Document:

Exhibit 10.1  

December
[    ], 2002 

To:
Computer Associates International, Inc.

Address: One Computer Associates Plaza

Islandia, NY 11749

Telephone: 631-342-2860

Facsimile: 631-342-5117 

From:
[ ] 

Re:
Issuer Call Spread Transaction 

Reference:
[ ] 

        The
purpose of this letter agreement is to confirm the terms and conditions of the Transaction entered into between Party A ("Party A")
and Computer Associates International, Inc. (either "Counterparty" or "Party B") on the Trade Date specified below (the "Transaction"). This
letter agreement constitutes a "Confirmation" as referred to in the ISDA Master Agreement specified below. This letter agreement is being entered into in connection with the sale by Counterparty of
its 15/8% Senior Convertible Notes due 2009 (the "Convertible Notes"). 

        The
definitions and provisions contained in the 1996 ISDA Equity Derivatives Definitions (the "Equity Definitions"), as published by the International Swaps and Derivatives
Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern. This
Confirmation evidences a complete binding agreement between Counterparty and Party A as to the terms of the transaction to which this Confirmation relates. This Transaction shall be deemed to consist
of Share Option Transactions, each within the meaning as set forth in the Equity Definitions and each referred to sequentially in Annex A. 

        Each
party is hereby advised, and each such party acknowledges, that the other party has engaged in, or refrained from engaging in, substantial financial transactions and has taken other
material actions in reliance upon the parties' entry into the Transaction to which this Confirmation relates on the terms and conditions set forth below. 

1.    If
Counterparty and Party A have entered into an ISDA Master Agreement (the "Agreement"), then this Confirmation supplements, forms a part of, and is subject to, that Agreement, as
amended and supplemented from time to time. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. If Counterparty and Party A have not entered into an
ISDA Master Agreement, then they agree to use all reasonable efforts to promptly negotiate, execute and deliver an agreement in the form of the ISDA Master Agreement (Multicurrency-Cross Border) (the
"ISDA Form"), with such modifications as Counterparty and Party A will in good faith agree. Upon the execution of such an agreement, this Confirmation will supplement, form a part of, and be
subject to, that agreement. All provisions contained or incorporated by reference in that agreement upon its execution will govern this Confirmation except as expressly modified below. Until the
parties execute and deliver that agreement, this Confirmation, together with all other documents relating to the ISDA Form (each a "Confirmation") confirming transactions (each a "Transaction")
entered into between us (notwithstanding anything to the contrary in a Confirmation), shall supplement, form a part of, and be subject to an agreement in the form of the ISDA Form as if we had
executed an agreement in such form (but without any Schedule) on the Trade Date of the first such Transaction between us (such agreement, or the ISDA Form, hereinafter the "Agreement"). In the event
of any inconsistency between the provisions of the agreement and this Confirmation, this Confirmation will prevail for the purpose of this Transaction. For purposes of such ISDA Master Agreement and
with respect of all Transactions thereunder in addition to such other modifications to the ISDA Form as shall be agreed by the parties from time to time and which may be set forth in any Confirmation,
the parties agree to the following provisions with respect to the ISDA Master Agreement: Second Method and Loss shall apply. 

 

It
is the understanding of the Parties that this Confirmation shall supercede all agreements and understandings related to this Transaction, including the Transaction Acknowledgment entered into by
the Parties in contemplation of this Transaction. 

	2.
	The
terms of the particular Transaction to which this Confirmation relates are as follows: 

General
Terms applicable to each Share Option Transaction ("SOT"): 

	 	 	

Trade Date:	
 	

December 6, 2002
	 	 	

Option Style:	
 	

European
	 	 	

Option Type:	
 	

Call Spread
	 	 	

Buyer:	
 	

Counterparty
	 	 	

Seller:	
 	

Party A
	 	 	

Shares:	
 	

The common stock of Computer Associates International, Inc. (the "Issuer"), par value U.S. $0.10 per Share (Exchange symbol "CA")
	 	 	

Number of Options:	
 	

As specified on Annex A
	 	 	

Option Entitlement:	
 	

One Share per Option
	 	 	

Low Call Strike Price:	
 	

U.S. $20.04
	 	 	

High Call Strike Price:	
 	

U.S. $30.00
	 	 	

Premium:	
 	

$36,330,000
	 	 	

Premium Payment Date:	
 	

December 11, 2002
	 	 	

Exchange:	
 	

The New York Stock Exchange
	 	 	

Related Exchange(s):	
 	

The principal exchange(s) for options contracts or futures contracts, if any, with respect to the Shares
	 	 	

Dividend Adjustment:	
 	

Notwithstanding the provisions of Section 9.1(e) of the Equity Definitions, if the Shares shall have gone ex-dividend with respect to any ordinary cash dividends ("Ordinary Dividend") on any day from and excluding the Trade Date, to and including the
Expiration Date and such Ordinary Dividend is less than U.S. $0.04 per Share (assuming a semi-annual dividend with appropriate adjustments to the terms of this Transaction in the event that the Issuer pays dividends other than on a semi-annual basis)
(the "Contractual Dividend"), then the Low Call Strike Price and the High Call Strike Price shall each be increased by an amount as determined by the Calculation Agent in a commercially reasonable manner.
	

Procedure for Exercise applicable to each Share Option Transaction:
	 	 	 

2

 

	 	 	

Exercise Date:	
 	

The Expiration Date, if on such date a SOT is or is deemed to be exercised, unless there is a Market Disruption Event on that date. If there is a Market Disruption Event on that day, then the Exercise Date shall be the first succeeding Exchange
Business Day on which there is no Market Disruption Event, unless there is a Market Disruption Event on each of the five Exchange Business Days immediately following the original date that, but for the Market Disruption Event, would have been the
Exercise Date. In that case, (a) that fifth Exchange Business Day shall be deemed to be the Exercise Date, notwithstanding the Market Disruption Event, and (b) the Calculation Agent shall determine the Reference Price, or Settlement Price, as the
case may be, on the basis of its good faith estimate of the trading value for the relevant Shares and each following Expiration Date for the remaining SOTs shall be postponed the minimum number of Exchange Business Days so that each Expiration Date
for the remaining SOTs falls on a separate Exchange Business Day; provided however, that if an Expiration Date for any SOT shall occur on or after 01/30/10, an Additional Termination Event shall be deemed to have occurred, the Early Termination Date
shall be 01/30/10, this Transaction shall be the sole Affected Transaction and Party A and Counterparty shall be the Affected Parties.
	 	 	

Expiration Time:	
 	

The Valuation Time
	 	 	

Expiration Date:	
 	

See Annex A
	 	 	

Automatic Exercise:	
 	

Applicable; provided that, notwithstanding the Equity Definitions, each Option will be deemed to be automatically exercised (i) where Cash Settlement or Net Share Settlement is applicable, at the Expiration Time on the Expiration Date, unless
Counterparty notifies Party A (by phone or in writing) prior to the Expiration Time on the Expiration Date that it does not wish Automatic Exercise to occur, and (ii) where Physical Settlement is applicable, at the Expiration Time on the Expiration
Date if at such time the Option is In-the-Money. "In-the-Money" means that the Reference Price exceeds the Low Call Strike Price.
	

Valuation applicable to each Share Option Transaction:
	 	 	 

3

 

	 	 	

Valuation Time:	
 	

At the close of trading of the regular trading session on the Exchange
	 	 	

Valuation Date:	
 	

The Exercise Date
	

Settlement Terms applicable to each Share Option Transaction:
	

Physical Settlement:	
 	

Applicable, where each SOT shall be deemed "Physically Settled"; provided, however, that Counterparty may elect the method of settlement with respect to all or a portion of such SOT to be Net Share Settlement, subject to the Additional Terms set
forth in Section 3 (a) herein, or Cash Settlement, subject to the Additional Terms set forth in Section 3(b) herein. For the avoidance of doubt, if Counterparty elects to settle all or a portion of any SOT pursuant to Net Share Settlement Terms or
Cash Settlement Terms as set forth below, the provisions relating to Physical Settlement will apply with respect to the remaining Number of Options not subject to Net Share Settlement or Cash Settlement.
	

 	
 	

Notwithstanding any election by Counterparty to net share settle or cash settle all or a portion of any SOT in accordance with the terms hereof, Party A may impose additional requirements or modifications, including, without limitation, the
registration of the Shares held by Party A as part of its hedge, the entering into of a registration rights agreement in a form acceptable to both parties, due diligence requirements of Party A, and effectiveness of a registration statement if in its
good faith determination registration of additional shares held as its hedge is legally required for sale in the public Market.
	

Physical Settlement Terms:	
 	

Physical Settlement means that Party A shall deliver to Counterparty the Number of Shares to be Delivered (as defined below) through the Clearance System against payment of the Settlement Price by Counterparty to Party A.
	

Number of Shares to be Delivered:	
 	

(a) If the Reference Price is greater than the High Call Strike Price, the difference between (A) the Number of Options less (B) the product of (x) the Number of Options times (y) the quotient of (i) the Reference Price minus the High Call Strike
Price, divided by (ii) the Reference Price.
	

