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                                                                    EXHIBIT 10.7

                                  GATEWAY, INC.
                      1996 LONG-TERM INCENTIVE EQUITY PLAN
                         AS AMENDED AND RESTATED 1/2000

        1. PURPOSE. The 1996 Long-Term Incentive Equity Plan (the "Plan") is
intended to promote the long-term success of Gateway, Inc. (the "Company") and
its stockholders by strengthening the Company's ability to attract and retain
highly competent managers and other selected employees and to provide a means to
encourage stock ownership and proprietary interest in the Company.

        2. TERM. The Plan shall become effective upon its ratification and
approval by the affirmative vote of the holders of a majority of the securities
of the Company present or represented, and entitled to vote at, a meeting of
stockholders of the Company, and shall terminate at the close of business on the
fifth anniversary of such approval date unless terminated earlier by the
compensation Committee (as defined in Section 3). After termination of the Plan,
no future awards may be granted, but previously granted awards shall remain
outstanding in accordance with their applicable terms and conditions and the
terms and conditions of the Plan.

        3. PLAN ADMINISTRATION. A committee (the "Compensation Committee")
appointed by the Board of Directors of the Company (the "Board") shall be
responsible for administering the Plan. The Compensation Committee shall be
comprised of two or more non-employee members of the Board who shall qualify as
disinterested persons to administer the Plan as contemplated by (1) Rule 16b-3
under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"),
or any successor rules; and (2) Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). The Compensation Committee shall have full and
exclusive power to interpret the Plan and to adopt such rules, regulations and
guidelines for carrying out the Plan as it may deem necessary or proper, and
such power shall be executed in the best interests of the company and in keeping
with the objectives of the Plan. This power includes but is not limited to
selecting award recipients, establishing all award terms and conditions and
adopting modifications, amendments and procedures, as well as rules and
regulations governing awards under the Plan. The interpretation and construction
of any provision of the Plan or any option or right granted hereunder and all
determinations by the Compensation Committee in each case shall be final,
binding and conclusive with respect to all interested parties.

        4. ELIGIBILITY. Any employee of the Company shall be eligible to receive
one or more awards under the Plan. "Company" includes any entity that is
directly or indirectly controlled by the Company or any entity in which the
Company has a significant equity interest, as determined by the Compensation
Committee.

        5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN. Subject to the provisions
of Section 6 of the Plan, the aggregate number of shares of Common Stock, $.01
par value, of the Company ("Shares") which may be transferred to participants
under the Plan shall be 12,800,000. The aggregate number of Shares that may be
issued under awards pursuant to Section 8.3 of the Plan

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shall not exceed 6,400,000 Shares, and the aggregate number of Shares that may
be covered by awards granted to any single individual under the Plan shall not
exceed 1,000,000 Shares per fiscal year of the Company. Any or all of the Shares
may be granted in the form of incentive stock options ("ISOs") intended to
comply with Section 422 of the Code.

        Shares subject to awards under the Plan which expire, terminate, or are
canceled prior to exercise or, in the case of awards granted under Section 8.3,
do not vest, shall thereafter be available for the granting of other awards.
Shares which have been exchanged by a participant as full or partial payment to
the Company in connection with any award under the Plan, also shall thereafter
be available for the granting of other awards. In instances where a stock
appreciation right ("SAR") or other award is settled in cash, the Shares covered
by such award shall remain available for issuance under the Plan. Likewise, the
payment of cash dividends and dividend equivalents paid in cash in conjunction
with outstanding awards shall not be counted against the Shares available for
issuance. Any Shares that are issued by the company, and any awards that are
granted through the assumption of, or in substitution for, outstanding awards
previously granted by acquired entity shall not be counted against the Shares
available for issuance under the Plan.

        Any Shares issued under the Plan may consist in whole or in part of
authorized and unissued Shares or of treasury Shares, and no fractional Shares
be issued under the Plan. Cash may be paid in lieu of any fractional Shares in
settlements of awards under the Plan.

        6. ADJUSTMENTS. In the event of any stock dividend, stock split,
combination or exchange of Shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash dividends) of
Company assets to stockholders, or any other change affecting Shares or Share
price, such proportionate adjustments, if any, as the Compensation Committee in
its discretion may deem appropriate to reflect such change shall be made with
respect to (1) the aggregate number of Shares that may be issued under the Plan,
the aggregate number of Shares that may be issued pursuant to Section 8.3 of the
Plan, and the aggregate number of Shares that may be granted to any single
individual under the Plan; (2) each outstanding award made under the Plan; and
(3) the exercise price per Share for any outstanding stock options, SARs or
similar awards under the Plan.

        7. FAIR MARKET VALUE. "Fair Market Value," for all purposes under the
Plan, shall mean the closing price of a Share as reported daily in The Wall
Street Journal or similar, readily available public source for the date in
question. If no sales of Shares were made on such date, the closing price of a
Share as reported for the preceding day on which a sale of Shares occurred shall
be used.

