Document:

Amendment No. 1
                      To OEM-IN Software License Agreement

This Amendment is the First Amendment ("Amendment No. 1") to the OEM-IN Software
License Agreement (with Reproduction Rights) dated December 3, 2002 ("License
Agreement"), by and between Cisco Systems, Inc., a California corporation with
offices at 170 W. Tasman Dr. San Jose, California 95134 ("Cisco") and Visual
Networks Operations, Inc., a Delaware corporation with offices at 2092 Gaither
Road, Rockville, Maryland 20850("Licensor.") and is made retroactive to December
3, 2002 ("Effective Date"). All defined terms used in this Amendment No. 1 have
the same meaning as in the License Agreement. The terms and conditions of this
Amendment No. 1 supersede and replace any terms and conditions of the License
Agreement, which are inconsistent with these terms and conditions. All other
terms and conditions of the License Agreement remain in full force and effect.

Whereas, the Parties desire to amend Exhibit A, Software and Royalties, and
Exhibit G, Licensor Support (Software), of the License Agreement; and

Now therefore, the Parties agree as follows:

1. Exhibit A and Exhibit G, attached hereto, shall replace Exhibit A and Exhibit
G of the License Agreement, in their respective entirety, retroactive to
December 3, 2002.

IN WITNESS WHEREOF, the parties have executed this Amendment No. 1, as of the
date first above written.

Agreed:                                      Agreed:

CISCO SYSTEMS, INC.                          VISUAL NETWORKS OPERATIONS, INC.

By:    /s/ Anson Chen                        By:    /s/ Steven G. Hindman
       --------------------------                   ----------------------------

Name:  Anson Chen                            Name:  Steven G. Hindman
       --------------------------                   ----------------------------

Title:  VP/GM, INSMBU                        Title: Executive Vice President
       --------------------------                   ----------------------------

Date:   December 30, 2002                    Date:  December 19, 2002
       --------------------------                   ----------------------------

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                                                                               1
<PAGE>

Exhibit A

SOFTWARE, ROYALTIES, AND SUPPORT COMPENSATION

      1. Payment. For each Software copy reproduced and distributed for revenue
by or under the sublicense rights of Cisco, Cisco shall pay a per copy royalty
of [***] of Net Invoice Price received by Cisco from the distribution of the
Software. In the event Software is sold on a stand-alone basis, "Net Invoice
Price" shall mean the Cisco's actual revenue received from the distribution of
the Software hereunder, less deductions for refunds, returns, taxes, export fees
and duties.

In the event Software is bundled with other Cisco products, "Net Invoice Price"
shall mean the amount equal to Licensor's Proportionate Share (as determined
below) of Cisco's actual revenue received from the distribution of the Software
hereunder, less deductions for refunds, returns, taxes, export fees and duties.
"Licensor's Proportionate Share" shall be determined by dividing the reference
price of the Software by the sum of the list prices of the bundle components.

[***]

      2. Payment Terms. All undisputed royalties will be paid quarterly,
pursuant to Cisco's fiscal year. Cisco will provide Licensor within forty-five
(45) days after the end of a Cisco fiscal quarter, (a) a report, substantially
in the form as follows, showing the total invoices sent to Cisco's customers in
the previous quarter and the Net Revenue received therefrom; and (b) a payment
equal to royalties owed to Licensor related thereto (or, if the credits owed to
Cisco hereunder exceed the amount of royalties owed in a particular quarter, an
invoice, payable by Visual within thirty (30) days of receipt, for the amount of
the excess). Cisco shall be entitled to credit for returns of the Software
within [***] days from the date Cisco ships the Software. Any such credit will
be offset against or deducted from royalties or other fees due to Licensor
hereunder. In the event a customer makes a return for which Cisco does not
receive a credit, Cisco shall be entitled to a credit against a future purchase
by the same customer of the returned Software (or a subsequent version of such
Software). To the extent that any royalties are in dispute, the parties agree to
reasonably cooperate to resolve such dispute as quickly as reasonably possible.

Licensor retains complete discretion to change its software product price list
or to discount the list price of its products. Notwithstanding any changes in
Licensor's software product price list, the prices set forth in the Reference
Price List shall not increase during the term of this Agreement. Licensor shall
provide Cisco with written notice of a modification to its software product
price list ninety (90) days before the effective date of any such modification
unless the parties agree in writing to a shorter notice period. If Licensor's
list price on its software products is reduced, Licensor will extend the price
reduction to Cisco as of the date of written notice of such price reduction.

Cisco Systems, Inc. Confidential Information For Internal Use Only.

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<PAGE>

CISCO SYSTEMS
FY (YEAR)
(QUARTER)

--------------------------------------------------------------------------------
Software         Units Shipped                Net Invoice Price         Royalty
--------------------------------------------------------------------------------
xxxxx
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
yyyyy
--------------------------------------------------------------------------------
TOTALS:
--------------------------------------------------------------------------------

                                                                 ---------------
                                             TOTAL ACCRUAL:      $0.0
                                                                 ---------------

      3. Audit Rights. Cisco shall maintain, for a period of [***] years after
the end of the year to which they pertain, complete records of the Software
manufactured and/or distributed by Cisco in order to calculate and confirm
Cisco's royalty obligations hereunder. Upon reasonable prior notice, Licensor
will have the right, exercisable not more than once every [***] to appoint an
independent accounting firm or other agent reasonably acceptable to Cisco, at
Licensor's expense, to examine such financial books, records and accounts during
Cisco's normal business hours to verify the royalties due from Cisco to Licensor
herein, subject to execution of Cisco's standard confidentiality agreement by
the accounting firm or agent; provided, however, that execution of such
agreement will not preclude such firm from reporting its results to Licensor. In
the event an audit discloses an underpayment or overpayment of royalties due
hereunder, the appropriate party will promptly remit the amounts due to the
other party. If any such audit discloses a shortfall in payment to Licensor of
more than five percent (5%) for any quarter, Cisco agrees to pay or reimburse
Licensor for the expenses of such audit.

      4. [***]

      5. Support Compensation. Licensor shall be compensated for and shall
perform Level 1 through Level 3 support, as follows:

(a) Initial Support Agreements: Cisco shall pay Licensor [***] of the net
revenue received by Cisco of the portion of each initial Single-Year SAS Support
Agreement, initial Multi-Year SAS Support Agreement and Master SAS Support
Agreement sold covering support for the Software attributable to support of the
Software.[***]

(b) Support Agreement Renewals: Cisco shall be responsible for generating all
renewal sales and shall pay Licensor [***] of net revenue for each Support
Agreement Renewal, provided that Licensor submits a report to Cisco within
forty-five (45) days after each Cisco fiscal quarter end, detailing a list of
Customers and Cisco support contracts expiring in the following quarter. Such
report shall list the Customer name,

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                                                                               3
<PAGE>

Support Agreement number, term of support, effective date of support, the
Software identification numbers being renewed, and the total list price. Cisco
shall thereafter submit a quarterly renewal report to Licensor in accordance
with subparagraph (e) below. Licensor's obligation to submit support renewal
reports to Cisco is contingent upon Cisco providing report information
identified in subparagraph (f) below to Licensor for Licensor to complete
support renewal reports for otherwise new support contracts. Licensor's
obligations to submit renewal reports shall cease when Cisco has implemented an
automated ability to track Support Agreement renewals and has provided Licensor
thirty (30) days' advance written notice of such automation.

(c) [***]

(d) Shared Support: Although Cisco will endeavor to discourage Support Agreement
sales and Renewals to Customers by a Cisco service integrator through Cisco's
SIS'98 or other shared support programs ("Shared Support") when such sale or
renewals are identified and accepted, the same percentage compensation noted in
subparagraph (b) above shall be paid to Licensor.