 	
 	

(b) If the Reference Price is greater than or equal to the Low Call Strike Price and less than or equal to the High Call Strike Price, the Number of Options.
	 	 	 

4

 

	

 	
 	

(c) If the Reference Price is less than the Low Call Strike Price, zero.
	

Settlement Price:	
 	

(a) If the Reference Price is greater than or equal to the Low Call Strike Price, an amount equal to the product of the (x) the Low Call Strike Price times (y) the Number of Options;
	

 	
 	

(b) If the Reference Price is less than the Low Call Strike Price, zero.
	

Reference Price:	
 	

The closing price per Share on the Exchange at the Valuation Time on the Valuation Date.
	

Settlement Date:	
 	

For any SOT, the final Settlement Date (as defined in Section 6.2 of the Equity Definitions) for all SOTs.
	

Failure to Deliver:	
 	

Applicable
	

3.    Additional Terms applicable to each Share Option Transaction:
	

(a) Option to Net Share Settle:	
 	

Counterparty shall have the right, but not the obligation to net share settle any SOT, in whole or in part. If Counterparty elects such right, Counterparty will execute and deliver written notice to Party A on any Currency Business Day but no later
than 12:00 p.m. noon New York City time on the Currency Business Day prior to the Expiration Date for such SOT, specifying that Net Share Settlement applies to such SOT and specifying the Number of Options subject to Net Share Settlement. Once Net
Share Settlement is elected with respect to such SOT, such election shall be irrevocable. Such notice shall be given by facsimile and telephone.
	

Net Share Settlement Terms:	
 	

 
	

Net Share Settlement:	
 	

Applicable, provided that Counterparty properly elects net share settlement in accordance with the "Option to Net Share Settle" provision above. Net Share Settlement shall mean Party A shall deliver to Counterparty the Share Delivery Quantity of
Shares on the Settlement Date to the account specified hereto free of payment through the Clearance System. For the avoidance of doubt, the Number of Options subject to Net Share Settlement shall be the Number of Options so specified by Counterparty
in the written notice delivered to Party A.
	

Share Delivery Quantity:	
 	

A number of Shares, as calculated by the Calculation Agent, equal to the Net Share Settlement Amount divided by the Settlement Price, plus cash in lieu of any fractional shares.
	 	 	 

5

 

	

Net Share Settlement Amount:	
 	

The product of the Number of Options multiplied by the Option Entitlement, multiplied by the Strike Price Differential.
	

Strike Price Differential:	
 	

(a) If the Settlement Price is greater than or equal to the Low Call Strike Price and less than or equal to the High Call Strike Price, an amount equal to the excess of the Settlement Price over the Low Call Strike Price; or
	

 	
 	

(b) If the Settlement Price is greater than the High Call Strike Price, an amount equal to the excess of the High Call Strike Price over the Low Strike Price; or
	

 	
 	

(c) If the Settlement Price is less than the Low Call Strike Price, zero.
	

Settlement Price:	
 	

The closing price per Share on the Exchange at the Valuation Time on the Valuation Date.
	

Settlement Date:	
 	

For any SOT, the final Settlement Date (as defined in Section 6.2 of the Equity Definitions) for all SOTs.
	

Failure to Deliver:	
 	

Applicable
	

Other Applicable Provisions:	
 	

If any portion of any SOT is to be Net Share Settled, the provisions of Sections 6.6, 6.7, 6.8 and 6.10 of the Equity Definitions will be applicable, except that all references in such provisions to "Physically-Settled" shall be read as references to
"Net Share Settled". "Net Share Settled" in relation to any SOT means, that Net Share Settlement is applicable to that SOT.
	

(b) Option to Cash Settle:	
 	

Counterparty shall have the right, but not the obligation, to cash settle any SOT, in whole or in part. If Counterparty elects such right, it will execute and deliver written notice to Party A on any Currency Business Day but no later than 12:00 p.m.
noon New York City time on the third Currency Business Day prior to the Expiration Date for such SOT, specifying that Cash Settlement applies to such SOT and specifying the Number of Options subject to Cash Settlement. Once Cash Settlement is elected
with respect to such SOT, such election shall be irrevocable. Such notice shall be given by facsimile and telephone.
	

Cash Settlement Terms:	
 	

 
	 	 	 

6

 

	

Cash Settlement:	
 	

Applicable, provided that Counterparty properly elects cash settlement in accordance with the "Option to Cash Settle" provision above. Party A shall pay to Counterparty the Cash Settlement Amount, if any, on the Cash Settlement Payment Date for all
Options exercised or deemed exercised. For the avoidance of doubt, the Number of Options subject to Cash Settlement shall be the Number of Options so specified by Counterparty in the written notice delivered to Party A.
	

Cash Settlement Amount:	
 	

An amount, as calculated by the Calculation Agent, equal to the Number of Options exercised on the Exercise Date multiplied by the Option Entitlement multiplied by the Strike Price Differential.
	

Strike Price Differential:	
 	

(a) If the Settlement Price is greater than or equal to the Low Call Strike Price and less than or equal to the High Call Strike Price, an amount equal to the excess of the Settlement Price over the Low Call Strike Price; or
	

 	
 	

(b) If the Settlement Price is greater than the High Call Strike Price, an amount equal to the excess of the High Call Strike Price over the Low Strike Price; or
	

 	
 	

(c) If the Settlement Price is less than the Low Call Strike Price, zero.
	

Cash Settlement Payment Date:	
 	

Three (3) Currency Business Days following the Exercise Date for a SOT.
	

Settlement Price:	
 	

The closing price per Share on the Exchange at the Valuation Time on the Valuation Date.
	

Settlement Currency:	
 	

USD
	

Adjustments applicable to each Share Option Transaction:
	 	 	

Method of Adjustment:	
 	

Calculation Agent Adjustment (including with respect to the terms of Annex A hereto)
	

Extraordinary Events applicable to each Share Option Transaction:
	 	

Consequence of Merger Events	
 	

 
	 	

(a) Share-for-Share:	
 	

Cancellation and Payment
	 	

(b) Share-for-Other:	
 	

Cancellation and Payment
	 	

(c) Share-for-Combined:	
 	

Cancellation and Payment
	

Nationalization, Insolvency or De-Listing Event:	
 	

Cancellation and Payment
	 	 	 

7

 

	 	

"De-Listing Event" means that the Shares cease to be listed on, or quoted by, any of the New York Stock Exchange, the American Stock Exchange or the Nasdaq Stock Market (or their respective successors) for any reason (other than a Merger Event,
Nationalization or Insolvency). Upon the occurrence of a De-Listing Event, the provisions of Section 9.7 of the Equity Definitions will apply, with the Announcement Date deemed to be the date that the De-Listing Event first occurs (as determined by
the Calculation Agent).
	

4.    Calculation Agent:	
 	

Party A, whose calculations and determinations shall be made in good faith and in a commercially reasonable manner, including with respect to calculations and determinations that are made in its sole discretion. In making determinations hereunder,
the Calculation Agent agrees to consult with the calculation agent (the "Other Agent") under the Issuer call spread transaction dated as of the date hereof between Counterparty and Party C (the "Other Transaction") so long as Party C or an affiliate
thereof is the Other Agent and a similar provision is in the Other Transaction.
	

5.    Cap on Net Value:	
 	

Notwithstanding anything to the contrary contained herein, the Net Value in cash and/or shares deliverable to Counterparty with respect to all SOTs shall not exceed an amount equal to [one half of] the excess, if any, of (i) the aggregate value
(excluding interest) in cash and/or shares payable by Counterparty under the Convertible Notes at their maturity, assuming conversion, over (ii) the aggregate amount of cash (excluding interest) payable by Counterparty under the Convertible Notes in
the absence of conversion.
	

 	
 	

"Net Value" means an amount equal to the excess, if any, of (i) the aggregate value of any cash or shares deliverable to Counterparty by Party A under this Transaction over (ii) the aggregate amount of cash, if any, deliverable to Party A by
Counterparty on the Settlement Date under this Transaction.
	

 	
 	

For the purpose of determining the value of shares under this provision (either deliverable under the Convertible Notes, or deliverable under this Confirmation), the value of such shares shall be their closing prices on the final Expiration Date of
all SOTs hereunder.

8

  

	 	 	

6. Account Details:	
 	

 
	 	

(a) Account for payments to Counterparty:	
 	

 
	 	 	

Mellon Bank N.A., Pittsburgh

ABA # 043000261

Acct: Computer Associates International, Inc.

Acct No.: 178-1540

Account for delivery of Shares to Counterparty: .

Mellon Investor Services LLP, Overpeck House

85 Challenger Road

Ridgefield Park, NJ 07660

Contact: Regina Brown

Telephone (917) 320-6238

	 	

(b) Account for payments to Party A:

[                        ]	
 	

 

	7.
	Offices:

The
Office of Counterparty for the Transaction is: Inapplicable, Counterparty is not a Multibranch Party. 

The
Office of Party A for the Transaction is: [            ] 

	8.
	Notices:
For purposes of this Confirmation:

	(a)
	Address
for notices or communications to Counterparty:

 Computer
Associates International, Inc.

