Document:

BASIC EQUITY ACQUISITION CONTRACT

                                     BETWEEN

                  CITIBANK, N.A. AND CITIZENS UTILITIES COMPANY

                  The purpose of this Basic  Equity  Acquisition  Contract  (the
"Master  Confirmation"),  dated as of February 24, 2000, is to set forth certain
terms and conditions for equity purchase  transactions  that Citizens  Utilities
Company ("Counterparty") will enter into with Citibank, N.A. ("Citibank").  Each
such   transaction  (a   "Transaction")   entered  into  between   Citibank  and
Counterparty  that  is to be  subject  to  this  Master  Confirmation  shall  be
evidenced  by a  written  confirmation  substantially  in the form of  Exhibit A
hereto,  with such  modifications  thereto as to which Counterparty and Citibank
mutually  agree  (a   "Confirmation").   This  Master   Confirmation   and  each
Confirmation  together  constitute  a  "Confirmation"  as  referred  to  in  the
Agreement specified below.

                  This  Master  Confirmation  and  a  Confirmation   evidence  a
complete binding agreement between you and us as to the terms of the Transaction
to which this Master  Confirmation and such Confirmation  relates.  In addition,
you and we agree to use our best  efforts  promptly  to  negotiate,  execute and
deliver  an  ISDA  Master  Agreement  (Multicurrency-Cross  Border)  (the  "ISDA
Agreement") in the form  published by the  International  Swaps and  Derivatives
Association,  Inc. ("ISDA"), with such modifications as you and we shall in good
faith agree (as modified, the "Agreement").  Upon the execution by you and us of
the Agreement,  this Master  Confirmation and each Confirmation will supplement,
form a part of, and be subject to the  Agreement.  A copy of the ISDA  Agreement
has been, or promptly after the date hereof will be,  delivered to you. Prior to
execution  of the  Agreement,  this Master  Confirmation  and each  Confirmation
hereunder,  together with all other  documents  referring to the ISDA  Agreement
(each a "Confirmation")  confirming  transactions (each a "Transaction") entered
into  between  you  and  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  Agreement  as if we had  executed an  agreement in such
form (but without any Schedule) on the Trade Date of the first such  Transaction
between you and us.

                  The ISDA Agreement, this Master Confirmation and each Confirm-
ation will be governed by the laws of the State of New York.

                  1. In the  event  of any  inconsistency  between  this  Master
Confirmation,  on the one hand, and the ISDA  Agreement,  or when executed,  the
Agreement,  on the other hand,  this Master  Confirmation  will  control for the
purpose of the Transaction to which a Confirmation  relates. In the event of any
inconsistency between the definitions and provisions of the ISDA Agreement,  the
Agreement (when executed) and this Master  Confirmation,  on the one hand, and a
Confirmation, on the other hand, the Confirmation will govern. With respect to a
Transaction,  capitalized terms used herein that are not otherwise defined shall
have  the  meaning  assigned  to  them  in the  Confirmation  relating  to  such
Transaction or, if not defined therein, in the ISDA Agreement or, when executed,
the Agreement.

                  2. Each party will make each payment  specified in this Master
Confirmation  or a  Confirmation  as being payable by it, not later than the due
date for  value on that  date in the  place of the  account  specified  below or
otherwise  specified in writing,  in freely  transferable  funds and in a manner
customary for payments in the required  currency.  This Master  Confirmation and
the Agreement,  together with the Confirmation relating to a Transaction,  shall
constitute the written agreement between  Counterparty and Citibank with respect
to such Transaction.

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                  3. Each Transaction to which a Confirmation relates is a Basic
Equity Acquisition  Contract ("BEACON") transaction, the terms of which include:

                  4. General Definitions:
                     -------------------

Actual Dividends:    means, for any Transfer Date and  subject to  paragraph9(e)
                     ("Funding Cost Adjustment"), the  amount of  all  dividends
                     (other than dividends resulting in an adjustment   pursuant
                     to paragraph 8(c)  ("Adjustment  Events")  and  other  than
                     dividends   transferred   to   Counterparty   pursuant   to
                     paragraph 9(f)  ("Dividends")) paid before the day on which
                     the Unwind  Period  commences, to which would be entitled a
                     holder of a number of Common Shares equal to the applicable
                     Daily Transfer  Amount (or portion  thereof) outstanding on
                     the  applicable  ex-dividend  date  divided by the weighted
                     average of the  Tranche  Prices  Per Share for each Tranche
                     Amount  included in such Daily  Transfer Amount (or portion
                     thereof).

BEACON Account(s):   means the account(s) in which  Citibank  shall  record  any
                     Common Shares,  Actual  Dividends, interest  on the  Actual
                     Dividends  that  are  cash  dividends,  and  other amounts.
                     Counterparty  shall  be  entitled  to  any  remaining  cash
                     amounts  or  property  in  the  BEACON Account  on the last
                     Trading Day in an Unwind Period, provided that Counterparty
                     has fully satisfied  all  of its payment  obligations  with
                     respect to Citibank  pursuant  to this  Master Confirmation
                     and there is no  remaining   Outstanding  Aggregate Amount.
                     The BEACON Account(s)  will be captioned:   "Master BEACON,
                     February 24, 2000, Citizens Utilities Company."

Business Day:        means  a day (other than a  Saturday or a Sunday) on  which
                     commercial  banks  generally  are  open for business in New
                     York City.

Carrying Rate:       means  on any day with respect  to any  Tranche  Amount (i)
                     until  but not  including the Initial Reset Date  specified
                     in the applicable Confirmation, the Tranche Initial Funding
                     Rate  for  that  Tranche  Amount  plus the  Carrying Spread
                     specified in the  applicable Confirmation  and (ii)  during
                     each period thereafter, LIBOR determined as  of the  begin-
                     ning of such  period  plus  the  Carrying Spread  specified
                     in the applicable Confirmation.

Closing Price:      means, with respect to a Trading Day, the  closing price per
                    Common Share on the principal Market on such day as reported
                    by Bloomberg L. P. ("Bloomberg") or (A) if such price is not
                    reported  by  Bloomberg,  then as  reported  by  such  other
                    recognized  source  selected by Citibank on the relevant day
                    or (B) if the Common Shares cease to be listed on a national
                    securities  exchange or included in a quotation system, then
                    the  price  as  determined  by  Citibank  in a  commercially
                    reasonable manner.

Common Shares:       means shares of Counterparty's common stock, par value $.25
                     per share.

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LIBOR:               means the rate per annum for U.S. dollar LIBOR  (determined
                     on the basis of the actual number of days  elapsed  over  a
                     360-day  year)  for  the appropriate  reference  period, as
                     determined  by Citibank, appearing (except as  provided  in
                     the  following  sentence)  on  Telerate  Page 3750  or  any
                     replacement of that page, two London Banking Days  prior to
                     the start of a relevant period,  provided  that if the rate
                     cannot  be so  determined, it  shall  be  determined  as if
                     USD-LIBOR-Reference  Banks (as  defined  in the  1991  ISDA
                     Definitions) had been specified for purposes of determining
                     the rate.  If the relevant  period is one week or less, the
                     reference period shall be  one week, and the  rate shall be
                     as  specified on  Reuters  Screen  LIBO Page.  LIBOR  shall
                     otherwise  be determined  by  linear  interpolation  if the
                     relevant period does not correspond exactly to a period for
                     which   rates   appear  on  Telerate   Page  3750  or   its
                     replacement.  Except for the period  ending on the Maturity
                     Date, or if  Counterparty notifies Citibank with an accept-
                     able alternative period within 7 Trading Days prior  to the
                     applicable  Reset  Date,  or unless  the  parties otherwise
                     agree,  the relevant period for determining  LIBOR shall be
                     three  months.  Citibank  agrees it will  not  unreasonably
                     withhold its acceptance of such alternative period.

