such other restrictive conditions; and (iii) except as otherwise determined by the Committee, all of the Common Shares shall be forfeited and all rights of the grantee to such Common Shares shall terminate, without further obligation on the part of the Company, unless the grantee remains in the continuous employment of the Company for the entire restricted period in relation to which such Common Shares were granted and unless any other restrictive conditions relating to the restricted stock award are met.  Any Common Shares, any other securities of the Company and any other property (except for cash dividends) distributed with respect to the Common Shares subject to restricted stock awards shall be subject to the same restrictions, terms and conditions as such restricted Common Shares.                            (c)         Termination of Restrictions.  At the end of the restricted period and provided that any other restrictive conditions of the restricted stock award are met, or at such earlier time as otherwise determined by the Committee, all restrictions set forth in the agreement relating to the restricted stock award or in the Plan shall lapse as to the restricted Common Shares subject thereto, and a stock certificate for the appropriate number of Common Shares, free of the restrictions and the restricted stock legend, shall be delivered to the grantee or his or her beneficiary or estate, as the case may be. Section 10.  Performance Awards.                            The Committee is further authorized to grant performance awards.  Subject to the terms of this Plan and any applicable award agreement, a performance award granted under the Plan (i) may be denominated or payable in cash, Common Shares (including, without limitation, restricted stock), other securities, other awards, or other property and (ii) shall confer on the holder thereof rights valued as determined by the Committee, in its discretion, and payable to, or exercisable by, the holder of the performance awards, in whole or in part, upon the achievement of such performance goals during such performance periods as the Committee, in its discretion, shall establish.  Subject to the terms of this Plan and any applicable award agreement, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any performance award granted, and the amount of any payment or transfer to be made by the grantee and by the Company under any performance award shall be determined by the Committee. Section 11.  Income Tax Withholding and Tax Bonuses.                            (a)         Withholding of Taxes.  In order to comply with all applicable federal or state income tax laws or regulations, the Company 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 an optionee or grantee under the Plan, are withheld or collected from such optionee or grantee.  In order to assist an optionee or grantee in paying all federal and state taxes to be withheld or collected upon exercise of an option or award which does not qualify as an Incentive Stock Option hereunder, the Committee, in its absolute discretion and subject to such additional terms and conditions as it may adopt, shall permit the optionee or grantee to satisfy such tax obligation by (i) electing to have the Company withhold a portion of the shares otherwise to be delivered upon exercise of such option or award with a fair market value, determined in accordance with Section 5 herein, equal to such taxes or (ii) delivering to the Company Common Shares other than the shares issuable upon exercise of such option or award with a fair market value, determined in accordance with Section 5, equal to such taxes.                            (b)        Tax Bonus.  The Committee shall have the authority, at the time of grant of an option under the Plan or at any time thereafter, to approve tax bonuses to designated optionees or grantees to be paid upon their exercise of options or awards granted hereunder.  The amount of any such payments shall be determined by the Committee.  The Committee shall have full authority in its absolute discretion to determine the amount of any such tax bonus and the terms and conditions affecting the vesting and payment thereafter. Section 12.  Additional Restrictions.                            The Committee shall have full and complete authority to determine whether all or any part of the Common Shares of the Company acquired upon exercise of any of the options or awards granted under the Plan shall be subject to restrictions on the transferability thereof or any other restrictions affecting in any manner the optionee’s or grantee’s rights with respect thereto, but any such restriction shall be contained in the agreement relating to such options or awards. Section 13.  Ten Percent Shareholder Rule.                            Notwithstanding any other provision in the Plan, if at the time an option is otherwise to be granted pursuant to the Plan the optionee owns directly or indirectly (within the meaning of Section 424(d) of the Code) Common Shares of the Company possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or its parent or subsidiary corporations, if any (within the meaning of Section 422(b)(6) of the Code), then any Incentive Stock Option to be granted to such optionee pursuant to the Plan shall satisfy the requirements of Section 422(c)(5) of the Code, and the option price shall be not less than 110% of the fair market value of the Common Shares of the Company determined as described herein, and such option by its terms shall not be exercisable after the expiration of five (5) years from the date such option is granted. Section 14.  Non-Transferability.                            No option or award granted under the Plan shall be transferable by an optionee or grantee, otherwise than by will or the laws of descent or distribution.  Except as otherwise provided in an option or award agreement, during the lifetime of an optionee or grantee, the option shall be exercisable only by such optionee or grantee. Section 15.  Dilution or Other Adjustments.                            If there shall be any change in the Common Shares through merger, consolidation, reorganization, recapitalization, dividend in the form of stock (of whatever amount), stock split or other change in the corporate structure, appropriate adjustments in the Plan and outstanding options and awards shall be made by the Committee.  In the event of any such changes, adjustments shall include, where appropriate, changes in the aggregate number of shares subject to the Plan, the number of shares and the price per share subject to outstanding options and awards and the amount payable upon exercise of outstanding awards, in order to prevent dilution or enlargement of option or award rights. Section 16.  Amendment or Discontinuance of Plan.                            The Board of Directors may amend or discontinue the Plan at any time.  Subject to the provisions of Section 15 no amendment of the Plan, however, shall without shareholder approval: (i) increase the maximum number of shares under the Plan as provided in Section 2 herein, (ii) decrease the minimum price provided in Section 5 herein, (ii) extend the maximum term under Section 6, or (iv) modify the eligibility requirements for participation in the Plan.  The Board of Directors shall not alter or impair any option or award theretofore granted under the Plan without the consent of the holder of the option. Section 17.  Time of Granting.                            Nothing contained in the Plan or in any resolution adopted or to be adopted by the Board of Directors or by the shareholders of the Company, and no action taken by the Committee or the Board of Directors (other than the execution and delivery of an option or award agreement), shall constitute the granting of an option or award hereunder. Section 18.  Effective Date and Termination of Plan.                            (a)         The Plan was approved by the Board of Directors on May 5, 1993, and as amended on _________, 1994 and the amendments shall be effective upon the approval by the shareholders of the Company (the “Effective Date”).                            (b)        Unless the Plan shall have been discontinued as provided in Section 15 hereof, the Plan shall terminate May 4, 2003.  No option or award may be granted after such termination, but termination of the Plan shall not, without the consent of the optionee or grantee, alter or impair any rights or obligations under any option or award theretofore granted.

EXHIBIT 10j SPLIT DOLLAR LIFE INSURANCE AGREEMENT      THIS AGREEMENT is entered into as of this 31st day of May, 2001, by and between ABRAMS INDUSTRIES, INC., a Georgia corporation (hereinafter the “Corporation”), J. ANDREW ABRAMS (also known and referred to as JAMES A. ABRAMS) (hereinafter the “Employee”), and JAMES A. ABRAMS, as owner of the Policy (hereinafter, with any subsequent assignee or owner of the Policy, the “Owner”).      WHEREAS, the Employee is an employee of the Corporation; and      WHEREAS, the Corporation wishes to assist the Employee in his efforts to obtain funds which will be used to purchase one or more life insurance policies.      NOW, THEREFORE, in consideration of the premises and of the mutual promises contained herein, the parties agree as follows:      1.      Policy. The life insurance policy on the life of JAMES A. ABRAMS (hereinafter referred to as the “Insured”) with which the Agreement deals is listed in Exhibit “A” attached hereto (the life insurance policy, along with any supplementary contracts issued in connection therewith, are collectively referred to as the “Policy,” and the issuer of the Policy is collectively referred to as the “Insurer”).      2.      Premiums. Each premium on the Policy shall be paid by the Corporation, on behalf of the Corporation and the Owner, as it becomes due. The Corporation shall annually furnish the Employee with a statement of the amount of income reportable by the Employee for Federal and state income tax purposes as a result of the insurance protection provided to the Employee (the “Economic Benefit”). The “Economic Benefit” shall be equal to the lesser of (i) the P.S. 58 cost, and (ii) the Insurer’s current published premium for annually renewable term insurance for standard risks, plus such “other benefits” relating to the Policy provided to the Employee, all determined in accordance with the guidelines set out in Rev. Rul. 64-328, 1964-2 C.B. 11, and Rev. Rul. 66-110, 1966-1 C.B. 12. For purposes of this Agreement, the Employee shall be deemed to have paid to the Insurer the portion of each premium equal to the Economic Benefit.      3.      Application of Dividends. Any annual dividends attributable to the Policy shall be utilized in such manner as the Corporation and the Owner shall from time to time agree. Without limitation, the dividends may be (i) paid out; (ii) used, in whole or in part, to reduce premiums on the Policy, to purchase paid-up additional life insurance or to purchase one-year term insurance; or (iii) accumulated until the parties direct how the dividends shall be applied or paid out.      4.      Security Interest and Collateral Assignment. To secure the repayment to the Corporation of the amount of the Corporation’s Current Policy Interest, as defined herein, the Owner has executed a collateral assignment of the Policy to the Corporation (hereinafter the “Collateral Assignment”).      5.      Death Benefit. In the event the Policy becomes a claim by reason of the death of the Insured, the Corporation shall have an interest in the proceeds of the Policy equal to the -------------------------------------------------------------------------------- “Corporation’s Current Policy Interest,” as defined herein. The balance, if any, of the proceeds of the Policy in excess of the Corporation’s Current Policy Interest shall be paid directly by the Insurer to the designated beneficiary under the Policy. In no event shall the amount payable to the Corporation hereunder exceed the proceeds payable due to the death of the Insured, and no amount shall be paid from such death benefit to the designated beneficiary until the full amount due the Corporation hereunder has been paid. Notwithstanding anything in this paragraph 5 to the contrary, if, for any reason whatsoever, no death benefit is payable under the Policy upon the death of the Insured and, in lieu thereof, the Insurer refunds all or any part of the premiums paid under the Policy, the Corporation and the Owner shall have the unqualified right to share such refund based on their respective cumulative contributions (deemed or actual) thereto.      6.      Corporation’s Interest.      (a)  In the event the Policy becomes a claim by reason of the death of the Insured, the “Corporation’s Current Policy Interest” shall be equal to the greater of:        (i) the cumulative premiums paid by the Corporation under the Policy, reduced by (aa) the amount of any policy dividends, or interest thereon, paid in cash to the Corporation, if any; and (bb) any Policy loans, including accrued interest, to the Corporation, if any; provided, however, the foregoing amount shall not include premiums for any extra benefit riders or agreement other than those providing additional life insurance coverage on the Insured and shall not include premiums waived pursuant to the terms of any disability waiver of premiums rider; or        (ii) total amounts payable on the Policy by reason of the death of the Insured minus One Million Dollars ($1,000,000.00).      (b)  In the event the Policy becomes a claim by reason of termination of this Agreement, as provided in paragraph 7 hereof, the Corporation’s Current Policy Interest shall be equal to the greater of:        (i) the cumulative premiums paid by the Corporation under the Policy, reduced by (aa) the amount of any policy dividends, or interest thereon, paid in cash to the Corporation, if any; and (bb) any Policy loans, including accrued interest, to the Corporation, if any; provided, however, the foregoing amount shall not include premiums for any extra benefit riders or agreement other than those providing additional life insurance coverage on the Insured and shall not include premiums waived pursuant to the terms of any disability waiver of premiums rider; or        (ii) cash surrender value (the cash value of the Policy, as determined under the terms of the Policy, less any Policy loans, if any) of the Policy at the time of termination of this Agreement, as provided in paragraph 7 below, minus One Million Dollars ($1,000,000.00). 2 --------------------------------------------------------------------------------      7.      