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    SECOND
      AMENDMENT TO CONTRACT TO PURCHASE

    

    THIS
      SECOND AMENDMENT TO
      CONTRACT TO PURCHASE (this
      “Amendment”)
      is
      entered into on this 21st day of February, 2008 (the “Effective
      Date”),

    

    BETWEEN:

    

    APC
      GROUP, INC., a
      Nevada
      corporation and formerly Alaskan Products Company, LLC,
      an
      Alaska limited liability company (“APC”);

    

    AND:

    

    REEL-THING
      INNOVATIONS, INC. (“Reel-Thing”);

    

    APC
      and
      Reel-Thing are collectively referred to herein as the “Parties”
and
      each as a “Party”.
      All
      other capitalized terms used in this Amendment and not otherwise defined have
      the meanings set forth in that certain Contract to Purchase, dated July 10,
      2003, as amended on May 5, 2005 (the “Contract”)

    

    WHEREAS,
      APC is
      more than ninety (90) days past due on installment payments due under the
      Contract;

    

    WHEREAS,
      Reel-Thing
      desires to retroactively waive its right to reversion of the Assets and to
      modify the Payment Schedule;

    

    WHEREAS,
      the
      total amount in arrears as of the January 31st,
      2008
      was $291,810.80 (the “Past Due Amount”) which consisted of $238,000 of the
      purchase price under the Contract and $53,810.80 of accrued late payment
      interest;

    

    WHEREAS,
      Reel-Thing desires to convert the Past Due Amount into 1,209,524 restricted
      shares (the “Shares”) of common stock, par value $.001 per share (the “Common
      Stock”) of the Company in full satisfaction of the Past Due Amount;

    

    WHEREAS,
      APC
      desires to issue the Shares to Reel-Thing in full satisfaction of the Past
      Due
      Amount;

    

    WHEREAS,
      the
      Parties desire to amend the Payment Schedule for $195,000 of the purchase price
      under the Contract which remains unpaid;

    

    NOW,
      THEREFORE,
      in
      consideration of the terms, conditions, agreements and covenants contained
      herein and in the Contract, the receipt and sufficiency of which are
      acknowledged by each Party, and in reliance upon the representations and
      warranties contained in the Contract, the Parties hereto agree as
      follows:

     

    

      
        	
                APC
                  GROUP, INC.

              	
                Ken
                  Forster 

              	
                President

              
	
                3526
                  Industrial Avenue

              	
                John
                  P Hoff 

              	
                Vice
                  President

              
	
                Fairbanks,
                  Alaska 99701

              	
                Kathleen
                  Smith

              	
                Office
                  Mgr.

              
	
                Phone:
                  (907) 457-2501 Fax: (907) 457-2502

              	
                Matthew
                  Meyer 

              	
                 Chairman

              
	
                WWW.ARCTICLEASH.COM

              	 	 
	
                WWW.MEDREEL.COM

              	 	 

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Section
      1. Reel-Thing
      hereby agrees to retroactively waive its right to reversion of the Assets during
      the period beginning on May 5, 2005 and ending on the Effective
      Date.

    

     

    
      	
              Reel-Thing
                Innovations, Inc.

            
	 
	
              Signature:
                /s/
                R. Ness            
                   

            
	
              Printed
                name: R.
                Ness            
                   

            
	
              Title:
                President                                         
                

            
	 
	
              Signature:
                /s/
                Dennis Gushuliak    

            
	
              Signature:
                Dennis
                Gushuliak                  
                

            
	
              Title:
                Treasurer                                         
                

            

    

    

    Section
      2.
      Reel-Thing warrants and represents to APC that Reel-Thing (i) owns or has rights
      in the Past Due Amount free and clear of any claim whatsoever by any parties;
      (ii) has not pledged or encumbered the Past Due Amount in any manner; (iii)
      has
      granted no right, warrant, purchase option, or any other right which directly
      or
      indirectly affects the Past Due Amount; (iv) is aware that the Common Stock
      to
      be received upon conversion as provided in Section 3 hereof will be restricted
      stock and will not be freely transferable by Reel-Thing and can only be
      transferred or sold at some later date pursuant to federal and state exemptions;
      (v) knows that no public market exists for the Shares and that Reel-Thing may
      not have the ability to liquidate the investment readily; (vi) is acquiring
      the
      Shares solely for the its own account for investment purposes only and not
      with
      a view towards their distribution within the meaning of the Securities Act
      of
      1933 (the “Act”); (vii) has no agreement or other arrangement, formal or
      informal, with any person to sell, transfer or pledge any part of the Shares
      or
      which guarantees Reel-Thing any profit of or indemnifies Reel-Thing for any
      loss
      with respect to the Shares; (viii) has no plans to enter into any agreement
      or
      arrangement of that nature; (ix) understands that it must bear the economic
      risk
      of the investment for an indefinite period of time because it cannot sell or
      otherwise transfer the Shares in the absence of the registration provisions
      of
      all applicable securities acts; and (x) understands that APC has no obligation
      to register the Shares under any securities act.

    

    Section
      3.
      Reel-Thing and APC hereby irrevocably convert $291,810.80 consisting of $238,000
      of the purchase price under the Contract and $53,810 of accrued late payment
      interest into 1,209,524 restricted Shares of Common Stock of APC as of the
      Effective Date. Reel-Thing represents and warrants that all offers and sales
      by
      the undersigned of the securities issuable to the undersigned upon conversion
      shall be made pursuant to registration of the securities under the Act, or
      pursuant to an exemption from registration under the Act. APC shall issue a
      certificate or certificates for the number of Shares of Common Stock in the
      name
      of Reel-Thing Innovations, Inc. bearing a restrictive legend the same or
      substantially similar to the following:

    

    “THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND
      MAY
      NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED WITHOUT EITHER: i)
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
      SECURITIES LAWS, OR ii) SUBMISSION TO THE CORPORATION OF AN OPINION OF COUNSEL,
      SATISFACTORY TO THE CORPORATION THAT SAID SHARES AND THE TRANSFER THEREOF ARE
      EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND
      APPLICABLE STATE SECURITIES LAWS.”

    

    Section
      4.
      The
      Parties hereby agree that the Payment Schedule shall be modified such that
      $5,000 is due on the Effective Date and twenty-four (24) installment payments
      of
      $ 7,916.67 are due on the first day of each month beginning on August 1, 2008
      and ending on August 1, 2010. If the first day of the month is a Saturday,
      Sunday or legal holiday in the U.S., then the installment payment shall be
      due
      on the first business day following such day.

     

     

    
      
         

      

      
        Page
          2 of 4

        
          

        

      

      
         

      

    

    

    

    Section
      5. The
      Contract is hereby reaffirmed and ratified in all respects, except as expressly
      provided herein. In the event of any conflict between the terms or provisions
      of
      this Amendment and the Contract, then this Amendment shall prevail in all
      respects. Otherwise, the provisions of the Contract shall remain in full force
      and effect.

