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GATEWAY, INC. CHANGE IN CONTROL COMPENSATION PLAN, AS AMENDED

     1. Purpose. The purpose of the Gateway, Inc. Change in Control Compensation
Plan (the “Plan”) is to reinforce and encourage the continued attention and
dedication of members of management to their assigned duties without distraction
in the event of potentially unsettling circumstances arising in connection with
a possible Change in Control of Gateway, Inc. (the “Company”) by providing for
severance payments upon involuntary termination of employment following such
Change in Control. Capitalized terms are defined in Section 8.

     2. Term of the Plan. The Plan shall be effective as of January 19, 2000
(the “Effective Date”), and shall remain in effect until January 19, 2003 (the
“Term”); provided, that on January 19, 2001 and on each subsequent anniversary
of the Effective Date, unless the Board shall adopt a resolution to the contrary
prior to any such anniversary, the term of the Plan shall automatically be
extended without further action of the Board for a period of one year, so that
on each such anniversary the then remaining Term of the Plan shall be three
years; and provided, further, that if a Change in Control shall occur within the
Term of the Plan, the Term shall automatically be extended without further
action of the Board until the date that is three years following the date of
such Change in Control.

     3. Participants. All management employees of the Company or any
wholly-owned subsidiary at the level of senior vice-president, vice-president or
director (or their equivalents) on the effective date of a Change in Control
occurring during the Term of the Plan (“Participants”) shall be eligible to
participate in the Plan and to receive the benefits set forth herein.

     4. Payment Conditions. If the employment of any Participant is terminated
at any time on or before the end of the three year period following the date of
a Change in Control other than (i) by the Company for Cause, (ii) by reason of
death or Disability or (iii) by the Participant other than for Good Reason, the
Company shall pay the Participant in a lump sum within ten (10) days following
the Date of Termination the applicable Severance Payment set forth in Section 5
and the compensation and benefits payable pursuant to Section 6. The Severance
Payment shall be in lieu of any further salary or bonus payments to the
Participant for periods subsequent to the Date of Termination and in lieu of any
severance benefits otherwise payable to the Participant.

     5. Severance Payment. The applicable Severance Payment shall be as follows:

  (a) A Participant in the position of senior vice president (or its equivalent)
as of the Notice Date (or but for the occurrence of an event constituting Good
Reason, would have been serving in such position) shall receive a Severance
Payment in the amount of 2.0 times the sum of (i) such Participant’s annual base
salary as of the Notice Date and (ii) such Participant’s target annual bonus for
the fiscal year of the Company in which the Notice Date occurs (or, if no target
annual bonus shall have been determined for such year, then the target annual
bonus for the immediately preceding fiscal year of the Company), determined in
each case without regard to any prior reduction thereof constituting Good
Reason.

       (b) A Participant in the position of vice president (or its equivalent)
as of the Notice Date (or but for the occurrence of an event constituting Good
Reason, would have been serving in such position) shall receive a Severance
Payment in the amount of 1.5 times the sum of (i) such Participant’s annual base
salary as of the Notice Date and (ii) such Participant’s target annual bonus for
the fiscal year of the Company in which the Notice Date occurs (or, if no target
annual bonus shall have been determined for such year, then the target annual
bonus for the immediately preceding fiscal year of the Company), determined in
each case without regard to any prior reduction thereof constituting Good
Reason.

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       (c) A Participant in the position of director (or its equivalent) as of
the Notice Date (or who but for the occurrence of an event constituting Good
Reason, would have been serving in such position) shall receive a Severance
Payment in the amount of 1.0 times the sum of (i) such Participant’s annual base
salary as of the Notice Date and (ii) such Participant’s target annual bonus for
the fiscal year of the Company in which the Notice Date occurs (or, if no target
annual bonus shall have been determined for such year, then the target annual
bonus for the immediately preceding fiscal year of the Company), determined in
each case without regard to any prior reduction thereof constituting Good
Reason.