One Computer Associates Plaza

Islandia, NY 11749

Telephone: 631-342-2860

Facsimile: 631-342-5117 

Attn:
Treasurer 

	(b)
	Address
for notices or communications to Party A:

[                    ]

	9.
	Other
Provisions

	(a)
	Each
party represents that:

	(i)
	Non-Reliance. It is acting for its own account, and it has made its own independent decision to enter into
this Transaction and as to whether this Transaction is appropriate or proper for it based upon its own judgement and upon advice from such advisors as it has deemed necessary. It is not relying on any
communication (written or oral) of the other party as investment advice or as a recommendation to enter into this Transaction; it being understood that information and explanations related to the
terms and conditions of this Transaction shall not be considered investment advice or a recommendation to enter into this Transaction. It 

2

 

has
not received from the other party any assurance or guarantee as to the expected results of this Transaction. 

	(ii)
	Evaluation and Understanding. It is capable of evaluating and understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms, conditions and risks (economic and otherwise) of this Transaction. It has adequate expertise in financial matters to evaluate those terms
and risks and is also capable of assuming (financially and otherwise), and assumes, the financial and other risks of this Transaction.

	(iii)
	Status of Parties. The other party or any affiliate of such party is not acting as a fiduciary or an advisor for it in
respect of this Transaction.

	(iv)
	Counterparty
is an "eligible contract participant" (as such term is defined in Section 1(a)(12) of the Commodity Exchange Act, as amended (the "CEA")) because
one or more of the following is true:

	(i)
	Counterparty
is an individual who:

	(A)
	has
total assets in excess of U.S. $10,000,000; or

	(B)
	has
total assets in excess of U.S. $5,000,000 and has entered into this Agreement in order to manage the risk associated with an asset owned or liability incurred, or reasonably
likely to be owned or incurred, by Counterparty; 

or,

	(ii)
	Counterparty
is a corporation, partnership, proprietorship, organization, trust or other entity and:

	(A)
	Counterparty
has total assets in excess of U.S. $10,000,000;

	(B)
	the
obligations of Counterparty hereunder are guaranteed, or otherwise supported by a letter of credit or keepwell, support or other agreement, by an entity of the type described in
Section 1a(12)(A)(i) through (iv), 1a(12)(A)(v)(I), 1a(12)(A)(vii) or 1a(12)(C) of the CEA; or

	(C)
	Counterparty
has a net worth in excess of U.S. $1,000,000 and has entered into this Agreement in connection with the conduct of Counterparty's business or to manage the risk
associated with an asset or liability owned or incurred or reasonably likely to be owned or incurred by Counterparty in the conduct of Counterparty's business.

	(b)
	No Information. Counterparty represents and warrants that it and its affiliates are not entering into the Transaction on the basis of
any material non-public information with respect to the Shares.

	(c)
	Private Placement. Counterparty represents and warrants to Party A that it (A) is an "accredited investor" within the meaning of
Rule 501(a) under the Securities Act, (B) is acquiring the instruments described in the Transaction for its own account, and not with a view to distribution and (C) understands
and acknowledges that the Transaction has not and will not be registered under the Securities Act.

	(d)
	Consistent with Public Disclosures. Counterparty represents and agrees that the Transaction and any repurchase of the Shares by
Counterparty in connection with the Transaction has been approved by its board of directors and that any such repurchase has been or will be publicly disclosed.

	(e)
	Governing Law/Jurisdiction. This Confirmation shall be governed by the laws of the State of New York without reference to the conflict
of laws provisions thereof. The parties hereto irrevocably submit to the exclusive jurisdiction of the courts of the State of New York and the United States Court for the Southern District of New York
in connection with all matters relating hereto and 

3

 

waive
any objection to the laying of venue in, and any claim of inconvenient forum with respect to, these courts. 

	(f)
	Designation by Party A. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Party A to
purchase, sell, receive or deliver any shares or other securities to or from Counterparty, Party A may designate any of its US affiliates to purchase, sell, receive or deliver such shares or other
securities and otherwise to perform Party A's obligations in respect of this Transaction and any such designee may assume such obligations. Party A shall be discharged of its obligations to
Counterparty to the extent of any such performance.

	(g)
	Disclosure. Counterparty and Party A hereby acknowledge and agree that Party A has authorized Counterparty to disclose this Transaction
to any and all persons, and there are no express or implied agreements, arrangements or understandings to the contrary, and Party A hereby waives any and all claims to any proprietary rights with
respect to this Transaction, and authorizes Counterparty to use any information which Counterparty receives or has received with respect to this Transaction in any manner.

	(h)
	Understanding. Counterparty acknowledges and agrees that it is not relying, and has not relied, upon Party A or any affiliate of Party
A, with respect to the legal, accounting, tax or other implications of this Transaction and that it has conducted its own analyses of the legal, accounting, tax and other implications hereof.

	(i)
	Certain Authorized Transfers. If Party A, in its reasonable judgment based on advice of counsel, determines that it is necessary to do
so, then, upon the consent of Counterparty, which consent shall not be unreasonably withheld, Party A may transfer or assign its rights and obligations in whole or in part to (i) any of its
affiliates or (ii) any entities sponsored or organized by, or on behalf of or for the benefit of, Party A.

	(j)
	Market Disruption Event. (i) The first two lines of Section 4.3(a) of the Equity Definitions are amended to read:
"Section 4.3 Market Disruption Event. (a) "Market Disruption Event" in relation to a Cash-Settled Option Transaction, Physically-Settled Option Transaction or Net Share
Settled Transaction means:', (ii) the second and third line of Section 4.3(a)(ii) are hereby amended by deleting the words "during the one-half hour period that ends
at the relevant Valuation Time" and replacing them with "at any time prior to the relevant Valuation Time" and (iii) the period at the end of Section 4.3(b) of the Equity Definitions
shall be deleted and replaced with "or, for the purposes of Physical Settlement, an Expiration Date".

	(k)
	Waiver of Trial by Jury. EACH OF COUNTERPARTY AND PARTY A HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
TRANSACTION OR THE ACTIONS OF PARTY A OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

	(l)
	Additional Provisions.
	(i)
	The
first paragraph of Section 9.1(c) of the Equity Definitions is hereby amended to read as follows: (c) 'If "Calculation Agent Adjustment" is specified
as the method of adjustment in the Confirmation of a Share Option Transaction, then following the declaration by the Issuer of the terms of any Potential Adjustment Event, the Calculation Agent will
determine whether such Potential Adjustment Event has a material effect on the theoretical value of the relevant Shares or Options and, if so, will (i) make appropriate adjustment(s), if any,
to any one or more of:' and, the sentence immediately preceding Section 9.1(c)(ii) is hereby amended by deleting the words "diluting or concentrative". 

4

 

	(ii)
	Section 9.1(e)(vi) of
the Equity Definitions is hereby amended by deleting the words "other similar" between "any" and "event"; deleting the words
"diluting or concentrative" and replacing them with "material"; and adding the following words at the end of the sentence "or Options".

	(iii)
	Section 9.6(a)(ii) of
the Equity Definitions is hereby amended by (1) deleting from the third line thereof the word "or" after the word "official"
and inserting a comma therefor, and (2) deleting the period at the end of subsection (ii) thereof and inserting the following words therefor "or (C) at Party A's option, the
occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer."

	(iv)
	Notwithstanding
Section 9.7 of the Equity Definitions, everything in the first paragraph of Section 9.7(b) of the Equity Definitions after the words
"Calculation Agent" in the third line through the remainder of such Section 9.7 shall be deleted and replaced with the following: 

"based
on an amount representing the Calculation Agent's determination of the fair value to Buyer of an option with terms that would preserve for Buyer the economic equivalent of any payment or
delivery (assuming satisfaction of each applicable condition precedent) by the parties in respect of the relevant Transaction that would have been required after that date but for the occurrence of
the Merger Event, Nationalization, Insolvency or De-Listing Event, as the case may be." 

	(v)
	Solely
for purposes of applying the Equity Definitions and for purposes of this Confirmation, any reference to a Strike Price shall be deemed to be a reference to any of
the Low Call Strike Price or the High Call Strike Price, or both, as appropriate.

	(m)
	Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If Party A shall owe Counterparty any
amount pursuant to Sections 9.3, 9.6 or 9.7 of the Equity Definitions (except in the event of a Nationalization or a Merger Event in which the merger consideration to be paid to holders of Shares
consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the event of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event
in which Counterparty is the Affected Party, other than an Event of Default of the type described in Section 5(a)(iii), (v), (vi) or (vii) of the Agreement or a Termination Event
of the type described in Section 5(b)(i), (ii), (iii), (iv), or (v) of the Agreement that resulted from an event or events outside Counterparty's control) (a "Payment Obligation"),
Counterparty shall have the right, in its sole discretion, to require Party A to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable
telephonic notice to Party A, confirmed in writing within one Currency Business Day, between the hours of 9:00 a.m. and 4:00 p.m. New York local time on the Merger Date, Announcement
Date or Early Termination Date, as applicable ("Notice of Share Termination"). Upon Notice of Share Termination no later than 8:00 a.m. on the Exchange Business Day immediately following the
Merger Date, Announcement Date or Early Termination Date, as applicable, the following provisions shall apply: 

	 	 	 

5

 

	

Share Termination Alternative:	
 	

Applicable and means that Party A shall deliver to Counterparty the Share Termination Delivery Property on the date when the Payment Obligation would otherwise be due pursuant to Section 9.7 of the Equity Definitions or Section 6(d)(ii) of the
Agreement, as applicable (the "Share Termination Payment Date"), in satisfaction of the Payment Obligation in the manner reasonably requested by Counterparty free of payment.
	