        8. AWARDS. The Compensation Committee shall determine the type or types
of award(s) to be made to each participant. Awards may be granted singly, in
combination or in tandem. Awards also may be made in combination or in tandem
with, in replacement of, as alternatives to or as the payment form for grants or
rights under any other compensation plan or individual

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contract or agreement of the Company including those of any acquired entity. The
types of awards that may be granted under the Plan are:

                8.1. STOCK OPTIONS. A stock option is a right to purchase a
specified number of Shares during a specified period as determined by the
Compensation Committee. The purchase price per Share for each stock option shall
be not less than 100% of Fair Market Value on the date of grant, except if a
stock option is granted retroactively in tandem with or as a substitution for a
SAR, the exercise price may be no lower than the Fair Market Value of a Share as
set forth in award agreements for such tandem or replaced SAR. A stock option
may be in the form of an ISO which, in addition to being subject to applicable
terms, conditions and limitations established by the Compensation Committee,
complies with Section 422 of the Code. The price at which Shares may be
purchased under a stock option shall be paid in full by the optionee at the time
of the exercise in cash or such other method permitted by the Compensation
Committee, including (1) tendering Shares (with prior approval of the Chief
Executive Officer if Shares are owned less than six months); (2) authorizing a
third party to sell the Shares (or a sufficient portion thereof) acquired upon
exercise of a stock option and assigning the delivery to the Company of a
sufficient amount of the sale proceeds to pay for all the Shares acquired
through such exercise; or (3) any combination of the above.

                8.2. SARS. A SAR is a right to receive a payment, in cash and/or
Shares, equal to the excess of the Fair Market Value of a specified number of
Shares on the date the SAR is exercised over the Fair Market Value on the date
the SAR was granted as set forth in the applicable award agreement; except that
if a SAR is granted retroactively in tandem with or in substitution for a stock
option, the designated Fair Market Value set forth in the award agreement shall
be no lower than the Fair Market Value of a Share for such tandem or replaced
stock option.

                8.3. STOCK AWARDS. A stock award is a grant made or denominated
in Shares or units equivalent in value to Shares. All or part of any stock award
may be subject to conditions and restrictions established by the Compensation
Committee, as set forth in the applicable award agreement, which may include,
but are not limited to, continuous service with the Company and/or the
achievement of performance goals. The performance criteria that may be used by
the Compensation Committee in granting a stock award contingent on performance
goals shall consist of earnings, earnings per share, revenues, profit growth,
profit-related return ratios, cash flow or total stockholder return. The
Compensation Committee may select one criterion or multiple criteria for
measuring performance, and the measurement may be stated in absolute terms or
relative to comparable companies.

        Notwithstanding anything to the contrary contained in the Plan, the
Compensation Committee may grant a stock award which is not contingent on
performance goals or which is contingent on performance goals other than those
specified in this Section 8.3, provided the Compensation Committee shall have
determined that such award is not required to satisfy the requirements for
"qualified performance-based compensation" within the meaning of Section 162(m)
of the Code.

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        9. DIVIDENDS AND DIVIDEND EQUIVALENTS. The Compensation Committee may
provide that any awards under the Plan earn dividends or dividend equivalents.
Such dividends or dividend equivalents may be paid currently or may be credited
to a participant's account. Any crediting of dividends or dividend equivalents
may be subject to such restrictions and conditions as the Compensation Committee
may establish, including reinvestment in additional Shares or Share equivalents.

        10. DEFERRALS AND SETTLEMENTS. Payment of awards may be in the form of
cash, stock, other awards or combinations thereof as the Compensation Committee
shall determine at the time of grant, and with such restrictions as it may
impose. The Compensation Committee also may require or permit participants to
elect to defer the issuance of Shares or the settlement of awards in cash under
such rules and procedures as it may establish under the Plan. It also may
provide that deferred settlements include the payment or crediting of interest
on the deferral amounts, or the payment or crediting of dividend equivalents
where the deferral amounts are denominated in Shares.

        11. TRANSFERABILITY AND EXERCISABILITY. Awards granted under the Plan
shall not be transferable or assignable other than (1) by will or the laws of
descent and distribution; (2) by gift or other transfer of an award to any trust
or estate in which the original award recipient or such recipient's spouse or
other immediate relative has a substantial beneficial interest, or to a spouse
or other immediate relative, provided that any such transfer is permitted by
Rule 16B-3 under the Exchange Act as in effect when such transfer occurs and the
Board does not rescind this provision prior to such transfer; or (3) pursuant to
a qualified domestic relations order (as defined by the Code). However, any
award so transferred shall continue to be subject to all the terms and
conditions contained in the instrument evidencing such award.