     6. Compensation Other Than the Applicable Severance Payment

       (a) Following a Change in Control and during the Term, during any period
that the Participant fails to perform the Participant’s duties with the Company
as a result of incapacity due to physical or mental illness, the Company shall
pay the Participant’s full salary to the Participant at the rate in effect at
the commencement of any such period, together with all compensation and benefits
payable to the Participant under the terms of any compensation or benefit plan,
program or arrangement (other than the Company’s short- or long-term disability
plan, as applicable) maintained by the Company during such period, until the
Participant’s employment is terminated by the Company for Disability.

       (b) If the Participant’s employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay the
Participant’s full salary to the Participant through the Date of Termination at
the rate in effect immediately prior to the Date of Termination or, if higher,
the rate in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, together with all compensation and
benefits payable to the Participant through the Date of Termination under the
terms of the Company’s compensation and benefit plans, programs or arrangements
as in effect immediately prior to the Date of Termination or, if more favorable
to the Participant, as in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason.

       (c) If the Participant’s employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay to the
Participant the Participant’s normal post-termination compensation and benefits
as such payments become due. Such post-termination compensation and benefits
shall be determined under, and paid in accordance with, the Company’s
retirement, insurance and other compensation or benefit plans, programs and
arrangements as in effect immediately prior to the Date of Termination or, if
more favorable to the Participant, as in effect immediately prior to the
occurrence of the first event or circumstance constituting Good Reason.

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     7. Notice of Termination. After a Change in Control and during the Term,
any purported termination of the Participant’s employment (other than by reason
of death) shall be communicated by written Notice of Termination from one party
hereto to the other party hereto in accordance with Section 12 hereof. For
purposes of this Plan, a “Notice of Termination” shall mean a notice which shall
indicate the specific termination provision in this Plan relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Participant’s employment under the provision so
indicated.

     8. Definitions.

       (a) “Affiliate” and “Associate” shall have the respective meanings set
forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

       (b) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3
under the Exchange Act.

       (c) “Board” shall mean the Board of Directors of the Company.

       (d) “Cause” shall mean (i) the willful and continued failure by the
Participant to substantially perform the Participant’s duties with the Company
(other than any such failure resulting from the Participant’s incapacity due to
physical or mental illness or any such actual or anticipated failure after the
Notice Date) that has not been cured within 30 days after a written demand for
substantial performance is delivered to the Participant by the Company, which
demand specifically identifies the manner in which the Company believes that the
Participant has not substantially performed the Participant’s duties; (ii) the
willful engaging by the Participant in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or
otherwise; (iii) the commission of any act of fraud, embezzlement or dishonesty
by a Participant; or (iv) any unauthorized use or disclosure by a Participant of
confidential information or trade secrets of the Company or any subsidiary. For
purposes of clauses (i) and (ii) of this definition, no act, or failure to act,
on the part of the Participant shall be deemed “willful” unless done, or omitted
to be done, by the Participant not in good faith and without reasonable belief
that the Participant’s act, or failure to act, was in the best interest of the
Company.

       (e) A “Change in Control” shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:

       (i) Any Person (as defined below) is or becomes the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing a percentage of the
combined voting power of the Company’s then outstanding securities that is at
least equal to the greater of (x) 30% and (y) the percentage of such combined
voting power then owned by Theodore Waitt and his affiliates and associates; or

       (I) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company’s stockholders was approved
or recommended by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended; or

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       (II) There is consummated a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) at least
50% of the combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after such merger
or consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes the beneficial owner, directly or indirectly, of securities of the
Company representing a percentage of the combined voting power of the Company’s
then outstanding securities that is at least equal to the greater of (x) 30% and
(y) the percentage of such combined voting power then owned by Theodore Waitt
and his affiliates and associates; or

       (III) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company’s assets, other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at least [50]% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.

       (f) “Code” shall mean the Internal Revenue Code of 1986, as amended.

       (g) “Date of Termination” with respect to any purported termination of a
Participant’s employment after a Change in Control and during the Term, shall
mean (i) if the Participant’s employment is terminated for Disability, thirty
(30) days after the Notice date (provided that the Participant shall not have
returned to the full-time performance of the Participant’s duties during such
thirty (30) day period), and (ii) if the Participant’s employment is terminated
for any other reason, the date specified in the Notice of Termination (which, in
the case of a termination by the Company, shall not be less than thirty (30)
days (except in the case of a termination for Cause) and, in the case of a
termination by the Participant, shall not be less than fifteen (15) days nor
more than sixty (60) days following the Notice Date.