London Banking Day:  Means any day on which commercial banks are open  for busi-
                     ness (including  dealings in  foreign  exchange and foreign
                     currency deposits) in  London.

 Principal Market:   means the New York Stock Exchange or the principal national
                     securities exchange or quotation system on which the Common
                     Shares may  be listed  or otherwise  included in the future
                     should they cease to be quoted on such  exchange or  quota-
                     tion system.   All references to closing  prices  or  sales
                     prices for the Common Shares shall be to such prices on the
                     Principal Market.

Trading Day:         means  a day  on which  the  Principal Market  is  open for
                     trading.

                   5.  Initiation  of a  Transaction;  Increasing  Trans-
                       --------------------------------------------------
                       action Amount; Fees:
                       --------------------

         (a) Initiation of a Transaction.  From time to time,  Citibank may (but
shall not be obligated to) agree to initiate a new Transaction at Counterparty's
request.  Counterparty  shall  specify in its  request for a new  Transaction  a
proposed Trade Date, Initial Reset Date, and Maturity Date for such Transaction.
As  promptly  as   practicable   following  the  agreement  to  initiate  a  new
Transaction, Citibank shall send Counterparty a Confirmation which shall include
the Trade Date, Initial Reset Date, Notice Date,  Optional Unwind Date, Maturity
Date, Carrying Spread,  Tranche Fee Rate and Commitment Fee to which the parties
have  agreed.  Counterparty  shall  promptly  either (i) sign such  Confirmation
indicating  agreement  thereto and return it to Citibank or (ii) notify Citibank
of any disagreement with respect to the Confirmation.

         (b) Increasing  Transaction Amount.  Except as hereinafter provided, on
any Trading  Day  (including  the Trade  Date)  prior to the Initial  Reset Date
specified in the applicable Confirmation, Counterparty and Citibank may agree to
increase  the number of Common  Shares under such  Transaction.  As used herein,
"Tranche  Date"  means,  with  respect  to  a  Transaction,   each  Trading  Day
(including,  if applicable,  the Trade Date) on which Common Shares are added to
such  Transaction  in accordance  with this  paragraph (b) and "Tranche  Amount"
means,  for each  Tranche  Date,  the  number  of  Common  Shares  added to such
Transaction  on such date  multiplied by the Tranche Price Per Share (as defined

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<PAGE>

below) for such date.  Citibank agrees that it will not unreasonably  reject any
request by Counterparty for a Tranche Amount, provided that (i) at any time, the
sum of the Outstanding Aggregate Amounts (as defined below) for all Transactions
shall  not  exceed  $100,000,000,  (ii) at any  time,  the sum of the  aggregate
numbers of Common Shares specified or to be specified on BEACON Account Schedule
A for all  Transactions  shall  not  exceed  7,500,000  (subject  to  adjustment
pursuant to paragraph 8(c) ("Adjustment Events")), (iii) Citibank may postpone a
request  in its  absolute  discretion  for up to five  Trading  Days  and (iv) a
Tranche Amount may not be accumulated  for more than one Transaction on a single
day.

          (c) Outstanding  Aggregate  Amount.  The term  "Outstanding  Aggregate
Amount" means, in respect of a Transaction as of any date, a dollar amount equal
to the sum of all original Tranche Amounts for such Transaction minus the sum of
the Daily  Transfer  Amounts for each related  Transfer Date (each as defined in
paragraph 6) occurring prior to such date.

         (d) Procedure for Updating  BEACON  Account  Schedule A. As promptly as
practicable  following any Tranche Date,  Citibank and Counterparty shall update
the BEACON Account Schedule A to the applicable Confirmation using the following
procedure.  Citibank shall send Counterparty a revised BEACON Account Schedule A
which shall include the price per Common Share (the "Tranche  Price Per Share"),
and the rate to be used to calculate  the funding cost to the third  Trading Day
after the Initial Reset Date (the "Tranche  Initial  Funding Rate") to which the
parties have agreed for the related Tranche Amount.  The Tranche Price Per Share
shall  include  an  amount  equal  to the  Tranche  Fee  Rate  specified  in the
applicable  Confirmation.  Counterparty  shall  promptly  either  (i) sign  such
revised BEACON Account Schedule A indicating  agreement to Citibank's  revisions
thereof and return it to Citibank  or (ii) notify  Citibank of any  disagreement
with respect to Citibank's revisions to BEACON Account Schedule A.

         (e) Fees.  Counterparty  shall,  by the third Trading Day following the
Trade Date for a  Transaction,  pay to  Citibank a  Commitment  Fee equal to the
amount, if any, specified in the applicable Confirmation.

         (f)  Suspension  of  Transactions.   Notwithstanding  anything  to  the
contrary set forth in this paragraph 5, the obligation of Citibank to accumulate
additional Tranche Amounts shall be suspended on any date when (i) a Share Price
Event or Credit Event (each as defined in paragraph 7) has occurred on or before
such date or (ii) an Event of Default, Potential Event of Default or Termination
Event with this  Transaction  as an Affected  Transaction  has  occurred  and is
continuing.

                  6.       Unwind Period Settlement Obligations:
                           ------------------------------------

         (a) Counterparty Unwind Period Settlement Option. Counterparty shall be
entitled to direct by timely  written notice to Citibank  whether  Settlement of
the parties'  respective  obligations for a particular Unwind Period shall be by
(i) "Full Physical  Settlement,"  (ii) "Net Share Settlement" or (iii) "Net Cash
Settlement"  (or if Counterparty  fails to so direct,  it shall be Full Physical
Settlement  according to the provisions below in paragraph (b)). If Counterparty
directs Net Share Settlement or Net Cash Settlement,  Counterparty shall provide
notice of such direction (a "Net  Settlement  Notice") to Citibank not less than
twenty Trading Days prior to the  commencement of the relevant Unwind Period.  A
Net Settlement  Notice shall be revocable by  Counterparty  through the close of
business on the eleventh  Trading Day prior to the  commencement of the relevant
Unwind Period. Upon (x) receipt by Citibank of a notice revoking a direction for
Net Share Settlement or Net Cash Settlement,  or (y) failure of the Counterparty
to direct a settlement  method by the close of business on the tenth Trading Day
prior to the commencement of the relevant Unwind Period,  Counterparty  shall be
deemed to have  elected  Full  Physical  Settlement.  With  respect to an Unwind

                                       4
<PAGE>

Period in  connection  with a Partial  Termination  Event,  Share Price Event or
Credit  Event,  Counterparty  may  elect  Full  Physical  Settlement,  Net Share
Settlement  or Net Cash  Settlement  on the first  Business Day after receipt of
notice from Citibank  specifying the date of  commencement of such Unwind Period
and, after receipt of timely election of a settlement method from  Counterparty,
Citibank may, in response to a request by Counterparty to defer  commencement of
such Unwind  Period,  but shall not be required to, defer  commencement  of such
Unwind  Period to a date  determined  and  designated by Citibank in a notice to
Counterparty.  The  commencement  of such Unwind  Period can not be suspended by
Counterparty  other than pursuant to Section 7(f).  The methods for  determining
the beginning and length of the "Unwind Period" for a "Maturity  Termination" as
well as for a "Share Price Event," a "Credit Event," an "Optional  Unwind" and a
"Partial Termination" are set forth in paragraph 7.