        In the event that a participant terminates employment with the Company
to assume a position with a governmental, charitable, educational or other
non-profit institution, the Compensation Committee may subsequently authorize a
third party, including but not limited to a "blind" trust, to act on behalf of
and for the benefit of such participant regarding any outstanding awards held by
the participant subsequent to such termination of employment. If so permitted by
the Compensation Committee, a participant may designate a beneficiary or
beneficiaries to exercise the rights of the participant and receive any
distribution under the Plan upon the death of the participant.

        12. AWARD AGREEMENTS. Awards under the Plan shall be evidenced by
agreements as approved by the Compensation Committee that set forth the terms,
conditions and limitations for each award, which may include the term of an
award (except that in no event shall the term of any ISO exceed a period of ten
years from the date of its grant), the provisions applicable in the event the
participant's employment terminates, and the Compensation Committee's authority
to unilaterally or bilaterally amend, modify, suspend, cancel or rescind any
award. The Compensation Committee need not require the execution of any such
agreement, in which case acceptance of the award by the participant shall
constitute agreement to the terms of the award.

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        13. FOREIGN PARTICIPATION. In order to assure the viability of awards
granted to participants employed in foreign countries, the Compensation
Committee may provide for such special terms as it may consider necessary or
appropriate to accommodate differences in local law, tax policy or custom.
Moreover, the Compensation Committee may approve such supplements to, or
amendments, restatements or alternative versions of the Plan as it may consider
necessary or appropriate for such purposes without thereby affecting the terms
of the Plan as in effect for any other purposes; provided that, no such
supplements, amendments, restatements or alternative versions shall increase the
Share limitations contained in Section 5 of the Plan.

        14. ACCELERATION AND SETTLEMENT OF AWARDS. The Compensation Committee
shall have the discretion, exercisable at any time before a sale, merger,
consolidation, reorganization, liquidation or change of control of the Company,
as defined by the Compensation Committee, to provide for the acceleration of
vesting and for settlement, including cash payment of an award granted under the
Plan, upon or immediately before the effectiveness of such event. However, the
granting of awards under the Plan shall in no way affect the right of the
Company to adjust, reclassify, reorganize or otherwise change its capital or
business structure, or to merge, consolidate, dissolve, liquidate, sell or
transfer all or any portion of its businesses or assets.

        14A. CHANGE OF CONTROL

                14A.1.  (a) ADDITIONAL OPTION GRANT. If a Change of Control (as
defined in paragraph (d)) occurs, then, except as otherwise agreed by the
Company and any participant by separate contract or award, all employees who
received one or more grants of stock options under this Plan during the twelve
months immediately preceding the effective date of such Change of Control shall
receive an additional grant of stock options (the "Additional Grant Option"),
effective immediately prior to such Change of Control. The number of Shares
subject to the Additional Grant Option made to each such optionee shall be equal
to the total number of Shares subject to the grant(s) of stock options made to
such optionee during the twelve months immediately preceding the effective date
of such Change of Control, and the exercise price of the Additional Grant Option
shall be equal to the Fair Market Value of the Shares immediately prior to such
Change of Control. Such grant shall be made regardless of whether there would
otherwise be available Shares under Section 5. All Additional Grant Options
shall vest in full twenty-four months following the date of such Change of
Control, unless vesting is accelerated as provided below.

                        (b) ACCELERATED VESTING OF AWARDS UPON A CHANGE OF
CONTROL. Except as otherwise agreed by the Company and any participant by
separate contract or award, all outstanding options and SARS, including the
Additional Grant Options, shall become immediately exercisable and vested in
full (and all restrictions and conditions upon all stock awards shall
immediately lapse and be deemed satisfied) upon the occurrence of a Change of
Control unless, in the case of a Change of Control described in paragraph
(d)(i) or (iii), the acquiring or surviving entity shall have agreed in
writing prior to the date of such Change of Control to assume the award
obligation by substituting awards of its own which are comparable

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in all respects to the outstanding awards under the Plan (including without
limitation the provisions of paragraph (c) below), with each such substituted
award equitably and appropriately adjusted in accordance with Section 6 above.

                (c)     ACCELERATED VESTING UPON INVOLUNTARY TERMINATION OF
EMPLOYMENT. Notwithstanding anything to the contrary in this Plan, in the event
of a participants's Involuntary Termination (as defined in paragraph (e)), in
either case within three years following the date of a Change of Control, all
outstanding awards under the Plan held by the participant that have not
previously vested (or with respect to which restrictions have not lapsed or
conditions have not been satisfied ) shall become immediately vested and
exercisable in full as of the date of such termination of employment (which
shall include, without limitation, the immediate lapse of all restrictions and
deemed satisfaction of all conditions on stock awards).