Termination. This Agreement shall be terminated, subject to the provisions in paragraphs 8 and 9 below, when, prior to the death of the Insured, any of the following events occurs:      (a)  Written agreement of the Employee and the Corporation, with a copy delivered to the Owner;      (b)  Cessation of the Corporation’s business;      (c)  Bankruptcy, receivership or dissolution of the Corporation; or      (d)  The Owner’s repayment of the Corporation’s Current Policy Interest and the Corporation’s release of its rights under the Collateral Assignment on the Policy.      8.      Repayment upon Termination. In the event of termination of this Agreement as provided in paragraph 7 above, the Owner shall have the option for sixty (60) days after the termination to repay the Corporation an amount equal to the Corporation’s Current Policy Interest and obtain the release and termination of the Collateral Assignment on the Policy to the Corporation. Upon receipt of such amount, the Corporation shall release the Collateral Assignment on the Policy, by the execution and delivery of an appropriate instrument of release.      9.      Transfer upon Termination. If the Owner fails to exercise such option to repay the Corporation’s Current Policy Interest to the Corporation within sixty (60) days of the date of the termination of this Agreement pursuant to the provisions of paragraph 8 above, the Corporation has the following options:      (a)  The Corporation may choose to have ownership of the Policy transferred to the Corporation. The Owner shall execute any and all instruments that may be required to vest ownership of the Policy in the Corporation. Thereafter, the Owner shall have no further interest in the Policy; or      (b)  The Corporation may enforce its right to be paid the Corporation’s Current Policy Interest from the cash surrender value of the Policy under the Collateral Assignment of the Policy; provided that in the event the cash surrender value of the Policy exceeds the Corporation’s Current Policy Interest, such excess shall be paid to the Owner. The Owner shall execute any and all instruments that may be required to surrender the Policy for its cash value.      10.      Plan Management.      (a)  Management. For the purposes of the Employee Retirement Income Security Act of 1974, as amended, the Corporation will be the “Named Fiduciary” and Plan Administrator of the split-dollar life insurance plan (the “Plan”) for which this Agreement is hereby designated the written plan instrument. The Corporation’s Board of Directors may authorize a person or group of persons to fulfill the responsibilities of the Corporation as Plan Administrator. 3 --------------------------------------------------------------------------------      (b)  Agents. The Named Fiduciary or the Plan Administrator may employ others to render advice with regard to its responsibilities under this Plan.      (c)  Fiduciary Duties. The Named Fiduciary may also allocate fiduciary responsibilities to others and may exercise any other powers necessary for the discharge of its duties to the extent not in conflict with the Employee Retirement Income Security Act of 1974, as amended.      11.      Claims Procedure.      (a)  Filing Claims. The Insured, beneficiary or other individual (hereinafter “Claimant”) entitled to benefits under the Plan or under the Policy shall file a claim request with the Plan Administrator with respect to benefits under the Plan and with the Insurer, with respect to benefits under the Policy. The Plan Administrator shall, upon written request of Claimant, make available copies of any claim forms or instructions provided by the Insurer or advise the Claimant where such forms or instructions may be obtained.      (b)  Notification to Claimant. If a claim request is wholly or partially denied, the Plan Administrator will furnish to the Claimant a notice of the decision within ninety (90) days in writing and in a manner calculated to be understood by the Claimant, which notice will contain the following information:        (1) The specific reason or reasons for the denial;          (2) Specific reference to pertinent Plan provisions upon which the denial is based;          (3) A description of any additional material or information necessary for the Claimant to perfect the Claim and an explanation of why such material or information is necessary; and          (4) An explanation of the Plan’s claims review procedure describing the steps to be taken by a Claimant who wishes to submit his or her claim for review.      In the case of benefits which are provided under the Policy, the initial decision on the claims shall be made by the Insurer.      (c)  Review Procedure. If a claim request is wholly or partially denied, a Claimant or his or her authorized representative may with respect to any denied claim:        (1) Request a review upon written application filed within sixty (60) days after receipt by the Claimant of written notice of the denial of his or her claim;        (2) Review pertinent documents; and        (3) Submit issues and comments in writing. 4 --------------------------------------------------------------------------------      Any request or submission shall be in writing and shall be directed to the Named Fiduciary (or its designee). The Named Fiduciary (or its designee) shall have the sole responsibility for the review of any denied claim and shall take all steps appropriate in the light of its findings.      (d) Decision on Review. The Named Fiduciary (or its designee) will render a decision upon review of a denied claim within sixty (60) days after receipt of a request for review. If special circumstances (such as the need to hold a hearing or any matter pertaining to the denied claim) warrant additional time, the decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of a request for review. Written notice of any such extension shall be furnished to the Claimant prior to the commencement of the extension. The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the Claimant, as well as specific references to the pertinent provisions of the Plan on which the decision is based. If the decision on review is not furnished to the Claimant within the time limits prescribed above, the claim shall be deemed denied on review.      12.      Binding Effect. This Agreement shall bind the Corporation and its successors and assigns, the Employee and his heirs, executors, administrators and assigns, the Owner and its successors and assigns and any other Policy beneficiary.      13.      Governing Law. This Agreement shall be construed in accordance with the laws of the State of Georgia.      14.      Entire Agreement. This Agreement represents the entire agreement and understanding of the parties hereto with respect to the subject matter hereof. This Agreement may only be altered or amended by a written instrument signed by the parties hereto.      15.      Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, and such counterparts together shall constitute but one and the same contract, which shall be sufficiently evidenced by any such original counterparts. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 5 --------------------------------------------------------------------------------      IN WITNESS WHEREOF, the parties have signed and sealed this Agreement as of the date and year first above written.         Corporation:   ABRAMS INDUSTRIES, INC.   /s/ Diane Silverhawk By: /s/ Alan R. Abrams -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Witness Co-Chairman, President & CEO   /s/ Carolyn Purvis Attest: /s/ Melinda S. Garrett -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Witness Secretary   Employee:   /s/ Diane Silverhawk /s/ James A. Abrams                                   (SEAL) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Witness JAMES A. ABRAMS   /s/ Carolyn Purvis -------------------------------------------------------------------------------- Witness   Owner:   /s/ Diane Silverhawk /s/ James A. Abrams                                   (SEAL) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Witness JAMES A. ABRAMS   /s/ Carolyn Purvis -------------------------------------------------------------------------------- Witness 6 -------------------------------------------------------------------------------- EXHIBIT “A” POLICIES ISSUED IN CONNECTION WITH SPLIT DOLLAR INSURANCE AGREEMENT                           Insured Insurer Policy Number -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- James A. Abrams Pruco Life Insurance Company A Subsidiary of the Prudential Insurance Company of America               V1  002  361 7

  Exhibit 10.37 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR AN EXEMPTION THEREFROM. PROMISSORY NOTE     U.S.$2,000,000 Dated: November 6, 2001      FOR VALUE RECEIVED, the undersigned, ISCO INTERNATIONAL, INC., a Delaware corporation formerly known as ILLINOIS SUPERCONDUCTOR CORPORATION with offices at 451 Kingston Court, Mt. Prospect, Illinois 60056 (“Borrower”), promises to pay to the order of ALEXANDER FINANCE, L.P., an Illinois limited partnership (“Lender”), at 1560 Sherman Avenue, Evanston, Illinois 60201, in lawful money of the United States, the principal sum of Two Million Dollars (U.S.$2,000,000) due March 31, 2003, subject to extension as set forth in Section 3 below (the "Maturity Date”), and to pay interest on the principal sum outstanding under this Note at the rate of 14% per annum, compounded annually, which interest shall also be due and payable on the Maturity Date. Accrual of interest shall commence on the first day to occur after the date hereof and shall continue until payment in full of the principal sum and all other amounts due hereunder have been made. The principal of, and interest on, this Note are payable in such currency of the United States of America as of the time of payment is legal tender for payment of public and private debts. This Note is one of the Notes (the “Notes”) issued pursuant to the Note Purchase Agreement, dated as of the date hereof (the “Note Purchase Agreement”) by and among Borrower, the Lender, and Elliott Associates, L.P. (“Elliott”).      This Note is subject to the following additional provisions:      1.     Interest and Payment Application. Interest shall be calculated on a 360 day year simple interest basis and paid for the actual number of days elapsed. All interest due hereunder shall be payable at the Maturity Date. Notwithstanding anything contained herein, the outstanding principal balance and interest due hereunder shall bear interest, from and after the occurrence and during the continuance of an Event of Default (as defined below) hereunder, at the rate equal to the lower of twenty percent (20%) per annum, compounded annually, or the highest rate permitted by law, and from and after such time interest shall be payable from time to time on demand. Unless otherwise agreed or required by applicable law, payments will be applied first to any unpaid collection costs, then to unpaid interest and fees and any remaining amount to principal.      2.     Prepayment.        (a)   Borrower may pre-pay all or any part of this Note at any time, without cost or penalty. --------------------------------------------------------------------------------          (b)   In the event that, at any time while the Note remains outstanding, the Lender provides equity or equity-linked financing to the Borrower (an “Equity Transaction"), then on the date of funding for the Equity Transaction, an amount under this Note (principal plus interest) equal to the lesser of: (i) the full amount of principal and accrued interest then outstanding or (ii) the amount of consideration Lender provides pursuant to the Equity Transaction, shall become due and payable.      3.     Extension of Maturity Date. In the event that, while any Notes remain outstanding, (a) the Borrower conducts a bona fide cash capital-raising transaction which consists solely of the sale for cash of shares of the Borrower’s common stock (“Common Stock”) or shares of the Borrower’s preferred stock convertible into Common Stock at a fixed price (subject to customary anti-dilution provisions), in either case with or without warrants to purchase Common Stock at a fixed price (subject to customary anti-dilution provisions), where the gross cash proceeds to the Borrower (before deducting bona fide transaction costs) are at least $5 million (a “Qualified Equity Transaction”); (b) the Borrower affords all holders of outstanding Notes the opportunity to participate in that Qualified Equity Transaction on equivalent terms and in an amount not less than the then outstanding principal and interest of the Notes; and (c) at least one holder of Notes participates in the Equity Transaction, and pursuant to Section 2(b) of the Notes all of such holder’s Notes are repurchased; then the Maturity of all the remaining outstanding Notes, including this Note, shall be extended to March 31, 2005.      4.     No Impairment. Borrower shall not intentionally take any action which would impair the rights of Lender hereunder.      5.     Obligations Absolute. No provision of this Note shall alter or impair the obligation of Borrower, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place and rate, and in the manner, herein prescribed.      6.     Defaults and Remedies.        (a)   Events of Default. An “Event of Default” is: (i) default in payment of the principal amount or accrued but unpaid interest thereon of any of the Notes on or after the date such payment is due, (ii) failure by the Borrower for ten (10) days after notice to it, to comply with any other material provision of any of the Notes, the Note Purchase Agreement or the Security Agreement (as defined below); (iii) an Event of Default under the Security Agreement; (iv) a breach by the Borrower of its representations or warranties in the Note Purchase Agreement or Security Agreement; (v) any default under or acceleration prior to maturity of any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Borrower or a subsidiary of Borrower or for money borrowed the repayment of which is guaranteed by the Borrower or a subsidiary of Borrower, whether such indebtedness or guarantee now exists or shall be created hereafter, provided that the obligations with respect to any such borrowed or accelerated amount exceeds, in the aggregate, $500,000; (vi) any money judgment, writ or warrant of attachment, or similar process in excess of $500,000 in the aggregate shall be entered or filed against the Borrower or a subsidiary of the Borrower or any of their respective properties or other assets and shall remain unpaid, unvacated, unbonded and unstayed for a period of 45 days; (vii) if the Borrower or any subsidiary of the Borrower pursuant to or within the meaning -2- --------------------------------------------------------------------------------     of any Bankruptcy Law; (A) commences a voluntary case; (B) has an involuntary case commenced against it, and such case is not dismissed within 30 days of such commencement or consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian of it for all or substantially all of its property; (D) makes a general assignment for the benefit of its creditors; or (E) admits in writing that it is generally unable to pay its debts as the same become due; (viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (1) is for relief against the Borrower in an involuntary case; (2) appoints a Custodian of the Borrower or for all or substantially all of its property; or (3) orders the liquidation of the Company or any subsidiary, and the order or decree remains unstayed and in effect for ninety (90) days; or (ix) in the event that the Borrower fails to raise, within four months of the date of the Note Purchase Agreement, at least $15 million in cash proceeds (net of expenses) in a pro rata rights offering to subscribe for Common Stock at a fixed price (qualifying for the exemption pursuant to Rule 16a-9 under the Securities Exchange Act of 1934, as amended) which seeks to raise at least $20 million in cash or in the event that the Borrower fails to file a registration statement covering such offering within one month of the date of this Note. The Terms “Bankruptcy Law” means Title 11, U.S. Code, or any similar Federal or State Law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.        (b)   Remedies. If an Event of Default occurs and is continuing with respect to any of the Notes, the Lender may declare all of the then outstanding principal amount of this Note, including any interest due thereon, to be due and payable immediately, except that in the case of an Event of Default arising from events described in clauses (vii) and (viii) of Section 6(a) above, this Note shall become due and payable without further action or notice.      7.     Waivers of Demand, Etc. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, all other notices whatsoever and bringing of suit and diligence in taking any action to collect amounts called for hereunder, and will be directly and primarily liable for the payment of all sums owing and to be owing hereon, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder.      8.     Replacement Note. In the event that Lender notifies Borrower that this Note has been lost, stolen or destroyed, a replacement Note identical in all respects to the original Note (except for the outstanding principal amount, if different than that shown on the original Note), shall be delivered to Lender, provided that the Lender executes and delivers to Borrower an agreement reasonably satisfactory to Borrower to indemnify Borrower from any loss incurred by it in connection with this Note.      9.     Note Purchase Agreement; Security Agreement; Guarantees. This Note is being issued to Lender in connection with the Note Purchase Agreement and is entitled to the benefits thereof. In addition Borrower’s obligations under this Note are guaranteed by the Guarantees of Spectral Solutions, Inc. and Illinois Superconductor Canada Corporation, subsidiaries of Borrower (the "Guarantees”) and this Note is entitled to the benefits thereof. The Borrower’s obligations under this Note are also secured, pursuant to the terms of the -3- --------------------------------------------------------------------------------   Security Agreement, dated as of November 6, 2001, by and among the Borrower, the Guarantor, the Lender and Alexander (the “Security Agreement”), by all the assets of the Borrower and the Guarantors.      10.     Payment of Expenses. Borrower agrees to pay all debts and expenses, including reasonable attorneys’ fees and expenses, which may be incurred by the Lender in preparing, administering or enforcing this Note and/or collecting any amount due under this Note, the Note Purchase Agreement, the Security Agreement or the Guarantees.      11.     Savings Clause. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby. In no event shall the amount of interest paid hereunder exceed the maximum rate of interest on the unpaid principal balance hereof allowable by applicable law. If any sum is collected in excess of the applicable maximum rate, the excess collected shall be applied to reduce the principal debt. If the interest actually collected hereunder is still in excess of the applicable maximum rate, the interest rate shall be reduced so as not to exceed the maximum amount allowable under law.      12.     Amendment. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by both Borrower and Lender; except that Sections 3 and 6 hereof may not be amended, nor the interest rate or principal amount hereunder increased or the maturity date hereunder shortened, nor may a waiver of the Event of Default set forth in Section 6(a)(ix) be effected, without the consent of the holders of 75% of the aggregate principal maximum amount of the outstanding Notes.      13.     Assignment Etc. Lender may (i) without notice transfer or assign to one or more of its affiliates at any time, or to any other party, if an Event of Default shall have occurred, this Note or any interest herein and (ii) other than in cases described in clause (i), may mortgage, encumber or transfer this Note or any of its rights or interest in and to this Note or any part hereof in accordance with applicable securities laws, rules and regulations. Each assignee, transferee and mortgagee shall have the right to transfer or assign its interest in accordance with the prior sentence. Each such assignee, transferee and mortgagee shall have all of the rights of Lender under this Note, the Note Purchase Agreement, the Security Agreement and the Guarantees. This Note shall be binding upon Borrower and its successors and shall inure to the benefit of the Lender and its successors and assigns.      14.     No Waiver. No failure on the part of Lender to exercise, and no delay in exercising any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Lender of any right, remedy or power hereunder preclude any other or future exercise of any other right, remedy or power. Each and every right, remedy or power hereby granted to Lender or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by Lender from time to time.      15.     Miscellaneous. Unless otherwise provided herein, any notice or other communication to Borrower hereunder shall be sufficiently given if in writing and personally -4- --------------------------------------------------------------------------------   delivered or mailed to Borrower by certified mail, return receipt requested, at its address set forth above or such other address as it may designate for itself in such notice to Lender, and communications shall be deemed to have been received when delivered personally or, if sent by mail or facsimile, then when actually received by the party to whom it is addressed. Whenever the sense of this Note requires, words in the singular shall be deemed to include the plural and words in the plural shall be deemed to include the singular. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may (1) renew, extend (repeatedly and for any length of time) or modify this Note (in accordance with Section 12 above), or release any party or any guarantor or collateral, (2) impair, fail to realize upon or perfect any security interest Lender may have from time to time in collateral, or (3) take any other action deemed necessary by Lender, in each case without the consent of or notice to anyone and without releasing Borrower or any guarantor from any liability.      16.     Choice of Law and Venue; Waiver of Jury Trial. THIS NOTE SHALL BE CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF LAW. Borrower hereby agrees that all actions or proceedings arising directly or indirectly from or in connection with this Note shall, at Lender’s sole option, be litigated only in the Supreme Court of the State of New York or the United States District Court for the Southern District of New York, in each case, located in New York County, New York. Borrower consents to the exclusive jurisdiction and venue of the foregoing courts and consents that any process or notice of motion or other application to either of said courts or a judge thereof may be served inside or outside the State of New York or the Southern District of New York by certified or registered mail, return receipt requested, directed to Borrower at its address set forth in this Note (and service so made shall be deemed “personal service” and be deemed complete five (5) days after the same has been posted as aforesaid) or by personal service or in such other manner as may be permissible under the rules of said courts. BORROWER HEREBY WAIVES ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION PURSUANT TO THIS NOTE.      IN WITNESS WHEREOF, Borrower has caused this instrument to be duly executed by an officer thereunto duly authorized.           ISCO INTERNATIONAL, INC.     By:   /s/ CHARLES F. WILLES -------------------------------------------------------------------------------- Charles F. Willes Executive Vice President and Chief Financial Officer ATTEST: -------------------------------------------------------------------------------- -5-

Exhibit 10.14 AEROGEN, INC. RESTATED EXECUTIVE SEVERANCE BENEFIT PLAN SECTION 1.    INTRODUCTION              The AeroGen, Inc. Executive Severance Benefit Plan (the “Plan”) is designed to provide separation pay and benefits to certain eligible executive employees of the Company whose employment is terminated under the conditions specified herein.  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 eligible employees.  The Plan was initially approved by the Board of Directors of the Company effective September 29, 2000. SECTION 2.    DEFINITIONS              For purposes of this Plan, the following terms shall have the meanings set forth below:              (a)         “Base Salary” means base salary paid to you (including all amounts elected to be deferred that would otherwise have been paid, under any cash or deferred arrangement established by the Company), bonuses, and commissions but excluding the cost of employee benefits paid for by the Company, education or tuition reimbursements, imputed income arising under any Company group insurance or benefit program, traveling expenses, business and moving expense reimbursements, income received in connection with stock options, contributions made by the Company under any employee benefit plan, and similar items of compensation.              (b)         “Board” means the Board of Directors of the Company.              (c)         “Cause” means any of the following: (i) your theft, dishonesty, or falsification of any Company documents or records; (ii) your improper use or disclosure of the Company’s confidential or proprietary information, which use or disclosure is not cured within ten (10) days following notification to you by the Company or the Board; (iii) your refusal to perform any reasonable assigned duties after written notice from the Company of, and a reasonable opportunity to cure, such refusal; (iv) any material breach by you of any agreement between you and the Company, which breach is not cured pursuant to the terms of such agreement; or (v) your conviction (including any plea of guilty or nolo contendere) of any felony or any crime involving moral turpitude or dishonesty which impairs your ability to perform your duties with the Company.  The Board shall have the right to reasonably determine whether you have engaged in conduct constituting “Cause” for purposes of this Plan.              (d)         “Change in Control” means a (i) a dissolution or liquidation of the Company; (ii) a sale, lease or other disposition of all or substantially all of the assets of the Company so long as the Company’s stockholders immediately prior to such transaction will, immediately after such transaction, fail to possess direct or indirect beneficial ownership of more than fifty percent (50%) of the voting power of the acquiring entity (for purposes of this clause 2(d)(ii), any person who acquired securities of the Company prior to the occurrence of such asset transaction in contemplation of such transaction and who after such transaction possesses direct or indirect ownership of at least ten percent (10%) of the securities of the acquiring entity immediately following such transaction shall not be included in the group of stockholders of the Company immediately prior to such transaction); (iii) either a merger or consolidation in which the Company is not the surviving corporation and the stockholders of the Company immediately prior to the merger or consolidation fail to possess direct or indirect beneficial ownership of more than fifty percent (50%) of the voting power of the securities of the surviving corporation (or if the surviving corporation is a controlled affiliate of another entity, then the required beneficial ownership shall be determined with respect to the securities of that entity which controls the surviving corporation and is not itself a controlled affiliate of any other entity) immediately following such transaction, or a reverse merger in which the Company is the surviving corporation and the stockholders of the Company immediately prior to the reverse merger fail to possess direct or indirect beneficial ownership of more than fifty percent (50%) of the securities of the Company (or if the Company is a controlled affiliate of another entity, then the required beneficial ownership shall be determined with respect to the securities of that entity which controls the Company and is not itself a controlled affiliate of any other entity) immediately following the reverse merger (for purposes of this clause 2(d)(iii), any person who acquired securities of the Company prior to the occurrence of a merger, reverse merger, or consolidation in contemplation of such transaction and who after such transaction possesses direct or indirect beneficial ownership of at least ten percent (10%) of the securities of the Company or the surviving corporation (or if the Company or the surviving corporation is a controlled affiliate, then of the appropriate entity as determined above) immediately following such transaction shall not be included in the group of stockholders of the Company immediately prior to such transaction); (iv) an acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or a subsidiary or other controlled affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors; or (v) the individuals who, as of the date of this Agreement, are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least fifty percent (50%) of the Board.  If the election, or nomination for election by the Company’s stockholders, of any new director was approved by a vote of at least fifty percent (50%) of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board.              (e)         “Company” means AeroGen, Inc., or following a Change in Control, the surviving entity resulting from such transaction.              (f)         “Involuntary Termination Without Cause” means your dismissal or discharge by the Company (or, if applicable, by any successor entity) for any reason or no reason other than for Cause.  