(e) [***]

(f) Quarterly Report: For Initial Support Agreements and Renewals, Cisco shall
submit (a) a report to Licensor within forty-five (45) days after each Cisco
fiscal quarter end, detailing each Customer invoiced for support during such
quarter, the Customer name, Support Agreement number, term of support, effective
date of support Software identification numbers, and the total list price; and
(b) a payment equal to support fees owed to Licensor by Cisco in accordance with
this Section 5. Licensor shall identify and advise Cisco of any issues
pertaining to the quarterly reports within fifteen (15) business days after
receipt of Cisco's report. If no issues are raised with such timeframe, the
report shall be deemed accepted by Licensor. Cisco and Licensor will work in
good faith to resolve any issues within a further thirty-day period.

(g) Non-Payment: In the event that Cisco is not in receipt of the invoiced
support fees due from a Customer, Cisco may terminate the support of that
individual Customer, less a pro-rata amount for the Licensor's agreed support
compensation commencing on the date support started through the date that Cisco
notifies Licensor that it has terminated support

(h) Credits: Section 2 of this Exhibit A to the Agreement regarding credit for
returns or offsets against License fees due to Licensor also will apply with
regard to maintenance and support fees. In addition, If a Cisco customer cancels
or terminates its annual maintenance agreement with Cisco for which it has paid
maintenance fees in advance and Cisco provides a pro-rata credit or refund to
the customer of the unused portion of the maintenance fees paid, Licensor will
provide Cisco with a credit or refund in the amount of the unused portion of the
maintenance fees paid to Licensor as of the date Licensor is notified of such
cancellation or termination. On a quarterly basis, Cisco will notify Licensor of
such refund or credit.

Cisco Systems, Inc. Confidential Information For Internal Use Only.

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<PAGE>

(i) Payment Schedule: Cisco shall pay Licensor the compensation reflected in
subsection (a), (b), and (e) above, as applicable, for the term of such Support
Agreement or Support Agreement Renewal together with any additional percentage
based upon customer satisfaction bonus goals outlined in Exhibit G and any
additional fees for Shared Support, within forty-five (45) days after Cisco's
fiscal quarter end. Any supplement payment or credit shall be paid to Licensor
during the immediate subsequent quarter; whereby Cisco shall make one payment
during its fiscal quarter to Licensor for all then-current applicable
compensation. Any credit or refund due Cisco shall be issued or paid by Licensor
within forty-five (45) days following the Cisco fiscal quarter in which Cisco
provides notice of such credit or refund to Licensor.

(j) Change in Compensation: At any time after the first twelve (12) months from
the effective date of Exhibit G, upon thirty (30) days' written notice to
Licensor, Cisco may, at its election, request additional Software training above
from Licensor so that Cisco may assume additional support obligations after such
training. Such additional training shall be offered to Cisco at a [***] discount
off Licensor's standard pricing for support training. If Cisco assumes
additional support responsibilities, compensation to Licensor shall be
negotiated in good faith at a lower compensation percentage.

k) [***]

Cisco Systems, Inc. Confidential Information For Internal Use Only.

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                                                                               5
<PAGE>

EXHIBIT G

EXHIBIT G to License Agreement
LICENSOR SUPPORT
(Software)

This Exhibit G pertains to support for Licensor's Software.

Definitions: The following terms shall have the meaning assigned to them.
Capitalized terms not defined herein shall have the meaning assigned to them in
the Agreement.

"Agreement" means that OEM Software License Agreement by and between Licensor
and Cisco, effective December 3, 2002.

"Customer" means Cisco's end-user of the Software who is requesting support.

"INSMBU" means Cisco's Intelligent Network Services Management Business Unit.

"Error" means a bug in the Software.

"Maintenance Release" means an incremental release of Software that provides
maintenance fixes and may provide additional Software features. Maintenance
releases are designated by Cisco as a change in the digit(s) to the right of the
tenths digit of the Software version number [x.x.(x)].

"Major Release" means a release of Software that provides additional Software
features and/or functions. Major Releases are designated by Cisco as a change in
the ones digit of the Software version number [(x).x.x].

"Minor Release" means an incremental release of Software that provides
maintenance fixes and additional Software features. Minor releases are
designated by Cisco as a change in the tenths digit(s) of the Software version
number [x.(x).x].

"Multi-Year Support Agreement" means a Support Agreement having a term greater
than one (1) year.

"SAS" means Cisco's current standard software application service offering which
includes Software bug fixes and patches and maintenance Updates (Minor
Releases).

"Single-Year Support Agreement" means a Customer Support Agreement having a term
of at least one (1) year, but less than two (2) years.

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                                                                               6
<PAGE>

"Support Agreement" means a support contract between Cisco and a Customer for
the provision by Cisco of support and maintenance for the Software and shall
include contracts for the initial period of support, renewal of such support,
and reinstatement of expired support.

"Support Agreement Renewals" means Software maintenance, which is purchased by a
Customer at least twelve (12) months after the initial Support Agreement.

"Updates" means Maintenance Releases, Version Releases, and/or Major Releases
which contain the same configuration as originally acquired.

"Version Release" means an incremental release of Cisco Software that provides
maintenance fixes and additional Software features. Version releases are
designated by Cisco as a change in the tenths digit(s) of the Software version
number [x.(x).x].

1.    SUPPORT LEVEL DEFINITIONS

1.1 Level 0 Support. Level 0 Support means that Customer shall have access to
Cisco's Global Call Center and shall have access to Cisco's Technical Assistance
Center for verifying Software support entitlement. Level 0 Support shall be
provided directly to Customer customers by Cisco.

1.2 Level 1 Support. Level 1 Support includes the ability to provide general
Software information and configuration support; collect relevant technical
problem identification information; perform base problem determination; provide
basic support on the standard protocols and features. Level 1 Support shall be
provided directly to Customers by Licensor.

1.3 Level 2 Support. Level 2 Support includes Level 1 Support plus the ability
to support problem isolation and Software specification defect determination;
provide lab simulation and interoperability testing; define an action plan;
analyze traces; provide advanced support on all protocols and features; filter
non-technical problems from technical problems, reproduce problems in a lab, and
diagnose problems remotely. Level 2 Support shall be provided directly to
Customers by Licensor.

1.4 Level 3 Support. Level 3 Support includes fixing or generating workarounds
for Software bugs and troubleshooting bugs that were not resolved during Second
Level Support. Level 3 Support shall be provided directly to Customers by
Licensor.

Cisco Systems, Inc. Confidential Information For Internal Use Only.

*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

                                                                               7
<PAGE>

2.    PROBLEM PRIORITIES DEFINITIONS

Problem priorities shall be classified as follows:

2.1 Priority 1: Cisco's customer is experiencing problems with the Software,
which is causing critical impact to business operations if service is not
restored quickly. No work-around is available. If a work-around is available,
the priority may be reduced to either a Priority 2, Priority 3 or Priority 4, as
identified below. Cisco, Cisco's customer, and Licensor will commit full-time
resources around the clock to resolve the situation.

2.2 Priority 2: Cisco's customer is experiencing problems with the Software,
which is impacting significant aspects of business operations. No work-around is
available. If a work-around is available, the priority may be reduced to either
a Priority 3 or Priority 4, as identified below. Cisco, Cisco's customer, and
Licensor will commit full-time resources during Business Hours to resolve the
situation.

2.3 Priority 3: Cisco's customer's network performance is degraded. Network
functionality is noticeably impaired, but most business operations continue.

2.4 Priority 4: Cisco or Cisco's customer requires information or assistance on
Software capabilities, installation, or configuration.

2.5 "Business Hours" means 6:00 a.m. to 6:00 p.m., Pacific Standard Time, Monday
through Friday, excluding Cisco-observed holidays.