    

    Section
      6.
      The
      Contract and this Amendment represent the entire understanding and Contract
      between the parties with respect to the subject matter thereof and hereof and
      can be amended, supplemented or changed, and any provision hereof can be waived,
      only by written instrument making specific reference to the Contract and this
      Amendment signed by the Parties thereto and hereto.

    

    Section
      7.
      This
      Amendment shall be binding upon the heirs, executors, administrators, successors
      and permitted assigns of the parties hereto.

    

    Section
      8.
      In the
      event an arbitration, mediation, suit or action is brought by any party under
      this Amendment or the Contract to enforce any of their terms, or in any appeal
      therefrom, it is agreed that the prevailing party shall be entitled to
      reasonable attorney’s fees to be fixed by the arbitrator, mediator, trial court
      and/or appellate court.

    

    Section
      9.
      If any
      provision of this Amendment is held to be illegal, invalid or unenforceable
      under present or future laws effective during the term hereof, such provision
      shall be fully severable and this Amendment and the Contract, shall be construed
      and enforced as if such illegal, invalid or unenforceable provision never
      comprised a part hereof; and the remaining provisions hereof and thereof shall
      remain in full force and effect and shall not be affected by the illegal,
      invalid or unenforceable provision or by its severance herefrom. Furthermore,
      in
      lieu of such illegal, invalid and unenforceable provision, there shall be added
      automatically as part of this Amendment and the Contract a provision as similar
      in nature in its terms to such illegal, invalid or unenforceable provision
      as
      may be legal, valid and enforceable.

    

    Section
      10.
      This
      Amendment shall be deemed an Contract made under the laws of the State of Nevada
      and shall be governed by and construed in accordance with the law of said state
      without regard to the principles of conflict of laws, and any suit, action
      or
      proceeding arising out of or relating to this Amendment shall be commenced
      and
      maintained in any court of competent subject matter jurisdiction in Clark
      County, Las Vegas, Nevada, and any objection to such jurisdiction and venue
      is
      hereby expressly waived.

    

    Section
      11.
      This
      Amendment may be executed in one or more counterparts, each of which shall
      be
      deemed an original, but all of which taken together shall constitute one and
      the
      same instrument. This Amendment may be executed by telecopied signatures with
      the same effect as original signatures.

    

    (Signatures
      on next page)

     

    

       

    

    
      
         

      

      
        Page
          3 of 4

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF,
      the
      undersigned have caused this Amendment to be duly executed as of the date first
      above written.

    

    
      	 
	
              APC
                Group, Inc.

            
	 
	
              Signature:
                /s/
                Kenneth S. Forster        
                

            
	
              Printed
                Name: Kenneth
                S. Forster       
                

            
	
              Title:
                President                                       
                

            
	 
	
              Reel-Thing
                Innovations, Inc.

            
	 
	
              Signature:
                /s/
                R.
                Ness                             
                

            
	
              Printed
                name: R.
                Ness                            
                   

            
	
              Title:
                President                                         
                

            
	 
	
              
                Signature:
                  /s/
                  Dennis Gushuliak    

              

            
	
              Printed
                name: Dennis
                Gushuliak    

            
	
              Title:
                Treasurer                                         
                

            

    

    

    

    

       

    

    
      
         

      

      
        Page
          4 of 4AMENDED
        AND RESTATED EMPLOYMENT AGREEMENT

       

      This
        AMENDED
        AND RESTATED EMPLOYMENT AGREEMENT (this
        “Agreement”)
        is
        made and entered into as of May 12, 2008 (the “Effective
        Date”),
        by
        and between NAPSTER,
        INC.,
        a
        Delaware corporation with its principal offices at 9044 Melrose Avenue, Los
        Angeles, California 90069 (the “Company”),
        and
WILLIAM
        CHRISTOPHER GOROG,
        an
        individual residing at 11434 Bellagio Road, Los Angeles, California 90049
        ( the
“Executive”),
        and
        amends and restates in its entirety that certain Employment Agreement by
        and
        between the Company and the Executive dated as of August 15, 2003 (the
“Prior
        Employment Agreement”).

       

      1.    Employment.
        The
        Company agrees to employ Executive and Executive agrees to be employed by
        the
        Company upon the terms and conditions set forth in this Agreement.

       

      2.    Duties.
        Executive is employed by the Company to render services to the Company in
        the
        position of Chairman and CEO of the Company. Executive agrees to perform
        such
        duties, and such other duties reasonable and consistent with such office
        as may
        be assigned to Executive by the Company’s Board of Directors from time to time.
        The principal places where Executive shall render his services hereunder
        shall
        be at the Company’s offices in Santa Clara and Los Angeles, California, and New
        York, New York, as well as in his home office, as he shall reasonably determine
        from time to time is in the best interests of the Company. In no case shall
        the
        Executive be required to relocate his residence from Los Angeles, California,
        nor to relocate his offices outside any of the cities of Santa Clara, New
        York
        or Los Angeles without his consent. Executive will devote his full time and
        efforts to the performance of Executive’s duties and responsibilities under this
        Agreement and to the business and affairs of Company, its subsidiaries and
        affiliates, in general, and Executive shall use his reasonable efforts to
        promote the interests thereof. Executive may engage in personal, charitable,
        professional and investment activities to the extent such activities do not
        materially conflict or interfere with Executive’s duties and obligations under
        this Agreement or Executive’s ability to perform his duties and responsibilities
        under this Agreement. During the Term, Executive shall not serve on the Board
        of
        Directors of any other business entity without the prior approval of the
        Board
        of Directors. The Board of Directors is aware of and approves Executive’s
        service on the Board of Directors of the following entities: House of Blues
        and
        Critical Path, Inc. provided that Executive’s future activities on such Boards
        do not materially conflict or interfere with the performance of his duties
        for
        the Company.

       

      3.    Term
        of Employment.
        The
        initial term of Executive’s employment hereunder shall commence on August 15,
        2003 (the “Commencement
        Date”)
        and,
        unless terminated sooner as provided in Paragraph 7 below, shall continue
        through August 14, 2008 (“Initial
        Term”).
        Thereafter Executive’s employment hereunder shall automatically continue year to
        year for successive terms of one year each ending on the next August 14th
        (each such year being referred to herein as an “Extended
        Year”),
        unless at least ninety (90) days prior to the end of the Initial Term or
        the
        then current Extended Year, as the case may be, either Executive or the Company
        delivers to the other written notice of non-renewal (“Non-Renewal
        Notice”),
        in
        which event Executive’s employment hereunder shall terminate as of the end of
        the Initial Term or the then current Extended Year, as applicable. The date
        on
        which Executive’s employment hereunder is terminated (either by reason of a
        Non-Renewal Notice or otherwise) pursuant to the provisions of this Agreement
        shall be referred to herein as the “Termination
        Date.”
The
        capitalized word “Term”
as
        used
        herein shall mean the period beginning on the Commencement Date and ending
        on
        the Termination Date.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      4.    Compensation.