The termination of your employment will not be deemed to be an “Involuntary Termination Without Cause” if your termination occurs as a result of your death or disability.              (g)        “Voluntary Termination for Good Reason” means that you voluntarily terminate your employment with the Company after any of the following are undertaken by the Company:                            (i)         the assignment to you of any duties or responsibilities which result in a material diminution or adverse change of your position, responsibilities, authority or circumstances of employment;                            (ii)        a reduction by the Company in your Base Salary;                            (iii)       any failure by the Company to continue in effect any benefit plan or arrangement, including incentive plans or plans to receive securities of the Company, in which you are participating (hereinafter referred to as “Benefit Plans”), or the taking of any action by the Company which would adversely affect your participation in or reduce your benefits under any Benefit Plans or deprive you of any fringe benefit then enjoyed by you; provided, however, a Voluntary Termination for Good Reason shall not exist under this subsection 2(g)(iii) if the Company offers a range of benefit plans and programs which, taken as a whole, are comparable to the Benefit Plans provided to you as of the date of this Plan, as determined in good faith by the Company;                            (iv)        a relocation of your or the Company’s principal business offices to a location more than thirty-five (35) miles from the location at which you have performed duties, except for required travel by you on the Company’s business to an extent substantially consistent with your business travel obligations as of the date of this Plan;                            (v)         any material breach by the Company of any provision of this Plan which is not cured by the Company within twenty (20) days of delivery of written notice from Executive of such breach; or                            (vi)        any failure by the Company to obtain the assumption of this Plan by any successor or assign of the Company. SECTION 3.    ELIGIBILITY AND PARTICIPATION              Employees of the Company listed on a separate schedule (“Eligible Employees”) shall receive benefits under the Plan.  The Board may determine that you are eligible for any portion of or all of the benefits set forth in Section 4 or Section 5 of the Plan for reasons other than those specified herein and such decision by the Board shall in no way obligate the Company to provide such benefits to any other Eligible Employee, even if similarly situated.  The Board may add employees to the schedule of Eligible Employees from time to time in its sole discretion or on the recommendation of the Chief Executive Officer. SECTION 4.    BENEFITS FOLLOWING A CHANGE IN CONTROL              In the event of your Involuntary Termination without Cause or your Voluntary Termination for Good Reason during the period commencing one (1) month prior to and ending thirteen (13) months following a Change in Control, you are entitled to the following benefits, subject to Section 5 hereof:              (a)         Salary Continuation.  The Company shall, subject to Section 5 hereof, continue your Base Salary for twelve (12) months.  Any salary continuation payments shall be paid to you in monthly installments beginning on the termination of your employment.  Any such amount that you receive shall be subject to all required tax withholding.              (b)         Continuation of Health Benefits.  Provided that you elect continued coverage under federal COBRA law as applicable, the Company shall pay, on your behalf, the portion of premiums of your group health insurance, including coverage for your eligible dependents, that the Company paid prior to your termination of employment; provided, however, that the Company will pay such premiums for your eligible dependents only for coverage for which those dependents were enrolled immediately prior to your termination of employment.  You will continue to be required to pay that portion of the premium of your health coverage, including coverage for your eligible dependents, that you were required to pay as an active employee immediately prior to your termination of employment.  The number of months of such premium payments shall equal the number of months of your salary continuation payments, but in no event shall such premium payments be made for a period exceeding twelve (12) months or be made following the effective date of your coverage by a health plan of a subsequent employer.  For the balance of the period that you are entitled to coverage under federal COBRA law, you shall be entitled to maintain coverage for yourself and your eligible dependents at your own expense.              (c)         Vesting of Stock Options.  The Company, immediately prior to your termination of employment, shall accelerate one hundred percent (100%) of the vesting of all of your unvested stock options to purchase stock of the Company or any successor thereto, such options to vest in 12 equal monthly installments beginning on the date of the termination of your employment.  Notwithstanding the provisions in your stock option agreements, you shall have fifteen (15) months from your date of termination to exercise your stock options.  In addition, if applicable, the Company’s (or any successor corporation’s ) right to repurchase any stock purchased by you pursuant to any stock purchase agreement under which the Company has the right to repurchase any or all of the shares, shall lapse in 12 equal monthly installments beginning on the date of the termination of your employment. In addition, as to any shares received in exchange for shares of Cerus Limited that were subject to repurchase by the Company and that remain subject to repurchase at the time of termination of your employment, the Company’s right to repurchase such shares shall lapse in twelve equal monthly installments beginning on the date of the termination of your employment. (as amended May 8, 2001)              (d)         Indemnification.  For a period no less than six (6) years following the date or your termination of employment, you shall be indemnified by the Company (or any successor entity) for any act, or omission, taken while you were employed by the Company (or any successor entity), and the Company shall maintain insurance coverage which is either at least equivalent to such indemnification coverage provided for you prior to such termination, or if such equivalent coverage is not available at a commercially reasonable price, then at least equivalent to the indemnification coverage provided to the then current executive officers of the Company (or in the event of the occurrence of a Change in Control of the Company, the executive officers of the controlling entity of which the Company is then a part).              (e)         Additional Benefits.  In addition to the benefits provided in the foregoing Sections 5(a), 5(b), 5(c) and 5(d), the Board may, in its sole discretion, provide additional benefits to Eligible Employees chosen by the Company, in its sole discretion, and the provision of any such additional benefits to an Eligible Employee shall in no way obligate the Company to provide such additional benefits to any other Eligible Employee, even if similarly situated.              (f)         Parachute Payments.  If any payment or benefit (or any portion thereof) you would receive pursuant to a Change in Control from the Company or otherwise (“Payment”) would (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, (the “Code”), or any comparable successor provision, and (ii) but for this section would be subject to the excise tax imposed by Section 4999 of the Code, or any comparable successor provision (the “Excise Tax”), then Executive’s benefits hereunder shall be either (i) provided to you in full, or     (ii) provided to you as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by you, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax.  Unless you and the Company otherwise agree in writing, any determination required under this section shall be made in writing in good faith by a qualified third party (the “Professional Service Firm”) selected by the Company prior to the Change in Control (and if none is selected by the Company prior to the Change in Control, then that Professional Service Firm selected by the Company at a later time).  In the event of a reduction of benefits hereunder, benefits payable in cash shall be reduced first.  For purposes of making the calculations required by this section, the Professional Service Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code, and other applicable legal authority.  You and the Company shall furnish to the Professional Service Firm such information and documents as the Professional Service Firm may reasonably request in order to make a determination under this section.  The Company shall bear all costs the Professional Service Firm may reasonably incur in connection with any calculations contemplated by this section.                            If, notwithstanding any reduction described in this section, the IRS determines that you are liable for the Excise Tax as a result of the receipt of the payment of benefits as described above, then you shall be obligated to pay back to the Company, within thirty (30) days after a final IRS determination or in the event that you challenge the final IRS determination, a final judicial determination, a portion of the payment equal to the “Repayment Amount.”  The Repayment Amount with respect to the payment of benefits shall be the smallest such amount, if any, as shall be required to be paid to the Company so that your net after-tax proceeds with respect to any payment of benefits (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized.  The Repayment Amount with respect to the payment of benefits shall be zero if a Repayment Amount of more than zero would not result in your net after-tax proceeds with respect to the payment of such benefits being maximized.  If the Excise Tax is not eliminated pursuant to this paragraph, you shall pay the Excise Tax.                            Notwithstanding any other provision of this Section 5(f), if (i) there is a reduction in the payment of benefits as described in this section, (ii) the IRS later determines that you are liable for the Excise Tax, the payment of which would result in the maximization of your net after-tax proceeds (calculated as if your benefits had not previously been reduced), and (iii) you pay the Excise Tax, then the Company shall pay to you those benefits which were reduced pursuant to this section contemporaneously or as soon as administratively possible after you pay the Excise Tax so that your net after-tax proceeds with respect to the payment of benefits is maximized. SECTION 5.    LIMITATIONS AND CONDITIONS ON BENEFITS              (a)         Release.  To receive benefits under this Plan, you must execute a release of claims in favor of the Company, in substantially the form attached to this Plan as Exhibit A, Exhibit B or Exhibit C, as appropriate, and such release must become effective in accordance with its terms.              (b)         Termination of Benefits.  Benefits under this Plan shall terminate immediately if you, at any time, violate any proprietary information or confidentiality obligation to the Company, which violation is not cured pursuant to the terms of such agreement or within ten (10) days following notification to you of such a violation by the Company or the Board.              (c)         Certain Reductions.  Notwithstanding any other provision of this Plan to the contrary, any benefits payable to you under this Plan shall be reduced by any severance benefits payable by the Company or an affiliate of the Company to you under any other policy, plan, program or arrangement, including, without limitation, a contract between you and any entity (other than any letter addressed from the Company to you which sets forth your eligibility under this Plan), under which you are covered.  Furthermore, to the extent that any federal, state or local laws, including, without limitation, so-called “plant closing” laws, require the Company to give advance notice or make a payment of any kind to you because of your involuntary termination due to a layoff, reduction in force, plant or facility closing, sale of business, change of control, or any other similar event or reason, the benefits payable under this Plan shall either be reduced or eliminated.              (d)         No Mitigation.  You shall not be required to mitigate the amount of any payment provided for in this Plan by seeking other employment or otherwise nor, except for your eligibility for COBRA continuation coverage, shall the amount of any payment or benefit provided for in this Plan be reduced or otherwise affected by any compensation or benefits received by you as a result of employment by another employer or self-employment, by any retirement benefits regardless of source, by offset against any amount claimed to be owed by you to the Company, or otherwise.              (e)         Non-Duplication of Benefits.  You are eligible to receive benefits under this Plan one (1) time.              (f)         Non-Competition.  If requested by the Company at the time of termination of your employment under circumstances giving rise to benefits under this Plan, you will enter into an agreement with the Company providing that you will not become employed as an executive, within twelve (12) months following the termination of your employment with the Company, by any of Inhale Therapeutics, Dura Pharmaceuticals, Aradigm Corporation, Battelle Pulmonary Therapeutics or Sheffield Pharmaceuticals, without the prior written consent of the Company.  In the event that you commence any such employment during such 12 month period without the prior written consent of the Company, the benefits otherwise due to you under Section 4 will terminate, effective on the date you commence such employment. SECTION 6.    ADMINISTRATION AND OPERATION OF THE PLAN              The Company is the “Plan Sponsor” and the “Plan Administrator” of the Plan, as such terms are defined in the Employee Retirement Income Security Act of 1974 (“ERISA”).  The Company, in its capacity as Plan Administrator of the Plan, is the named fiduciary that has the authority to control and manage the operation and administration of the Plan.  The Company has the sole discretion to make such rules, regulations, and interpretations of the Plan and to make such computations and shall take such other action to administer the Plan as it may deem appropriate in its sole discretion.  Such rules, regulations, interpretations, computations, and other actions shall be conclusive and binding upon all persons.  