       (h) “Disability” shall be deemed the reason for the termination by the
Company of the Participant’s employment, if, as a result of the Participant’s
incapacity due to physical or mental illness, the Participant shall have been
absent from the full-time performance of the Participant’s duties with the
Company for a period of six (6) consecutive months, the Company shall have given
the Participant a Notice of Termination for Disability, and, within thirty (30)
days after such Notice of Termination is given, the Participant shall not have
returned to the full-time performance of the Participant’s duties.

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       (i) “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time.

       (j) “Excise Tax” shall mean any excise tax imposed under section 4999 of
the Code

       (k) “Good Reason” for termination by the Participant of the Participant’s
employment shall mean the occurrence (without the Participant’s express written
consent) after any Change in Control, of any one of the following acts by the
Company, or failures by the Company to act, unless, in the case of any act or
failure to act described in paragraph (i), (v), (vi) or (vii) below, such act or
failure to act is corrected prior to the Date of Termination specified in the
Notice of Termination given in respect thereof:

       (i) the assignment to the Participant of any duties inconsistent with the
Participant’s position with the Company or a substantial adverse alteration in
the nature or status of the Participant’s responsibilities from those in effect
immediately prior to the Change in Control [other than any such alteration
primarily attributable to the fact that the Company may no longer be a public
company];

       (ii) a reduction by the Company in the Participant’s annual base salary
as in effect on the date hereof or as the same may be increased from time to
time;

       (iii) the relocation of the Participant’s principal place of employment
to a location more than 50 miles from the Participant’s principal place of
employment immediately prior to the Change in Control or the Company’s requiring
the Participant to be based anywhere other than such principal place of
employment (or permitted relocation thereof) except for required travel on the
Company’s business to an extent substantially consistent with the Participant’s
business travel obligations at the time of the change in control.

       (iv) the failure by the Company to pay to the Participant any portion of
the Participant’s current compensation, or to pay to the Participant any portion
of an installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such compensation is
due;

       (v) the failure by the Company to continue in effect any compensation
plan in which the Participant participates immediately prior to the Change in
Control which is material to the Participant’s total compensation, or any
substitute plans adopted prior to the Change in Control, unless an equitable
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 the
Participant’s participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amount or timing
of payment of benefits provided and the level of the Participant’s participation
relative to other participants, as existed immediately prior to the Change in
Control;

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       (vi) the failure by the Company to continue to provide the Participant
with benefits substantially similar to those enjoyed by the Participant under
any of the Company’s pension, savings, life insurance, medical, health and
accident, or disability plans in which the Participant was participating
immediately prior to the Change in Control, the taking of any other action by
the Company which would directly or indirectly materially reduce any of such
benefits or deprive the Participant of any material fringe benefit enjoyed by
the Participant at the time of the Change in Control, or the failure by the
Company to provide the Participant with the number of paid vacation days to
which the Participant is entitled on the basis of 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; or

       (vii) any purported termination of the Participant’s employment which is
not effected pursuant to a Notice of Termination satisfying the requirements of
Section 7 hereof; for purposes of this Plan, no such purported termination shall
be effective.

The Participant’s right to terminate the Participant’s employment for Good
Reason shall not be affected by the Participant’s incapacity due to physical or
mental illness. The Participant’s continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.

       (l) “Notice Date” shall mean the date a Notice of Termination is
delivered by the Company to a Participant or by a Participant to the Company, as
applicable.

       (m) “Notice of Termination” shall have the meaning set forth in Section
7.

       (i) “Person” shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) Theodore Waitt or any of his Affiliates or
Associates, (ii) the Company or any of its subsidiaries, (iii) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its Affiliates, (iv) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (v) a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.

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       9. Limitations on Payments.