                (d)     DEFINITION OF CHANGE IN CONTROL. For purposes hereof,
the term "Change in Control" shall mean the first to occur of the following
events:

                        (i)     Any Person (as defined below) is or becomes the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing a percentage
of the combined voting power of the Company's then outstanding securities that
is at least equal to the GREATER of (x) 30% and (y) the percentage of such
combined voting power then owned by Theodore Waitt and his affiliates and
associates (within the meaning of Rule 12b-2 under the Exchange Act); or

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

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

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and (y) the percentage of such combined voting power then owned by Theodore
Waitt and his affiliates and associates (within the meaning of Rule 12b-2 under
the Exchange Act); or

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

        For purposes of this Section 14, "Person" shall have the meaning given
in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof, except that such term shall not include (i) Theodore Waitt or
any of his affiliates or associates (within the meaning of Rule 12b-2 under the
Exchange Act), (ii) the Company or any of its subsidiaries, (iii) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its affiliates (within the meaning of Rule 12b-2 under the Exchange
Act), (iv) an underwriter temporarily holding securities pursuant to an offering
of such securities, or (v) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

                (e)     DEFINITION OF INVOLUNTARY TERMINATION. For purposes of
the Plan, "Involuntary Termination" of a participant's employment shall mean (x)
termination of the participant's employment by the Company other than by reason
of death or disability (within the meaning of the Company's long-term disability
plan) and other than for Cause or (y) the occurrence, following a Change of
Control, any of the following acts or omissions by the Company or changes in the
terms and conditions of a participant's employment or service with the Company
without the participant's express written consent:

                        (i)     The assignment to the participant of any duties
inconsistent with the participant's position with the Company or a substantial
adverse alteration in the nature or status of the participant's responsibilities
from those in effect immediately prior to the Change of Control;

                        (ii)    A reduction by the Company in the participant's
annual base salary or hourly wage rate as in effect on the date of grant of the
award or as the same may be increased from time to time;

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

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

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

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

        The participant's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any act or failure to act constituting
Involuntary Termination hereunder.

                (f)     DEFINITION OF CAUSE. For purposes of the Plan, "Cause"
                        shall mean:

                        (i)     The willful and continued failure by the
participant to substantially perform the participant's duties with the Company
or an affiliate (other than any such failure resulting from the participant's
incapacity due to physical or mental illness) that has not been cured within 30
days after a written demand for substantial performance is delivered to the
participant by the Company, which demand specifically identifies the manner in
which the Company believes that the participant has not substantially performed
the participant's duties;

                        (ii)    The willful engaging by the participant in
conduct which is demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise;

                        (iii)   The commission of any act of fraud, embezzlement
or dishonesty by a participant; or

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                        (iv)    Any unauthorized use or disclosure by a
participant of confidential information or trade secrets of the Company or any
subsidiary.

        For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the part of the participant shall be deemed "willful" unless
done, or omitted to be done, by the participant not in good faith and without
reasonable belief that the participant's act, or failure to act, was in the best
interest of the Company.

                (g)     PARACHUTE PAYMENTS. In the event that the aggregate
present value of payments to a participant under this Plan and/or under any
other plan, program, or arrangement maintained by the Company constitutes an
"excess parachute payment" (within the meaning of Code Section 280G(b)(1)) and
the excise tax on such payment would cause the net parachute payments (after
taking into account federal and state income and excise taxes) to which such
participant would otherwise be entitled to be less than what such participant
would have netted (after taking into account federal and state income taxes) had
the present value of such participant's total parachute payments equaled $1.00
less than three times his or her "base amount" (within the meaning of Code
Section 280G(b)(3)(A)), unless the Company and the affected individual(s)
otherwise have agreed by separate contract or award, his or her total "parachute
payments" (within the meaning of Code Section 280G(b)(2)(A)) shall be reduced
(but by the minimum possible amount) so that their aggregate present value
equals $1.00 less than three times such base amount. For purposes of this
calculation, unless it would be inequitable to a participant to do so, it shall
be assumed that such participant's tax rate will be the maximum marginal federal
and state income tax rate on earned income, with such maximum federal rate to be
computed with regard to Code Section 1(g), if applicable. In the event that the
participant and the Company are unable to agree as to the amount of the
reduction described above, if any, the participant shall select a law firm or
accounting firm from among those regularly consulted (during the twelve-month
period immediately prior to the relevant change of control) by the Company
regarding federal income tax matters, and such law firm or accounting firm shall
determine the amount of such reduction and such determination shall be final and
binding upon the participant and the Company.

        15. PLAN AMENDMENT. The Plan may be amended by the Compensation
Committee as it deems necessary or appropriate to better achieve the purposes of
the Plan, except that no such amendment shall be made without the approval of
the Company's stockholders which would increase the number of Shares available
for issuance in accordance with Sections 5 and 6 of the Plan, or cause the Plan
not to comply with Rule 16b-3 (or any successor rule) under the Exchange Act or
Section 162(m) of the Code. The Board may suspend the Plan or terminate the Plan
at any time; provided that, that no such action adversely affects any
outstanding benefit. Any Shares authorized under Section 5 (or any amendment
thereof) with respect to which no Award is granted prior to termination of the
Plan, or with respect to which an Award is terminated, forfeited or canceled
after termination of the Plan, shall automatically be transferred to any
subsequent long-term incentive equity plan for employees of the Company.