Share Termination Delivery Property:	
 	

A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing
any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
	

Share Termination Unit Price:	
 	

The value to Party A of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion
by commercially reasonable means and notified by the Calculation Agent to Party A at the time of notification of the Payment Obligation.
	 	 	 

6

 

	

Share Termination Delivery Unit:	
 	

In the case of a Termination Event or Event of Default, one Share or, in the case of a Merger Event, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay
cash or other consideration in lieu of fractional amounts of any securities) in such Merger Event. If a Share Termination Delivery Unit consists of property other than cash or New Shares and if Counterparty provides irrevocable written notice to the
Calculation Agent on or prior to the Merger Date that it elects to have Party A deliver cash, New Shares or a combination thereof (in such proportion as Counterparty designates) in lieu of such other property, the Calculation Agent will replace such
property with cash, New Shares or a combination thereof as components of a Share Termination Delivery Unit in such amounts, as determined by the Calculation Agent in its discretion by commercially reasonable means, as shall have a value equal to the
value of the property so replaced. If such Merger Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
	

Failure to Deliver:	
 	

Applicable
	

Other applicable provisions:	
 	

If this Transaction is to be Share Termination Settled, the provisions of Sections 6.6, 6.7, 6.8 and 6.10 of the Equity Definitions will be applicable, except that all references in such provisions to "Physically-Settled" shall be read as references
to "Share Termination Settled" and all references to "Shares" shall be read as references to "Share Termination Delivery Units". "Share Termination Settled" in relation to this Transaction means that Share Termination Settlement is applicable to this
Transaction.

Please
confirm your acceptance and agreement with the foregoing by immediately executing the copy of this Confirmation enclosed for that purpose and returning it to [ ] by
facsimile at 212-230-8610. 

Very
truly yours,

  [                        ]

7

 

By:                                

Authorized Signatory

Name: 

Accepted
and confirmed

as of the Trade Date:
 Computer Associates International, Inc.

By:                                

Authorized Signatory

Name: 

8EXHIBIT 10.24

                      NOTE PURCHASE AND SECURITY AGREEMENT

     This Note Purchase and Security Agreement (the "Agreement") is entered into
as of July 1, 2003, by and between PetCARE Television Network, Inc., a Florida
corporation (the "Company") and Pet Edge, LLC, a Connecticut limited liability
company ("Edge").

     WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Company is issuing that certain Senior Convertible Promissory
Note (the "Note") attached hereto as Exhibit A to Edge in the principal amount
of $275,000, payable to Edge in cash or convertible into equity of the Company
in the manner and under the terms set forth therein; and

     WHEREAS, the Company and Edge wish to set forth the nature of the
consideration Edge is providing to the Company in exchange for the Note and to
acknowledge delivery and receipt thereof.

     NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Edge hereby agree as follows:

1. Purchase and Sale of Note. Subject to all of the terms and conditions of this
Agreement and in reliance on the representations and warranties set forth
herein, the Company proposes to sell to Edge the Note in exchange for the
consideration described in Section 2 hereof.

2. Consideration for Note. Upon and in exchange for the Company's issuance of
the Note to Edge, Edge shall deliver to the Company, and by signing below, the
Company hereby accepts and acknowledges receipt of, immediately available funds
in the amount of $275,000.

3. Representations and Warranties.

     (a)  Company. The Company represents and warrants to Edge as follows:

          (i)  Organization. The Company and each of its Subsidiaries, if any,
               are duly organized and validly existing corporations in good
               standing under the laws of the jurisdiction of incorporation. The
               Company and each of its Subsidiaries, if any, is duly qualified
               to do business as a foreign corporation and is in good standing
               in each jurisdiction in which it does business, except where the
               failure to so qualify would not have a material adverse effect.
               For the purposes of this Agreement, the term "Subsidiary" shall
               mean with respect to any person, any corporation, limited
               liability company, partnership, joint venture, trust or estate of
               which, or in which, more than 50% of (i) the issued and
               outstanding capital stock having ordinary voting power to elect a
               majority of the Board of Directors of such corporation, (ii) the
               interest in capital or profits of such limited liability company,
               partnership or joint venture, or (iii) the beneficial interest in

                                       1

<PAGE>

               such trust or estate, is at the time directly or indirectly owned
               or controlled by such person, by such person and one or more of
               its subsidiaries, or by one or more of such person's other
               subsidiaries.

          (ii) Corporate Power, Authorization. The Company has all necessary
               corporate power and authority to enter into and perform this
               Agreement and its obligations under the Note, and to carry on the
               business now conducted or presently proposed to be conducted by
               it. All corporate actions on the part of the Company necessary
               for the due authorization, execution and delivery of this
               Agreement and the consummation of the transactions contemplated
               herein, and for the due authorization and issuance of the Note
               have been taken. This Agreement and the Note are legally binding
               on the Company, enforceable in accordance with their terms. The
               execution, delivery and performance by the Company of this
               Agreement and the issuance and sale of the Note will not result
               in any violation of or be in conflict with, or result in a breach
               of or constitute a default under, any term or provision of the
               Company's certificate of incorporation, by-laws or any contract
               to which the Company is a party or by which it is bound, except
               where such violation, conflict, breach or default would not have
               a material adverse effect on the Company.

         (iii) No Insolvency. The Company is not insolvent. Insolvent means any
               of the following:

               A.   the Company shall have (a) applied for or consented to the
                    appointment of a receiver, trustee, liquidator or custodian
                    of itself or of all or a substantial part of its property,
                    (b) made a general assignment for the benefit of its
                    creditors, (c) been dissolved or liquidated in full or in
                    part, or (d) commenced a voluntary case or other proceeding
                    seeking liquidation, reorganization or other relief with
                    respect to itself or its debts under any bankruptcy,
                    insolvency or other similar law now or hereafter in effect
                    or consent to any such relief or to the appointment of or
                    taking possession of its property by any official in an
                    involuntary case or other proceeding commenced against it;

               B.   proceedings for the appointment of a receiver, trustee,
                    liquidator or custodian of the Company or all or a
                    substantial part of the property thereof, or an involuntary
                    case or other proceedings seeking liquidation,
                    reorganization or other relief with respect to Company or
                    the debts thereof under any bankruptcy, insolvency or other
                    similar law now or hereafter in effect shall have been
                    commenced and such proceeding shall not have been dismissed,
                    discharged or stayed; or

               C.   the Company is unable to pay in full and in a timely manner
                    of its debts due and payable in the ordinary course of
                    business.

                                       2

<PAGE>

          (iv) Capitalization. The Company has delivered to Edge a schedule (the
               "Capitalization Schedule") detailing the capitalization of the
               Company as of the date hereof. On the date hereof, the Company
               has no outstanding capital stock except as listed on the
               Capitalization Schedule. All of the outstanding shares of capital
               stock have been offered and sold in compliance with applicable
               federal and state securities laws. No Subsidiary has any
               outstanding capital stock except for shares of capital stock
               owned beneficially and of record by the Company, all of which are
               duly authorized, validly issued, fully paid and non-assessable.
               Other than as set forth on the Capitalization Schedule, neither
               the Company nor any Subsidiary has outstanding (a) any rights
               (either preemptive or otherwise) or options to subscribe for or
               purchase, or any warrants or other agreements providing for or
               requiring the issuance of, any capital stock or any securities
               convertible into or exchangeable for its capital stock, (b) any
               obligation to repurchase or otherwise acquire or retire any of
               its capital stock, any securities convertible into or
               exchangeable for its capital stock or any rights, options or
               warrants with respect thereto, (c) any rights that require it to
               register the offering of any of its securities under the
               Securities Act of 1933, as amended or (d) any restrictions on
               voting any of its securities.

          (v)  Financial Statements and projections. Edge has been furnished
               with complete and correct copies of (A) the most recent financial
               statements of the Company and its Subsidiaries, if any, and (B) a
               Business Plan for the Company dated March 2003 which includes a
               five year budget with supporting schedules, with actual
               expenditures for the first twelve months. Except where otherwise
               noted therein, the Phase 1 column of actual expenditures accurate
               report the expenditures of the Company during the applicable
               period and the budgeted projections and supporting schedules are
               based on and reflect reasonable assumptions made in good faith by
               management of the company.

          (vi) Disclosure. To the knowledge of the Company, neither this
               Agreement, nor any other agreement, certificate, statement or
               document furnished in writing by or on behalf of the Company to
               Edge in connection herewith or therewith (including without
               limitation the Business Plan for the Company and projections
               referred to above), contains any untrue statement of material
               fact or omits to state a material fact necessary in order to make
               the statements herein or therein not misleading in any material
               respect.