         Where: "Unwind Period" means a number of days designated by Citibank or
as determined in paragraph 7 in which  Citibank  transfers  Common Shares to the
Counterparty   or  otherwise  sells  Common  Shares  in  settlement  or  partial
settlement of this Transaction.  (b) Full Physical  Settlement.  If Counterparty
does not otherwise  direct Citibank,  Full Physical  Settlement shall take place
with  respect to an Unwind  Period.  Under  Full  Physical  Settlement,  on each
Transfer Date in such Unwind Period,  Citibank shall transfer to  Counterparty a
number of Common  Shares  equal to the Citibank  Share Amount for such  Transfer
Date against  payment by  Counterparty  to Citibank of cash equal to the Forward
Amount for such Transfer Date.

         (c)      Net Share Settlement.  If  Counterparty  so  directs Citibank,
Net Share Settlement will take place with respect to an Unwind Period. Under Net
Share Settlement, on each Transfer Date in such Unwind Period,

         (i)      Citibank  shall  sell for cash a number of the  Common  Shares
                  sufficient  to  yield  proceeds  equal to the  Forward  Amount
                  divided  by the  Determination  Price  (but not to exceed  the
                  Citibank Share Amount) for the related Transfer Date, and

                  (A)    hold such cash proceeds in the BEACON Account,

                  (B)    and  record a  reduction  (but not  below  zero) in the
                         number of Common Shares in the BEACON  Account equal to
                         the number of Common Shares sold;

         (ii)     Citibank shall compute the "Counterparty  Share Amount," which
                  shall be the Forward  Amount for such Transfer Date divided by
                  the Determination Price for such Transfer Date;

         (iii)    (A)    if the  Citibank Share  Amount minus  the  Counterparty
                         Share Amount (the "Net Share Amount") is positive, then
                         Citibank shall transfer to Counterparty a number of the
                         Common Shares equal to the Net Share Amount, and

                  (B)    if the Net Share Amount is negative,  then Counterparty
                         shall  transfer  into the  BEACON  Account  a number of
                         Common  Shares equal to the excess of the  Counterparty
                         Share  Amount  over  the  Citibank   Share  Amount  and
                         Citibank   shall   immediately   sell  for  cash   such
                         transferred  Common  Shares and hold such cash proceeds
                         in the BEACON Account; and

         (iv)     Counterparty shall pay to Citibank an amount of  cash equal to
                  the Forward Amount.

                                       5
<PAGE>

         (d)      Net Cash Settlement. If Counterparty so directs Citibank,  Net
                  -------------------
Cash Settlement will take place with respect to an Unwind Period. Under Net Cash
Settlement, on each Transfer Date in such Unwind Period,

         (i)      Citibank  shall  sell (or be deemed to have  sold) for cash at
                  the Determination Price a number of the Common Shares equal to
                  the  Citibank  Share Amount for the related Transfer Date and;

                  (A)      hold such cash proceeds in the BEACON Account, and

                  (B)      record a reduction (but not below zero) in the number
                           of Common  Shares in the BEACON  Account equal to the
                           number of Common Shares sold; and

         (ii)     Counterparty shall pay to Citibank an amount of cash equal  to
                  the Forward Amount.

         WHERE:

         "Citibank  Share  Amount"  means,  for any  Transfer  Date,  the  Daily
         Transfer Amount for such Transfer Date divided by the weighted  average
         of the Tranche  Prices Per Share for each  Tranche  Amount  included in
         such Daily Transfer Amount.

         "Daily  Transfer  Amount" means,  for any Transfer Date, the portion of
         the Outstanding  Aggregate  Amount subject to the related Unwind Period
         divided  by the number of Unwind  Period  Days for such  Unwind  Period
         (each determined in accordance with paragraph 7). Tranche Amounts shall
         be allocated  to the Daily  Transfer  Amount for any  Transfer  Date as
         determined by Citibank.

         "Forward Amount" means, for any Transfer Date, a dollar amount equal to
         (i) the Daily Transfer Amount for such Transfer Date plus (ii) Carrying
         Costs for such Transfer.

         "Transfer  Date" means, in respect of each Unwind Period Day, the third
         Trading Day after such Unwind Period Day.

         "Unwind Period Day" means each Trading Day in an Unwind Period.
          -----------------

         "Carrying  Costs" means, for any Transfer Date and subject to paragraph
         9(e)  ("Funding Cost  Adjustment"),  an amount equal to interest on the
         Daily Transfer Amount for such Transfer Date at the applicable Carrying
         Rate, compounded periodically each time LIBOR is reset on an actual/360
         basis,  for the period from and  including  the third Trading Day after
         the  Tranche  Date for  each  Tranche  Amount  included  in such  Daily
         Transfer Amount to but excluding such Transfer Date.

          "Determination   Price"  means,   (i)  for  any  Transfer  Date  where
         Counterparty  has  elected  either  Net Cash  Settlement,  or Net Share
         Settlement,  the volume weighted average price (net of brokerage costs)
         of the Common  Shares as traded on the New York Stock  Exchange  on the
         relevant Unwind Period Day.

         (e)      Final Dividend Amount.  In connection with each Unwind Period,
Citibank shall  transfer to  Counterparty,  promptly after the related dividend
payment  date  and  in the same form  in which the dividend was made, the amount
of all dividends (other than dividends  resulting in  an  adjustment pursuant to

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<PAGE>

paragraph 8(c) ("Adjustment  Events")) with an ex-dividend date  before the last
Trading Day  in such Unwind Period and a dividend  payment date on or after  the
first  Trading  Day  in such Unwind  Period to  which a  holder  of a number  of
Common Shares equal to the Remaining Share Amount on  the applicable ex-dividend
date would be entitled.

         WHERE:

         "Remaining  Share Amount"  means,  for any  ex-dividend  date,  (i) the
portion of the  Outstanding  Aggregate  Amount that is the subject of the Unwind
Period   (determined  in  accordance  with  paragraph  7)  outstanding  on  such
ex-dividend date divided by the weighted average of the Tranche Prices Per Share
for each Tranche Amount  included in such portion of the  Outstanding  Aggregate
Amount  minus  (ii) the  Citibank  Share  Amount for each  Transfer  Date with a
related Unwind Period Day occurring on or before such ex-dividend date.

         (f) Citibank Unwind Period Settlement  Right. If Counterparty  fails to
comply with or perform any agreement or obligation  contained in paragraph 10(c)
("Securities Laws and Registration--Registration  Statement") or paragraph 10(e)
("Securities   Laws  and   Registration--Due   Diligence")   or   Counterparty's
representations   contained   in   paragraph   10(d)   ("Securities   Laws   and
Registration--Representations")  are  incorrect  or  misleading  in any material
respect, Citibank and its affiliates shall be entitled (in addition to any other
remedies under the Agreement or otherwise) in connection with a Transfer Date:

         (i)      to eliminate Counterparty's  right to direct Net Share Settle-
                  ment  or  Net  Cash   Settlement  and  effect  Full   Physical
                  Settlement.   Citibank shall give  Counterparty notice of  any
                  such action; or