       (a) Notwithstanding any other provisions of this Plan, in the event that
any payment or benefit received or to be received by the Participant in
connection with a Change in Control or the termination of the Participant’s
employment (whether pursuant to the terms of this Plan or any other plan,
arrangement or agreement with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person) (all
such payments and benefits, including the Severance Payments, being hereinafter
called “Total Payments”) would be subject (in whole or part), to the Excise Tax,
then, after taking into account any reduction in the Total Payments provided by
reason of section 280G of the Code in such other plan, arrangement or agreement,
the cash Severance Payments shall first be reduced, and the noncash Severance
Payments shall thereafter be reduced, to the extent necessary so that no portion
of the Total Payments is subject to the Excise Tax but only if (A) the net
amount of such Total Payments, as so reduced (after subtracting the net amount
of federal, state and local income taxes on such reduced Total Payments) is
greater than or equal to (B) the net amount of such Total Payments without such
reduction (after subtracting the net amount of federal, state and local income
taxes on such Total Payments and the amount of Excise Tax to which the
Participant would be subject in respect of such unreduced Total Payments);
provided, however, that the Participant may elect to have the noncash Severance
Payments reduced (or eliminated) prior to any reduction of the cash Severance
Payments.

       (b) For purposes of determining whether and the extent to which the Total
Payments will be subject to the Excise Tax, (i) no portion of the Total Payments
the receipt or enjoyment of which the Participant shall have waived at such time
and in such manner as not to constitute a “payment” within the meaning of
section 280G(b) of the Code shall be taken into account, (ii) no portion of the
Total Payments shall be taken into account which, in the opinion of tax counsel
(“Tax Counsel”) reasonably acceptable to the Participant and selected by the
accounting firm (the “Auditor”) which was, immediately prior to the Change in
Control, the Company’s independent auditor, does not constitute a “parachute
payment” within the meaning of section 280G(b)(2) of the Code (including by
reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax,
no portion of such Total Payments shall be taken into account which, in the
opinion of Tax Counsel, constitutes reasonable compensation for services
actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in
excess of the Base Amount allocable to such reasonable compensation, and
(iii) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be determined by the Auditor in accordance
with the principles of sections 280G(d)(3) and (4) of the Code.

       (c) At the time that payments are made under this Plan, the Company shall
provide the Participant with a written statement setting forth the manner in
which such payments were calculated and the basis for such calculations
including, without limitation, any opinions or other advice the Company has
received from Tax Counsel, the Auditor or other advisors or consultants (and any
such opinions or advice which are in writing shall be attached to the
statement).

     10. No Mitigation; or Offset. The Company agrees that, if the Participant’s
employment with the Company terminates during the Term, the Participant is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to the Participant by the Company under the Plan. Further, the amount of
any payment or benefit provided for in this Plan shall not be reduced by any
compensation earned by the Participant as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Participant to the Company, or otherwise.

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     11. Non-Competition; Non-Solicitation. For a period of one year following
his or her applicable Date of Termination, (i) a Participant shall not, without
the written consent of the Board, directly or indirectly, knowingly engage or be
interested in (as owner, partner, stockholder, employee, director, officer,
agent, consultant or otherwise), with or without compensation, any Competitor of
the Company, (ii) the Participant shall not, without the written consent of the
Board, directly or indirectly solicit or recruit any person (other than persons
employed in a clerical or other non-professional position) who is then employed
by the Company or who was employed by the Company or any of its subsidiaries or
affiliates at any time during the six-month period preceding the Date of
Termination for the purpose of being employed by the Participant, by any entity
or person on whose behalf the Participant is acting as an agent, representative
or employee or by any Competitor of the Company and (iii) the Participant shall
not, without the written consent of the Board, directly or indirectly, solicit,
entice, persuade or induce any person or entity doing business with the Company
and its subsidiaries and affiliates, to terminate such relationship or to
refrain from extending or renewing the same. For purposes of this Section 11,
the term “Competitor of the Company” shall mean competitors as designated by the
Company on or before the Date of Termination. Nothing herein, however, shall
prohibit a Participant from acquiring or holding not more than five percent of
any class of publicly traded securities of any such business; provided that such
securities entitle the Participant to no more than five percent of the total
outstanding votes entitled to be cast by security holders of such business in
matters on which such security holders are entitled to vote. In the event of a
breach or any threatened breach of the Section 11, each Participant agrees that,
in addition to any other remedy available to the Company at law or in equity,
the Company shall be entitled4 to injunctive relief in a court of appropriate
jurisdiction to remedy any breach or prevent any threatened breach. Each
Participant further acknowledges that damages would be inadequate and
insufficient to compensate the Company for any breach of this Section 11.