       

      (a)    Salary.
        For all
        services rendered by Executive hereunder, the Company agrees to pay Executive
        the sum of Six Hundred Twenty Five Thousand Dollars ($625,000) per annum
        (“Salary”),
        payable in accordance with the Company’s then applicable payroll practices
        applicable to similarly-situated executives generally. The amount of the
        annual
        Salary shall be subject to annual review and upward adjustment at the first
        quarter board of directors meeting each fiscal year of the Term; provided,
        however, that the amount of the annual Salary may not be reduced during the
        Term. Any adjustment to the annual Salary shall be in the sole discretion
        of the
        Company.

       

      (b)    Bonus
        Compensation; Equity Award Grants.
        In
        addition to the Salary, Executive will be eligible to participate in Company’s
        annual bonus program and any other bonus plan adopted during the Term, and
        will
        be eligible for equity award grants, in each case as determined by the Company’s
        compensation committee (the “Compensation
        Committee”)
        and
        dependent on Executive’s performance and that of the Company.

       

      (c)    Change
        in Control Gross-Up.
        Executive shall be entitled to the excise tax protections set forth in
Exhibit
        A
        attached
        hereto. 

       

      5.    Benefits.
        Executive shall be entitled to four (4) weeks paid vacation per each calendar
        year during the Term. Executive shall also be entitled to participate in
        such
        life, disability, medical insurance and pension and retirement plans (and
        any
        other plans and benefits not otherwise referred to in this Agreement) as
        the
        Company may maintain or establish from time to time applicable to other Company
        executives on terms no less favorable than the terms applicable to such
        executives and in which Executive would be entitled to participate pursuant
        to
        the terms thereof. In addition, the Company shall directly pay for or reimburse
        Executive for up to a total aggregate amount of $15,000 per year in order
        for
        Executive to purchase supplemental life and/or disability insurance, any
        such
        reimbursement to be made not later than the end of the calendar year following
        the year in which the related expense was incurred. Executive and the Company
        acknowledge that, as of the Effective Date, Executive has accrued and heretofore
        unpaid vacation of approximately 143.1 hours.

       

      6.    Business
        Expenses; Etc.
        During
        the Term, all of Executive’s reasonable travel and other expenses incurred in
        the performance of Executive’s duties for the Company will be paid for or
        reimbursed by the Company. When traveling by air, Executive will exercise
        his
        judgment regarding when economy, business class or first class air travel
        is
        justified. The Company will pay or reimburse Executive for reasonable expenses
        relating to airline clubs, and to his participation in professional
        organizations (including, without limitation, the Young Presidents Organization
        or any successor organizations), provided, however, that Executive may not
        exceed $20,000 per year in such expenses without prior approval of the
        Compensation Committee. Executive shall be entitled to a car allowance of
        $1,500
        per month plus car insurance, an annual Company-paid physical examination,
        a
        health club subsidy and financial planning assistance (the health club subsidy
        and financial planning assistance not to exceed $7,500 per year in the aggregate
        on a gross basis), and such other perquisites not otherwise provided for
        in this
        Agreement (if any) as are accorded generally to other Company executives.
        The
        Company shall reimburse Executive for or pay the reasonable legal fees incurred
        by Executive relating to the negotiation and preparation of this Agreement,
        provided that in no event shall the Company’s obligation with respect to such
        reimbursement or payment of such legal fees exceed Twenty Thousand Dollars
        ($20,000). Any reimbursement made to Executive pursuant to this Paragraph
        6
        shall be subject to the Company’s expense reimbursement policies in effect from
        time to time and in all events shall be made not later than the end of the
        calendar year following the year in which the related expense was
        incurred.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      7.    Termination
        of Employment.
        The
        employment of Executive under this Agreement shall be terminated prior to
        the
        end of the Initial Term or prior to the end of an Extended Year, as the case
        may
        be, under the following circumstances:

       

      (a)    Termination
        by Reason of Death of Executive.
        Upon
        the death of Executive, the employment of Executive hereunder shall
        automatically terminate on the date of Executive’s death. 

       

      (b)    Termination
        by Reason of Disability of Executive.
        In the
        event Executive suffers a disability, due to illness or injury, such that
        Executive is unable to perform the essential functions of his position, even
        with a reasonable accommodation, for a period in excess of six (6) consecutive
        months (“Disability”),
        the
        Company reserves the right to terminate Executive’s employment by giving
        Executive written notice of termination (the “Disability
        Notice”)
        if
        Executive remains Disabled at the time such Disability Notice is given. If
        Executive disputes a Disability termination, the Company may require that
        Executive be evaluated, at the Company’s expense, by an independent physician to
        be selected by the Company. In the event that Executive’s physician and the
        Company’s physician report contrary findings as to the nature and duration of
        the Disability, the Company may require an additional evaluation, at the
        Company’s expense, by a second independent physician of the Company’s choice. At
        such time that the second independent physician’s evaluation of Executive is
        completed, the Company will use the findings reported by two of the three
        physicians to determine the nature and duration of the Disability and its
        resulting effect on the continuation or termination of Executive’s employment.

       

      (c)    Termination
        for Cause.
        The
        Company shall have the right to terminate Executive’s employment hereunder for
“Cause”
if
        Cause as defined below exists and at least 2/3 of the members of the Board
        of
        Directors of the Company make the good faith determination that termination
        is
        appropriate. For purposes of this Agreement, the term “Cause” shall be limited
        to (i) conviction of, or a plea of nolo contendre to, a felony or crime
        involving moral turpitude; (ii) gross negligence in the performance of
        Executive’s duties that has injured the reputation or business of the Company;
        or (iii) willful misconduct by Executive with respect to the Company’s
        business that has injured the reputation or business of the
        Company.