3.    ESCALATION GUIDELINES

3.1 The following table sets forth the escalation guidelines by which Licensor
shall address customer support problems reported by Cisco and involve its
management personnel to address such problems. Priority 1 problem escalation
times are measured in calendar hours, twenty-four (24) hours per day, seven (7)
days per week. Priority 2, Priority 3, and Priority 4 escalation times
correspond with Business Hours. The Licensor manager to whom the problem is
escalated will take ownership of the problem and ensure that updates are
provided to the appropriate Cisco personnel. Cisco-initiated escalation's will
begin at the Technical Support Group Leader level and proceed upward. This will
allow those most closely associated with the support resources to correct any
service problems quickly.

3.2 It is Cisco's policy to work with its customer to establish the Priority for
a problem and to accept the customer's determination of the Priority. Licensor
shall accept the Priority designation agreed to by Cisco and Customers and

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<PAGE>

communicated to Licensor by Cisco. Licensor will work with Cisco according to
the processes and procedures contained in this Exhibit G.

-------------------------------------------------------------------------------
Elapsed       Priority 1         Priority 2       Priority 3       Priority 4
Time

-------------------------------------------------------------------------------
              Technical
1-Hour        Support
              Group Leader
-------------------------------------------------------------------------------
              Technical          Technical
4-Hour        Support            Support
              Director           Group Leader
-------------------------------------------------------------------------------
              Vice President     Technical
24-Hour       Engineering        Support
                                 Director
-------------------------------------------------------------------------------
48-Hour       President (CEO)    Vice
                                 President
                                 Engineering
-------------------------------------------------------------------------------
72-Hour                                           Technical
                                                  Support
                                                  Group Leader
-------------------------------------------------------------------------------
96-Hour                          President        Technical        Technical
                                 (CEO)            Support          Support
                                                  Director         Group
                                                                   Leader
-------------------------------------------------------------------------------

      1.  Name :  Noel Warnert
          Title:  Technical Support Lead
          Phone:  (301) 296-2414
          Pager or Cell: (240) 401-4227
          Email:  nwarnert@visualnetworks.com

      2.  Name :  Linda Vargas
          Title:  Manager of Customer Service
          Phone:  (301) 296-2738
          Pager or Cell: (301) 529-9037
          Email:  lvargas@visualnetworks.com

      3.  Name:   Wayne Fuller
          Title:  EVP, Product Operations
          Phone:  (301) 296-2673
          Pager or Cell:  (703) 629-3427
          Email:  wfuller@visualnetworks.com

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                                                                               9
<PAGE>

        4.   Name:   Peter Minihane
             Title:  President & CEO
             Phone:  (301) 296-2365
             Pager or Cell: (240) 401-4863
             Email:  pminihane.visualnetworks.com

4.    SUPPORT

4.1 Software Support. Licensor will support any release of Software for the
longer of: (a) the time until the general availability of the release that is
two releases after such release; and (b) twenty-four (24) months, meaning that
for that time period, Errors in that release will be corrected either by means
of a patch or correction to that release. For a period of twelve (12) months
after the initial Software Support term for a release referenced above, Software
Support shall be offered to Cisco, if requested by Cisco, at Licensor's
reasonable and customary time and materials rates. Subject to the prior written
approval of the Cisco Serviceability Design Engineer for the Software, which
approval shall not be unreasonably withheld, a subsequent release may be
substituted to correct an Error in any Software release. Software releases shall
be downward compatible, so that new releases are compatible with pre-existing
configurations and data formats. Whenever commercially reasonable, Licensor
shall have the capability to electronically transfer Software updates, upgrades,
and patches/fixes to Cisco.

4.2 Customer Support. Cisco will provide Level 0 Support in the same manner that
it provides such support for its other similar Software. Licensor will provide
Level 1 Support, Level 2 Support, and Level 3 Support to a Customer by telephone
and/or e-mail seven (7) days a week, twenty-four (24) hours per day, with a
maximum one (1) hour telephone response time for all Priority 1 and Priority 2
problems. In the event that diagnostics and troubleshooting are required at a
Customer site, as reasonably determined by Cisco, Cisco and Licensor will
provide, at their own expense, the necessary resources for problem resolution in
accordance with each party's respective obligations hereunder. Each party shall
be entitled to recover its actual and reasonable expenses from the other party
or from the Customer if it is later determined that the cause of the problem is
so attributable. Cisco shall provide Licensor feedback on any Software bugs and
potential fixes. Licensor shall use commercially reasonable efforts to resolve
Software bugs.

4.3 Initial Call Flow Process

(a) Customer contacts Cisco's Global Call Center ("GCC") via Cisco's "800"
number or the Customer opens their own case on-line via Cisco Case Open Tool.
The GCC shall perform Level 0 Support by verifying customer support entitlement
and opening a case in Cisco's CARE database ("Clarify"). The case is then

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dispatched to the INSMBU-VISUAL NETWORKS CARE queue, which shall generate an
internal case at nfm-Licensor-support@cisco.com, which shall be forwarded to
Licensor's support email alias as provided to Cisco by Licensor Technical
Support Group ("TSG"). INSMBU shall send a page for all P1 and P2 cases to the
appropriate Licensor technical support pager and make reasonable efforts to send
an email message and a message to support@visualnetworks.com and a message via
phone to (800) 708-4784. In that respect, Licensor TSG shall provide its
technical support schedule to Cisco and update such schedule if there are any
changes via email.?? ??Licensor TSG shall report the time that it contacted the
Customer, which is based on the support priority reflected in Section 4.4 below,
and the associated Licensor case number to INSMBU within twenty-four hours after
initial case response. Licensor TSG shall provide INSMBU with case updates on a
weekly basis or more often if reasonably requested by Cisco. In turn, INSMBU
will update cases in CARE on a weekly basis. While Licensor TSG is working on
the case, INSMBU will update the case in CARE stating "This case is currently
being supported by our third-party Licensor. The LICENSOR case reference is:
XXXX. If you have any questions, please call 1-800-LICENSOR_TSG." Licensor TSG
will notify INSMBU when the case is ready to be closed. INSMBU will close the
case when resolved, with case details. A customer satisfaction survey, as
reflected in Section 9 hereinbelow, will be sent via CARE to the Customer after
the case is closed.

(b) A troubleshooting tips document for the Software, prepared and maintained by
Licensor TSG, will be made available to Cisco for Customer's on-line use in
troubleshooting the problem, without Cisco's or Licensor's assistance. If the
problem is not resolved, the case will be escalated to Licensor's TSG to perform
Level 1, Level 2, and Level 3 Support, as appropriate. Licensor TSG may consult
with INSMBU if necessary, but will work directly with the Customer to resolve a
Software problem. INSMBU may occasionally call Licensor's TSG directly for case
status.

(c) When Cisco's Customer Support database is modified by Cisco to allow
appropriate supplier access, Licensor and Cisco will work in good faith to
develop a call flow transition plan so that all case information is updated and
transferred to the Cisco database.

4.4 Support Prioritization and Escalation Guidelines. To ensure that all
Software problems and technical inquiries are reported in a standard format,
Licensor will use and comply with the problem priority definitions and
escalation guidelines herein pursuant to Section 3.2. Based on the priority of a
Software problem, Licensor will provide to Cisco fixes or work-arounds in the
following time frames:

      o     Priority 1: Fix or work-around within eight (8) hours of problem
            report to Licensor;

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      o     Priority 2: Fix or work-around within two (2) business days of
            problem report to Licensor;

      o     Priority 3: Fix or work-around within two (2) weeks of problem
            report to Licensor;

      o     Priority 4: Fix or work-around within one (1) month of problem
            report to Licensor.