         (ii)     to the extent  Counterparty  effects Physical Share Settlement
                  in accordance with Section 6(b), to sell Common Shares  in the
                  BEACON  Account  or Common Shares  received  from Counterparty
                  hereunder  (including  pursuant  to  this  clause  (ii)) on  a
                  private  placement  basis and  apply the proceeds of such sale
                  towards the payment of  the Forward Amount for  such  Transfer
                  Date and if Common  Shares are  so  sold,  Counterparty  shall
                  transfer to Citibank an amount of cash such that the aggregate
                  actual net  proceeds of the Common Shares  so sold  plus  such
                  cash amount is equal to the Forward  Amount for such  Transfer
                  Date.  If  Counterparty  does not deliver such amount of cash,
                  Counterparty  shall transfer to Citibank promptly upon request
                  the number of Common  Shares  Citibank  reasonably  determines
                  is adequate to realize actual net proceeds in such amount, and
                  Counterparty's obligation to transfer Common Shares under this
                  clause (ii) shall be  a continuing  one until Citibank  or its
                  affiliates  have  received  actual  net proceeds  equal to the
                  Forward Amount for such Transfer  Date.   Counterparty  repre-
                  sents  that each  of its  filings under the  Securities Act of
                  1933,  as  amended  (the  "Securities  Act"),  the  Securities
                  Exchange Act  of 1934,  as  amended  (the "Exchange  Act")  or
                  other applicable securities laws that are required to be filed
                  have been filed  and that,  as of the  dates thereof  there is
                  and,  as  of  each  day on which  Citibank  or its  affiliates
                  sell   Common  Shares  pursuant  to  this   clause  (ii),   as
                  supplemented  by any  information provided by  Counterparty to
                  Citibank,  there  will be  no misstatement  of  material  fact
                  or   omission  of  a  material  fact  required  to  be  stated
                  therein  or  necessary  to  make  the  statements  therein not
                  misleading.  Citibank and its  affiliates shall be entitled to
                  disclose   any   material  non-public  information   regarding
                  Counterparty  in  their  possession  to  purchasers in such  a
                  private placement.

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<PAGE>

                  7.       Unwind Periods:
                           --------------

         (a) Maturity  Termination.  By the close of business in New York on the
Notice Date specified in the applicable Confirmation, Counterparty shall propose
to Citibank a Trading Day on which the Unwind Period ending on the Maturity Date
specified in the applicable  Confirmation will commence, such that the length of
such  Unwind  Period  is from 1 to 75  consecutive  Trading  Days  inclusive  (a
"Maturity  Termination").   If  Citibank  does  not  agree  with  Counterparty's
proposal,  the  parties  shall  negotiate  in good faith  and,  in the event the
parties cannot agree by the tenth Business Day after the Notice Date, the Unwind
Period  shall  commence on a Trading Day  determined  by Citibank  such that the
expected number of Trading Days in the Unwind Period ending on the Maturity Date
shall be 40. An Unwind  Period will commence on such Trading Day with respect to
the entire Outstanding Aggregate Amount.

         (b) Optional Unwind. At any time,  Counterparty (i) may notify Citibank
of its desire to effect a  transfer  with  respect to any  portion or all of the
Outstanding  Aggregate Amount for any one or more  Transactions  having a Notice
Date (as specified in the  applicable  Confirmation)  after the proposed  Unwind
Period  commencement  date  over  such  number  of  Trading  Days,  from 1 to 75
consecutive Trading Days inclusive,  as Counterparty may determine (an "Optional
Unwind") and (ii) shall include in such notice an irrevocable  indication of its
election  pursuant to paragraph  6(a)  ("Counterparty  Unwind Period  Settlement
Option").  Citibank shall not  unreasonably  reject the proposed portion of such
Outstanding  Aggregate Amount, Unwind Period length, or commencement date of the
Unwind Period relating to such Optional Unwind;  provided that the provisions of
paragraph  6(a)  regarding  notice and method of  settlement  shall apply to any
Optional  Unwind  after  Counterparty  gives  notice of its  desire to effect an
Optional Unwind. If any such term is not reasonably acceptable to Citibank,  the
parties shall negotiate in good faith to modify the proposed term, provided that
if the parties cannot agree  regarding the Unwind Period  length,  the number of
Trading  Days in the Unwind  Period  shall be 40.  Citibank  shall  allocate the
portion of the  Outstanding  Aggregate  Amount  that is to be the subject of the
Unwind Period to one or more Transactions  having a Notice Date after the Unwind
Period commencement date as it determines appropriate.  If the first Trading Day
in the Unwind Period is before the Optional  Unwind Date,  if any,  specified in
the  applicable  Confirmation,  Counterparty  shall pay  Citibank  by the second
Business Day  following  such  Trading Day an amount equal to the present  value
(calculated  by Citibank  using a discount  rate equal to LIBOR minus 0.125% per
annum) of the Carrying  Spread that would have been earned on the portion of the
Outstanding  Aggregate  Amount  subject to such Optional  Unwind had it remained
outstanding through such date.

         (c) Partial  Termination  Event.  A "Partial  Termination  Event" shall
occur if on any day (i) the Transaction  Equity for such day exceeds 4.9% of the
number of outstanding Common Shares on such day or (ii) the Net Transfer Balance
for such day  exceeds  the  Available  Common  Shares for such day, in each case
determined  on an aggregate  basis for all  outstanding  Transactions.  Upon the
occurrence  of a  Partial  Termination  Event,  Citibank  shall be  entitled  to
commence an Unwind Period with respect to a portion of the Outstanding Aggregate
Amount for all Transactions  equal to the amount  determined by Citibank so that
after completion of the Unwind Period related to the Partial  Termination Event,
(x) in the case of (i) above,  the  Transaction  Equity would not exceed 4.9% of
the number of outstanding  Common Shares and (y) in the case of (ii) above,  the
Net Transfer  Balance would not exceed the  Available  Common  Shares.  Citibank
shall allocate the portion of such  Outstanding  Aggregate  Amount that is to be
the subject of the Unwind  Period to one or more  Transactions  as it determines
appropriate.  Such Unwind Period shall  commence on a Trading Day and end on and
include  a  Trading  Day,  each  as  designated  by  Citibank  in  a  notice  to
Counterparty delivered at least two Business Days prior to the commencement date
of the Unwind Period  designated in such notice.  At the option of Citibank upon

                                       8
<PAGE>

notice to  Counterparty,  an Unwind Period that has commenced  with respect to a
Transaction  shall terminate on the Trading Day prior to the start of the Unwind
Period for such Partial Termination Event.

         WHERE:

         "Transaction Equity" means, with respect to any day, a number of Common
         Shares equal to the sum of (i) the  Counterparty  Share Amount for such
         day  (determined  using the Closing  Price for such day and assuming an
         Unwind  Period of one day) and (ii) the number of Common Shares held by
         Citibank  or its  affiliates  on such day for other  transactions  with
         Counterparty.

         "Net  Transfer  Balance"  means,  with  respect to any day, a number of
         Common  Shares  equal to the  Counterparty  Share  Amount  for such day
         (determined using the Closing Price for such day and assuming an Unwind
         Period  of one  day)  minus  the  Citibank  Share  Amount  for such day
         (assuming an Unwind Period of one day).

         "Available  Common Shares" means,  with respect to any day, a number of
         Common  Shares equal to (i) the number of  authorized  Common Shares on
         such day minus  (ii) the sum of (x) the  number of  outstanding  Common
         Shares on such day and (y) the  number of Common  Shares  reserved  for
         other purposes.