The Company may engage the services of such persons or organizations to render advice or perform services with respect to its responsibilities under the Plan as it shall determine to be necessary or appropriate.  Such persons or organizations may include (without limitation) actuaries, attorneys, accountants and consultants.              Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan.  The responsibilities of the Company under the Plan shall be carried out on its behalf by its directors, officers, employees and agents, acting on behalf or in the name of the Company in their capacity as directors, officers, employees and agents and not as individual fiduciaries.  The Company may delegate any of its fiduciary responsibilities under the Plan to another person or persons pursuant to a written instrument that specifies the fiduciary responsibilities so delegated to each such person. SECTION 7.    CLAIMS, INQUIRIES AND APPEALS              (a)         Applications for Benefits and Inquiries.  Applications for benefits should be in writing, signed and submitted to: Plan Administrator, Executive Severance Benefit Plan, AeroGen, Inc., 1310 Orleans Drive, Sunnyvale, California 94089.              (b)         Denial of Claims.  If any application for benefits is denied in whole or in part, the Plan Administrator must notify you, in writing, of the denial of the application, and of your right to review the denial.  The written notice of denial will be set forth in a manner designed to be understood, and will include specific reasons for the denial, specific references to the Plan provision upon which the denial is based, a description of any information or material that the Plan Administrator needs to complete the review and an explanation of the Plan’s review procedure.              This written notice will be given to you within ninety (90) days after the Plan Administrator receives the application, unless special circumstances require an extension of time, in which case, the Plan Administrator has up to an additional ninety (90) days for processing the application.  If an extension of time for processing is required, written notice of the extension will be furnished to you before the end of the initial 90-day period.              This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the application.  If written notice of denial of the application for benefits is not furnished within the specified time, the application shall be deemed to be denied.  You will then be permitted to appeal the denial in accordance with the review procedure described below.              (c)         Request for Review.  You (or your authorized representative) may appeal a denied benefit claim by submitting a written request for a review to: Review Panel, Executive Severance Benefit Plan, AeroGen, Inc., 1310 Orleans Drive, Sunnyvale, California 94089.  The Review Panel shall be comprised of two (2) or more persons to be appointed by the Company.  Your appeal must be submitted within sixty (60) days after the application is denied (or deemed denied).  The Review Panel will give you (or your representative) an opportunity to review pertinent documents in preparing a request for a review.                            A request for review must set forth all of the grounds on which it is based, all facts in support of the request and any other matters that you or your representative feel are pertinent.  The Review Panel may require you or your representative to submit additional facts, documents or other material as it may find necessary or appropriate in making its review.              (d)         Decision on Review.  The Review Panel will act on each request for review within sixty (60) days after receipt of the request, unless special circumstances require an extension of time (not to exceed an additional sixty (60) days) for processing the request for a review.  If an extension for review is required, written notice of the extension will be furnished within the initial 60-day period.  The Review Panel will give written notice of its decision to the applicant.  In the event that the Review Panel confirms the denial of the application for benefits in whole or in part, the notice will outline the specific Plan provisions upon which the decision is based.  If written notice of the Review Panel’s decision is not given within the time prescribed above, the application will be deemed denied on review.              (e)         Rules and Procedures.  The Plan Administrator and/or the Review Panel may establish rules and procedures, consistent with the Plan and with ERISA, as necessary and appropriate in carrying out their responsibilities in reviewing benefit claims.  If you wish to submit additional information in connection with an appeal from the denial (or deemed denial) of benefits, you may be required to do so at your own expense.              (f)         Exhaustion of Remedies.  No legal action for benefits under the Plan may be brought until (i) a written application for benefits has been submitted in accordance with the procedures described above, (ii) the person claiming benefits has been notified by the Plan Administrator that the application is denied (or the application is deemed denied due to the Plan Administrator’s failure to act on it within the time prescribed), (iii) a written request for a review of the application has been submitted in accordance with the appeal procedure described above and (iv) the person appealing the denial has been notified in writing that the Review Panel has denied the appeal (or the appeal is deemed to be denied due to the Review Panel’s failure to take any action on the claim within the time prescribed). SECTION 8.    BASIS OF PAYMENTS TO AND FROM THE PLAN              All benefits under the Plan shall be paid by the Company.  The Plan shall be unfunded and benefits hereunder shall be paid only from the general assets of the Company. SECTION 9.    LEGAL FEES.              If there is termination of your employment with the Company pursuant to Section 4 hereof followed by a dispute as to whether you are entitled to the benefits provided under this Agreement, then, during the period of that dispute the Company shall pay you fifty percent (50%) of the amount specified in Section 4 (except that the Company shall pay one hundred percent (100%) of any insurance premiums provided for in Section 4), if, and only if, you agree in writing that if the dispute is resolved against you, you shall promptly refund to the Company all payments you receive plus interest at the rate provided in Section 1274(d) of the Code, compounded quarterly.  If the dispute is resolved in your favor, promptly after resolution of the dispute the Company shall pay you the sum that was withheld during the period of the dispute plus interest at the rate provided in Section 1274(d) of the Code, compounded quarterly.              Notwithstanding any other provisions of this Plan, if you either (i) bring any action to enforce your rights pursuant to Section 4 of this Plan, or (ii) defend any legal challenge to your rights under Section 4 hereof, you shall be entitled to recover reasonable attorneys’ fees and costs incurred in connection with such action from the Company, payable on a monthly basis, regardless of the outcome of such action; provided, however, that in the event such action is commenced by you, the court finds the claim was brought in good faith. SECTION 10.  AMENDMENT AND TERMINATION              The Company reserves the right to amend or terminate this Plan at any time; provided, however, that this Plan may not be amended or terminated following the effective date of a Change in Control, and no amendment or termination of the Plan shall adversely affect any benefits to which you have become entitled prior to such amendment or termination. SECTION 11.  NON-ALIENATION OF BENEFITS              No Plan benefit may be anticipated, alienated, sold, transferred, assigned, pledged, encumbered or charged, and any attempt to do so will be void. SECTION 12.  SUCCESSORS AND ASSIGNS              This Plan shall be binding upon any surviving entity resulting from a Change in Control and upon any other person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by the Company without regard to whether or not such person actively adopts or formally continues the Plan.  Eligible Employees, to the extent they are otherwise eligible for benefits under the Plan, are intended third party beneficiaries of this provision. SECTION 13.  LEGAL CONSTRUCTION              This Plan shall be interpreted in accordance with ERISA and, to the extent not preempted by ERISA, with the laws of the State of California.  This Plan constitutes both a plan document and a summary plan description for purposes of ERISA. SECTION 14.  OTHER PLAN INFORMATION Plan Identification Number: 502     Employer Identification Number: 33-0488580     Ending of the Plan’s Fiscal Year: December 31     Agent for the Service of Legal Process: AeroGen, Inc., 1310 Orleans Drive, Sunnyvale, California 94089 SECTION 15.  STATEMENT OF ERISA RIGHTS              As a participant in this Plan (which is a welfare benefit plan sponsored by the Company) you are entitled to certain rights and protections under ERISA, including the right to:              (a)         Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as work sites, all Plan documents and copies of all documents filed by the Plan with the U.S. Department of Labor, such as detailed annual reports;              (b)         Obtain copies of all Plan documents and Plan information upon written request to the Plan Administrator.  The Plan Administrator may make a reasonable charge for the copies; and              (c)         Receive a summary of the Plan’s annual financial report, in the case of a plan which is required to file an annual financial report with the Department of Labor.  (Generally, all pension plans and welfare plans with 100 or more participants must file these annual reports.)              In addition to creating rights for Plan participants, ERISA imposes duties upon the people responsible for the operation of the employee benefit plan.  The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries.              No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under ERISA.  If your claim for a Plan benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial.  You have the right to have the Plan review and reconsider your claim.              Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request materials from the Plan and do not receive them within thirty (30)  days, you may file suit in a federal court.  In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.  If you have a claim for benefits that is denied or ignored, in whole or in part, you may file suit in a state or federal court.  If it should happen that the Plan fiduciaries misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court.  The court will decide who should pay court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.              If you have any questions about this statement or about your rights under ERISA, you should contact the nearest office of the Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Pension and Welfare Benefit Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.   Exhibit A:  Release (For Persons 40 Years of Age or Older-Group Termination) Exhibit B:  Release (For Persons 40 Years of Age or Older-Individual Termination) Exhibit C:  Release (For Persons Under 40 Years of Age) -------------------------------------------------------------------------------- Amended by the Board of Directors on May 8, 2001 to replace Section 4(c). EXHIBIT A RELEASE (For Persons 40 Years of Age or Older-Group Termination)              I understand and agree completely to the terms set forth in the AeroGen, Inc. Executive Severance Benefit Plan (the “Plan”).              In consideration of benefits I will receive under the Plan, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their respective officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the date I execute this Agreement, including but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing.              I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA.  I also acknowledge that the consideration given for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that:  (a) my waiver and release do not apply to any rights or claims that may arise after I execute this Agreement; (b) I have the right to consult with an attorney prior to executing this Agreement; (c) I have forty-five (45) days from the date I receive this Agreement and the information specified in (f) below to consider this Agreement (although I voluntarily may choose to execute this Agreement earlier); (d) I have seven (7) days following the execution of this Agreement to revoke the Agreement; and (e) this Agreement shall not be effective until the later of (i) the date upon which the revocation period has expired, which shall be the eighth (8th) day after I execute this Agreement, and (ii) the date I return this Agreement, fully executed, to the Company; and (f) I have received with this Agreement a detailed list of the job titles and ages of all employees who were terminated in this group termination and the ages of all employees of the Company and its affiliates in the same job classification or organizational unit who were not terminated.              I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads 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.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims I may have against the Company, its affiliates, and the entities and persons specified above. EMPLOYEE Name: Date:   EXHIBIT B RELEASE (For Persons 40 Years of Age or Older-Individual Termination)              I understand and agree completely to the terms set forth in the AeroGen, Inc. Executive Severance Benefit Plan (the “Plan”).              In consideration of benefits I will receive under the Plan, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their respective officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the date I execute this Agreement, including but not limited to:  all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing.              I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA, as amended.  I also acknowledge that the consideration given for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that:  (a) my waiver and release do not apply to any rights or claims that may arise after the execution date of this Release Agreement; (b) I have been advised hereby that I have the right to consult with an attorney prior to executing this Agreement; (c) I have twenty-one (21) days to consider this Agreement (although I may choose to voluntarily execute this Agreement earlier); (d) I have seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; and (e) this Agreement will not be effective until the date upon which the revocation period has expired, which will be the eighth day after this Agreement is executed by me, provided that the Company has also executed this Agreement by that date (“Effective Date”).              I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads 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.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims I may have against the Company, its affiliates, and the entities and persons specified above. EMPLOYEE Name: Date: EXHIBIT C RELEASE (For Persons Under 40 Years of Age)              I understand and agree completely to the terms set forth in the AeroGen, Inc. Executive Severance Benefit Plan (the “Plan”).              In consideration of benefits I will receive under the Plan, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their respective officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the date I execute this Agreement, including but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964 as amended; the federal Americans with Disabilities Act of 1990; the California Fair Employment and Housing Act, as amended; tort law; contract law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing.              I acknowledge that to become effective, I must sign and return this Agreement to the Company so that it is received not later than fourteen (14) days following the date of my employment termination.  I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads 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.”  I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims I may have against the Company, its affiliates, and the entities and persons specified above. EMPLOYEE Name: Date:  