For Priority 3 or Priority 4 problems, if Licensor is unable to meet the time
frames listed above, the Licensor will provide to Cisco within that time frame,
at a minimum, a plan for addressing the problem.

4.5 Support Documentation. Promptly upon Cisco's written request, Licensor will
supply Cisco with all technical documentation and resources that Cisco
reasonably determines to be useful or necessary to perform Customer support or
to analyze the technical benefits and risks of introducing new releases of
Software into the Customer base. Such support documentation will include,
without limitation: (i) Software specifications, (ii) release notes, (iii)
debugging/support tools, and (iv) where available, lists of all error messages
with explanations as needed and recommended actions. Licensor will regularly
supply Cisco with all release notes or other documentation defining the relevant
Software information, symptoms, solutions or work-arounds for Software problems.
Licensor will keep accurate records of Software bugs and make such reports
available to Cisco at least quarterly. Licensor will maintain an electronic
means (e.g., an FTP server) through which Cisco can obtain up-to-date
information on Software bugs, fixes, and code updates. During the term of this
Agreement, Licensor will provide such support to Cisco at no charge.

5.    Training.

5.1 Upon Cisco's request, Licensor shall offer, at no cost to Cisco, prior to
Licensor's first commercial shipment of any major Software release and at least
annually thereafter, general Software training in the service and maintenance of
Licensor's Software as mutually agreed by the parties, so that Cisco can perform
its then-current support obligations hereunder. Cisco shall be responsible for
all travel expenses, which Cisco may incur in connection with such training.
Upon Licensor's request and as mutually agreed by the parties Cisco shall offer,
at no cost to Licensor technical training on its software which is associated
with Licensor's Software so that Licensor can perform its then-current support
obligations hereunder. Licensor shall be responsible for all travel expenses,
which Licensor may incur in connection with such training. The parties shall use
commercially reasonable efforts to schedule such training concurrently to
minimize travel costs.

5.2 Upon Cisco's request, more detailed Software training shall be offered to
Cisco at such time and place as reasonably and mutually agreed, which shall
include, if necessary, compatibility issues and engineering debug capabilities.

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<PAGE>

All of Licensor's reasonable expenses in connection with such additional
training shall be pre-approved and reimbursed by Cisco, consistent with Cisco's
standard policies. Such additional training shall be offered to Cisco at a [***]
discount off Licensor's standard pricing for support training. Cisco shall be
responsible for all travel expenses, which Cisco may incur in connection with
such training.

6. Global Business Reviews. Unless otherwise mutually agreed, business reviews
will be held remotely on a quarterly basis, after the close of Cisco's fiscal
quarter, to assess Licensor's performance against the support objectives.
Reviews will include the resetting of support standards for subsequent periods,
establishing and measuring the performance record of Licensor, reviewing levels
of call escalations and resolutions, providing general business updates,
identifying any process improvement opportunities, reviewing forecasts of
anticipated demand for the next one-hundred and eighty (180) day period,
reviewing any quality assurance issues, reviewing any customer satisfaction
issues, and addressing any other issues raised with reasonable advance notice by
either party. Each party will provide any information, which is reasonably
requested by the other party and will work with the other party to resolve any
issues, concerns or problems identified within a reasonable amount of time. The
location and/or meeting method will be mutually agreed upon by the parties and
will be attended by the respective parties' Account Representative and by such
other personnel as are appropriate.

7.    Support Level Requirements:

7.1 Licensor shall:

(a) Provide all the labor, expertise, and skills necessary for the performance
of the support services in a manner reasonably satisfactory to Cisco and Cisco's
customers. Licensor shall provide a Technical Tips Sheet for Customer's access
on-line, describing the top ten support problems and solutions and use Cisco's
phone support script as provided to Licensor by Cisco . The Technical Tips Sheet
shall be available to Cisco electronically and shall be updated by Licensor TSG
from time to time.

(b) [***]

(c) Identify bugs in other Cisco Software, which is associated with the Software
as well as the Software and communicate those bugs to Cisco's DE on a weekly
basis.

(d) Employ competent technical support and maintenance organizations, and use
professional standards in the industry while performing services to Cisco and
Customers hereunder.

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<PAGE>

(e) Provide Software patches and bug fixes to Cisco electronically so that
Customers can access such updates and upgrades from Cisco's software upgrade
tool.

(f) Upon Cisco's request, keep Cisco advised on the progress of the Customer
support cases and the status of the support services.

(g) Keep accurate records of support services performed, evidence of which
Licensor shall provide to Cisco upon resolution of each customer case.

(h) Upon reasonable advance notice, permit any designated representative of
Cisco to periodically review during normal business hours Licensor's support
center and observe the personnel who are performing support services for Cisco.

(i) Establish a problem reporting and tracking mechanism of support services
performed by Licensor, which is reasonably acceptable to Cisco.

(j) Keep Cisco informed as to any problems, which involve the Software and/or
Cisco technologies or impact Licensor's ability to deliver service or solutions
to Cisco's customer, to communicate such problems promptly to Cisco, and to
assist Cisco in the resolution of such problems.

(k) Appoint a relationship manager whose primary responsibility will be to work
with the designated Cisco Serviceability Design Engineer or Cisco DE to manage
the implementation of the support model, act as the focal point for day-to-day
support issues and problem escalations, and participate in Cisco support-related
activities.

Licensor shall not:

(a) Subcontract its duties and responsibilities hereunder to any other person or
entity, in whole or in part, without prior written notice to and approval by
Cisco, which consent shall not be unreasonably withheld.

(b) Disclose any Cisco customer support information to third parties without
Cisco's prior written consent.

(c) Assign this support exhibit or any rights hereunder, without Cisco's prior
written consent.

8.    Customer Satisfaction

8.1 Customer Satisfaction Survey: Cisco will survey its Customers under Software
Support for the purpose of ensuring customer satisfaction with the Software and
Licensor's support. For such purposes, Licensor shall provide

Cisco Systems, Inc. Confidential Information For Internal Use Only.

*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

                                                                              14
<PAGE>

Cisco with any necessary customer contact information to conduct such a survey.
Cisco shall accumulate a monthly average of the customer satisfaction scores
from these surveys (sample attached).

8.2 Customer Satisfaction Scores: Customer satisfaction survey scores are
defined as follows:

"Delighted Score" means that all survey questions had a response of 5.

"Dissatisfied Score" means that one or more survey questions had a response of 1
or 2.

"Satisfied Score" encompasses everything else, i.e. no 1's and 2's, but not all
5's.

8.3 Customer Satisfaction Goals and Bonus: Licensor's customer satisfaction
goal, at a minimum, shall be to achieve a Satisfied Score. (c) During each Cisco
fiscal quarter from the effective date of this Exhibit G and continuing through
subsequent quarters thereafter, in the event that the customer satisfaction
surveys average at least [***] during any Cisco fiscal quarter, Licensor shall
receive a customer satisfaction bonus of [***] of the list price from the sale
of an Initial Support Agreement or Support Agreement Renewal.

8.4 Dissatisfied Score: In the event any customer satisfaction surveys contains
a Dissatisfied Score in any Cisco fiscal quarter, Licensor shall promptly
contact the Customer who submitted the Dissatisfied Score to gather input about
such score and provide Cisco with a case report which contains the details for
such score and Licensor's corrective action. At any time, if [***] or more of
the customer satisfaction surveys contain a Dissatisfied Score in any Cisco
fiscal quarter, Cisco shall notify Licensor and Licensor shall comply with
subparagraphs (a) and (b) below:

(a) Licensor will have five (5) business days from the date that Cisco gives
Licensor a written notice of non-compliance to develop and present to Cisco a
corrective action plan that will enable Licensor to meet the applicable customer
satisfaction goals.