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        16. TAX WITHHOLDING. The Company shall have the right to deduct from any
settlement of an award made under the Plan, including the delivery or vesting of
Shares, a sufficient amount to cover withholding of any federal, state or local
taxes required by law, or to take such other action as may be necessary to
satisfy any such withholding obligations. The Compensation Committee may, in its
discretion and subject to such rules as it may adopt, permit participants to use
Shares to satisfy required tax withholding (with prior approval of the Chief
Executive Officer if Shares are owned less than six months) and such Shares
shall be valued at the Fair Market Value as of the settlement date of the
applicable award.

        17. REGISTRATION OF SHARES. Notwithstanding any other provision of the
Plan, the Company shall not be obligated to offer or sell any Shares unless such
Shares are at that time effectively registered or exempt from registration under
the Securities Act of 1933, as amended (the "Securities Act") and the offer and
sale of such Shares are otherwise in compliance with all applicable federal and
state securities laws and the requirements of any stock exchange or similar
agency on which the Company's securities may then be listed or quoted. The
Company shall have no obligation to register the Shares under the federal
securities laws or take any other steps as may be necessary to enable the Shares
to be offered and sold under federal or other securities laws. Prior to
receiving Shares, a Plan participant may be required to furnish representations
or undertakings deemed appropriate by the Company to enable the offer and sale
of the Shares or subsequent transfers of any interest in such Shares to comply
with the Securities Act and other applicable securities laws. Certificates
evidencing Shares shall bear any legend required by, or useful for the purposes
of compliance with, applicable securities laws, this Plan or award agreements.

        18. OTHER BENEFIT AND COMPENSATION PROGRAMS. Unless otherwise
specifically determined by the compensation Committee, settlements of awards
received by participants under the Plan shall not be deemed a part of a
participant's regular, recurring compensation for purposes of calculating
payments or benefits from any Company benefit plan, severance program or the
severance pay law of any country. Further, the Company may adopt other
compensation programs, plans or arrangements as it deems appropriate or
necessary.

        19. UNFUNDED PLAN. Unless otherwise determined by the Compensation
Committee, the Plan shall be unfunded and shall not create (or be construed to
create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any participant or other person.
To the extent any person holds any rights by virtue of an award granted under
the Plan, such rights shall be no greater than the rights of an unsecured
general creditor of the Company.

        20. USE OF PROCEEDS. The cash proceeds received by the Company from the
issuance of Shares pursuant to awards under the Plan shall constitute general
funds of the Company.

        21. REGULATORY APPROVALS. The implementation of the Plan, the granting
of any award under the Plan, and the issuance of Shares upon the exercise or
settlement of any award shall be subject to the Company's procurement of all
approvals and permits required by regulatory

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authorities having jurisdiction over the Plan, the awards granted under it or
the Shares issued pursuant to it.

        22. EMPLOYMENT RIGHTS. The Plan does not constitute a contract of
employment, and participation in the Plan will not give a participant the right
to continue in the employ of the Company on a full-time, part-time or any other
basis. Participation in the Plan will not give any participant any right or
claim to any benefit under the Plan, unless such right or claim has specifically
accrued under the terms of the Plan.

        23. GOVERNING LAW. The validity, construction and effect of the Plan and
any actions taken or relating to the Plan shall be determined in accordance with
the laws of the State of South Dakota and applicable federal law.

        24. SUCCESSORS AND ASSIGNS. The Plan shall be binding on all successors
and assigns of a participant, including, without limitation, the estate of such
participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the participant's
creditors.

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                                                                   EXHIBIT 10.16

                              EMPLOYMENT AGREEMENT

     This Employment Agreement ("Agreement") by and between Gateway Companies,
Inc., a Delaware corporation (the "Company"), and Richard T. Bradley (the
"Executive") is made as of August 1, 2000.

     1.   EMPLOYMENT PERIOD; COORDINATION WITH CHANGE OF CONTROL COMPENSATION
          AGREEMENT.

          (a)  The Company hereby agrees to employ the Executive, and the
Executive hereby accepts such employment, pursuant to the terms and conditions
set forth in this Agreement, for a period commencing August 1, 2000 (the
"Commencement Date") and ending July 31, 2004, unless terminated earlier as
provided herein (the "Initial Employment Period"), provided that the Initial
Employment Period shall be automatically extended for successive one (1) year
periods ("Additional Periods") unless terminated earlier as provided herein or a
party gives written notice to the other party of non-extension at least ninety
(90) days prior to the end of the Initial Employment Period or the then
Additional Period. A notice of non-extension by the Company shall be deemed a
Termination without Cause as of the end of the then Initial Employment Period or
Additional Period or such earlier date after notice as the Executive shall
elect. The period of Executive's actual employment hereunder after the
Commencement Date shall be referred to herein as the "Employment Period."