--------------------------------------------------------------------------------     Exhibit 10.31   THE GYMBOREE CORPORATION 1993 STOCK OPTION PLAN (AS AMENDED AND RESTATED THROUGH DECEMBER 31, 2000)      1.   Purposes of the Plan. The purposes of this Stock Option Plan are: • to attract and retain the best available personnel for positions of substantial responsibility, • to provide additional incentive to Employees, Consultants and Outside Directors, and • to promote the success of the Company’s business.      Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be granted under the Plan. The Plan also provides for automatic grants of Nonstatutory Stock Options to Outside Directors.      2.   Definitions. As used herein, the following definitions shall apply:        (a)  “Administrator” means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan.        (b)  “Applicable Laws” means the legal requirements relating to the administration of stock option plans under state corporate and securities laws and the Code.        (c)  “Board” means the Board of Directors of the Company.        (d)  “Code” means the Internal Revenue Code of 1986, as amended.        (e)  “Committee” means a Committee appointed by the Board in accordance with Section 4 of the Plan.        (f)  “Common Stock” means the Common Stock of the Company.        (g)  “Company” means The Gymboree Corporation, a Delaware corporation.        (h)  “Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services and who is compensated for such services, provided that the term “Consultant” shall not include Directors who are paid only a director’s fee by the Company or who are not compensated by the Company for their services as Directors.        (i)  “Continuous Status as an Employee, Consultant or Outside Director” means that the employment, consulting or Outside Director relationship is not interrupted or terminated by the Company, any Parent or Subsidiary. Continuous Status as an Employee, Consultant or Outside Director shall not be considered interrupted in the case of: (i) any leave of absence approved by the Administrator, including sick leave, military leave, or any other personal leave; provided, however, that for purposes of Incentive Stock Options, any such leave may not exceed ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed by contract (including certain Company policies) or statute; or (ii) transfers between locations of the Company or between the Company, its Parent, its Subsidiaries or its successor.        (j)  “Director” means a member of the Board.        (k)  “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code. 1 --------------------------------------------------------------------------------        (l)  “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.        (m)  “Exchange Act” means the Securities Exchange Act of 1934, as amended.        (n) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:        (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”) System, 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 system or exchange (or the exchange with the greatest volume of trading in Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;        (ii) If the Common Stock is quoted on the NASDAQ System (but not on the National Market System thereof) or is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;        (iii)  In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator.        (o)  “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.        (p)  “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.        (q)  “Notice of Grant” means a written notice evidencing certain terms and conditions of an individual Option or Stock Purchase Right grant. The Notice of Grant is part of the Option Agreement.        (r)  “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.        (s)  “Option” means a stock option granted pursuant to the Plan.        (t)  “Option Agreement” means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.        (u)  “Optioned Stock” means the Common Stock subject to an Option or Stock Purchase Right.        (v)  “Optionee” means an Employee, Consultant or Outside Director who holds an outstanding Option or Stock Purchase Right.        (w)  “Outside Director” shall mean a member of the Board who is not an Employee or a Consultant. 2 --------------------------------------------------------------------------------        (x)  “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.        (y)  “Plan” means The Gymboree Corporation 1993 Stock Option Plan.        (aa)  “Stock Purchase Right Agreement” means a written agreement between the Company and the Optionee evidencing the terms and restrictions applying to stock purchased under a Stock Purchase Right. The Stock Purchase Right Agreement is subject to the terms and conditions of the Plan and the Notice of Grant.        (bb)  “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.        (cc)  “Share” means a share of the Common Stock, as adjusted in accordance with Section 13 of the Plan.        (dd)  “Stock Purchase Right” means the right to purchase Common Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.        (ee)  “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.      3.   Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan is 6,025,000 Shares of Common Stock. The Shares may be authorized, but unissued, or reacquired Common Stock. However, should the Company reacquire Shares which were issued pursuant to the exercise of an Option or Stock Purchase Right, such Shares shall not become available for future grant under the Plan.      If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant under the Plan (unless the Plan has terminated).      4.   Administration of the Plan.        (a)  Procedure.        (i)  Multiple Administrative Bodies. The Plan may be administered by different Committees with respect to different groups of persons providing services to the Company.        (ii)  Section 162(m).To the extent that the Administrator determines it to be desirable to qualify Options granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code.        (iii)  Rule 16b-3.To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3.        (iv)  Other Administration.Other than as provided above, the Plan shall be administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws.        (b)  Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion: 3 --------------------------------------------------------------------------------        (i)  to determine the Fair Market Value of the Common Stock, in accordance with Section 2(n) of the Plan;        (ii)  to select the Consultants and Employees to whom Options and Stock Purchase Rights may be granted hereunder;        (iii) to determine whether and to what extent Options and Stock Purchase Rights or any combination thereof, are granted hereunder;        (iv)  to determine the number of shares of Common Stock to be covered by each Option and Stock Purchase Right granted hereunder;        (v)  to approve forms of agreement for use under the Plan;        (vi)  to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder. Such terms and conditions may include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;        (vii)  to determine whether, to what extent and under what circumstances Common Stock and other amounts payable with respect to an award under this Plan shall be deferred either automatically or at the election of the participant (including providing for and determining the amount (if any) of any deemed earnings on any deferred amount during any deferral period);        (viii)  to construe and interpret the terms of the Plan;        (ix)  to prescribe, amend and rescind rules and regulations relating to the Plan;        (x) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option or Stock Purchase Right previously granted by the Administrator;        (xi) to determine the terms and restrictions applicable to Options and Stock Purchase Rights; and        (xii)  to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by an Optionee to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;        (xiii)  to make all other determinations deemed necessary or advisable for administering the Plan.        (c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations shall be final and binding on all Optionees and any other holders of Options or Stock Purchase Rights. 4 --------------------------------------------------------------------------------      5.   Eligibility.      (a)  Stock Purchase Rights and Options may be granted to Employees, Consultants and Outside Directors provided that (i) Incentive Stock Options may only be granted to Employees and (ii) only Options may be granted to Outside Directors, and such grants may only be made in accordance with the provisions of Section 5(b) hereof. Each Option shall be designated in the written option agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. Subject to Section 5(b) with respect to Outside Directors, an Employee or Consultant who has been granted an Option or Stock Purchase Right may, if such Employee or Consultant is otherwise eligible, be granted additional Option(s) or Stock Purchase Right(s).      (b)  All grants of Options to Outside Directors under this Plan shall be automatic and non-discretionary (except as set forth in this Section 5(b)) and shall be made strictly in accordance with the following provisions:        (i)  On the date first elected to the Board of Directors and on such date each year thereafter during the term of this Plan, each Outside Director shall automatically receive an Option to purchase 2,500 Shares. Also, on each anniversary of such person’s election to the Board of Directors, each Outside Director who is then the chairperson of a committee shall receive an Option to purchase 500 Shares. In addition, each Outside Director who is an Outside Director on the date on which this Plan becomes effective shall automatically receive an Option to purchase 15,000 Shares.        (ii)  The terms of an Option granted pursuant to this Section 5(b) shall be as follows:        (A)  the term of the Option shall be ten (10) years;        (B)  except as provided in Section 10 of this Plan, the Option shall be exercisable only while the Outside Director remains a Director;        (C)  the exercise price per share of Common Stock shall be 100% of the Fair Market Value on the date of grant of the Option;        (D)  the Option shall become exercisable in installments cumulatively with respect to twenty-five percent (25%) of the Optioned Stock one year after the date of grant and as to an additional twenty-five percent (25%) of the Optioned Stock each year thereafter, so that one hundred percent (100%) of the Optioned Stock shall be exercisable four years after the date of grant; provided, however, that in no event shall any Option be exercisable prior to obtaining stockholder approval of the Plan.        (iii)  The Board of Directors may make discretionary grants of Options to Outside Directors for a number of Shares not to exceed in the aggregate 15,000.      6.   Limitations.        (a)  Each Option shall be designated in the Notice of Grant as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value: (i) of Shares subject to an Optionee’s incentive stock options granted by the Company, any Parent or Subsidiary, which (ii) become exercisable for the first time during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the time of grant.        (b)  Neither the Plan nor any Option or Stock Purchase Right shall confer upon an Optionee any right with respect to continuing the Optionee’s employment relationship, consulting relationship or directorship with the Company, nor shall they interfere in any way with the Optionee’s right or the Company’s right to terminate such relationship at any time, with or without cause.        (c)  The following limitations shall apply to grants of Options: 5 --------------------------------------------------------------------------------        (i)  No Employee shall be granted, in any fiscal year of the Company, Options to purchase more than 400,000 Shares.        (ii)  In connection with his or her initial service, an Employee may be granted Options to purchase up to an additional 400,000 Shares which shall not count against the limit set forth in subsection (i) above.        (iii)  The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 13.      7.   Term of Plan. Subject to Section 19 of the Plan and any resolution of the Board of Directors concerning effectiveness, the Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the stockholders of the Company as described in Section 19 of the Plan. It shall continue in effect for a term of ten (10) years unless terminated earlier under Section 15 of the Plan.      8.   Term of Option. The term of each Option shall be stated in the Notice of Grant; provided, however, that in the case of an Incentive Stock Option, the term shall be ten (10) years from the date of grant or such shorter term as may be provided in the Notice of Grant. However, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Notice of Grant.      9.   Option Exercise Price and Consideration.        (a)  Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following:        (i)  In the case of an Incentive Stock Option        (A)  granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.        (B)  granted to any Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.        (ii)  In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant; provided, however, that the per exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant if the Option is expressly granted at a discount in lieu of a reasonable amount of salary or cash bonus.        (b)  Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised. In so doing, the Administrator may specify that an Option may not be exercised until the completion of a service period.        (c)  Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Such consideration may consist of: 6 --------------------------------------------------------------------------------        (i)  cash;        (ii)  check;        (iii)  promissory note;        (iv)  other Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;        (v)  delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the exercise price;        (vi)  any combination of the foregoing methods of payment; or        (vii) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.      10. Exercise of Option.        (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement.        An Option may not be exercised for a fraction of a Share.        An Option shall be deemed exercised when the Company receives: (i) written notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 13 of the Plan. Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.        (b) Termination of Employment Relationship, Consulting Relationship or Directorship. In the event that an Optionee’s Continuous Status as an Employee, Consultant or Outside Director terminates (other than upon the Optionee’s death or Disability), the Optionee may exercise his or her Option, but only within such period of time as is determined by the Administrator, and only to the extent that the Optionee was entitled to exercise it at the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant). In the case of an Incentive Stock Option, the Administrator shall determine such period of time (in no event to exceed ninety (90) days from the date of termination) when the Option is granted. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 7 --------------------------------------------------------------------------------        (c) Disability of Optionee. In the event that an Optionee’s Continuous Status as an Employee, Consultant or Outside Director terminates as a result of the Optionee’s Disability, the Optionee may exercise his or her Option at any time within twelve (12) months from the date of such termination, but only to the extent that the Optionee was entitled to exercise it at the date of such termination (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant). If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.        (d) Death of Optionee. In the event of the death of an Optionee, the Option may be exercised at any time within twelve (12) months following the date of death (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option at the date of death. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall revert to the Plan. If, after death, the Optionee’s estate or a person who acquired the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall immediately revert to the Plan.      11.   Stock Purchase Rights.        (a)  Rights to Purchase. An annual maximum of 200,000 Shares may be issued to Employees or Consultants pursuant to Stock Purchase Rights. Stock Purchase Rights may be granted either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing, by means of a Notice of Grant, of the terms, conditions and restrictions related to the offer, including the number of Shares that the offeree shall be entitled to purchase, the price to be paid (which price shall be no less than 100% of the Fair Market Value per Share on the date of grant; provided, however, that the price shall be no less than 85% of the Fair Market Value per Share on the date of grant if the Stock Purchase Right is expressly granted at a discount in lieu of a reasonable amount of salary or cash bonus), and the time within which the offeree must accept such offer, which shall in no event exceed six (6) months from the date upon which the Administrator made the determination to grant the Stock Purchase Right. The offer shall be accepted by execution of a Stock Purchase Right Agreement in the form determined by the Administrator.        (b)  Repurchase Option. Unless the Administrator determines otherwise, the Stock Purchase Right Agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or Disability). The purchase price for Shares repurchased pursuant to the Stock Purchase Right Agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at a rate determined by the Administrator; provided, however, that in no event may the repurchase option lapse more quickly than ratably over the three (3) year period following the date of grant.        (c)  Other Provisions. The Stock Purchase Right Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. In addition, the provisions of Stock Purchase Right Agreements need not be the same with respect to each purchaser. 8 --------------------------------------------------------------------------------        (d)  Rights as a Stockholder. Once the Stock Purchase Right is exercised, the purchaser shall have the rights equivalent to those of a stockholder, and shall be a stockholder when his or her purchase is entered upon the records of the 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 Stock Purchase Right is exercised, except as provided in Section 13 of the Plan.      12.   Non-Transferability of Options and Stock Purchase Rights. Unless determined otherwise by the Administrator, an Option or Stock Purchase Right may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. If the Administrator makes an Option or Stock Purchase Right transferable, such Option or Stock Purchase Right shall contain such additional terms and conditions as the Administrator deems appropriate.      13.   Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset Sale or Change of Control.        (a)  Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each outstanding Option and Stock Purchase Right, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, as well as the price per share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option or Stock Purchase Right.        (b)  Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, to the extent that an Option or Stock Purchase Right has not been previously exercised, it will terminate immediately prior to the consummation of such proposed action. The Board may, in the exercise of its sole discretion in such instances, declare that any Option or Stock Purchase Right shall terminate as of a date fixed by the Board and give each Optionee the right to exercise his or her Option or Stock Purchase Right as to all or any part of the Optioned Stock, including Shares as to which the Option or Stock Purchase Right would not otherwise be exercisable.        (c)  Merger or Asset Sale. Subject to the provisions of paragraph (d) hereof, in the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option and Stock Purchase Right shall be assumed or an equivalent option or right shall be substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation does not agree to assume the Option or Stock Purchase Right or to substitute an equivalent option or right, the Administrator shall, in lieu of such assumption or substitution, provide for the Optionee to have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be exercisable. If the Administrator makes an Option or Stock Purchase Right fully exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee that the Option or Stock Purchase Right shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Purchase Right will terminate upon the expiration of such period. For the purposes of this paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase, for each Share of Optioned Stock subject to the Option or Stock Purchase Right immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets was not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation and the participant, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase Right, to be solely common stock of the successor corporation or its Parent equal in Fair Market Value to the per share consideration received by holders of Common Stock in the merger or sale of assets. 9 --------------------------------------------------------------------------------        (d)  Change of Control. In the event of a “Change of Control” of the Company, as defined in paragraph (e) below, the following acceleration and valuation provisions shall apply:        (i)  Any Options and Stock Purchase Rights outstanding as of the date on which such Change of Control is determined to have occurred that are not yet exercisable and vested on such date shall become fully exercisable and vested;        (ii)  To the extent that they are exercisable and vested, all outstanding Options and Stock Purchase Rights, unless otherwise determined by the Board at or after grant, shall be terminated in exchange for a cash payment at the Change of Control Price, reduced by the exercise price applicable to such Options or Stock Purchase Rights. These cash proceeds shall be paid to the Optionee or, in the event of death of an Optionee prior to payment, to the estate of the Optionee or to a person who acquired the right to exercise the Option or Stock Purchase Right by bequest or inheritance.        (e)  Definition of “Change of Control.” For purposes of this Section 13, a “Change of Control” means the happening of any of the following:        (i) When any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company employee benefit plan, including any trustee of such plan acting as trustee) 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 fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors; or        (ii)  The stockholders of the Company approve 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) at least fifty percent (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 the stockholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all the Company’s assets; or        (iii)  A change in the composition of the Board of Directors of the Company, 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 the Plan is approved by the stockholders, or (B) are elected, or nominated for election, to the Board of Directors of the Company with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company). 10 --------------------------------------------------------------------------------        (f)  Change of Control Price. For purposes of this Section 13, “Change of Control Price” shall be, as determined by the Board, (i) the highest Fair Market Value of a Share within the 60-day period immediately preceding the date of determination of the Change of Control Price by the Board (the “60-Day Period”), or (ii) the highest price paid or offered per Share, as determined by the Board, in any bona fide transaction or bona fide offer related to the Change of Control of the Company, at any time within the 60-Day Period, or (iii) such lower price as the Board, in its discretion, determines to be a reasonable estimate of the fair market value of a Share.      14.   Date of Grant. The date of grant of an Option or Stock Purchase Right shall be, for all purposes, the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant.      15.   Amendment and Termination of the Plan.        (a)  Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.        (b)  Stockholder Approval. The Company shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws, including, without limitation, the requirements of any exchange or quotation system on which the Common Stock is listed or quoted.        (c)  Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company.      16.  Conditions Upon Issuance of Shares.        (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option or Stock Purchase Right unless the exercise of such Option or Stock Purchase Right and the issuance and delivery of such Shares shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, Applicable Laws, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted, and shall be further subject to the approval of counsel for the Company with respect to such compliance.        (b)  Investment Representations. As a condition to the exercise of an Option or Stock Purchase Right, the Company may require the person exercising such Option or Stock Purchase Right to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.      17.   Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.      18.   Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.      19.   Stockholder Approval. Continuance of the Plan shall be subject to approval by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such stockholder approval shall be obtained in the manner and to the degree required under applicable federal and state law. 11

AMENDMENT NO. 3 TO EMPLOYMENT AGREEMENT AND AMENDMENT NO. 3 TO CHANGE OF CONTROL AGREEMENT                      This Amendment No. 3 to Employment Agreement and Amendment No. 3 to Change of Control Agreement is made as of the 31st day of October, 2000, by and between Stewart Enterprises, Inc., a Louisiana corporation (the "Company"), and Brian J. Marlowe (the "Employee"). W I T N E S S E T H:                     WHEREAS, the Company has entered into an Employment Agreement with the Employee dated as of August 1, 1995, which has been previously amended two times (as amended, the "Employment Agreement");                     WHEREAS, the Company has entered into a Change of Control Agreement with the Employee dated as of December 5, 1995, which has been previously amended two times (as amended, the "Change of Control Agreement"); and                     WHEREAS, the Company and the Employee have agreed to an extension of the terms of the Employment Agreement and the Change of Control Agreement and an increase in salary, as set forth herein.                     NOW, THEREFORE, for and in consideration of the continued employment of Employee by the Company and the payment of wages, salary and other compensation to Employee by the Company, the parties hereto agree as follows, effective October 31, 2000:                     Section 1.     Except as expressly amended herein, all of the terms and provisions of the Employment Agreement and Change of Control Agreement shall remain in full force and effect.                     Section 2.     Article I, Section 2 of the Employment Agreement is hereby amended to read in its entirety as follows: > >         Employment Term.     The term of this Agreement (the "Employment > > Term") shall commence on the Agreement Date and shall continue through > > October 31, 2001, subject to any earlier termination of Employee's status as > > an employee pursuant to this Agreement.                     Section 3.     Article II, Section 1 of the Employment Agreement is hereby amended to read in its entirety as follows: > >         1.         Salary.     Beginning November 1, 2000, a salary ("Base > > Salary") at the rate of $380,000 per fiscal year of the Company ("Fiscal > > Year"), payable to the Employee at such intervals as other salaried > > employees of the Company are paid.                     Section 4.     Article II, Section 2.1(a) of the Change of Control Agreement is hereby amended to read in its entirety as follows: > >         2.1     Employment Term and Capacity after Change of Control. (a) If > > a Change of Control occurs on or before October 31, 2001, then the > > Employee's employment term (the "Employment Term") shall continue through > > the second anniversary of the Change of Control, subject to any earlier > > termination of Employee's status as an employee pursuant to this Agreement.                     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and signed as of the date indicated above.   STEWART ENTERPRISES, INC. By:  /s/ James W. McFarland                               James W. McFarland             Compensation Committee Chairman     EMPLOYEE:   /s/   Brian J. Marlowe                                                   Brian J. Marlowe      