(b) Licensor will have thirty (30) days from the date that Cisco gives Licensor
a written notice of non-compliance to initiate the corrective action plan to
meet the applicable customer satisfaction goals.

8.5 Termination for Dissatisfaction Score: In the event that [***]or more of the
customer satisfaction surveys contain a Dissatisfaction Score for two (2)
consecutive Cisco fiscal quarters, at Cisco's option Cisco may (i) immediately

Cisco Systems, Inc. Confidential Information For Internal Use Only.

*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

                                                                              15
<PAGE>

terminate Licensor's support services, and (ii) invoke transition training, as
reflected in Section 12 below. Cisco shall be invoiced for reasonable fees for
services actually rendered by Licensor prior to termination.

9.    CISCO AND LICENSOR CONTACTS:

Cisco Contact Information

      1. For questions concerning this Exhibit:

         Name:   Scott Mousley, Serviceability Design Engineer
                 (Office) phone number:  408 525-5945
                 (Pager) phone number: 800-365-4578
                 Email: smousley@cisco.com

      2. For questions concerning Software Support:

         Name:   Kui Zhang, Mgr. Software Development
                 (Office) phone number:408 526-7603
                 Email:  kzhang@cisco.com

      3. For questions concerning Entitlement:

         Name:   Rebecca Sanders,
                 Mgr.  Joint Venture Engineering Group - INSMBU
                 (Office) phone number: 408 853 9754
                 Cell: 512 917-8720
                 Pager: (800) 365-4578
                 Email: resande@cisco.com

         Name:   Andrew Zielinski, Product  Mgr. - INSMBU
                 (Office) phone number:  408 527 4831
                 Pager:  408 322-9842
                 Email:  azielins@cisco.com

      4. For legal notices under this Exhibit:

                 Cisco Systems, Inc.
                 170 West Tasman Drive
                 San Jose, CA  95134
                 Attn:  VP Legal and Government Affairs
                 Fax:  (408) 526-7019
                 Phone:  (408) 526-4000

Cisco Systems, Inc. Confidential Information For Internal Use Only.

*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

                                                                              16
<PAGE>

Licensor Contact Information

      1. For questions concerning Software Support:

         Name :  Noel Warnert
         Title:  Technical Support Lead
         Phone:  (301) 296-2414
         Pager or Cell: (240) 401-4227
         Email:  nwarnert@visualnetworks.com

         Name :  Linda Vargas
         Title:  Manager of Customer Service
         Phone:  (301) 296-2738
         Pager or Cell: (301) 529-9037
         Email:  lvargas@visualnetworks.com

      2. For questions concerning this Exhibit:

         Name:   Wayne Fuller
         Title:  VP, Engineering
         Phone:  (301) 296-2673
         Pager or Cell:  (703) 629-3427
         Email:  wfuller@visualnetworks.com

      3. For legal notices under this Exhibit:

         Visual Networks Operations, Inc.
         Attn: Corporate Counsel
         2092 Gaither Road
         Rockville, MD 20850
         301.296.2731 - fax
         301.296.2742 - voice

10. Support Compensation: In exchange for Licensor's support as reflected in
this Exhibit, Cisco shall compensate Licensor pursuant to the terms of Section 5
of Exhibit A of the License Agreement.

11.   SUPPORT TERM AND TERMINATION.

11.1 This support exhibit shall be co-terminous with the Agreement. In that
respect, in addition to this Section, Sections 13.1, 13.3, and 13. 4 of the
Agreement shall apply to this support exhibit.

Cisco Systems, Inc. Confidential Information For Internal Use Only.

*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

                                                                              17
<PAGE>

11.2 Cisco may terminate this support exhibit at any time for its convenience,
for no reason or for any reason, with sixty (60) days' written notice to
Licensor. In the event of such termination, Cisco shall be entitled to a
prorated portion of any unused fees paid for support.

11.3 Transition Training: Upon termination or expiration of Licensor's support
services herein, if requested by Cisco, Licensor shall provide technical
training to Cisco at such time and place as is reasonably requested by Cisco and
shall include, but not be limited to, conventional engineering training and
instruction classes in the service and maintenance of the Software as well as
instruction on resolving compatibility issues and engineering debug
capabilities. Such transition training shall continue until Cisco can
efficiently perform Level 1 and Level 2 support for the Software. All of
Licensor's reasonable expenses in connection with such transition training shall
be pre-approved and reimbursed by Cisco, consistent with Cisco's standard
policies. Such additional training shall be offered to Cisco at a [***] discount
off Licensor's standard pricing for support training.

11.4 In the event of any termination or expiration of the Agreement, at Cisco's
request, Licensor shall make available to Cisco Level 3 support reflected in
this Exhibit G, or other agreed support, at Licensor's reasonable and customary
rates for a minimum of two (2) years after such termination or expiration.

11.5 The terms and conditions of this Section 11 supersede any terms and
conditions of the Agreement, which are inconsistent with these terms and
conditions.

Cisco Systems, Inc. Confidential Information For Internal Use Only.

*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

                                                                              18
<PAGE>

Customer Satisfaction Survey

Subject: Cisco Systems Survey

Recently you contacted the Cisco _To be filled in____.
We appreciate the opportunity to assist you, and we hope we were responsive to
your needs.

CASE: CR-XXXXX OPENED: 00-XX-XXXX                         AGENT:

DESCRIPTION:

On a scale of 1 to 5 (1= Unacceptable, 2 = Poor, 3 = Met your needs, 4 - Good, 5
= Excellent) rate each of the following

(PLACE YOUR ANSWERS IN THE SURVEY AFTER EACH COLON).

(Q1) Ease of Access to Help line.......................................(1-5):
COMMENTS ON Q1:

(Q2) Timeliness of Information.........................................(1-5):
COMMENTS ON Q2:

(Q3) Effectiveness of Information......................................(1-5):
COMMENTS ON Q3:

(Q4) Software Knowledge of the Agent...................................(1-5):
COMMENTS ON Q4:

(Q5) Courteous Service.................................................(1-5):
COMMENTS ON Q5:

(Q6) OVERALL satisfaction of customer regarding software support ......(1-5):
COMMENTS ON Q6:
What could we do to better support you?

----------
Thank you for letting us know how we're doing and giving us the opportunity to
improve.

Sincerely,

Cisco Systems, Inc. Confidential Information For Internal Use Only.

*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

                                                                              19EX-10.7.1

	

EXHIBIT 10.7.1 

INDEMNIFICATION
AGREEMENT 

     This
INDEMNIFICATION AGREEMENT made and entered into this ___ day of ________, 2003,
by and between Building Materials Holding Corporation, a Delaware corporation
(the “Company”), and _________ (the “Indemnitee”); 

     WHEREAS,
there is a general awareness that competent and experienced persons are becoming
more reluctant to serve as directors or officers of a corporation unless they
are protected by comprehensive insurance and indemnification, especially since
shareholder and derivative suits against public-held corporations, their
directors and officers for decisions and action in the scope of their duties
have increased in number in recent years for damages in amounts that have no
reasonable relationship to the compensation received by such directors and
officers from the corporation; and 

     WHEREAS,
the Company has adopted provisions in its Certificate of Incorporation and
By-laws providing for indemnification of its officers and directors to the
fullest extent permitted by applicable law, and the Company wishes to clarify
the rights and obligations of the Company and the Indemnitee with respect to
indemnification; and 

     WHEREAS,
Section 145 of the General Corporation Law of the State of Delaware, which sets
forth certain provisions relating to the mandatory and permissive
indemnification of officers and directors (among others) of a Delaware
corporation by such corporation is specifically not exclusive of other rights to
which those indemnified thereunder may be entitled under any charter, by-law,
agreement, vote of stockholders or disinterested directors or otherwise, and
thus does not by itself limit the extent to which the Company may indemnify
persons serving as its officers and directors (among others); and 