         (d)  Suspension  of  Unwind  Period.  Counterparty  may,  by  notice to
Citibank by 8:30 a.m. New York time on any Trading Day, suspend an Unwind Period
for up to 5 days in the  aggregate  based on the  advice of  counsel  respecting
applicable  federal securities laws that such Unwind Period should be suspended.
As promptly as practicable after such suspension,  Citibank will adjust any term
of this Transaction relating to an Unwind Period, Maturity Date or other Trading
Day or  otherwise  to the  extent  appropriate  to  effectuate  the  fundamental
economic terms of this Transaction.

         (e) Unwind  Periods in Effect.  For purposes of  "Optional  Unwind" and
"Maturity Termination," and unless Citibank (in the case of "Share Price Event,"
"Credit  Event" or "Partial  Termination  Event")  elects to terminate an Unwind
Period in effect in accordance  with the last sentence of such  paragraphs,  any
Daily  Transfer  Amount for which an Unwind  Period is in effect shall be deemed
not outstanding for purposes of determining the Outstanding  Aggregate Amount to
be subject to such an Unwind Period.

         (f) Share Price Event. A "Share Price Event" shall occur if the Closing
Price on any  Trading  Day is equal to or less than $8.00 per share  (subject to
adjustment  pursuant  to  paragraph  8(c)  ("Adjustment   Events")).   Upon  the
occurrence  of a Share Price  Event,  Citibank  shall be entitled to commence an
Unwind  Period  with  respect to the  entire  Outstanding  Aggregate  Amount two
Business  Days after  delivery  of notice by Citibank  to  Counterparty  of such
event. Such Unwind Period shall commence on a Trading Day and end on and include
a Trading Day, each as designated  by Citibank.  At the option of Citibank,  any
Unwind  Period that had  commenced  prior to the start of the Unwind  Period for
such Share Price Event and not  terminated  shall  terminate  on the Trading Day
prior to the start of the Unwind Period for such Share Price Event.

         (g) Credit Event.  A "Credit  Event" shall occur if (i)  Counterparty's
unsecured and unsubordinated long-term debt rating (not supported by third party
credit enhancement), if any, falls to or below BBB- by Standard & Poor's Ratings
Services  (including its successors,  "S&P"), Baa3 by Moody's Investors Service,
Inc.  (including its successors,  "Moody's") or the equivalent rating by another
nationally  recognized  statistical  rating  agency or in any case is suspended,

                                       9
<PAGE>

withdrawn or  otherwise  unavailable,  or (ii) an Event of Default  described in
Section 5(a)(i),  (ii), (iii), (iv), (v) or (vi) of the Agreement (other than an
Event of Default under Section 5(a)(i),  (ii), (iii) or (iv) that does not arise
with respect to this Master  Confirmation  or a Transaction  hereunder where the
Counterparty is the Affected Party, or a Termination  Event described in Section
5(b) of the Agreement (other than an Additional  Termination  Event Described in
Section 10(f)  hereof) where the  Counterparty  is an Affected  Party.  Upon the
occurrence  and  continuation  of a Credit Event,  Citibank shall be entitled to
commence  an Unwind  Period  with  respect to the entire  Outstanding  Aggregate
Amount.  Such  Unwind  Period  shall  commence  on a Trading  Day and end on and
include  a  Trading  Day,  each as  designated  by  Citibank.  At the  option of
Citibank,  any Unwind Period that had commenced prior to the start of the Unwind
Period for such Credit Event and not terminated  shall  terminate on the Trading
Day  prior  to  the  start  of  the  Unwind   Period  for  such  Credit   Event.
Notwithstanding  the  provisions  of  Section  6  of  the  Agreement,  upon  the
occurrence of an Event of Default or Termination  Event described in clause (ii)
above where the  Counterparty is an Affected Party,  the provisions of Section 6
of the Agreement will not be applicable,  other than Section  6(b)(i),  (ii) and
(iii) to the extent applicable.

                  8.       Disruptions and Adjustments:
                           ---------------------------

         (a) Market  Disruption  Events. If on any day that would otherwise be a
Trading Day Citibank  determines  that there has been a material  suspension  or
material  limitation of trading in the Common Shares on the Principal Market, or
that  trading  in  securities  in  general  on the  Principal  Market  has  been
materially  suspended or materially limited (a "Market Disruption Event"),  then
that day shall be deemed not to be a Trading Day (in whole or in part),  and the
next  Trading  Day shall be  postponed  to the first  succeeding  Trading Day on
which,  in Citibank's  determination,  there is no Market  Disruption  Event. As
promptly as  practicable  after the  occurrence  of a Market  Disruption  Event,
Citibank will adjust any term of this Transaction  relating to an Unwind Period,
Maturity  Date or other  Trading Day or otherwise to the extent  appropriate  to
effectuate the fundamental economic terms of this Transaction.

         (b) Disruption of Transfer. If on any date there occurs an event beyond
the control of the parties as a result of which The Depository  Trust Company or
any successor  depository cannot effect a transfer of the Common Shares pursuant
to this Transaction, the party obligated to transfer the Common Shares shall use
its best  efforts to cause the Common  Shares to be  transferred  as promptly as
practicable to the other party in any commercially reasonable manner. Each party
agrees that if transfer of the Common  Shares on any Transfer Date is subject to
any restriction imposed by a regulatory authority, the parties will negotiate in
good faith a procedure to effect transfer of such Common Shares in a manner that
complies with any relevant rules of such regulatory authority.

         (c) Adjustment Events. In the event of (i) a subdivision, consolidation
or  reclassification  of the Common  Shares into a  different  number or kind of
shares of stock of  Counterparty,  (ii) a dividend on the Common  Shares paid in
Common  Shares,  (iii) a merger or other  transaction  whereby  the  outstanding
Common Shares are exchanged  for another class of  securities,  or securities of
another issuer, or (iv) any other similar event (an "Adjustment Event"), then in
each case,  Citibank  shall make  appropriate  adjustments  to the terms of this
Transaction,  and/or amend the definition of Common Shares or Share Price Event,
such that the fundamental  economic terms of this  Transaction are equivalent to
those in effect immediately prior to the Adjustment Event.

                  9.       Miscellaneous:
                           -------------

         (a) Early  Termination.  The parties agree that for purposes of Section
6(e) of the  Agreement,  Second Method and Loss will apply to this  Transaction.
The parties  further agree that for purposes of calculating  Citibank's  Loss in

                                       10
<PAGE>

connection  with  this  Transaction,  Citibank  or any of its  affiliates  shall
dispose of any Common Shares in the BEACON  Account over a period  consisting of
(i) in the case of an Early Termination Date resulting from an Event of Default,
any number of Trading Days as Citibank may  determine and (ii) in the case of an
Early Termination Date resulting from a Termination Event, any number of Trading
Days as Citibank may determine and to which  Counterparty shall not unreasonably
object.

         (b) Netting of  Obligations;  Rounding.  The  respective  Common  Share
transfer and cash payment  obligations  on any day of  Counterparty,  on the one
hand,  and  Citibank  on the other  hand,  whether  under a single  or  multiple
Transactions,  shall be  netted.  The  number of Common  Shares  required  to be
transferred  hereunder  by either  party  shall be rounded  down to the  nearest
number of whole  shares,  such that neither  party shall be required to transfer
any fractional shares.

         (c) Agreement regarding Common Shares. Each party agrees with the other
that, in respect of any Common Shares transferred to the other party such shares
will, at the time transfer, be free of liens and other encumbrances, and, in the
case of Counterparty, such shares shall be, upon such transfer, duly and validly
authorized, issued and outstanding, fully paid and nonassessable, and subject to
no adverse claims of any other party. Citibank shall record any Common Shares in
the BEACON Account.