       

      (d)    Termination
        by Executive for Good Reason.
        Executive shall have the right to terminate his employment under this Agreement
        for “Good
        Reason”
upon
        thirty (30) days’ written notice to the Company. For the purposes of this
        Agreement, the term “Good Reason” means the good faith determination by the
        Executive that any one or more of the following has occurred: (i)  without
        the express, written consent of Executive, a material diminution of Executive’s
        duties, titles, authority, or responsibilities; (ii) without the express,
        written consent of Executive, the Company requiring Executive to report to
        anyone other than the Board of Directors; (iii) any material breach by the
        Company of this Agreement, including, but not limited to, failure by the
        Company
        to comply with any of the provisions of Paragraphs 4 and/or 5, other than
        insubstantial and inadvertent failures to comply, remedied promptly by the
        Company after receipt of notice thereof from Executive; (iv) without
        Executive’s consent, any requirement by the Company that Executive be based at
        any office or location other than an office or location located in the greater
        Santa Clara, California, New York, New York, or Los Angeles, California area
        (except for travel reasonably required for the performance of Executive’s
        duties), or (v) any proposed termination by the Company of Executive’s
        employment hereunder other than as permitted by this Agreement. Executive
        agrees
        that nothing has occurred on or before the Effective Date that would constitute
        Good Reason under this Agreement.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (e)    Termination
        by the Company Other than For Death, Disability, or Cause.
        The
        Company may terminate Executive’s employment at any time for any reason other
        than the reasons specified in Paragraphs 7(a), 7(b) or 7(c) hereof or for
        no reason whatsoever, effective thirty (30) days after written notice is
        given
        to Executive of such termination.

       

      (f)    Obligations
        of the Company upon Termination.
        

       

      (i)    In
        General.
        Except
        as otherwise expressly provided in this Agreement, all compensation otherwise
        payable to Executive under this Agreement shall cease to accrue upon termination
        of Executive’s employment and Executive’s entitlements under applicable plans
        and programs of the Company following termination of Executive’s employment will
        be determined under the terms of those plans and programs. Upon any termination
        of Executive’s employment, the Company shall pay to Executive, within thirty
        (30) days after the Termination Date: (i) any accrued Salary that had not
        been
        paid prior to the Termination Date, (ii) any bonus payable with respect to
        the
        fiscal year preceding the fiscal year in which the Termination Date occurs
        that
        had not previously been paid, (iii) a per diem amount based upon Executive’s
        Salary for any accrued vacation days not previously taken by Executive prior
        to
        the Termination Date, and (iv) reimbursement for expenses incurred through
        the
        Termination Date in accordance with the provisions of Paragraph 6 of this
        Agreement (the sum of the amounts described in clauses (i), (ii), (iii) and
        (iv)
        shall be hereinafter referred to as the “Accrued
        Obligations”).

       

      (ii)    Death.
        If
        Executive’s employment is terminated by reason of Executive’s death during the
        Term, Executive’s heirs shall be entitled to the following: (1) payment to
        Executive’s estate of the Accrued Obligations set forth in 7(f)(i) above; (2)
        payment to Executive’s estate or beneficiary, as applicable, any amounts due
        pursuant to the terms of any applicable welfare benefit plans, including
        but not
        limited to any life insurance proceeds; (3) reimbursement to Executive’s
        dependents for a period of eighteen (18) months following Executive’s death of
        any COBRA premiums paid by Executive’s dependents to continue medical and dental
        insurance coverage under COBRA; and (4) any stock options and restricted
        stock
        awards granted by the Company to Executive, to the extent outstanding and
        unvested as of the Termination Date, shall become fully vested as of such
        date,
        and such stock options, together with any previously vested stock options
        granted by the Company to Executive that are then outstanding, shall be
        exercisable by Executive’s heirs for one (1) year thereafter (subject to earlier
        termination upon the expiration of the maximum ten-year term of such options
        and
        further subject to earlier termination upon a dissolution, liquidation, change
        of control or similar event in accordance with Section 12 of the RSOP or
        similar
        provisions of the particular option plan under which such options were
        granted).

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (iii)    Disability.
        If
        Executive’s employment is terminated by reason of Executive’s Disability during
        the Term, Executive shall be entitled to receive, after the date of receipt
        by
        Executive of the Disability Notice: (1) payment of the Accrued Obligations
        pursuant to 7(f)(i) above, (2) the maximum disability benefits then provided
        by
        Company to disabled executives and/or their families, (3) to the extent
        Executive elects to continue medical and dental insurance coverage under
        COBRA,
        reimbursement of the COBRA premium for such continuation coverage for a period
        of eighteen (18) months following the Termination Date; and (4) any stock
        options and restricted stock awards granted by the Company to Executive,
        to the
        extent outstanding and unvested as of the Termination Date, shall become
        fully
        vested as of such date, and such stock options, together with any previously
        vested stock options granted by the Company to Executive that are then
        outstanding, shall be exercisable by Executive or Executive’s heirs, as the case
        may be, for one (1) year thereafter (subject to earlier termination upon
        the
        expiration of the maximum ten-year term of such options and further subject
        to
        earlier termination upon a dissolution, liquidation, change of control or
        similar event in accordance with Section 12 of the RSOP or similar provisions
        of
        the particular option plan under which such options were granted). 

       

      (iv)    Termination
        by the Company Other than For Death, Disability, or Cause; Termination by
        Executive for Good Reason.
        Subject
        to Paragraphs 7(f)(v) and 7(f)(vi) below, if, during the Term, Executive’s
        employment with the Company is terminated by the Company pursuant to Paragraph
        7(e) or by Executive for Good Reason, then Executive shall be entitled to
        the
        following: (1) payment to Executive of the Accrued Obligations provided for
        in Paragraph 7(f)(i) above; (2) subject to Paragraph 7(f)(ix) below, within
        thirty (30) days after Executive’s Separation from Service (as defined below),
        payment to Executive of an amount equal to Executive’s Salary which would
        otherwise be payable from the Termination Date through the end of the Initial
        Term, or Extended Term as the case may be, provided,
        however,
        that
        such payment may not be more than 300% of Executive’s then-applicable Salary or
        less than 165% of Executive’s then-applicable Salary; (3) to the extent
        Executive elects to continue medical and dental insurance coverage under
        COBRA,
        reimbursement of the COBRA premium for such continuation coverage for a period
        of eighteen (18) months following the Termination Date; and (4) any stock
        options and restricted stock awards granted by the Company to Executive,
        to the
        extent outstanding and unvested as of the Termination Date, shall become
        fully
        vested as of such date, and such stock options, together with any previously
        vested stock options granted by the Company to Executive that are then
        outstanding, shall be exercisable by Executive or Executive’s heirs, as the case
        may be, for the full term of such options (subject to earlier termination
        upon a
        dissolution, liquidation, change of control or similar event in accordance
        with
        Section 12 of the RSOP or similar provisions of the particular option plan
        under
        which such options were granted). As used herein, a “Separation
        from Service”
occurs
        when the Executive dies, retires, or otherwise has a termination of employment
        with the Company that constitutes a “separation from service” within the meaning
        of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional
        alternative definitions available thereunder. 