          (b)  On or about the date hereof, Executive and the Company have
entered or will enter into a Change of Control Compensation Agreement
substantially in the form attached hereto as Exhibit "A" (the "Change of Control
Agreement"). This Agreement and the Change of Control Agreement shall each
remain in effect in accordance with their respective terms, provided, however,
that:

          (i)  If a Change of Control (as defined in the Change of Control
               Agreement) shall occur during the Employment Period and at a time
               when the Change of Control Agreement is in effect, then, (A)
               during the remaining Term (as defined therein) of the Change of
               Control Agreement, the terms "Cause" and "Good Reason" and
               "Disability" as used in this Agreement shall have the meanings
               assigned to such terms in the Change of Control Agreement, (B)
               Sections 6(a) and 6(c) of this Agreement and the third and fourth
               sentences of Section 5(b) of this Agreement shall not apply to
               any termination of Executive's employment occurring during the
               remaining Term of the Change of Control Agreement, and (C) the
               second sentence of Section 6(b) of this Agreement shall not apply
               to options and other equity awards to which Section 6.1 (C) of
               the change of Control Agreement applies; and

          (ii) If a Pre-Change of Control Entitlement Event (as defined in the
               Change of Control Agreement) shall occur during the Employment
               Period and at a time when the Change of Control is in effect,
               then (A) Executive shall not be entitled to benefits under
               Section 6(a) of this Agreement and (B) Sections 5(b) and Section
               6(b) of this Agreement shall be of no force or effect (it being

<PAGE>

               understood and agreed that any termination of Executive's
               employment that would qualify as both a Pre-Change of Control
               Entitlement Event (for purposes of the Change of Control
               Agreement) and a termination of Executive's employment for
               "Cause" or without "Good Reason" (each as defined in this
               Agreement) shall be treated solely as a Pre-Change of Control
               Entitlement Event).

     2.   POSITION AND DUTIES.

          (a)  During the Employment Period, the Executive shall be employed as
Executive Vice President, Global Operations.

          (b)  The Executive shall devote his full business time, attention and
best efforts to his duties and responsibilities hereunder and shall comply with
the Company's written rules and policies including, without limitation, the
Company's Code of Ethics and Non-Harassment policy. It shall not be a violation
of this Section for the Executive to (i) manage his personal investments, (ii)
be involved in charitable, civic and professional activities, (iii) serve on for
profit corporate or corporate advisory boards or committees approved by the
President and Chief Executive Officer, or (iv) deliver lectures or fulfill
speaking engagements, provided that the activities referred to in subparts (i)
through (iv) do not interfere with the performance of the Executive's
responsibilities as an employee of the Company or violate the Company's written
rules and policies. In the event the President and Chief Executive Officer of
the Company notifies Executive in writing that any such activity presents a
conflict, or an appearance of a conflict, of interest with the Company, or
violates the Company's written rules and policies, the Executive shall cease the
activity as soon as reasonably practicable.

     3.   SALARY, BONUS AND BENEFITS.

          (a)  BASE SALARY. During the Employment Period, the Executive shall
receive an annual base salary of at least $475,000 (as increased from time to
time, "Annual Base Salary"), payable pursuant to the Company's normal payroll
practices.

          (b)  ANNUAL BONUS. During the Employment Period, the Executive's
annual target bonus shall be equal to 70% of the Executive's Annual Base Salary
(the "Target Bonus") and shall be increased or reduced in accordance with the
pay-out formula if established target performance goals are exceeded or not met.
The target performance goals shall be established by the Compensation Committee
of the Board (the Compensation Committee) at the beginning of each calendar year
if pursuant to a plan subject to Section 162(m) of the Internal Revenue Code, or
otherwise by the Company.

          (c)  BENEFITS. The Executive shall be treated in the same manner as,
and shall be entitled to such benefits and other perquisites as provided to,
other senior executive officers ("Senior Executive Officers") of the Company. In
this regard, the Executive shall be entitled to benefits under the Company's
vacation, benefit and welfare plans which are generally applicable to other
Senior Executive Officers including, without limitation, the Company's
relocation plan, the Company's stock option plan, the retirement savings plan,
and the short-term and long-term disability plans.

                                       2
<PAGE>

     4.   STOCK OPTIONS.

          (a)  INITIAL OPTION GRANT. At the time Executive commenced employment
with the Company, Executive was given an initial option grant ("Initial
Options") to purchase 175,000 shares (which was thereafter adjusted for the
stock split that occurred on September 7, 1999) of Gateway common stock pursuant
to the terms of the 1996 Long-Term Equity Incentive Plan (the "1996 Plan") and
the related stock option agreement.