     WHEREAS,
in order to induce and encourage highly experienced and capable persons such as
the Indemnitee to serve and continue to serve as directors of the Company and in
any other capacity with respect to the Company, and to otherwise promote the
desirable end that such persons will resist what they consider unjustified
lawsuits and claims made against them in connection with the good faith
performance of their duties to the Company, with the knowledge that certain
costs, judgments, penalties, fines, liabilities and expenses incurred by them in
their defense of such litigation are to be borne by the Company and they will
receive the maximum protection against such risks and liabilities as may be
afforded by law, the Board of Directors of the Company has determined, after due
consideration and investigation of the terms and provisions of this Agreement
and the various other options available to the Company and the Indemnitee in
lieu hereof, that the following Agreement is not only reasonable and prudent but
necessary to promote and ensure the best interests of the Company and its
stockholders; and 

     WHEREAS,
the Company desires to have the Indemnitee continue to serve as a director of
the Company and in such other capacity with respect to the Company as the
Company may request, as the case may be, free from undue concern for
unpredictable, inappropriate or unreasonable legal risks and personal
liabilities by reason of Indemnitee’s acting in good faith in 

33 

	

the performance of Indemnitee’s
duty to the Company; and the Indemnitee desires to continue so to serve the Company,
provided, and on the express condition, that Indemnitee is furnished with the indemnity
set forth hereinafter;  

     NOW,
THEREFORE, in consideration of the premises and the covenants contained herein,
the Company and the Indemnitee do hereby covenant and agree as follows: 

     SECTION
1. Service by the Indemnitee. The Indemnitee will serve and/or continue
to serve as a director of the Company faithfully and to the best of
Indemnitee’s ability so long as Indemnitee is duly elected or qualified in
accordance with the provisions of the By-laws of the Company or until such time
as Indemnitee is removed as permitted by law or Indemnitee tenders a resignation
in writing. The Indemnitee may at any time and for any reason resign from such
position (subject to any other contractual obligation or other obligation
imposed by operation of law). If Indemnitee shall serve in any other capacity
with respect to the Company, nothing in this Agreement shall confer upon the
Indemnitee the right to continue in the employ of the Company or affect the
right of the Company to terminate the Indemnitee’s employment at any time
in the sole discretion of the Company, with or without cause. 

     SECTION
2. Maintenance of D&O Insurance. 

			(a)		
The Company hereby represents and warrants that Exhibit A accurately lists the
policies of directors’ and officers’ liability insurance purchased by
the Company that such policies are in full force and effect, and that all
premiums for such policies have been fully paid for the full term of such
policies.

			(b)		
The Company hereby covenants and agrees that, so long as the Indemnitee shall
continue to serve as a director of the Company and thereafter so long as the
Indemnitee shall be subject to any possible claim or Proceeding (defined below),
by reason of the fact that the Indemnitee was a director of the Company and/or
in any other capacity with respect to the Company, the Company shall maintain
the D&O Insurance (defined below) in full force and effect.

			(c)		
In each policy of D&O Insurance, the Indemnitee shall be named as an insured
in such a manner as to provide the Indemnitee the same rights and benefits,
subject to the same limitations, as are accorded to the Company’s directors
and officers most favorably insured by such policy.

	

     SECTION
3. Indemnification. The Company shall indemnify the Indemnitee to the
fullest extent permitted by applicable law in effect on the date hereof or as
such laws may from time to time be amended (but in the case of any such
amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than were permitted prior to the amendment).
Without diminishing the scope of the indemnification provided by this Section 3,
the rights of indemnification of the Indemnitee provided hereunder shall include
but shall not be limited to those rights hereinafter set forth, except that no
indemnification shall be paid to the Indemnitee: 

			(a)		
on account of any Proceeding in which judgment is rendered against the
Indemnitee for an accounting of profits made from the purchase or sale by the

	

34 

	 	Indemnitee
of securities of the Company pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law;

			(b) 		on
account of the Indemnitee’s conduct which is finally adjudged to have been knowingly
fraudulent or deliberately dishonest, or to constitute willful misconduct;

			(c) 		to
the extent expressly prohibited by applicable law;

			(d)		
for which payment is actually made to the Indemnitee under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
by-law or agreement, except in respect of any indemnity exceeding the payment
under such insurance, clause, by-law or agreement; or

			(e)		
if a final decision by a court having jurisdiction in the matter shall determine
that such indemnification is not lawful (and, in this respect, both the Company
and the Indemnitee have been advised that the Securities and Exchange Commission
believes that (i) indemnification for liabilities arising under the federal
securities laws is against public policy and is, therefore, unenforceable and
(ii) claims for indemnification should be submitted to the appropriate court for
adjudication).

	

     SECTION
4. Action or Proceedings Other than an Action by or in the Right of the
Company. Except as limited by Section 3 above, the Indemnitee shall be
entitled to the indemnification rights provided in this Section if Indemnitee is
a party or is threatened to be made a party to any Proceeding (other than an
action by or in the name of the Company) by reason of the fact that Indemnitee
is or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
or fiduciary of any other entity, including, but not limited to, another
corporation, limited liability company, partnership, joint venture or trust, or
by reason of anything done or not done by Indemnitee in any such capacity,
including, but not limited to, the filing of written statements or
certifications regarding the accuracy of reports or statements filed by the
Company with the Securities and Exchange Commission. Pursuant to this Section,
the Indemnitee shall be indemnified against all costs, judgments, penalties,
fines, liabilities, amounts paid in settlement by or on behalf of Indemnitee and
Expenses (defined below) actually and reasonably incurred by Indemnitee in
connection with such Proceeding, if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and with respect to any criminal Proceeding, had no
reasonable cause to believe Indemnitee’s conduct was unlawful. 

     SECTION
5. Indemnity in Proceedings by or in the Name of the Company. Except as
limited by Section 3 above, the Indemnitee shall be entitled to the
indemnification rights provided in this Section if Indemnitee was or is a party
or is threatened to be made a party to any Proceeding brought by or in the name
of the Company to procure a judgment in its favor by reason of the fact that
Indemnitee is or was a director, officer, employee or agent or fiduciary of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of another entity, including, but not
limited to, another corporation, limited 

35 

	

liability company partnership, joint
venture or trust, or by reason of anything done or not done by Indemnitee in any such
capacity. Pursuant to this Section, the Indemnitee shall be indemnified against all
costs, judgments, penalties, fines, liabilities, amounts paid in settlement by or on
behalf of Indemnitee and Expenses actually and reasonably incurred by Indemnitee in
connection with such Proceeding if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of the
Company; provided, however, that no such indemnification shall be made in respect of any
claim, issue, or matter as to which applicable law expressly prohibits such
indemnification by reason of any adjudication of liability of the Indemnitee to the
Company, unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly entitled to indemnity for such costs,
judgments, penalties, fines, liabilities and Expenses as such court shall deem proper.  

     SECTION
6. Indemnification for Costs, Charges and Expenses of Successful Party.
Notwithstanding the other provisions of this Agreement, to the extent that the
Indemnitee has served as a witness on behalf of the Company or has been
successful, on the merits or otherwise, in whole or in part, in defense of any
Proceeding referred to in Sections 4 and 5, or in defense of any claim, issue or
matter therein, including, without limitation, the dismissal of any action
without prejudice, or if it is ultimately determined that the Indemnitee is
otherwise entitled to be indemnified against Expenses, Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred by Indemnitee
in connection therewith. 

     SECTION
7. Partial Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the costs, judgments, penalties, fines, liabilities or Expenses
actually and reasonably incurred by Indemnitee in connection with the
investigation, defense, appeal or settlement of a Proceeding described in
Section 4 or 5, but not, however, for all of the total amount thereof, the
Company shall nevertheless indemnify the Indemnitee for the portion of such
costs, judgments, penalties, fines, liabilities and Expenses actually and
reasonably incurred by Indemnitee to which the Indemnitee is entitled. 