         (vii) Legal Proceedings. There is no action, suit or proceeding
               pending or to the Company's knowledge currently threatened
               against the Company or any of subsidiaries. Neither the Company
               nor any of its subsidiaries is a party or subject to the
               provisions of any order, writ, injunction, judgment or decree of
               any court or governmental agency or instrumentality. There is no
               action suit or proceeding by the Company or any of its
               subsidiaries currently pending or which the Company or its
               subsidiaries intend to initiate.

                                       3

<PAGE>

        (viii) Proprietary Rights. To its knowledge, the Company owns all
               patents trademarks, service marks, trade names, copyrights trade
               secrets, licenses, information and proprietary rights and
               processes which it currently uses or is necessary for its
               business without any conflict with, or infringement of the rights
               of others. The Company has not received any communication
               alleging that the Company has violated or, by conducting its
               business, would violate any of the patents, trademarks, service
               marks, trade names, copyrights, trade secrets, or other
               proprietary rights or processes of any other person or entity.

          (ix) Compliance with Other Instruments. (a) To the actual knowledge of
               the President of the Company, the Company is not in any material
               violation or default of any provisions of its Amended and
               Restated Certificate of Incorporation or Bylaws or of any
               instrument, judgment, order, writ, decree or contract to which it
               is a party or by which it is bound or, to the actual knowledge of
               the President of the Company, of any material provision of
               federal or state statute, rule or regulation applicable to the
               Company. The execution, delivery and performance of the
               Agreements and the consummation of the transactions contemplated
               hereby or thereby will not result in any such material violation
               or materially conflict with or constitute, with or without the
               passage of time and giving of notice, either a material default
               under any such provision, instrument, judgment, order, writ,
               decree or contract or an event which results in the creation of
               any material lien, charge or encumbrance upon any assets of the
               Company other than (i) carriers', warehousemen's, mechanics',
               materialmen's and repairmen's liens, and other like Encumbrances
               imposed by applicable law, arising in the ordinary course of
               business in connection with activities properly undertaken in the
               Company's business; (ii) easements, zoning restrictions,
               rights-of-way, reservations, restrictions and other similar
               encumbrances on real property imposed by law that do not secure
               any monetary obligations and do not materially detract from the
               value of the affected property or interfere with the ordinary
               conduct of business, (iii) liens, charges or encumbrances for
               taxes, assessments or governmental charges not yet due and
               payable, (iv) inchoate statutory and common law liens, charges or
               encumbrances for which payment is not delinquent, and (v) minor
               defects, irregularities, liens, and clouds on title which do not
               materially impair or materially adversely affect the value of the
               assets, financial condition, operating results, or business of
               the Company (collectively, "Permitted Encumbrances").

               (b) To the actual knowledge of the Company's President, the
               Company has not performed any act, the occurrence of which would
               result in the Company's loss of any material right granted under
               any license, distribution agreement or other agreement.

                                       4

<PAGE>

          (x)  No Conflict of Interest. Except as set forth on Schedule 3(a)(x),
               the Company is not indebted, directly or indirectly, to any of
               its officers or directors or to their respective spouses or
               children, in any amount whatsoever other than in connection with
               expenses or advances of expenses incurred in the ordinary course
               of business of the Company or relocation expenses of employees.
               None of the Company's officers or directors, or any members of
               their immediate families, are, directly or indirectly, indebted
               to the Company (other than in connection with purchases of the
               Company's capital stock) or have any direct or indirect ownership
               interest in any firm or corporation with which the Company is
               affiliated or with which the Company has a business relationship,
               or any firm or corporation which competes with the Company except
               that officers, directors and/or stockholders of the Company may
               own stock in (but not exceeding five percent (5%) of the
               outstanding capital stock of) any publicly traded companies that
               is affiliated with the Company, with which the Company has a
               business relationship, or which may compete with the Company. To
               the actual knowledge of the President of the Company none of the
               Company's officers or directors or any members of their immediate
               families are, directly or indirectly, interested in any material
               contract or proposed contract with the Company. The Company is
               not a guarantor or indemnitor of any indebtedness of any other
               person, firm or corporation.

          (xi) Rights of Registration and Voting Rights. The Company has not
               granted or agreed to grant any registration rights, including
               piggyback rights, to any person or entity except set forth on
               Schedule 3(a)(xi). To the actual knowledge of the Company's
               President, no stockholder of the Company has entered into any
               agreements with respect to the voting of capital shares of the
               Company.

         (xii) Title to Property and Assets. The Company owns its property and
               assets free and clear of all Encumbrances, except for (1)
               Encumbrances that may appear in the Financial Statements, or (2)
               any Permitted Encumbrances. With respect to the property and
               assets it leases, the Company is in material compliance with such
               leases and, to the actual knowledge of the Company's President,
               such leases are valid and effective in accordance with their
               respective terms, except as limited by applicable bankruptcy,
               insolvency, reorganization, moratorium, fraudulent conveyance, or
               other laws and judicial decisions of general application relating
               to or affecting enforcement of creditors' rights generally, by
               laws relating to the availability of specific performance,
               injunctive relief, or other equitable remedies and with respect
               to indemnification provisions contained therein, or principles of
               public policy.

        (xiii) Changes. Since December 31, 2002, there has not been:

                                       5

<PAGE>

               (a)  any material change in the assets, liabilities, financial
                    condition or operating results of the Company from that
                    reflected in the Financial Statements, except changes in the
                    ordinary course of business, that have not been material and
                    adverse;

               (b)  any damage, destruction or loss, whether or not covered by
                    insurance, materially and adversely affecting the business,
                    properties, prospects, or financial condition of the
                    Company;

               (c)  any waiver or compromise by the Company of a valuable right
                    or of a material debt owed to it that would have an adverse
                    affect;

               (d)  any satisfaction or discharge of any liens, claim, or
                    encumbrance of payment of any obligation by the Company,
                    except in the ordinary course of business and that is not
                    material and adverse to the business, properties, prospects
                    or financial condition of the Company;

               (e)  any material change to a material contract or agreement by
                    which the Company or any of its assets is bound or subject;

               (f)  any material change in any compensation arrangement or
                    agreement with any employee, officer, director or
                    stockholder;

               (g)  any sale, assignment or transfer of any patents, trademarks,
                    copyrights, trade secrets or other intangible assets other
                    than in the ordinary course of business;

               (h)  any resignation or termination of employment of any officer
                    or key employee of the Company; and the President of the
                    Company has no actual knowledge of any impending resignation
                    or termination of employment of any such officer or key
                    employee;

               (i)  any mortgage, pledge, transfer of a security interest in, or
                    lien, created by the Company, with respect to any of its
                    material properties or assets, except liens for taxes not
                    yet due or payable;

               (j)  any loans or guarantees made by the Company to or for the
                    benefit of its employees, officers or directors, or any
                    members of their immediate families, other than travel
                    advances and other advances made in the ordinary course of
                    its business;

               (k)  any declaration, setting aside or payment or other
                    distribution in respect to any of the Company's capital
                    stock; or any direct or indirect redemption, purchase, or
                    other acquisition of any such stock by the Company;

                                       6

<PAGE>

               (l)  to the actual knowledge of the officers and directors of the
                    Company, any other event or condition of any character that
                    might materially and adversely affect the business,
                    properties or financial condition of the Company; or

               (m)  any arrangement or commitment by the Company to do any of
                    the things described in this Section 3(a)(xiii).

         (xiv) Employee Benefit Plans. Except as set forth on Schedule
               3(a)(xiv), the Company does not have any Employee Benefit Plan as
               defined in the Employee Retirement Income Security Act of 1974.

          (xv) Tax Returns and Payments. The Company has filed all tax returns
               and reports as required by applicable law. These returns and
               reports are true and correct in all material respects. The
               Company has paid all taxes and other assessments due except those
               being contested in good faith.

         (xvi) Insurance. The Company has in force a fire and casualty
               insurance policy, with extended coverage, sufficient in amount
               (subject to reasonable deductibles) to allow it to replace any of
               its properties material to its business that might be damaged or
               destroyed.

        (xvii) Labor Agreements and Actions. Except for a contract with the
               screen actors guild/AFTRA, the Company is not bound by or subject
               to (and none of its assets or properties is bound by or subject
               to) any written or oral, express or implied, contract, commitment
               or arrangement with any labor union, and no labor union has
               requested or, to the actual knowledge of the President of the
               Company, has sought to represent any of the employees,
               representatives or agents of the Company. There is no strike or
               other labor dispute involving the Company pending, or to the
               actual knowledge of the Company's President threatened, which
               could have a material adverse effect on the assets, properties,
               financial condition, operating results, or business of the
               Company, nor does the President of the Company have actual
               knowledge of any labor organization activity involving its
               employees. The employment of each officer and employee of the
               Company is terminable at the will of the Company. To the actual
               knowledge of the President of the Company, the Company has
               complied in all material respects with all applicable state and
               federal equal employment opportunity laws and with other laws
               related to employment.