          (b)  RETENTION OPTION GRANT. The Executive was granted by the
Compensation Committee, on or about September 30, 1999, an option to purchase an
additional 200,000 shares of Gateway common stock pursuant to the terms and
conditions of the 1996 Plan and the related stock option agreement.

          (c)  RECURRING OPTIONS. Commencing in calendar year 2000 and
thereafter in each calendar year during the Employment Period, the Executive
will be eligible for option grants in accordance with the provisions of the
Company's stock incentive plan(s) then in effect. All stock option grants under
Section 4(c) of this Agreement will be granted under, and subject to, such
plans. Any such options granted in calendar year 2000 but prior to the
Commencement Date were, and shall continue to be, subject to the terms of the
1996 Plan (or its replacement) and the related stock option agreement(s).

     5.   TERMINATION OF EMPLOYMENT.

          (a)  TERMINATION WITHOUT CAUSE AND TERMINATION WITH CAUSE. The Company
may terminate the Executive's employment during the Employment Period without
Cause or with Cause. For purposes of this Agreement, Termination without Cause
shall mean any termination by the Company during the Employment Period other
than for Cause or as a result of death, retirement, or Disability. Except as
provided in Section 1(b) above, Termination for Cause shall mean termination
resulting from, as determined in the Company's sole discretion, the Executive's
(i) conviction (including a plea of guilty or nolo contendere) of any felony of
any kind (other than Limited Vicarious Liability or a routine traffic
infraction) or any other crime (whether it is a felony or not) involving
securities fraud, theft of assets of the Company, or falsification of the
Company's books or records; (ii) material breach of the agreement signed by
Executive as a condition of employment (attached hereto as Exhibit "B" and made
a part hereof) which breach is not cured within twenty (20) days of written
notice thereof; (iii) willful misconduct with regard to the Company; or neglect
or dereliction of duty resulting in either case in economic harm to the Company
or damage to the Company's name or reputation; (iv) failure to follow or in good
faith attempt to follow the reasonable lawful direction of the President and
Chief Executive Officer or Vice Chairman, or the person to whom the Executive
directly reports; or (v) failure to comply with the Company's Code of Ethics or
other policies including, without limitation, the Company's Non-Harassment
policy. Limited Vicarious Liability, as used above, shall mean any liability
which is based on acts of the Company (x) for which the Executive is charged
solely as a result of his offices with the Company, (y) in which he was not
directly or indirectly involved, and (z) with respect to which he had no prior
knowledge or reasonable belief that a law was being violated.

                                       3
<PAGE>

          (b)  GOOD REASON. The Executive may terminate employment for Good
Reason, which is referred to herein as a Termination for Good Reason. Except as
provided in Section 1(b) above, Good Reason means: (i) a diminution in
Executive's title; provided, however, that it shall not be deemed a diminution
in Executive's title where Executive continues to carry the title Executive Vice
President, (ii) the assignment of duties to the Executive that are materially
and adversely inconsistent with the Executive's position as Executive Vice
President, (iii) any material diminution in Executive's authority or
responsibility, or (iv) any material breach by the Company of this Agreement. If
the Executive determines that Good Reason exists, the Executive must notify the
Company in writing, within 180 days following the Executive's knowledge of the
first event which the Executive determines constitutes Good Reason, or such
event shall not constitute Good Reason under this Agreement. If the Company
remedies such event within sixty (60) days following receipt of notice, the
Executive may not terminate employment for Good Reason as a result of such
event.

          (c)  DEATH, RETIREMENT, OR DISABILITY. The Executive's employment
shall terminate automatically upon the Executive's death or retirement during
the Employment Period. Except as provided in Section 1(b) above, the Executive's
employment under this Agreement shall terminate for "Disability" where the
Executive has been unable to render the material services required by his
position as a result of physical or mental incapacity (as determined by the
Company's disability insurance carrier) for a period of 180 consecutive days and
the Company has notified the Executive of such termination while he is so
disabled. The parties agree that exceeding such a period would constitute an
undue hardship for the Company under Federal and state law including, without
limitation, the Americans with Disabilities Act and the California Fair
Employment and Housing Act.

          (d)  TERMINATION WITHOUT GOOD REASON. The Executive may terminate his
employment with the Company without Good Reason at any time. Any such
termination is referred to herein as a Termination without Good Reason. Notice
of non-extension by the Executive under Section 1 above shall be deemed a
Termination without Good Reason as of the end of the Employment Period.

          (e)  NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive shall be communicated by Notice of
Termination to the other party. For purposes of this Agreement, a "Notice of
Termination" means a written notice which indicates the specific termination
provision in this Agreement relied upon and, to the extent practicable sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated.