     SECTION
8. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this
Agreement, to the maximum extent permitted by applicable law, Indemnitee shall be
entitled to indemnification against all Expenses actually and reasonably incurred or
suffered by Indemnitee or on Indemnitee’s behalf if Indemnitee appears as a witness or
otherwise incurs legal expenses as a result of or related to Indemnitee’s service as a
director or officer of the Company, in any threatened, pending or completed legal,
administrative, investigative or other proceeding or matter to which Indemnitee neither
is, nor is threatened to be made, a party. 

     SECTION
9. Determination of Entitlement to Indemnification. Upon written request
by the Indemnitee for indemnification pursuant to Section 4, 5, 6 or 7, the
entitlement of the Indemnitee to indemnification pursuant to the terms of this
Agreement shall be determined by the following person or persons who shall be
empowered to make such determination: (a) the Board of Directors of the Company
by a majority vote of Disinterested Directors (defined   

36 

	

below), whether or not such majority
constitutes a quorum; (b) a committee of Disinterested Directors designated by a majority
vote of such directors, whether or not such majority constitutes a quorum or (c) if the
Board of Directors by the majority vote of Disinterested Directors so directs or if there
are no Disinterested Directors, by Independent Counsel (defined below) in a written
opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee.
Such Independent Counsel shall be selected by the Board of Directors and approved by the
Indemnitee. Upon failure of the Board so to select such Independent Counsel or upon
failure of the Indemnitee so to approve, such Independent Counsel shall be selected upon
application of Indemnitee by the Chancellor of the State of Delaware or such other person
as the Chancellor shall designate to make such selection. Such determination of
entitlement to indemnification shall be made not later than 30 calendar days after
receipt by the Company of a written request for indemnification. Such request shall
include documentation or information which is necessary for such determination and which
is reasonably available to the Indemnitee. Any Expenses incurred by the Indemnitee in
connection with Indemnitee’s request for indemnification hereunder, under any other
agreement, any provision of the Company’s Bylaws or any directors’and officers’liability
insurance, shall be borne by the Company. The Company hereby indemnifies Indemnitee for
any such Expense and agrees to hold the Indemnitee harmless therefrom irrespective of the
outcome of the determination of the Indemnitee’s entitlement to indemnification. If
the person making such determination shall determine that the Indemnitee is entitled to
indemnification as to part (but not all) of the application for indemnification, such
person shall reasonably prorate such partial indemnification among such claims, issues or
matters.  

     SECTION
9. Presumptions and Effect of Certain Proceedings. The Secretary of the
Company shall, promptly upon receipt of the Indemnitee’s request for
indemnification, advise in writing the Board of Directors or such other person
or persons empowered to make the determination as provided in Section 8 that the
Indemnitee has made such request for indemnification. Upon making such request
for indemnification, the Indemnitee shall be presumed to be entitled to
indemnification hereunder and the Company shall have the burden of proof in
making of any determination contrary to such presumption. If the person or
persons so empowered to make such determination shall have failed to make the
requested indemnification within 30 calendar days after receipt by the Company
of such request, the requisite determination of entitlement to indemnification
shall be deemed to have been made and the Indemnitee shall be absolutely
entitled to such indemnification, absent actual and material fraud in the
request for indemnification. The termination of any Proceeding described in
Section 4 or 5 by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself: (a) create a
presumption that the Indemnitee did not act in good faith and in a manner which
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal Proceeding, that the Indemnitee
had reasonable cause to believe that Indemnitee’s conduct was unlawful; or
(b) otherwise adversely affect the rights of the Indemnitee to indemnification
except as may be provided herein. 

     SECTION
10. Advancement of Expenses. All Expenses incurred by the Indemnitee
shall be paid by the Company in advance of the final disposition of such
Proceeding at the request of the Indemnitee within twenty calendar days after
the receipt by the Company of a statement or statements from the Indemnitee
requesting such advance or advances from time to time. The Indemnitee’s
entitlement to such Expenses shall include those incurred in connection 

37 

	

with any Proceeding by the
Indemnitee seeking an adjudication or award in arbitration pursuant to this Agreement.
Such statement or statements shall reasonably evidence the expenses and costs incurred by
Indemnitee in connection therewith and shall include or be accompanied by an undertaking
by or on behalf of the Indemnitee to repay such amount if it is ultimately determined
(after all appeals) by a court of competent jurisdiction that the Indemnitee is not
entitled to be indemnified against such Expenses by the Company as provided by this
Agreement or otherwise. Indemnitee’s undertaking to repay any such amounts is not
required to be secured.  

     SECTION
11. Remedies of the Indemnitee in Cases of Determination not to Indemnify or
to Advance Expenses. In the event that a determination is made that the
Indemnitee is not entitled to indemnification hereunder or if payment has not
been timely made following a determination of entitlement to indemnification
pursuant to Sections 8 and 9, or if Expenses are not advanced pursuant to
Section 10, the Indemnitee shall be entitled to a final adjudication in an
appropriate court of the State of Delaware or any other court of competent
jurisdiction of Indemnitee’s entitlement to such indemnification or
advance. Alternatively, the Indemnitee at Indemnitee’s option may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
rules of the American Arbitration Association, such award to be made within
sixty days following the filing of the demand for arbitration. The Company shall
not oppose the Indemnitee’s right to seek any such adjudication or award in
arbitration or any other claim. Such judicial proceeding or arbitration shall be
made de novo and the Indemnitee shall not be prejudiced by reason of a
determination (if so made) pursuant to Sections 8 or 9 that Indemnitee is not
entitled to indemnification. If a determination is made or deemed to have been
made pursuant to the terms of Section 8 or 9 that the Indemnitee is entitled to
indemnification, the Company shall be bound by such determination and is
precluded from asserting that such determination has not been made or that the
procedure by which such determination was made is not valid, binding and
enforceable. The Company further agrees to stipulate in any such court or before
any such arbitrator that the Company is bound by all the provisions of this
Agreement and is precluded from making any assertions to the contrary. If the
court or arbitrator shall determine that the Indemnitee is entitled to any
indemnification hereunder, the Company shall pay all Expenses actually and
reasonably incurred by the Indemnitee in connection with such adjudication or
award in arbitration (including, but not limited to, any appellate Proceedings). 

     SECTION
12. Notification and Defense of Claim. Promptly after receipt by the
Indemnitee of notice of any Proceeding, the Indemnitee will, if a claim in
respect thereof is to be made against the Company under this Agreement, notify
the Company in writing of the commencement thereof; but the omission so to
notify the Company will not relieve it from any liability that it may have to
the Indemnitee. Notwithstanding any other provision of this Agreement, with
respect to any such Proceeding as to which the Indemnitee notifies the Company: 

	 	
(a)
The Company will be entitled to participate therein at its own expense; and

			(b)		
Except as otherwise provided in this Section 13(b), to the extent that it may
wish, the Company, jointly with any other indemnifying party similarly notified,
shall be entitled to assume the defense thereof, with counsel satisfactory to
the Indemnitee. After notice from the Company to the Indemnitee of its election
so to assume the defense thereof, the Company shall not be liable to the
Indemnitee 

	

38 

	 	under
this Agreement for any Expenses subsequently incurred by the Indemnitee in connection
with the defense thereof other than costs of investigation or as otherwise provided
below. The Indemnitee shall have the right to employ Indemnitee’s own counsel in
such Proceeding, but the fees and expenses of such counsel incurred after notice from the
Company of its assumption of the defense thereof shall be at the expense of the
Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by
the Company, (ii) the Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and the Indemnitee in the conduct of the defense
of such action or (iii) the Company shall not in fact have employed counsel to assume the
defense of the action, in each of which cases the fees and expenses of Indemnitee’s
counsel shall be at the expense of the Company. The Company shall not be entitled to
assume the defense of any Proceeding brought by or on behalf of the Company or as to
which the Indemnitee shall have made the conclusion provided for in (ii) above. 