     12. Notices. For the purpose of this Plan, notices and all other
communications provided for in the Plan 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, if to the
Participant, to the last address set forth in the Company’s records, and, if to
the Company, to the address 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 actual receipt:

  To the Company:
Gateway, Inc.
14303 Gateway Place
Poway, CA 92064
Attention: General Counsel

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     13. Governing Law. Except to the extent state law is preempted by the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the
provisions of this Plan shall be governed by and construed in accordance with
the laws of the State of California.

     14. Headings. Section headings are used herein for convenience of reference
only and shall not affect the meaning of any provision of this Plan.

     15. Rules of Construction. Whenever the context so requires, the use of the
masculine gender shall be deemed to include the feminine, and vice versa and the
use of the singular shall be deemed to include the plural and vice versa.

     16. Amendment. The Company may amend or terminate this Plan from time to
time or at any time, by action of the Board, provided that, from and after the
date of a Change in Control, the Plan shall not be terminated and no amendment
may be made which would result in a reduction of the benefits otherwise payable
to any Participant hereunder, unless such Participant individually, or a
majority of the Participants, collectively, consent in writing to such
termination or amendment.

     17. Withholding. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law and any
additional withholding to which a Participant has agreed.

     18. Survival. The obligations of the Company and the Participant under this
Plan which by their nature may require either partial or total performance after
the expiration of the Term shall survive such expiration.

     19. Entire Plan. The provisions of this Plan supersede any other agreements
or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof which have been made by the Company; provided, that this
Plan shall supersede any agreement setting forth the terms and conditions of a
Participant’s rights to compensation upon termination of employment with the
Company only in the event that the Participant’s employment with the Company is
terminated on or following a Change in Control, other than (i) by the Company
for Cause, (ii) by reason of death or Disability, or (iii) by the Participant
without Good Reason.

     20. Validity. The invalidity or unenforceability of any provision of this
Plan shall not affect the validity or enforceability of any other provision of
this Plan, which shall remain in full force and effect.

     21. Claims Procedure

       (a) The Board shall establish a committee (the “Committee”) to determine
claims for benefits under the Plan. Claims for benefits under the Plan shall be
filed with the Committee, which shall provide written notice to a Participant of
any denial of his or her claim within ten (10) days following the Date of
Termination. Such notice must be written in a manner calculated to be understood
by the claimant, state specific reasons for denying the claim, citing the
provisions of the Plan on which the denial is based, explain the procedure for
reviewing the Committee’s decision, and if the claim is denied because the
Committee lacks adequate information to reach a decision, state what information
is needed to make a decision possible and why it is needed.

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       (b) If a claim is denied, the claimant may appeal to the Company. His
appeal must be submitted in writing to the Company no later than ninety (90)
days after the earlier of the date on which he receives notice of denial or the
expiration of the period within which the Committee is required to render a
decision. The claimant or his representative may submit any documents or written
arguments that he desires in support of his claim, and the Company may, but is
not required to, hold a hearing on the claim. The Company will decide the
claimant’s appeal within twenty (20) days after it is filed. If the Company does
not act within the time specified by this subparagraph (b), the appeal is
automatically approved. If the Company determines that an appeal should be
denied, it must give the claimant written notice of the denial in the same
manner as required on initial denial of the claim by the Committee.

       (c) No Participant or Beneficiary may bring an action, suit or
proceeding, at law or in equity, with regard to the determination of benefits
due to him under the Plan unless the Participant or Beneficiary first exhausts
the claims procedures set forth in subparagraphs (a) and (b), above.