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      (v)    Modified
        Severance Benefits on Certain Terminations.
        Notwithstanding Paragraph 7(f)(iv) and subject to Paragraph 7(f)(vi), if,
        during
        the Term (x) Executive’s employment with the Company is terminated by the
        Company pursuant to Paragraph 7(e) or by Executive for Good Reason, and
        either
        (y) the Termination Date occurs on or after August 15, 2008, or (z) the
        Termination Date occurs on or before August 14, 2008 and the Company’s Board of
        Directors, by at least a majority vote, makes a determination in its sole
        discretion that the Company is not actively engaged in discussions with one
        or
        more third parties for a transaction that, if consummated, would result in
        a
        Change of Control, then Executive shall be entitled to the following (in
        lieu
        of, not in addition to, the benefits provided under Paragraph 7(f)(iv)):
        (1) payment to Executive of the Accrued Obligations provided for in
        Paragraph 7(f)(i) above; (2) if the Termination Date occurs prior to the
        end of
        the Initial Term, then subject to Paragraph 7(f)(ix), within thirty (30)
        days
        after Executive's Separation from Service, payment to Executive of an amount
        equal to Executive's Salary which would otherwise be payable from the
        Termination Date through the end of the Initial Term; (3) subject to Paragraph
        7(f)(ix), within thirty (30) days after Executive’s Separation from Service,
        payment to Executive of an amount equal to nine (9) months of Executive’s Salary
        at the rate in effect on the Termination Date; (4) to the extent Executive
        elects to continue medical and dental insurance coverage under COBRA,
        reimbursement of the COBRA premium for such continuation coverage for a period
        of eighteen (18) months following the Termination Date; and (5) on the
        Termination Date, any portion of Executive’s stock options and restricted stock
        awards granted by the Company that are outstanding and unvested immediately
        prior to the Termination Date and would have otherwise become vested on or
        before the first anniversary of the Termination Date based solely on Executive’s
        continued employment through that anniversary date (had it continued through
        that date and assuming that no Change of Control had occurred during such
        twelve-month period and, in the case of a Termination Date that occurs on
        or
        after August 15, 2008, after giving effect to the modified vesting schedule
        set
        forth in Paragraph 7(f)(x)) shall be vested as of the Termination Date. Any
        portion of Executive’s stock options and restricted stock awards that are
        outstanding and unvested as of the Termination Date after giving effect to
        the
        preceding clause (5) shall terminate as of the Termination Date. 

       

      (vi)    Certain
        Terminations Prior to Change of Control.
        Notwithstanding Paragraphs 7(f)(iv) and 7(f)(v), in the event that Executive’s
        employment is terminated during the Term by the Company without Cause
and
        a Change
        of Control occurs during the period of six (6) months following the Termination
        Date, Executive shall be entitled to the benefits set forth in Paragraph
        8 (in
        lieu of, not in addition to, benefits under any other provision of this
        Paragraph 7(f)). In the event that any of Executive’s stock options or
        restricted stock awards that had not vested as of the Termination Date were
        cancelled or otherwise terminated prior to the date of the Change of Control
        solely as a result of such termination of Executive’s employment, such awards
        shall be reinstated and shall automatically become fully vested and, in the
        case
        of stock options, Executive shall be given a reasonable opportunity to exercise
        such accelerated portion of the option before it terminates.

       

      (vii)    [Reserved.]
        

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      (viii)    No
        Duplication of Benefits.
        For
        purposes of clarity, in no event will the Executive be entitled to benefits
        under more than one of the foregoing paragraphs of this Paragraph 7(f). In
        the
        event that Executive is entitled to receive severance benefits under Paragraph
        8
        in connection with a termination of his employment, Executive shall receive
        the
        severance benefits provided in Paragraph 8 and not
        any
        severance benefits provided in this Paragraph 7(f).

       

      (ix)    Section
        409A.
        Notwithstanding any provision of this Agreement to the contrary, if Executive
        is
        a “specified employee” within the meaning of Treasury Regulation Section
        1.409A-1(i) as of the date of Executive’s Separation from Service, Executive
        shall not be entitled to any payment or benefit pursuant to this Paragraph
        7(f)
        or Paragraph 8 until the earlier of (i) the date which is six (6) months
        after
        Executive’s Separation from Service for any reason other than death, or (ii) the
        date of Executive’s death. Any amounts otherwise payable to Executive upon or in
        the six (6) month period following Executive’s Separation from Service that are
        not so paid by reason of this Paragraph 7(f)(ix) shall be paid (without
        interest) as soon as practicable (and in all events within thirty (30) days)
        after the date that is six (6) months after Executive’s Separation from Service
        (or, if earlier, as soon as practicable, and in all events within thirty
        (30)
        days, after the date of Executive’s death). The provisions of this Paragraph
        7(f)(ix) shall only apply if, and to the extent, required to avoid the
        imputation of any tax, penalty or interest pursuant to Section 409A of the
        Internal Revenue Code of 1986, as amended. To the extent that the payment
        of any
        COBRA premiums pursuant to this Paragraph 7(f) or Paragraph 8 is taxable
        to
        Executive, any such payment shall be paid to Executive on or before the last
        day
        of Executive’s taxable year following the taxable year in which the related
        expense was incurred. Executive’s right to payment of such premiums is not
        subject to liquidation or exchange for another benefit and the amount of
        such
        benefits that Executive receives in one taxable year shall not affect the
        amount
        of such benefits that Executive receives in any other taxable year.

       

      (x)    Vesting
        of Restricted Stock Awards.
        In the
        event that Executive continues to be employed with the Company through August
        15, 2008, the vesting schedule of each of Executive’s then-outstanding and
        unvested restricted stock awards shall be adjusted, effective as of August
        15,
        2008, as follows:

       

      
        	 	
                ·

              	
                The
                  next annual installment that is scheduled to vest under the original
                  vesting schedule after August 15, 2009 shall be divided into twelve
                  (12)
                  substantially equal monthly installments, with the first such installment
                  being scheduled to vest on August 15, 2009 and an additional installment
                  vesting on the 15th
                  day of each month thereafter through July 15,
                  2010.

              

      

       

      
        	 	
                ·

              	
                Each
                  subsequent annual installment under the original vesting schedule
                  (if any)
                  shall be divided into twelve (12) substantially equal monthly
                  installments, with the first such monthly installment being scheduled
                  to
                  vest on the August 15 that precedes the date such annual installment
                  was
                  originally scheduled to vest and the last such monthly installment
                  being
                  scheduled to vest on the July 15 that follows the date such annual
                  installment was scheduled to vest under the original
                  schedule.

              

      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      Except
        as
        expressly set forth in this Paragraph 7(f) and Paragraph 8 below, this Agreement
        does not modify any other terms of such restricted stock awards.