         (d) Default  Interest.  If a party  defaults in the  performance of any
obligation required to be settled by transfer, it will indemnify the other party
on demand,  in  accordance  with the  practice of the  Principal  Market for the
Common  Shares,  for any  costs,  losses  or  expenses  (including  the costs of
borrowing  Common  Shares,  if  applicable)  resulting from such default and, in
addition,  shall indemnify the other party for interest  computed at the Default
Rate for the period  commencing on the Transfer Date and ending on the date such
default is cured. A certificate signed by the transferee setting out such costs,
losses or expenses in reasonable  detail shall be conclusive  evidence that they
have been incurred, absent manifest error.

         (e) Funding Cost  Adjustment.  If for any reason the relevant  interest
period  does not  correspond  with the  reference  period  used for  purposes of
calculating Carrying Costs,  Citibank shall adjust the terms of this Transaction
appropriately to reflect any additional funding costs incurred, or any reduction
in funding costs received, by Citibank.

         (f) Dividends.  Citibank  shall record Actual  Dividends  in the BEACON
Account. Interest shall accrue at LIBOR less 0.125% on Actual Dividends that are
cash  dividends,  commencing  with the dividend  payment date and such  interest
shall also be  recorded  in the  BEACON  Account.  Citibank  shall  transfer  to
Counterparty,  promptly after the related  dividend payment date and in the same
form in which the dividend  was made,  the amount of all  dividends  (other than
cash  dividends and dividends  resulting in an adjustment  pursuant to paragraph
8(c) ("Adjustment Events")) to which a holder of a number of Common Shares equal
to the  Dividend  Share  Amount  on the  applicable  ex-dividend  date  would be
entitled.

         WHERE:

         "Dividend Share Amount" means,  for any  ex-dividend  date, a number of
         Common  Shares  equal to (i) the portion of the  Outstanding  Aggregate
         Amount  outstanding on such  ex-dividend  date that is not, and has not
         been, the subject of an Unwind Period  (determined  in accordance  with
         paragraph  7) when such  dividend is paid  divided by (ii) the weighted
         average  of the  Tranche  Prices  Per  Share  for each  Tranche  Amount

                                       11
<PAGE>

         included in such portion of the Outstanding Aggregate Amount.

         (g) Increased Costs. If Citibank determines that from the Trade Date of
the relevant Transaction (i) due to either (x) the introduction of or any change
in or in the  interpretation of any law or regulation or (y) the compliance with
any guideline or request from any central bank or other  governmental  authority
(whether  or not having the force of law),  there  shall be any  increase in the
cost to Citibank or its  affiliates of engaging in this  Transaction  or related
transactions,  or (ii) compliance with any law or regulation or any guideline or
request from any central bank or other  governmental  authority  (whether or not
having the force of law)  increases or would  increase the amount of any capital
required or expected to be  maintained  by Citibank or any affiliate of Citibank
as a direct or indirect  consequence of this  Transaction  ("Increased  Costs"),
then  Counterparty  shall from time to time until this  Transaction is no longer
outstanding (whether through Optional Unwind or otherwise), promptly upon demand
by Citibank,  convey to Citibank  additional  amounts  sufficient  to compensate
Citibank for such  Increased  Costs as are  incurred;  provided,  however,  that
Counterparty's  obligation to pay such additional amounts shall be limited to 15
percent of the Carrying Costs of this Transaction.  Such additional amounts may,
at Counterparty's option, be paid in U.S. dollars or be satisfied by transfer of
a number of Common Shares having an equivalent value;  provided,  however,  that
Counterparty  shall be entitled to satisfy such obligation by transfer of Common
Shares only if it provides  twenty  Trading  Days' notice and complies  with its
obligations and makes the  representations set forth in paragraph 10 "Securities
Laws and  Registration")  as if such transfer  were in connection  with Transfer
Date to which Net Share  Settlement or Net Cash Settlement  applied for purposes
of  paragraph  6(a)  ("Counterparty   Unwind  Period  Settlement   Option").   A
certificate as to the amount of Increased  Costs,  submitted to  Counterparty by
Citibank,  shall be  conclusive  and binding for all  purposes  absent  manifest
error.  In the event that  Citibank  determines  that it has incurred  Increased
Costs which  exceed 15 percent of the  Carrying  Costs of this  Transaction  (an
"Increased Cost Event"), Citibank shall be entitled to commence an Unwind Period
with respect to the entire  Outstanding  Aggregate  Amount.  Such Unwind  Period
shall  commence on a Trading Day and end on and include a Trading  Day,  each as
designated  by Citibank.  At the option of Citibank,  any Unwind Period that had
commenced  prior to the start of the Unwind Period for such Increased Cost Event
and not terminated  shall terminate on the Trading Day prior to the start of the
Unwind Period for such Increased Cost Event.

         (h) Transfer.  Notwithstanding  Sections 7 or 10(b) of the  Agreement,
Citibank  shall assign its rights and  obligations  hereunder to make or receive
cash payments and transfer of Common Shares to a Citibank Affiliate (one or more
affiliates of Citibank, wholly-owned, directly or indirectly, by Citigroup Inc.,
or any successor  thereto);  provided that  Counterparty  shall have recourse to
Citibank in the event of the failure by a Citibank  Affiliate  to perform any of
such obligations hereunder.  Notwithstanding the foregoing, recourse to Citibank
shall  be  limited  to  recoupment  of   Counterparty's   monetary  damages  and
Counterparty hereby waives any right to seek specific performance by Citibank of
its obligations hereunder.  Such failure after any applicable grace period shall
be an Additional  Termination  Event with this  Transaction as the sole Affected
Transaction and Citibank as the sole Affected Party.

         (i) Consent to Recording.  Each party (i) consents to the recording of
the telephone  conversations  of trading and marketing  personnel of the parties
and their  affiliates in  connection  with this  Transaction  and (ii) agrees to
obtain any  necessary  consent  of, and give notice of such  recording  to, such
personnel of it and its affiliates.

                                       12
<PAGE>

         (j) Severability;  Illegality.  If compliance by either party with any
provision of this Transaction would be unenforceable or illegal, (i) the parties
shall negotiate in good faith to resolve such  unenforceability or illegality in
a manner that preserves the economic  benefits of the transactions  contemplated
hereby  and  (ii)  the  other  provisions  of  this  Transaction  shall  not  be
invalidated, but shall remain in full force and effect.

         (k) Calculation Agent.Citibank shall make all calculations, adjustments
and determinations required pursuant to this Transaction.  Citibank's good faith
calculations, adjustments and determinations  shall be binding  absent  manifest
error.

         (l) Cash Payments.   All references  herein to "dollars"  or "$" are to
U.S. dollars.  All  amounts  payable  in  cash  shall  be payable  in dollars in
immediately available funds.

         (m) Waiver of Trial by Jury. EACH OF  COUNTERPARTY  AND CITIBANK 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 CITIBANK OR ITS
AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

         (n) Financial  Statements.   Counterparty  will  provide  to   Citibank
promptly upon request copies of its most recent annual report containing audited
or certified financial statements.

         (o) Delivery of Opinion. On the date hereof,  Counterparty will provide
to Citibank an opinion of counsel  regarding  this Master  Confirmation  and the
Transactions  contemplated hereby in form and substance reasonably  satisfactory
to Citibank. Upon the request of Citibank, Counterparty will provide to Citibank
such an opinion in connection  with  particular  Transactions on or prior to the
Trade Date thereof.