     6.   PAYMENT OBLIGATIONS OF THE COMPANY UPON TERMINATION.

          (a)  TERMINATION WITHOUT CAUSE; TERMINATION FOR GOOD REASON. Upon (i)
Termination without Cause or (ii) Termination for Good Reason during the
Employment Period, and in either case subject to and conditioned on Executive's
timely execution and non-revocation of a Separation Agreement and General
Release of claims against the Company and its subsidiaries and affiliates in a
form satisfactory to the Company, the Company shall pay the Executive an amount
equal to two (2) times the sum of (x) the Executive's then current Annual Base
Salary plus (y) the Executive's then current annual Target Bonus. The amount
will be paid in a single lump sum payment within twenty (20) days after the date
of termination. Any Company stock options or other equity, if

                                       4
<PAGE>

any, held by the Executive as of the date of termination will be handled in
accordance with Section 4 of this Agreement and the applicable plan and grants.
In addition, the Executive will be entitled to Accrued Amounts, as defined in
Section 6(d) below.

          (b)  TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If the Executive's
employment is terminated by the Company for Cause or by the Executive without
Good Reason during the Employment Period, the Company will pay to the Executive
the Executive's Annual Base Salary through the date of termination, to the
extent not yet paid, and the Company shall have no further obligations under
this Agreement. In addition, all outstanding Company stock options and other
equity awards, if any, will be handled in accordance with Section 4 of this
Agreement and the applicable plan and grants. In addition, the Executive will
also be entitled to other Accrued Amounts.

          (c)  DEATH, RETIREMENT, OR DISABILITY. If the Executive's employment
is terminated by reason of the Executive's death, retirement, or disability
during the Employment Period, the Company will pay the Executive (or the
Executive's heirs or representatives, if applicable) the Executive's Annual Base
Salary through the date of termination, to the extent not yet paid and other
Accrued Amounts, plus a pro-rated amount of Executive's Target Bonus. In
addition, any Company stock options or other equity, if any, held by the
Executive as of the date of termination will be handled in accordance with
Section 4 of this Agreement and the applicable plans and grants.

          (d)  ACCRUED AMOUNTS. Accrued Amounts shall mean Annual Base Salary
and expense reimbursements due for the period prior to any termination.

     7.   EXCISE TAX. The provisions of Annex B to the Change of Control
          Agreement are incorporated herein by reference and shall survive the
          termination of the Change of Control Agreement.

     8.   SUCCESSORS.

          (a)  This Agreement is personal to the Executive and shall not be
assignable by the Executive except by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's heirs or legal representatives. Notwithstanding the foregoing,
any amounts that become payable hereunder pursuant to Section 6, shall be
payable to Executive's estate if not paid prior to the Executive's death.

          (b)  This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns, provided that the Company may not
assign this Agreement except in connection with the assignment or disposition of
all or substantially all of the assets or stock of the Company or by law as a
result of a merger or consolidation and only if such assignee promptly delivers
to Executive a written assumption of this Agreement in form and substance
reasonably acceptable to Executive.

     9.   MISCELLANEOUS.

                                       5
<PAGE>

          (a)  This Agreement shall be governed, by, and construed in accordance
with, the laws of the State of California, without reference to its conflict of
law rules. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
except by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

          (b)  All notices and other communications under this Agreement shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

          IF TO THE EXECUTIVE

          Richard T. Bradley
          4545 Towne Centre Court
          San Diego, CA  92121

          IF TO THE COMPANY

          Gateway Companies, Inc.
          4545 Towne Centre Court
          San Diego, CA 92121
          Attn: General Counsel

or to such other address as either party furnishes to the other in writing in
accordance with this Section 9(b). Notices and communications shall be effective
when actually received by the addressee.

          (c)  The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.

          (d)  Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations.

          (e)  The Executive's or the company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.

          (f)  Except as provided herein, the Executive and the Company
acknowledge that this Agreement constitutes the entire agreement between the
parties and supersedes any prior agreement between the Executive and the Company
concerning the subject matter hereof. Except as provided herein, the Executive
shall not be entitled to participate in any severance plans or severance
programs of the Company during the Employment Period.

                                       6
<PAGE>

          (g)  The Company shall indemnify Executive with respect to claims
(both during and after employment) relating to Executive's service as an
employee and officer of the Company and its affiliates and as a fiduciary of any
benefit plan of any of the foregoing to the full extent permitted by applicable
law and the Company shall cover the Executive under the Company's Directors and
Officers indemnification insurance policy (as in effect from time to time) both
during and after employment with regard to actions or inactions in such
capacities.

          (h)  The prevailing party in any litigation with regard to this
Agreement or the grants hereunder, as determined by the Court, shall be awarded
by the Court his or its reasonable legal fees and disbursements.

          (i)  This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.

     IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.

                                       7

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