       (xviii) Permits. The Company has all franchises, permits, licenses and
               any similar authority necessary for the conduct of its business,
               the lack of which could materially and adversely affect the
               business, properties, prospects, or financial condition of the
               Company. The Company is not in default in any material respect

                                       7

<PAGE>

               under any of such franchises, permits, licenses or other similar
               authority that would materially and adversely affect the
               Company's business.

     (b)  Edge.

               (i)  Edge represents and warrants to the Company that Edge is
                    acquiring this Note and the underlying securities for Edge's
                    own account for investment only and not with a view to
                    distribution or resale of the Note or underlying securities.
                    Edge represents that it is an "accredited investor" as such
                    term is defined in Rule 501 under the Act. Edge understands
                    that the Note and the underlying securities are being issued
                    to Edge pursuant to an exemption from the registration
                    requirements of the Act and, accordingly, must be held
                    indefinitely by Edge unless later transferred in
                    transactions that are either registered under the Act or
                    exempt from registration.

               (ii) Edge represents and warrants to the Company that Edge has
                    such knowledge and experience in financial and business
                    matters as to be capable of evaluating the merits and risks
                    of an investment in the Note and the underlying securities
                    and that Edge is able to incur a complete loss of Edge's
                    investment and to bear the risk of such a loss for an
                    indefinite period of time. Edge understands that the Note
                    and any securities acquired upon conversion are a risky and
                    speculative investment.

4. Financial Information. For so long as the obligations under the Note are
outstanding and for so long as Edge holds an equity interest in the Company, the
Company shall deliver to Edge within fifty (50) days of the end of each of the
Company's fiscal quarters and one hundred and five (105) days from the end of
the Company's fiscal year, the Company's balance sheet and income statement
("Financial Statements") for the most recent quarter or year as the case may be,
together with the related statements of income and cash flow, and an updated
Capitalization Schedule, which Financial Statements shall be prepared in
accordance with United States Generally Accepted Accounting Principles
consistently applied.

5. Security Interest.

     (a)  Grant. The Company hereby grants to Edge a security interest in the
          Collateral (as such term is defined below). The security interest
          shall constitute a first lien on the Collateral and shall secure the
          Company's obligations (the "Secured Obligations") under the Note and
          this Agreement and any other and/or future obligations of the Company
          to Edge. Edge may sign and file financing statements in the name of
          the Company, and, if Edge requests, the Company agrees to sign
          financing statements from time to time and to take all other steps
          reasonably necessary to enable Edge and its successors in interest to
          perfect, or maintain perfection of, its security interest in the
          Collateral. The Company shall pay all filing fees and tax stamps due
          in connection with filing the financing statements. This Agreement or
          a copy of this Agreement shall be sufficient as a financing statement
          and may be filed as such. The "Collateral" shall mean the property

                                       8

<PAGE>

          (but none of the Company's obligations or liabilities with respect
          thereto) of the Company described in Exhibit A attached hereto and
          made a part hereof:

     (b)  Termination. Upon payment by the Company of all principal and interest
          on the Note or conversion of the Note in accordance with its terms,
          Edge, on behalf of itself and each successor holder of the Note, shall
          execute and deliver such instruments and do and perform such acts as
          may be reasonably necessary to terminate its security interest in the
          Collateral.

     (c)  Right to Realize Upon Collateral. Except to the extent prohibited by
          applicable law that cannot be waived, this Section shall govern Edge's
          (as defined in the Note) rights to realize upon the Collateral. The
          provisions of this Section are in addition to any rights and remedies
          available in law or equity. Upon any breach of the terms of the Note
          by the Company, it is agreed that Edge shall have the right to take
          any or all of the actions included in this Section at the same or
          different times.

          (i)  Assembly of Collateral; Receiver. Edge may request that the
               Company assemble the Collateral and otherwise make it available
               to Edge and the Company and its officers and directors shall
               comply with such request. Edge may have a receiver appointed for
               all or any portion of the Company's assets or business which
               constitutes the Collateral in order to manage, protect, preserve,
               sell and otherwise dispose of all or any portion of the
               Collateral.

          (ii) Foreclosure Sale. All or any part of the Collateral may be sold
               for cash or other value in any number of lots in any commercially
               reasonable manner; provided, however that unless the Collateral
               to be sold threatens to decline speedily in value or is of a type
               customarily sold on a recognized market, Edge shall give the
               Company 10 days prior written notice of the time and place of any
               public sale, or the time after which a private sale may be made,
               which notice each of the Company and Edge agrees to be
               reasonable. At any sale or sales of Collateral, Edge or any of
               its assigns may bid for and purchase all or any part of the
               property and rights so sold and may use all or any portion of the
               Secured Obligations owed to Edge as payment for the property or
               rights so purchased, all without further accountability to the
               Company, except for the proceeds of such sale or sales pursuant
               to Section 4(c)(iii).

         (iii) Application Proceeds. The proceeds of all sales and collections
               in respect of any Collateral or other assets of the Company, all
               funds collected from the Company and any cash contained in the
               Collateral, the application of which is not otherwise
               specifically provided for herein, shall be applied as follows:

               A.   First, to the payment of the costs and expenses of such
                    sales and collections, the reasonable expenses of Edge and
                    the reasonable fees and expenses of its counsel;

                                       9

<PAGE>

               B.   Second, any surplus then remaining to the payment of the
                    Secured Obligations in such order and manner as Edge may in
                    its reasonable discretion determine, subject, however, to
                    the rights of the holder of any then existing lien for which
                    Edge has received a proper demand for proceeds prior to
                    making such payment; and

               C.   Third, any surplus then remaining shall be paid to the
                    Company, subject, however, to the rights of the holder of
                    any then existing lien for which Edge has received a proper
                    demand for proceeds prior to making such payment to the
                    Company.

     (d)  Custody of Collateral. Except as provided by applicable law that
          cannot be waived, Edge will have no duty as to the custody and
          protection of the Collateral, the collection of any part thereof or of
          any income thereon or the preservation or exercise of any rights
          pertaining thereto, including rights against prior parties, except for
          the use of reasonable care in the custody and physical preservation of
          any Collateral in its possession.

6. Covenants of the Company. The Company covenants that from and after the date
hereof and for so long as any of the Notes are outstanding:

     (a)  Limitation of Indebtedness. The Company will not incur any
          indebtedness, other than trade debt incurred in the ordinary course of
          business, without the approval of Edge.

     (b)  Dividends and Distributions. The Company shall not, and shall cause
          each of its Subsidiaries not to, directly or indirectly, (i) declare
          or pay any dividend or make any distribution in cash or property to
          holders of Capital Stock of the Company or any Subsidiary of the
          Company or (ii) purchase, redeem or otherwise acquire or retire for
          value (other than through the issuance solely of Capital Stock of the
          Company) any Capital Stock or warrants, rights or options to acquire
          Capital Stock of the Company or any securities exchangeable for or
          convertible into any such shares or permit any Subsidiary to purchase,
          redeem or otherwise acquire or retire for value any Capital Stock of
          the Company or any Subsidiary or any such warrant, rights or options
          on convertible securities.

     (c)  Compliance with Laws. The Company will, and will cause each of its
          Subsidiaries to, comply with all applicable Laws with respect to the
          conduct of its business and the ownership of its properties, including
          without limitation, compliance with the reporting requirements of all
          applicable securities Laws; provided that the Company shall not be
          deemed to be in violation of this Section 6(c) as a result of any
          failure to comply with any provisions of any such Laws, the
          noncompliance with which would not, individually or in the aggregate,
          have or reasonably be expected to have a Material Adverse Effect or
          have a materially adverse effect on the ability of the holder of any
          Securities to sell such Securities.

                                       10

<PAGE>

     (d)  Limitation of Agreements. The Company will not, and will not permit
          any Subsidiary to, enter into any Contract, or any amendment,
          modification, extension or supplement to any existing Contract, which
          contractually prohibits the Company from paying interest on, or
          principal of, the Notes or effecting the conversion of the Notes.

     (e)  Preservation of Franchises and Existence. The Company will maintain
          and cause each Subsidiary to maintain its corporate existence, rights
          and franchises in full force and effect, provided that nothing in this
          Section 6(e) shall prevent the Company or any Subsidiary from
          discontinuing its operations in any particular state or at any
          particular location or locations within the state, or prevent the
          corporate existence, rights and franchises of any Subsidiary from
          being terminated if, in the opinion of the Board of Directors of the
          Company, the preservation thereof is no longer desirable in the
          conduct of the business of the Company and its Subsidiaries taken as a
          whole.

     (f)  Payment of Taxes and Other Charges. The Company will pay or discharge,
          and will cause each Subsidiary to pay or discharge, before the same
          shall become delinquent, (i) all Taxes imposed upon it or any of its
          properties or income, and (ii) all claims of material men, mechanics,
          landlords and other like Persons which, in the case of either clause
          (i) or clause (ii), if unpaid, might result in the creation of a
          material lien upon any of its properties, provided, however, that the
          Company shall not be required to pay or discharge or cause to be paid
          or discharged any such Tax or claim whose amount, applicability or
          validity is being contested in good faith pursuant to appropriate
          proceedings.