			(c)		
If the Company ha assumed the defense of the Proceeding, the Company shall not
be liable to indemnify the Indemnitee under this Agreement for any amounts paid
in settlement of any Proceeding effected without its written consent. The
Company shall not settle any Proceeding in any manner that would impose any
penalty or limitation on or disclosure obligation with respect to the Indemnitee
without the Indemnitee’s written consent. Neither the Company nor the
Indemnitee will unreasonably withhold its consent to any proposed settlement.

	

     SECTION
14. Other Rights to Indemnification. The indemnification and advancement
of Expenses provided by this Agreement shall not be deemed exclusive of any
other rights to which the Indemnitee may now or in the future be entitled under
any provision of the By-laws or the Certificate of Incorporation of the Company,
vote of stockholders or Disinterested Directors, provision of law, agreement or
otherwise. 

     SECTION
15. Expenses to Enforce Agreement. In the event that the Indemnitee is
subject to or intervenes in any Proceeding in which the validity or
enforceability of this Agreement is at issue or seeks an adjudication or award
in arbitration to enforce Indemnitee’s rights under, or to recover damages
for breach of, this Agreement, the Indemnitee, if Indemnitee prevails in whole
or in part in such action, shall be entitled to recover from the Company and
shall be indemnified by the Company against any actual Expenses incurred by
Indemnitee. 

     SECTION
16. Duration of Agreement. This Agreement shall terminate upon the later
of: (a) ten years after the Indemnitee has ceased to occupy any of the positions
or have any relationships described in Sections 4 and 5; and (b) the final
termination of all pending or threatened Proceedings to which the Indemnitee may
be subject by reason of the fact that Indemnitee is or was a director, officer,
employee, agent or fiduciary of the Company or is or was serving at the request
of the Company as a director, officer, employee, agent or fiduciary of any other
entity, including but not limited to, another corporation, partnership, joint
venture or trust, or by reason of anything done or not done by Indemnitee in any
such capacity. The indemnification provided under this Agreement shall continue
as to the Indemnitee even though Indemnitee may have ceased to be a director or
officer of the Company. This Agreement shall 

39 

	

be binding upon the Company and its
successors and assigns and shall inure to the benefit of the Indemnitee and Indemnitee’s
spouse, assigns, heirs, devises, executors, administrators or other legal
representatives. The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all the business or
assets of the Company, expressly 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 if no
such succession had taken place.  

     SECTION
17. Severability. If any provision or provisions of this Agreement shall
be held invalid, illegal or unenforceable for any reason whatsoever, (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any Sections of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that are not themselves invalid, illegal
or unenforceable) shall be construed so as to give effect to the intent manifest
by the provision held invalid, illegal or unenforceable that are not themselves
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent of the parties that the Company provide protection to Indemnitee to
the fullest enforceable extent. This Agreement shall supersede and replace any
prior indemnification agreements entered into by and between the Company and
Indemnitee and any such prior agreements shall be terminated upon execution of
this Agreement. 

     SECTION
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement. Only one
such counterpart signed by the party against whom enforceability is sought needs
to be produced as evidence of the existence of this Agreement. 

     SECTION
19. Headings; References; Pronouns. The headings of the Sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.
References herein to Section numbers are to Sections of this Agreement. All
pronouns and any variations thereof shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as appropriate. 

     SECTION
20. Definitions. For purposes of this Agreement: 

			(a)		
“D&O Insurance” means the directors’ and officers’
liability insurance issued by the insurers, and having the policy numbers, and
amounts set forth on Exhibit A hereto and any replacement or substitute policies
issued by one or more reputable insurers providing in all respects coverage at
least comparable to and in the same amount as that provided under the policies
identified on Exhibit A.

			(b)		
“Disinterested Director” means a director of the Company who is not or
was not a party to the Proceeding in respect of which indemnification is being
sought by the Indemnitee.

	

40 

			(c)		
“Expenses” includes, without limitation, expenses of investigations,
judicial or administrative proceedings or appeals, amounts paid in settlement by
or on behalf of Indemnitee, attorneys’ fees, witness fees and expenses,
fees and expenses of accountants and other advisors, retainers and disbursements
and advances thereon, and any expenses of establishing a right to
indemnification hereunder, but shall not include the amount of judgments, fines
or penalties actually levied against Indemnitee.

			(d)		
“Independent Counsel” means a law firm or a member of a law firm that
neither is presently nor in the past five years has been retained to represent:
(i) the Company or the Indemnitee in any matter material to either such party,
or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or the Indemnitee in an
action to determine the Indemnitee’s right to indemnification under this
Agreement.

			(e)		
“Proceeding” includes any threatened, pending or completed
investigation (other than internal investigations of the conduct of
Company’s employees), action, suit or proceeding, whether brought in the
name of the Company or otherwise and whether of a civil, criminal,
administrative or investigative nature, including, but not limited to, actions,
suits or proceedings brought under and/or predicated upon the Securities Act of
1933, as amended, and/or the Securities Exchange Act of 1934, as amended, the
Sarbanes Oxley Act of 2002, and/or their respective state counterparts and/or
any rule or regulation promulgated thereunder, in which Indemnitee may be or may
have been involved as a party or otherwise, by reason of the fact that
Indemnitee is or was a director, officer, employee or agent of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent or fiduciary of any other entity, including, but not limited to,
another corporation, partnership, joint venture or trust, or by reason of
anything done or not done by Indemnitee in any such capacity, whether or not
Indemnitee is serving in such capacity at the time any liability or expense is
incurred for which indemnification or reimbursement can be provided under this
Agreement.

	

     SECTION
21. Modification and Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver. 

41 

	

     SECTION
22. Notices. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given and
received (i) if delivered by hand, on the date so delivered, or (ii) if sent by
overnight courier, on the next business day after being so sent, or (iii) if
sent by facsimile, on the day so sent: 

	     (a) If to the Indemnitee, to:	_____________

_____________

_____________

	     (b) If to the Company, to:	Building Materials Holding Corporation
Four Embarcadero Center, Suite 3250
San Francisco, California 94111
Attn: President
facsimile: (415) 627-9119

	

or to such other address as may be
furnished to the Indemnitee by the Company or to the Company by the Indemnitee, as the
case may be. 

     SECTION
23. Governing Law. The parties hereto agree that this Agreement shall be governed by,
construed and enforced in accordance with, the laws of the State of Delaware. 

     SECTION
24. Subrogation. Upon a payment to Indemnitee under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of Indemnitee to recover against any person for such liability, and Indemnitee
shall execute all documents and instruments required and shall take such other
actions as may be necessary to secure such rights, including the execution of
such documents as may be necessary for the Company to bring suit to enforce such
rights. 

42 

	

     IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and
year first above written. 

		BUILDING MATERIALS HOLDING CORPORATION

By   ______________________________
        Robert E. Mellor, Chairman, President and
        Chief Executive Officer

INDEMNITEE

By   ______________________________

	

43 

	

EXHIBIT A

Directors’and
Officers’Liability Insurance 

Primary Policy 

Federated Insurance Company (a
member of the Chubb Group of Insurance Companies) 
Policy No. 8146-0955
Coverage Limits:
$15 million 

Excess Policies 

National Union Fire Insurance
Company of Pittsburgh — AIG
Policy No. 5511-62-48
Coverage Limits: $5 million 

44

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