       

      8.    Change
        of Control.
        If a
        Change of Control (as defined in the RSOP) occurs during the Term (or in
        the
        event that Paragraph 7(f)(vi) applies), at Executive’s option, all stock options
        and restricted stock awards that are granted to Executive by the Company
        (including options and restricted stock awards granted to Executive after
        the
        date of this Agreement) and that are outstanding immediately before the Change
        of Control will thereupon become fully vested and, in the case of options,
        may
        be exercised at any time thereafter without restriction for a period of
        twenty-four (24) months (subject to earlier termination upon the expiration
        of
        the maximum ten-year term of such options and further subject to earlier
        termination upon a dissolution, liquidation, change of control or similar
        event
        in accordance with Section 12 of the RSOP or similar provisions of the
        particular option plan under which such options were granted). In the event
        Executive resigns or is terminated (other than a termination by the Company
        for
        Cause) within twelve (12) months following a Change of Control, instead of
        and
        not in addition to the payments and benefits set forth in Paragraph 7(f)(iv)
        above, Executive shall be entitled to receive the following: (1) payment of
        the Accrued Obligations provided for in Paragraph 7(f)(i) above; (2) subject
        to
        Paragraph 7(f)(ix), a lump sum severance payment, in cash, within thirty
        (30)
        days after the date of Executive’s Separation from Service, in an amount equal
        to two hundred ninety-nine percent (299%) of the Executive’s then-applicable
        Salary, (3) a lump sum bonus for the year in which termination or resignation
        occurs in an amount equal to the average of the three prior cash bonuses
        received by Executive, such amount to be paid in cash within thirty (30)
        days
        after the date of Executive’s Separation from Service; and (4) to the
        extent Executive elects to continue medical and dental insurance coverage
        under
        COBRA, reimbursement of the COBRA premium for such continuation coverage
        for a
        period of eighteen (18) months following the Termination Date. The accelerated
        vesting provided for in this Paragraph 8 will apply notwithstanding the fact
        that accelerated vesting may not be required in the circumstances under the
        applicable Company stock option plan.

       

      9.    Exclusive
        Employment, Confidential Information, Etc.

       

      (a)    Non-Competition.
        Executive agrees that Executive’s employment hereunder is on an exclusive basis,
        and that during the Term, Executive will not engage in any other business
        activity which is in conflict with Executive’s duties and obligations hereunder,
        except for any such activities which have been previously reported to Company’s
        Board of Directors prior to the date of this Agreement. Subject to the
        foregoing, Executive agrees that for the Term Executive shall not directly
        or
        indirectly engage in or participate as an officer, employee, director, agent
        of
        or consultant for any business in the United States directly competitive
        with
        that of Company, nor shall Executive make any investments in any company
        or
        business competing with Company; provided,
        however,
        that
        nothing herein shall prevent Executive from investing as less than a one
        (1%)
        percent shareholder without limit in the securities of any company listed
        on a
        national securities exchange or quoted on an automated quotation
        system.

       

      (b)    Confidential
        Information.
        Executive recognizes and agrees that access to and knowledge of Company’s trade
        secrets and other confidential information (collectively “confidential
        information”),
        which
        are valuable and unique assets of their businesses, is essential to the
        performance of Executive’s duties hereunder. Accordingly, Executive agrees that
        Executive shall not during the Term disclose any confidential information
        to or
        for the benefit of any third party for any purpose whatsoever (except as
        may be
        required by law or court order or in the performance of Executive’s duties
        hereunder), nor make use of any of the same for Executive’s own purposes;
        provided, however, that disclosures may be made (i) to the extent necessary
        to comply with government disclosure requirements or applicable laws,
        (ii) pursuant to subpoena or order of any judicial, legislative, executive,
        regulatory or administrative body, or for Executive to enforce Executive’s
        rights under this Agreement, (iii) to employees, advisors, counsel,
        financial advisors and other third parties as may be necessary and appropriate
        in connection with the proper performance and enforcement of this Agreement;
        and
        (iv) pursuant to Executive’s normal reporting procedures as an executive of
        a publicly traded company (e.g., pursuant to Sarbanes-Oxley requirements
        or
        otherwise). Confidential information includes, but is not limited to,
        information regarding the businesses of Company, and Company’s customers,
        vendors, policies, products, services, designs, systems, business plans,
        agreements, marketing strategies, pricing and costs. Notwithstanding any
        of the
        foregoing to the contrary, confidential information shall be deemed not to
        include information which (i) is or becomes generally available to the
        public other than as a result of a disclosure by Executive or any other person
        who directly or indirectly receives such information from Executive or at
        Executive’s direction or (ii) is or becomes available to Executive on a
        non-confidential basis from a source which is entitled to disclose it to
        Executive.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (c)    Non-Solicitation
        of Employees.
        Executive promises and agrees that he will not, for a period of one year
        following termination of his employment, directly or indirectly solicit any
        of
        the employees of the Company whose annualized rate of compensation was $100,000
        or more at any time during the last six months of his or her employment with
        the
        Company to work for any business, individual, partnership, firm, corporation,
        or
        other entity. This Paragraph shall not apply to Executive’s Personal
        Assistant.

       

      10.    Notices.
        All
        notices required to be given hereunder shall be given in writing, by personal
        delivery or by certified mail, return receipt requested, at the respective
        addresses of the parties hereto set forth above, or at such other address
        as may
        be designated in writing by either party, and in the case of Company, to
        the
        attention of the General Counsel of Company, and shall also be given to David
        Krinsky, Esq., c/o O’Melveny & Myers LLP, 610 Newport Center Drive, Suite
        1700, Newport Beach, California 92660. Copies of any notices to Executive
        shall
        be delivered to him at the Company’s Santa Clara, California office, and shall
        also be given to M. Kenneth Suddleson, Esq., c/o Foley & Lardner LLP, 2029
        Century Park East, Suite 3500, Los Angeles, California 90067. Any notice
        given
        by mail shall be deemed to have been given three days following such
        mailing.

       

      11.    Assignment.
        This is
        an Agreement for the performance of personal services by Executive and may
        not
        be assigned by Executive or the Company except that the Company may assign
        this
        Agreement to any successor in interest to the Company as a result of a merger,
        consolidation or sale of all or substantially all of the assets of the Company,
        whether by operation of law (in the case of a sale or other transfer of stock)
        or otherwise (subject to the provisions of Paragraph 7 above).

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      12.    California
        law, Etc.
        This
        Agreement and all matters or issues collateral thereto shall be governed
        by the
        laws of the State of California applicable to contracts entered into and
        to be
        performed entirely therein. Any disputes regarding this Agreement or Executive’s
        employment by Company will be resolved through binding arbitration with a
        single
        neutral arbitrator under the rules of JAMS. The proper venue for any such
        action
        is the County of Los Angeles. In any action to enforce this Agreement, Executive
        and the Company each agree to accept service of process by mail at its address,
        as applicable, as set forth above (or at any different address of which
        Executive has notified the Company, or the Company has notified Executive,
        as
        applicable, in writing). In any action in which service is made pursuant
        to this
        Paragraph, Executive and the Company each waive any challenge to the personal
        jurisdiction of JAMS.