         (p) Voting of Common  Shares.  Citibank  and its  affiliates  shall not
exercise  any voting  rights with respect to any Common  Shares  recorded in the
BEACON  Account.  This provision  shall not preclude  Citibank or its affiliates
from voting Common Shares that are not held in  connection  with a  Transaction.
The provisions of this paragraph  shall not remain in force or effect (i) during
an Unwind Period, unless Counterparty has elected or been deemed to have elected
Full Physical  Settlement in accordance with the provisions of paragraph 6(a) or
6(b) and performed in accordance with Section 6(b), or (ii) at any time an Event
of Default or Termination  Event has occurred and is continuing and with respect
to which Counterparty is the Defaulting Party or an Affected Party.

         (q) Tax  Reporting.  Citibank  and  the  Counterparty  agree  that  the
requirement  of the  Counterparty  to pay the  Forward  Amount is an  obligation
described  in, and shall be reported in  accordance  with the  requirements  of,
Subtitle A, Ch. 1P, Part V, Subpart A of the Internal  Revenue Code of 1986,  as
amended.  Citibank shall furnish Counterparty with all information necessary for
Counterparty to file its tax returns in such a manner.

                  10.      Securities Laws and Registration:
                           --------------------------------

         (a)      Compliance with Securities Laws.  Counterparty agrees:
                  ------------------------------------------------------

                                       13
<PAGE>

                  (i)      with respect to each Tranche Date, that if it were to
                           have  effected  transactions  in the Common Shares on
                           such Tranche Date, whether on the Principal Market or
                           otherwise,  such transactions would not have violated
                           any applicable securities law;

                 (ii)      that it is not,  on any  Tranche  Date,  engaged in a
                           distribution,  as such term is used in  Regulation  M
                           under the  Securities  Act, of any  securities of the
                           Counterparty; and

                 (iii)     that it is not  entering  into any  Tranche to create
                           actual or  apparent  trading  activity  in the Common
                           Shares   (or  any   security   convertible   into  or
                           exchangeable  for  Common  Shares)  or  to  raise  or
                           depress  or to  manipulate  the  price of the  Common
                           Shares   (or   any   shares   convertible   into   or
                           exchangeable for Common Shares).

         (b) Triggers for Shelf Registration.  Unless Counterparty has (A) given
notice of its desire to effect an  Optional  Unwind  with  respect to the entire
Outstanding   Aggregate  Amount  for  all  Transactions  upon  terms  reasonably
satisfactory to Citibank and (B) irrevocably  directed Full Physical  Settlement
pursuant to paragraph 6(a)  ("Counterparty  Unwind Period  Settlement  Option"),
Counterparty shall file the Registration  Statement referred to in paragraph (c)
below within five days of the  occurrence of either (x) the Closing Price on any
Trading Day being equal to or less than $10.00 per share  (subject to adjustment
pursuant  to  paragraph  8(c)  ("Adjustment   Events"))  or  (y)  Counterparty's
unsecured and unsubordinated long-term debt rating (not supported by third party
credit  enhancement)  falling  to or below BBB by S&P,  Baa2 by  Moody's  or the
equivalent rating by another nationally recognized  statistical rating agency or
in any case being suspended or withdrawn, and thereafter use its best efforts to
have the  Registration  Statement  declared  effective  as soon as possible  and
remain effective over the remaining term of this Transaction.

         (c) Registration Statement. Unless in connection with an Unwind Period,
Counterparty  directs  Full  Physical  Settlement  pursuant  to  paragraph  6(a)
("Counterparty  Unwind Period Settlement  Option"),  Counterparty agrees to make
available to Citibank and its  affiliates  an effective  registration  statement
(the "Registration Statement") pursuant to Rule 415 under the Securities Act and
one or more  prospectuses  as necessary to allow  Citibank and its affiliates to
comply with the applicable  prospectus delivery  requirements (the "Prospectus")
for the resale by Citibank and its affiliates of the Common Shares in the BEACON
Account (or such greater  number as Citibank  shall  reasonably  specify),  such
Registration Statement to be effective and Prospectus to be current for each day
in the Unwind  Period and for at least ten Trading Days after the Unwind  Period
(excluding  days on which the  Unwind  Period  has been  suspended  pursuant  to
paragraph  7(f)  ("Suspension  of Unwind  Period")).  It is understood  that the
Registration  Statement and Prospectus may cover a number of Common Shares equal
to all Common Shares  acquired by Citibank or its affiliates in connection  with
this  Master  Agreement  plus all  Common  Shares  transferred  by  Counterparty
pursuant to this  Transaction.  Citibank shall provide,  by a reasonable time in
advance, such information regarding Citibank and its affiliates as Counterparty,
upon advice from  counsel,  reasonably  determines is required to be included in
the Prospectuses. Counterparty shall pay the applicable registration fee and all
costs in connection with the preparation of the  Registration  Statement and the
Prospectus   including,   without  limitation,   Citibank's  legal  expenses  in
connection with the preparation of the Registration Statement and the Prospectus
and the  cost of  printing  the  Prospectus.  Citibank  agrees  that  except  as
Counterparty  shall  otherwise  agree,  it and its affiliates  shall sell Common
Shares pursuant to the Prospectus only on the Principal Market, and Counterparty
agrees to take all  required  action so that all  Common  Shares  covered by the

                                       14
<PAGE>

Registration  Statement  are  eligible  for  sale on the  Principal  Market  and
otherwise to take such actions  reasonably  requested by Citibank to  facilitate
the disposition of the Common Shares.

         (d) Representations.  Counterparty  represents (A) on the Trade Date of
this  Transaction,  (B) on each day on which  the  Transaction  amount  is being
increased, and (C) unless Counterparty directs Full Physical Settlement pursuant
to paragraph 6(a) ("Counterparty  Unwind Period Settlement Option"), on each day
described in paragraph (c) above in connection  with an Unwind Period,  that (x)
each of its  filings  under  the  Securities  Act,  the  Exchange  Act or  other
applicable  securities  laws that are  required  to be filed have been filed and
that,  as  of  the  respective  dates  thereof  and  as  of  the  date  of  this
representation,  there is no misstatement of material fact contained  therein or
omission of a material fact  required to be stated  therein or necessary to make
the statements  therein not misleading and (y) in the case of (B), a purchase by
Counterparty  of a number of Common  Shares equal to the Tranche  Amount for the
related Tranche Date divided by the related Tranche Price Per Share,  whether on
the Principal  Market or otherwise,  would be in compliance  with applicable law
and all contractual obligations of Counterparty and its affiliates.

         (e) Due  Diligence.  Unless by the close of business  on the  twentieth
Trading Day prior to the commencement of the relevant Unwind Period Counterparty
directs  Full  Physical  Settlement  pursuant to paragraph  6(a)  ("Counterparty
Unwind Period Settlement  Option"),  Counterparty  agrees to provide to Citibank
and its  affiliates by the Trading Day before the  commencement  of the relevant
Unwind Period opinions of counsel,  comfort letters,  officers' certificates and
representations  and such other  documents  as may be  reasonably  requested  by
Citibank.  Counterparty  also  agrees  that  beginning  (x) no later  than  such
twentieth  Trading Day before the commencement of the relevant Unwind Period and
(y) on the date of occurrence of an event that obligates  Counterparty to file a
Registration  Statement  pursuant  to  paragraph  (b)  above,  Citibank  and its
affiliates  shall  be  entitled  to  perform  such  diligence  as  Citibank  may
reasonably request.  In addition,  from time to time, Citibank shall be entitled
to attend,  with notice,  Counterparty's  meetings with equity analysts and make
reasonable inquiries of appropriate officers of Counterparty.