     (g)  Lost, Stolen, Damaged and Destroyed Securities. Upon receipt of
          evidence reasonably satisfactory to the Company of the loss, theft,
          destruction or mutilation of any certificate representing shares of
          Common Stock or a Note and in the case of loss, theft or destruction,
          upon delivery of an indemnity satisfactory to the Company (which, in
          the case of Edge, may be an undertaking by Edge to so indemnify the
          Company and which, in the case of any Person other than Edge, shall be
          delivery of an indemnity bond), or, in the case of mutilation, upon
          surrender and cancellation thereof, the Company will issue a new share
          certificate of like tenor for a number of shares of Common Stock equal
          to the number of shares of such stock represented by the certificate
          lost, stolen, destroyed or mutilated, or a new Note of like tenor in
          an amount equal to the amount of such Note lost, stolen, destroyed or
          mutilated.

     (h)  Information; Access. The Company will permit Edge and its
          representatives to visit and inspect, at Edge's expense, any of the
          properties of the Company and its Subsidiaries, to examine the
          corporate books and make copies or extract therefrom and to discuss
          the affairs, finances and accounts of the Company and its Subsidiaries
          with the principal officers of the Company as well as the accountants

                                       11

<PAGE>

          of the Company; provided, that, so long as no default or Event of
          Default shall have occurred under any of the documents that are part
          of this transaction, Edge shall not without the Company's consent,
          which shall not be unreasonably withheld, visit and inspect the
          Company's properties more than four times a year.

     (i)  Transactions with Affiliates. The Company will not, and will not
          permit any Subsidiary to, engage in any transaction or group of
          related transactions (including, without limitation, the purchase,
          lease, sale or exchange of properties of any kind or the rendering of
          any service) with any of its Affiliates (other than the Company) or
          Associates, except in the ordinary course and pursuant to the
          reasonable requirements of the Company's or such Subsidiary's business
          and upon fair and reasonable terms no less favorable to the Company or
          such Subsidiary than would be obtainable in a comparable arm's-length
          transaction with a person not an Affiliate or Associate and except
          that the Company may issue stock options pursuant to its employee
          benefit plans, provided that award must be approved by a compensation
          committee made up of non-executive board members, one of which shall
          be John Sfondrini and the exercise price on any option granted cannot
          be less than Edge's then effective conversion price as defined in the
          Note.

     (j)  Notice of Breach. As promptly as practicable, and in any event not
          later than five Business Days after senior management of the Company
          becomes aware thereof, the Company shall provide Edge with written
          notice of any breach by the Company of any provision of this
          Agreement, including, without limitation, this Article 6, specifying
          the nature of such breach and any actions proposed to be taken by the
          Company to cure such breach.

     (k)  Reporting Company. The Company has taken all necessary steps,
          including filing a Registration Statement on SB-2, to become a
          reporting company pursuant to Section 12(g) of the Securities Exchange
          Act of 1934, as amended.

     (l)  Impairment. The Company shall not take any action which would impair
          or jeopardize the first lien status of the Security Interest created
          hereby and shall take such action as may be requested to maintain the
          first lien status of such Security Interest.

     (n)  Directors' Indemnification; Insurance.

          (i)  The Company does not have directors' and officers' liability
               insurance, however, the Company intends on obtaining and
               maintaining directors' and officers' liability insurance in the
               near future, and the Edge Designees shall be covered under such
               insurance.

          (ii) The Certificate of Incorporation, By-laws and other
               organizational documents of the Company shall at all times, to
               the fullest extent permitted by law, provide for indemnification

                                       12

<PAGE>

               of, advancement of expenses to, and limitation of the personal
               liability of, the members of the Board of Directors of the
               Company. Such provisions may not be amended, repealed or
               otherwise modified in any manner adverse to any member of the
               Board of Directors of the Company until at least six years
               following the date that the Edge Designees are no longer members
               of the Board of Directors of the Company.

        (iii) The Edge Designees are intended to be third-party beneficiaries
               of the obligations of the Company pursuant to this Section 6(n),
               and the obligations of the Company pursuant to this Section 6(n)
               shall be enforceable by the Edger Designees.

     (o)  Merger, Etc. The Company will not merge with or into or consolidate
          with, or sell all or substantially all of its assets to, any other
          Person unless (i) the surviving entity shall have assumed in writing
          all of the obligations of the Company under each of the documents that
          are part of this transaction, and (ii) immediately after the
          consummation of such merger or consolidation the surviving entity
          would not be in violation of any of the provisions applicable to the
          Company contained in any of the Transaction Documents.

     (p)  Life Insurance. The Company shall immediately obtain and maintain a
          key man life insurance policy on Philip Cohen. The face amount of the
          policy will be at least $1,100,000.

7. Pre-emptive Rights. So long as the Notes are outstanding, the Company shall
not issue, sell or exchange or agree to issued, sell or exchange (collectively
"Issue," and any issuance, sale or exchange resulting therefrom, an "Issuance")
any share of Capital Stock or any securities convertible into the company's
Capital Stock (collectively "Securities") (other than securities issued by the
Company in an underwritten Initial Public Offering), except as authorized by the
Board of Directors and in accordance with the following procedures:

     (a)  The Company shall deliver to Edge a written notice (a "Pre-emptive
          Notice"), which shall (i) state the Company's intention to Issue
          Securities to one or more Persons, the amount and type of Securities
          to be Issued (the "Securities Issuance"), the purchase price
          ("Purchase Price") therefor and a summary of the other material terms
          of the proposed Issuance and (ii) offer Edge the option to acquire all
          or any part of the Securities Issuance (the "Pre-emptive Offer"). The
          Pre-emptive Offer shall remain open and irrevocable for the periods
          set forth below (and, to the extent the Pre-emptive Offer is accepted
          during such periods, until the consummation of the Issuance
          contemplated by the Pre-emptive Offer). Edge shall have the right and
          option, for a period of 15 business days after delivery of the
          Pre-emptive Notice (the "Pre-emptive Acceptance Period"), to accept
          all or any part of the Securities Issuance at the purchase price and
          on the terms stated in the Pre-emptive Notice. Such acceptance shall

                                       13

<PAGE>

          be made by delivering a written notice to the Company by Edge within
          the Pre-emptive Acceptance Period specifying the maximum number of
          shares of the Securities Issuance Edge will purchase (the "Accepted
          Securities").

     (b)  If effective acceptance shall not be received pursuant to Section 7(a)
          above with respect to all of the Securities Issuance offered for sale
          pursuant to the Pre-emptive Notice, then the Company may Issue all or
          any portion of such Securities so offered for sale and not so
          accepted, at a price not less than the Purchase Price, and on terms
          not more favorable to the purchaser thereof than the terms, stated in
          the Pre-emptive Notice at any time within 90 days after the expiration
          of the Pre-emptive Acceptance Period (the "Issuance Period"). In the
          event that all of the Securities Issuance is not Issued by the Company
          during the Issuance Period, the right of the Company to Issue such
          unsold Securities Issuance shall expire and the obligations of this
          Section 7 shall be reinstated.

     (c)  All sales of Securities Issuance to Edge subject to any Pre-emptive
          Notice shall be consummated contemporaneously at the offices of the
          Company on a mutually satisfactory business day within 5 days after
          the expiration of the Pre-emptive Acceptance Period. The delivery of
          certificates or other instruments evidencing such Securities Issuance
          shall be made by the Company on such date against payment of the
          Purchase Price for such Securities Issuance.

     (d)  The provision of this Section 7 shall terminate at such time Edge is
          no longer the owner of the Notes or three years after the date hereof,
          whichever is earlier.

8. Notices. Any notice, request or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
sent via facsimile or overnight or second day delivery service, to the
respective addresses and/or facsimile numbers of the parties as set forth below:

If to the Company:                  PetCARE Television Network, Inc.
                                    321 N. Kentucky Avenue, Suite 1
                                    Lakeland, Florida 33801
                                    Attn:   Philip Cohen, President and CEO
                                    Facsimile No.: (863) 683-5651

                                       14

<PAGE>

With a copy to:                     Sommer & Schneider LLP
                                    595 Stewart Avenue, Suite 710
                                    Garden City, New York  11530
                                    Attn:  Joel C. Schneider
                                    Facsimile No.:  (516) 228-8211

If to Edge:                         Pet Edge, LLC
                                    P.O. Box 1248
                                    Ridgefield, Connecticut 06877
                                    Attn:  John Sfondrini, Manager
                                    Facsimile No.: (203) 894-8244

With a copy to:                     J. Michael Gottesman, Esq.
                                    477 Madison Avenue
                                    New York, New York 10022
                                    Facsimile No.: 212-308-2323

Any party hereto may by notice so given change its address for future notice
hereunder. Notice shall conclusively be deemed to have been given upon confirmed
receipt of delivery.

9. Successors and Assigns; Assignment. The terms and conditions of the Note and
this Agreement shall inure to the benefit of and be binding upon the respective
executors, administrators, heirs, successors and permitted assigns of the
parties. Neither party hereto may assign any of its rights or obligations
hereunder without the prior written consent of the other party; provided,
however, Edge may assign its rights and obligations hereunder to any Permitted
Transferee (as defined in the Note).