       

      13.    Entire
        Understanding.
        This
        Agreement contains the entire understanding of the parties hereto relating
        to
        the subject matter herein contained, and can be changed only by a writing
        signed
        by both parties hereto.

       

      14.    Void
        Provisions.
        If any
        provision of this Agreement, as applied to either party or to any circumstances,
        shall be adjudged by a court to be void or unenforceable, the same shall
        be
        deemed stricken from this Agreement and shall in no way affect any other
        provision of this Agreement or the validity or enforceability of this
        Agreement.

       

      15.    Supersedes
        Previous Understanding.
        This
        Agreement embodies the entire agreement of the parties hereto respecting
        the
        matters within its scope. This Agreement supersedes all prior agreements
        of the
        parties hereto on the subject matter hereof (including, without limitation,
        the
        Prior Employment Agreement). Any prior negotiations, correspondence, agreements,
        proposals, or understandings relating to the subject matter hereof shall
        be
        deemed to be merged into this Agreement and to the extent inconsistent herewith,
        such negotiations, correspondence, agreements, proposals, or understandings
        shall be deemed to be of no force or effect. There are no representations,
        warranties, or agreements, whether express or implied, or oral or written,
        with
        respect to the subject matter hereof, except as set forth herein.

       

      [Remainder
        of Page Intentionally Blank]

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF,
        the
        undersigned have executed this Amended and Restated Employment Agreement
        on the
        date first above written.

      
 

      
        
          	 	
                  NAPSTER,
                    INC.

                	 
	 	 	 
	 	 	 
	 	
                  By:
                    /s/
                    Wm. Christopher Gorog

                	 
	 	
                  Name:
                    Wm.
                    Christopher Gorog

                	 
	 	
                  Title:
                    Chief
                    Executive Officer

                	 
	 	 	 
	 	
                  By:
                    /s/
                    Robert Rodin

                	 
	 	
                  Name:
                    Robert
                    Rodin

                	 
	 	
                  Title:
                    Chairman,
                    Compensation Committee

                	 
	 	 	 
	 	 	 
	 	
                  EXECUTIVE

                	 
	 	 	 
	 	 	 
	 	
                  /s/
                    Wm. Christopher Gorog

                	 
	 	
                  WILLIAM
                    CHRISTOPHER GOROG

                	 

        

        
 

      

      
        
          
            
            

          

          
            S-1

            
              

            

          

          
            
            

          

        

         

        EXHIBIT
          A

      

      

      SECTION
        280G GROSS-UP PROVISIONS

      

      

      Equalization
        Payment.
        If upon
        or following a CIC (as defined below) the tax imposed by Section 4999 of
        the
        Internal Revenue Code of 1986, as amended (the “Code”),
        or
        any similar or successor tax (the “Excise
        Tax”)
        applies, because of the CIC, to any payments, benefits and/or amounts received
        by Executive as severance benefits or otherwise, including, without limitation,
        any amounts received or deemed received, within the meaning of any provision
        of
        the Code, by Executive as a result of (and not by way of limitation) any
        automatic vesting, lapse of restrictions and/or accelerated target or
        performance achievement provisions, or otherwise, applicable to outstanding
        grants or awards to Executive under any of the Company’s incentive plans or
        agreements (collectively, the “Total
        Payments”),
        the
        Company shall pay in cash to Executive or for Executive’s benefit as provided
        below an additional amount or amounts (the “Gross-Up
        Payment(s)”)
        such
        that the net amount retained by Executive after the deduction of any Excise
        Tax
        on such Total Payments so received and any Federal, state and local income
        and
        employment taxes and Excise Tax upon the Gross-Up Payment(s) provided for
        by
        this Exhibit A shall be equal to such Total Payments so received had they
        not
        been subject to the Excise Tax. Such Gross-Up Payment(s) shall be made by
        the
        Company to Executive or applicable taxing authority on behalf of Executive
        as
        soon as practicable following the receipt or deemed receipt of any portion
        of
        such Total Payments so received, and may be satisfied by the Company making
        a
        payment or payments on Executive’s account in lieu of withholding for tax
        purposes but in all events shall be made within thirty (30) days of the receipt
        or deemed receipt by Executive of any portion of such Total Payments. For
        purposes of this Exhibit A, “CIC”
means
        the occurrence, either during the Term or, if the Executive’s employment by the
        Company terminates during the Term, at any time following such termination
        of
        employment, of either (a) a change in the ownership or effective control
        of the
        Company (within the meaning of Section 280G of the Code), or (b) or a change
        in
        the ownership of a substantial portion of the assets of the Company (within
        the
        meaning of Section 280G of the Code).

       

      Calculation
        of Gross-Up Payment.
        The
        determination of whether a Gross-Up Payment is required pursuant to this
        Exhibit
        A and the amount of any such Gross-Up Payment shall be determined in writing
        (the “Determination”)
        by a
        nationally-recognized certified public accounting firm selected by the Company
        (the “Accounting
        Firm”).
        The
        Accounting Firm shall provide its Determination in writing, together with
        detailed supporting calculations and documentation and any assumptions used
        in
        making such computation, to the Company and Executive within twenty (20)
        days
        after the later of the date of the CIC or the Executive’s Termination Date.
        Within twenty (20) days following delivery of the Accounting Firm’s
        Determination, Executive shall have the right, at the Company’s expense, to
        obtain the opinion of an “outside counsel,” which opinion need not be
        unqualified, which sets forth: (a) the amount of Executive’s “annualized
        includible compensation for the base period” (as defined in Code Section 280G(d)
        (1)); (b) the present value of the Total Payments; (c) the amount and present
        value of any “excess parachute payment;” and (d) detailed supporting
        calculations and documentation and any assumptions used in making such
        computations. The opinion of such outside counsel shall be supported by the
        opinion of a nationally-recognized certified public accounting firm and,
        if
        necessary or required by the Company, a firm of nationally-recognized executive
        compensation consultants. The outside counsel’s opinion shall be binding upon
        the Company and Executive and shall constitute the “Determination”
for
        purposes of this Exhibit A instead of the initial determination by the
        Accounting Firm. The Company shall pay (or, to the extent paid by Executive,
        reimburse Executive for) the certified public accounting firm’s and, if
        applicable, the executive compensation consultant’s reasonable and customary
        fees for rendering such opinion. For purposes of this Exhibit A, “outside
        counsel” means a licensed attorney selected by Executive who is recognized in
        the field of executive compensation and has experience with respect to the
        calculation of the Excise Tax; provided that the Company must approve
        Executive’s selection, which approval shall not be unreasonably
        withheld.