Exhibit 10.3   PROMISSORY NOTE   Minneapolis, Minnesota $78,094 March 9, 2001              FOR VALUE RECEIVED, N. Michael Stickel (the "Maker") promises to pay to PW Eagle, Inc., its or successors or assigns ("Eagle"), at such place as may be designated from time to time by Eagle, in lawful money of the United States of America, the principal sum of Seventy Eight Thousand and Ninety Four Dollars ($78,094) together with interest on the unpaid principal balance hereof, from the date hereof until this Promissory Note (the "Note") is fully paid, at an annual rate equal to the Applicable Interest Rate (defined below), calculated on the basis of actual number of days elapsed in a 360-day year. Payment of Interest.              The principal balance of this Note will accrue interest from the date hereof until this Note is paid in full at that interest rate applicable to Eagle’s revolving credit facility in place during the term of this Note (the “Applicable Interest Rate”).  Interest only shall be paid (at the Applicable Interest Rate) on the last day of each calendar year commencing on December 30, 2001, and continuing on the last day of each and every calendar year thereafter until that date on which the Maker shall have paid the principal balance of this Note in full, but in no event later than February 28, 2006 (the “Maturity Date”). Payments of Principal.              On the Maturity Date, the entire principal balance of this Note plus accrued interest and all other charges and sums due under this Note shall be due and payable in full. Prepayment.              This Note may be prepaid in whole at any time, or in part from time to time, at the option of the Maker, without penalty or premium. Application of Payments.              All payments shall be applied first to any costs of collection, then to the payment of accrued interest, and then to the principal balance of this Note.  If any payment of principal, interest, late charge of other sum be made hereunder becomes due and payable on a day other than a business day, the due date of such payment shall be extended to the next succeeding business day and interest thereon shall be extended to the next succeeding business day and interest thereon shall be payable at the Applicable Interest Rated during such extension. Use of Proceeds.              Eagle acknowledges that this Note was issued to Eagle in partial payment of 15,000 shares of Common Stock of PW Eagle, Inc. purchased by the Maker from Eagle as of the date hereof (the “Purchased Stock”). Security.              As security for the payment and performance of this Note, the Maker hereby pledges to Eagle all of the Maker’s right, title and interest in and to the Purchased Stock, and all dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Purchased Shares.  Upon request by Eagle, the Maker shall deliver to Eagle the Purchased Shares for possession during the term of this Note, and Eagle shall refrain from exercising the voting and other consensual rights pertaining to the Purchased Shares. Events of Default.              The occurrence of any one or more of the following events shall constitute an Event of Default:              (a)         The Maker shall fail to make when due any payment of principal of, or interest on, this Note and such failure shall continue for a period of thirty days after the Maker receives written notice from Eagle of such failure; or              (b)        The Maker’s employment with Eagle is terminated for any reason including, without limitation, death or total disability. Remedies.              If any Event of Default shall occur and be continuing, then Eagle may declare that the outstanding unpaid principal balance of the Note, the accrued and unpaid interest thereon and all other obligations of the Maker to Eagle to be forthwith due and payable, whereupon the Note, all accrued and unpaid interest thereon and all such obligations shall immediately become due and payable, in each case without further demand or notice of any kind. No Waiver.              No delay or failure on the part of Eagle in exercising any right or remedy hereunder, or at law or at equity, shall operate as a waiver of or preclude the exercise of any such right or remedy, and no single or partial exercise by Eagle of any such right or remedy shall preclude or estop another or further exercise thereof or exercise of any other right or remedy.  No waiver by Eagle hereof shall be effective unless in writing signed by Eagle.  A waiver on any one occasion shall not be construed as a waiver of any such right or remedy on any prior or subsequent occasion. Costs of Collection.              The Maker agrees to pay all costs of collection, including attorneys' fees, in the event that any amount under this Note is not paid when due. Miscellaneous.              This Note is being delivered in, and shall be governed by the laws of, the State of Minnesota.  Presentment or other demand for payment, notice of dishonor and protest are expressly waived.     /s/ N. Michael Stickel --------------------------------------------------------------------------------   N. Michael Stickel   (the “Maker”)  

PROMISSORY NOTE City of Birmingham State of Alabama $200,000.00                                                                             April 14, 2000         FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to Saks Incorporated ("Company") on April 14, 2004 or, if earlier, termination of Maker's employment with Company, in one payment, the sum of Two Hundred Thousand Dollars ($200,000.00) (the "Principal"), plus accrued interest. Simple interest shall accrue on the Principal at a rate of 8% per year. Maker may pre-pay the Principal at any time with accrued interest and without penalty.         All persons now or later liable, whether primarily or secondarily, for the payment of the indebtedness hereby evidenced, for themselves, their heirs, legal representatives, and assigns, do hereby waive demand, presentment for payment, notice of dishonor, protest, notice of protest and diligence in collection and all other notices or demands whatsoever with respect to this note or the enforcement hereof, and consent that the time of said payments or any part thereof may be extended by the holder hereof, all without in any way modifying, altering, releasing, affecting or limiting their respective liability.         It is expressly understood that, if it is necessary to enforce payment of this note through an attorney or by suit, Maker or any obligors shall pay reasonable attorney's fees and all costs of collection. Company shall have the right to deduct from Maker's compensation amounts necessary to satisfy Maker's obligations under this note.         This obligation is made and intended as an Alabama contract and is to be so construed.         IN WITNESS WHEREOF, this note, which represents a valid debt, has been duly executed by the Maker as of the date and year first above written.                                                                      MAKER                                                                      ______________________________                                                                      Donald Wright

QuickLinks -- Click here to rapidly navigate through this document Exhibit 10.21 THIRD AMENDMENT TO NOTE PURCHASE AGREEMENT     THIS THIRD AMENDMENT TO NOTE PURCHASE AGREEMENT, dated as of February 7, 2001 (this "Third Amendment"), is entered into by and among WLFC FUNDING CORPORATION, as issuer (the "Issuer"), WILLIS LEASE FINANCE CORPORATION, as servicer (the "Servicer"), VARIABLE FUNDING CAPITAL CORPORATION, as a purchaser ("VFCC"), the Investors, FIRST UNION SECURITIES, INC. (f/k/a First Union Capital Markets Corp.), as deal agent (the "Deal Agent") and FIRST UNION NATIONAL BANK, as liquidity agent ("FUNB"). Capitalized terms used and not otherwise defined herein are used as defined in the Agreement (as defined below).     WHEREAS, the parties hereto entered into that certain Note Purchase Agreement, dated as February 11, 1999, as amended by the First Amendment, dated as of May 12, 1999, and a Second Amendment, dated as of February 9, 2000 (the "Agreement"); and     WHEREAS, the parties hereto desire to amend the Agreement in certain respects as provided herein;     NOW THEREFORE, in consideration of the premises and the other mutual covenants contained herein, the parties hereto agree as follows:     SECTION 1.  Amendments.   (a)The definition of "Commitment Termination Date" in Section 1.1 of the Agreement is hereby modified, amended and restated to read in its entirety as follows: "Commitment Termination Date: February 6, 2002 or such later date to which the Commitment Termination Date may be extended (if extended) in the sole discretion of the Purchasers in accordance with the terms of Section 2.3(b)." (2)The following definition is hereby added in its entirety to Section 1.1 of the Agreement: "Third Amendment Date: The date on which the Third Amendment to the Agreement shall become effective." (c)The first sentence of Section 2.1 of the Agreement is hereby amended and restated to read in its entirety as follows: "On the basis of the representations and warranties and subject to the terms and conditions herein set forth, the Issuer agrees to deliver to the Deal Agent on behalf of the Purchasers on the Third Amendment Date, the Class A Note with a maximum principal amount of $180,000,000, which Class A Note shall be duly executed by the Issuer, duly authenticated by the Indenture Trustee and registered in the name of the Deal Agent on behalf of the Purchasers."     SECTION 2.  Agreement in Full Force and Effect as Amended.  Except as specifically amended hereby, the Agreement shall remain in full force and effect. All references to the agreement shall not constitute a novation of the Agreement, but shall constitute an amendment thereof. The parties hereto agree to be bound by the terms and conditions of the Agreement, as amended by this Third Amendment, as though such terms and conditions were set forth herein. 21 --------------------------------------------------------------------------------     SECTION 3.  Miscellaneous.       (a) This Third Amendment may be executed in any number of counterparts, and by the different parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument but all of which together shall constitute one and the same agreement.     (b) The descriptive headings of the various sections of this Third Amendment are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.     (c) This Third Amendment may not be amended or otherwise modified except as provided in the Agreement.     (d) THIS THIRD AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS. [Remainder of Page Intentionally left Blank] 22 --------------------------------------------------------------------------------     IN WITNESS WHEREOF, the parties have caused this Third Amendment to the Agreement to be executed by their respective officers thereunto duly authorized as, of the date first above written. THE ISSUER:   WLFC FUNDING CORPORATION     By:   /s/ NICHOLAS J. NOVASIC    --------------------------------------------------------------------------------     Title:   Chief Financial Officer THE SERVICER:   WILLIS LEASE FINANCE CORPORATION     By:   /s/ NICHOLAS J. NOVASIC    --------------------------------------------------------------------------------     Title:   Chief Financial Officer THE INVESTOR:   FIRST UNION NATIONAL BANK     By:   /s/ BILL A. SHIRLEY    --------------------------------------------------------------------------------     Title:   Senior Vice President         First Union National Bank One First Union Center, TW-9 Charlotte, North Carolina 28288 Attention: Credit Administration Facsimile No.: (704) 374-6355 Confirmation No.: (704) 374-4001 VFCC:   VARIABLE FUNDING CAPITAL CORPORATION     By:   FIRST UNION SECURITIES, INC., as attorney-in-fact     By:   DOUGLAS R. WILSON, SR. --------------------------------------------------------------------------------     Title:   Vice President         Variable Funding Capital Corporation c/o First Union Securities, Inc. One First Union Center, TW-9 Attention: Conduit Administration Facsimile No.: (704) 383-6036 Confirmation No.: (704) 383-9343 23 --------------------------------------------------------------------------------                         with a copy to:       Lord Securities Corp. 2 Wall Street, 19th Floor New York, New York Attention: Vice President Facsimile No.: (212) 346-9012 Confirmation No.: (212) 346-9008 THE DEAL AGENT:   FIRST UNION SECURITIES, INC.     By:   /s/ LEAH W. FORSTNER    --------------------------------------------------------------------------------     Title:   Director         First Union Securities, Inc. One First Union Center, TW-9 Charlotte, North Carolina 28288 Attention: Conduit Administration Facsimile No.: (704) 383-6036 Telephone No.: (704) 383-9343 THE LIQUIDITY AGENT:   FIRST UNION NATIONAL BANK     By:   /s/ BILL A. SHIRLEY    --------------------------------------------------------------------------------     Title:   Senior Vice President         First Union National Bank One First Union Center, TW-9 Charlotte, North Carolina 28288 Attention; Credit Administration Facsimile No.: (704) 374-6355 Telephone No.: (704) 374-4001 24 -------------------------------------------------------------------------------- QuickLinks THIRD AMENDMENT TO NOTE PURCHASE AGREEMENT