10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without reference to conflict
of laws principles.

11. Headings. The headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.

12. Further Assurances. The Company will take such further action, and will
execute and deliver to Edge all such further financing statements, certificates,
and other documents as Edge may reasonably request from time to time in order to
give full effect to this Agreement and to secure the rights of Edge hereunder.

13. Entire Agreement. This Agreement and the Note of even date herewith, from
Edge and acknowledged by the Company constitute the entire agreement of the
parties with respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous understandings, whether written or oral.

14. Media Releases. All media releases and public announcements or disclosures
by either party relating to this Agreement and the Note or the business

                                       15

<PAGE>

relationship between the parties contemplated by those documents shall be
coordinated with and approved by the other party in writing prior to the release
thereof.

15. Jurisdiction. The Company consents to and agrees that it is subject to the
jurisdiction of the Courts in the State of Connecticut, Florida, or New York
with respect to any litigation in connection with this Agreement. The Company
will also reimburse Edge for any legal fees it incurred in enforcing Edge's
rights under this Agreement.

     IN WITNESS WHEREOF, the Company and Edge have caused this Agreement to be
executed as of the date first set forth above.

                                        PETCARE TELEVISION NETWORK, INC.

                                        By:
                                           -------------------------------------
                                             Philip Cohen, President and CEO

                                        PET EDGE, LLC

                                        By:
                                           -------------------------------------
                                                 John Sfondrini, Manager

                                       16

<PAGE>

                Exhibit A to Note Purchase and Security Agreement

     The Collateral covered by this financing statement includes all of the
Debtor's right, title, interest and privilege in and to all the following
property of the Debtor, whether now owned or existing or hereafter acquired or
arising:

     1. All accounts, accounts receivable, general intangibles, contracts,
chattel paper, instruments, documents, warehouse receipts, documents of title,
or any document which evidences that a person in possession of it is entitled to
receive, hold and dispose of the document or the goods it covers, including but
not limited to all rights and claims of the Debtor for payment or monies due and
to become due from customers in connection with the sale of goods or the
rendering of services by the Debtor or purchased, assigned or transferred to the
Debtor, together with all checks, drafts, security agreements and other
instruments or documents securing, evidencing or otherwise relating to any and
all accounts and all rights and remedies of the Debtor under or with respect to
any and all Receivables and any and all of the foregoing (collectively referred
to hereinafter as "Accounts");

     2. All intangible personal property of every kind and nature including,
without limitation, General Intangibles and Payment Intangibles, choses in
action, causes of action, contracts with persons to sell goods, inventory or
other property from such persons or to buy goods, inventory or other property
from such person, rights to payment for goods sold or services rendered which
have not yet been billed or invoiced to any customer, corporate or other
business records, intellectual property, license rights, inventions, drawings,
specifications, designs, patents, patent applications, trademarks, trade names,
trade secrets, know how, goodwill, notes with respect to research and
development, copyrights, registrations, licenses, franchises, tax refund claims,
computer programs, know how and any guarantee claims, security interests or
other security held by Debtor;

     3. Any and all inventory, merchandise and other personal property,
including, without limitation, goods in transit, wheresoever located, owned or
acquired by the Debtor which are or may at any time be held for sale or lease,
furnished under any contract of service or held as raw materials, work in
process, or supplies or materials used or consumed in Debtor's business,
packaging material, returned goods, proceeds and products of the foregoing
including, without limitation, personal property owned by Debtor and wheresoever
located which is evidenced by any document of title, warehouse receipt, receipt,
or other document which evidences that a person in possession of it is entitled
to receive hold and dispose of the documents or the goods it covers;

     4. All goods, including without limitation, all machinery, equipment,
computers, supplies, appliances, tools, patterns, molds, dies, blueprints,
fittings, furniture, furnishings, fixtures and articles of tangible personal
property of every description now or hereafter owned by Debtor or in which
Debtor may have or may hereafter acquire any interest, at any location;

                                       17

<PAGE>

     5. All cash and monies, bank accounts, deposit accounts, residues and
property of any kind, now or at any time or times hereafter owned by debtor or
in which Debtor has an interest;

     6. All of the right, title and the interest of Debtor in and to any and all
leases (including equipment leases), rental agreements, management contracts,
franchise agreements, technical services agreements, licenses and permits now or
hereafter affecting any personal or real property now or hereafter leased by
Debtor or any part thereof;

     7. All accessories to, substitutions for and all replacements, products and
proceeds of the foregoing including, without limitation, proceeds of insurance
policies insuring the collateral;

     8. All books and records (including without limitation, customer data,
credit files, computer programs, printouts, and other computer materials and
records(s) of Debtor pertaining to any of the foregoing;

     9. Investment property;

     10. Proceeds, including Cash Proceeds and Non Cash Proceeds;

     11. Letter of credit rights;

     12. Fixtures;

     13. Software;

     14. Chattel paper, including without limitation, Tangible Chattel Paper and
Electronic Chattel Paper;

     15. Real Estate;

     16. Farm Products;

     17. Consumer Goods;

     18. Equipment;

     19. Instruments and any and all other real or personal property owned by
Debtor or in which the Debtor has an interest.

     The Collateral covers all of the present and future property of the Debtor.

                                       18

<PAGE>

                                SCHEDULE 3(a)(iv)
                            CAPITALIZATION SCHEDULE,
                     SECURITIES SUBJECT TO REGISTRATION, AND
                      RESTRICTIONS ON VOTING OF SECURITIES
                      ------------------------------------

Capital Stock Structure:
------------------------

Common Stock:              50,000,000 shares authorized
                           11,836,000 shares issued and outstanding

Preferred Stock:           10,000,000 shares authorized

   Series A:               1,500,000 shares authorized
   Series A:               101,250 shares issued and outstanding (1)(2)

     (1)  These shares are automatically convertible into the Company's Common
          Stock ten (10) days after the Company's Common Stock begins to be
          quoted. To determine the number of shares of Common Stock which will
          be issued in exchanged for the Series A Preferred Stock upon
          conversion, take the price per share of the Series A Preferred ($2.00)
          and divide it by 50% of the average closing price as reported for the
          five trading days preceding the date of conversion, or $2.00,
          whichever is less. Prior to the Company's Common Stock being traded,
          the holders of the Series A Preferred Stock will not be able to
          convert into shares of Common Stock.

     (2)  The Reserved Shares issuable upon conversion of the Series A Preferred
          Stock are covered under a Registration Rights Agreement.

Securities Subject to Registration Rights:
------------------------------------------

     a)   See (1) and (2) above.
     b)   Promissory Note dated May 16, 2002 for $100,000 to James Calaway with
          accompanying Registration Rights Agreement for 2,355,158 shares. Of
          these shares, Mr. Calaway retains ownership of 2,300,000 as the others
          were gifted and transferred.
     c)   Promissory Note dated June 5, 2002 for $5,000 to Robert and Jamie
          Turner with accompanying Registration Rights Agreement for 5,000
          shares of Common Stock.
     d)   Promissory Note dated June 7, 2002 for $25,000 to Daniel V. Hugo with
          accompanying Registration Rights Agreement for 573,395 shares of
          Common Stock.
     e)   Convertible Promissory Note dated June 10, 2003 for $50,000 to Mark
          Maltzer with accompanying Registration Rights Agreement for underlying
          shares received upon conversion of principal and interest at $.246 per
          share.

Restrictions on Voting of Securities:
-------------------------------------

Series A Preferred Shares: Until or unless the Series A Preferred Stock is
converted into Common Stock as set forth above, no holder of the Series A
Preferred Stock shall have any voting rights except as may be required under

                                       19

<PAGE>

Florida law in certain instances or as set forth in the Certificate of
Designation, Preferences, Rights and Limitations of Series A Convertible
Preferred Stock No Par Value of PetCARE Television Network, Inc.

                  (Remainder of page left intentionally blank.)

                                       20

<PAGE>

                                SCHEDULE 3(a)(x)
                              CONFLICTS OF INTEREST
                              ---------------------

Company's Indebtedness to Officers and Directors:
-------------------------------------------------

     1)   James Calaway - $207,400 as of February 28, 2003, plus interest (under
          promissory notes)

     2)   Daniel Hugo - $25,000 as of February 28, 2003, plus interest (under
          promissory note)

     3)   Mark Maltzer - $50,000 as of June 10, 2003, plus interest (under
          Convertible Promissory Note)

Indebtedness to the Company by Officers and Directors:
------------------------------------------------------

None.

                                       21

<PAGE>

                                SCHEDULE 3(a)(xi)
                    RIGHTS OF REGISTRATION AND VOTING RIGHTS
                    ----------------------------------------

See Capitalization Schedule for shares subject to Registration Rights.

                                       22

<PAGE>

                               SCHEDULE 3(a)(xiv)
                             EMPLOYEE BENEFITS PLAN
                             ----------------------

SAVAGE MOJO, INC. 2002 EQUITY INCENTIVE PLAN  -

     Stock option plan for key employees covering 2,000,000 shares.

                                       23

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