       

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

       

      Computation
        Assumptions.
        For
        purposes of determining whether any payments, benefits and/or amounts, including
        amounts paid as severance benefits, will be subject to Excise Tax, and the
        amount of any such Excise Tax:

       

      (a)    Any
        other
        payments, benefits and/or amounts received or to be received by Executive
        in
        connection with or contingent upon a CIC of the Company or Executive’s
        termination of employment (whether pursuant to the terms of this Agreement
        or
        any other plan, arrangement or agreement with the Company, or with any person
        whose actions result in a CIC of the Company or any person affiliated with
        the
        Company or such persons) shall be combined to determine whether Executive
        has
        received any “parachute payment” within the meaning of Section 280G(b)(2) of the
        Code, and if so, the amount of any “excess parachute payments” within the
        meaning of Section 280G(b)(1) that shall be treated as subject to the Excise
        Tax, unless in the opinion of the person or firm rendering the Determination,
        such other payments, benefits and/or amounts (in whole or in part) do not
        constitute parachute payments, or such excess parachute payments represent
        reasonable compensation for services actually rendered within the meaning
        of
        Section 280G(b)(4) of the Code in excess of the base amount within the meaning
        of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise
        Tax;

       

      (b)    The
        value
        of any non-cash benefits or any deferred payment or benefit shall be determined
        by the person or firm rendering the Determination in accordance with the
        principles of Sections 280G(d)(3) and (4) of the Code.

       

      (c)    The
        compensation and benefits provided for in this Agreement, and any other
        compensation earned prior to the Termination Date by Executive pursuant to
        the
        Company’s compensation programs (if such payments would have been made in the
        future in any event, even though the timing of such payment is triggered
        by the
        CIC), shall for purposes of the calculation pursuant to this Exhibit A be
        deemed
        to be reasonable; and

       

      (d)    Executive
        shall be deemed to pay Federal, state, and local income taxes at the highest
        applicable marginal rate of taxation (subject, in the case of employment
        taxes,
        to any applicable wage base limitations) in the calendar year in which the
        Gross-Up Payment is to be made. Furthermore, the computation of the Gross-Up
        Payment shall assume (and adjust for the fact) that (i) there is a loss of
        miscellaneous itemized deductions under Section 67 of the Code (or analogous
        federal or state provisions) on account of the Gross-Up Payment and (ii)
        a loss
        of itemized deductions under Section 68 of the Code (or analogous federal
        or
        state provisions) on account of the Gross-Up Payment. The computation of
        the
        Gross-Up Payment shall take into account any reduction in the Gross-Up Payment
        due to Executive’s share of the hospital insurance portion of FICA and any state
        withholding taxes (other than any state withholding tax for income tax
        liability). The computation of the state and local income taxes applicable
        to
        the Gross-Up Payment shall be based on the highest marginal rate of taxation
        in
        the state and locality of Executive’s residence on the Termination Date, and
        shall take into account the maximum reduction in Federal income taxes that
        could
        be obtained from the deduction of such state and local taxes.

       

      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

       

      Executive’s
        Obligation to Notify Company.
        Executive shall promptly notify the Company in writing of any claim by the
        Internal Revenue Service (or any successor thereof) or any state or local
        taxing
        authority (individually or collectively, the “Taxing
        Authority”)
        that,
        if successful, would require the payment by the Company of a Gross-Up Payment
        in
        excess of any Gross-Up Payment as originally set forth in the Determination.
        If
        the Company notifies Executive in writing that it desires to contest such
        claim,
        Executive shall: (a) give the Company any information reasonably requested
        by
        the Company relating to such claim; (b) take such action in connection with
        contesting such claim as the Company shall reasonably request in writing
        from
        time to time, including, without limitation, accepting legal representation
        with
        respect to such claim by an attorney selected by the Company that is reasonably
        acceptable to Executive; (c) cooperate with the Company in good faith in
        order
        to effectively contest such claim; and (d) permit the Company to participate
        in
        any proceedings relating to such claim; provided that the Company shall bear
        and
        pay directly all attorneys fees, costs and expenses (including additional
        interest, penalties and additions to tax) incurred in connection with such
        contest and shall indemnify and hold Executive harmless, on an after-tax
        basis,
        for all taxes (including, without limitation, income and excise taxes),
        interest, penalties and additions to tax imposed in relation to such claim
        and
        in relation to the payment of such costs and expenses or indemnification.
        Without limitation on the foregoing provisions of this paragraph, and to
        the
        extent its actions do not unreasonably interfere with or prejudice Executive’s
        disputes with the Taxing Authority as to other issues, the Company shall
        control
        all proceedings taken in connection with such contest and, in its reasonable
        discretion, may pursue or forego any and all administrative appeals,
        proceedings, hearings and conferences with the Taxing Authority in respect
        of
        such claim and may, at its sole option, either direct Executive to pay the
        tax,
        interest or penalties claimed and sue for a refund or contest the claim in
        any
        permissible manner, and Executive agrees to prosecute such contest to a
        determination before any administrative tribunal, in a court of initial
        jurisdiction and in one or more appellate courts, as the Company shall
        determine; provided, however, that if the Company directs Executive to pay
        such
        claim and sue for a refund, the Company shall advance an amount equal to
        such
        payment to Executive, on an interest-free basis, and shall indemnify and
        hold
        Executive harmless, on an after-tax basis, from all taxes (including, without
        limitation, income and excise taxes), interest, penalties and additions to
        tax
        imposed with respect to such advance or with respect to any imputed income
        with
        respect to such advance, as any such amounts are incurred; and, further,
        provided, that any extension of the statute of limitations relating to payment
        of taxes, interest, penalties or additions to tax for the taxable year of
        Executive with respect to which such contested amount is claimed to be due
        is
        limited solely to such contested amount; and, provided, further, that any
        settlement of any claim shall be reasonably acceptable to Executive and the
        Company’s control of the contest shall be limited to issues with respect to
        which a Gross-Up Payment would be payable hereunder, and Executive shall
        be
        entitled to settle or contest, as the case may be, any other issue.

       

      
        
          
          

        

        
          A-3

          
            

          

        

        
          
          

        

      

       

      Subsequent
        Recalculation.
        In the
        event of a binding or uncontested determination by the Taxing Authority that
        adjusts the computation set forth in the Determination so that Executive
        did not
        receive the greatest net benefit required pursuant to this Exhibit A, the
        Company shall reimburse Executive as provided herein for the full amount
        necessary to place Executive in the same after-tax position as he would have
        been in had no Excise Tax applied. In the event of a binding or uncontested
        determination by the Taxing Authority that adjusts the computation set forth
        in
        the Determination so that Executive received a payment or benefit in excess
        of
        the amount required pursuant to this Exhibit A, then Executive shall promptly
        pay to the Company (without interest) the amount of such excess.

       

      

      
        
          
          

        

        
          A-4

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