         (f) Additional Termination Event. The failure by Counterparty to comply
with its obligations under paragraphs (b), (c) and (e) above, if such failure is
not remedied on or before the third Business Day after notice of such failure is
given to  Counterparty,  shall constitute an Additional  Termination  Event with
Counterparty  as the  sole  Affected  Party  and  this  Transaction  as the sole
Affected Transaction.

                  11.      Indemnification and Contribution:
                           --------------------------------

         (a)  Indemnification by Counterparty.  Counterparty agrees to indemnify
and  hold  harmless  Citibank,  its  affiliates,   their  respective  directors,
officers,  employees, agents, advisors, brokers effecting sales of Common Shares
on behalf of Citibank or its affiliates and  representatives and each person who
controls  Citibank or its affiliates within the meaning of either the Securities
Act or the Exchange Act against,  (and  Counterparty  agrees that no indemnified
party  shall  have  any  liability  to  Counterparty  or any of its  affiliates,
officers,  directors,  or  employees  for,  any  liability  (whether  direct  or
indirect,  in contract,  tort or otherwise) for), any losses,  claims,  damages,
liabilities  or  expenses,  joint or  several,  to which they or any of them may
become  subject under the  Securities  Act, the Exchange Act or other federal or
state statutory law or regulation,  at common law or otherwise,  insofar as such
losses,  claims,   damages,   liabilities  or  expenses  (or  actions,   claims,
investigations   or  proceedings  in  respect  thereof,   whether  commenced  or
threatened)  (A) arise out of or relate to (x)  actions  or  failures  to act by

                                       15
<PAGE>

Counterparty  (including any misstatement or alleged  misstatement of a material
fact  contained  in the  Registration  Statement  or the  Prospectus  (or in any
offering  materials  or  supplemental  information  provided  by or on behalf of
Counterparty in connection with any sales on a private  placement basis pursuant
to paragraph  6(f)  ("Citibank  Unwind Period  Settlement  Option")),  or in any
amendment  thereof or  supplement  thereto,  or omission or alleged  omission to
state therein a material fact required to be stated therein or necessary to make
the statements  therein not  misleading) or (y) actions or failures to act by an
indemnified  party with the  consent of or in reliance  on  Counterparty  or (z)
otherwise arise out of or relate to any breach or violation by Counterparty  of,
or  misrepresentation  by  Counterparty  under,  the  Master  Confirmation,   or
allegation by a third party that Counterparty acted or failed to act in a manner
that,  as  alleged,   would  have  constituted  such  a  breach,   violation  or
misrepresentation.  Counterparty  agrees,  promptly on demand, to reimburse each
such indemnified  party for any legal or other expenses  reasonably  incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability,  expense or action.  Notwithstanding  anything to the contrary in the
foregoing,  Counterparty  will not be liable in any such case to the extent that
any such loss,  claim,  damage,  liability or expense  arises out of or is based
upon any such  untrue  statement  or alleged  untrue  statement  or  omission or
alleged   omission  made  in  reliance  upon  and  in  conformity  with  written
information  furnished to Counterparty by or on behalf of Citibank  specifically
for use in connection  with the  preparation of the Prospectus or any supplement
thereto.  This  indemnity  agreement  will be in addition to any liability  that
Counterparty may otherwise have.

         (b) Indemnification by Citibank.  Citibank agrees to indemnify and hold
harmless  Counterparty,  its affiliates,  their respective directors,  officers,
employees  and agents,  and each  person who  controls  Counterparty  within the
meaning of either the  Securities Act or the Exchange Act, to the same extent as
the foregoing  indemnity from Counterparty to Citibank,  but only with reference
to written  information  furnished to  Counterparty  by or on behalf of Citibank
specifically  for use in the  preparation  of the  Prospectus or any  supplement
thereto.  This indemnity  agreement  will be in addition to any liability  which
Citibank may otherwise have.

         (c) Legal  Proceedings.  Promptly after receipt by an indemnified party
under  paragraphs (a) or (b) above of notice of the  commencement of any action,
such indemnified party will, if a claim in respect thereof is to be made against
the  indemnifying   party  under  paragraphs  (a)  or  (b)  above,   notify  the
indemnifying party in writing of the commencement  thereof;  but the omission so
to notify the indemnifying  party will not relieve the  indemnifying  party from
any liability  that it may have to any  indemnified  party  otherwise than under
paragraphs  (a) or (b) above or, in respect of paragraphs  (a) or (b) above,  to
the extent that the  indemnifying  party was not  materially  prejudiced by such
failure to notify.  In case any such action is brought  against any  indemnified
party, and it notifies the indemnifying party of the commencement  thereof,  the
indemnifying  party will be entitled to participate  therein,  and to the extent
that it may  elect  by  written  notice  transferred  to the  indemnified  party
promptly after  receiving the aforesaid  notice from such  indemnified  party to
assume the defense thereof, with counsel satisfactory to such indemnified party;
provided that if the defendants in any such action include both the  indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded  that  there  may be  legal  defenses  available  to it  and/or  other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate  counsel to represent such  indemnified  party or parties.  Upon
receipt of notice from the indemnifying  party to such indemnified  party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel,  the indemnifying party will not be liable to such indemnified
party  under  paragraphs  (a) or (b)  above  for any  legal  or  other  expenses
subsequently  incurred by such indemnified  party in connection with the defense
thereof unless (A) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however,  that the  indemnifying  party shall not be liable for the  expenses of

                                       16
<PAGE>

more than one separate counsel (in addition to local counsel),  representing the
indemnified parties who are parties to such action),  (B) the indemnifying party
shall  not  have  employed  counsel  satisfactory  to the  indemnified  party to
represent  the  indemnified  party  within a  reasonable  time  after  notice of
commencement  of the action or (C) the  indemnifying  party has  authorized  the
employment  of  counsel  for  the  indemnified  party  at  the  expense  of  the
indemnifying  party;  and except that, if clause (A) or (C) is applicable,  such
liability shall be only in respect of the counsel referred to in such clause (A)
or (C).  The  indemnifying  party  shall not be liable for any  transfer  of any
proceeding  effected  without  its  written  consent,  but if settled  with such
consent  or  if  there  shall  be  a  final  judgment  for  the  plaintiff,  the
indemnifying  party agrees to indemnify the  indemnified  party from and against
any loss or liability by reason of such  transfer or judgment.  No  indemnifying
party shall,  without the prior written consent of the indemnified party, effect
any  settlement of any pending or threatened  proceeding in respect of which any
indemnified  party is or could have been a party and  indemnity  could have been
sought hereunder by such indemnified party,  unless such settlement  includes an
unconditional  release of such indemnified party from all liability arising from
such proceeding.

         (d)  Contribution.   If  the  indemnification  provided  for  above  is
unavailable to an indemnified party in respect of any losses,  claims,  damages,
expenses or liabilities  referred to herein,  then each applicable  indemnifying
party, in lieu of indemnifying such indemnified  party,  shall contribute to the
amount  paid or payable by such  indemnified  party as a result of such  losses,
claims, damages,  expenses or liabilities,  in such proportion as is appropriate
to reflect not only the relative  fault of  Counterparty  on the one hand and of
Citibank  on the other in  connection  with the  statements  or  omissions  that
resulted in such losses, claims, damages, expenses or liabilities,  but also any
other relevant equitable  considerations.  The relative fault of Counterparty on
the one hand and  Citibank on the other shall be  determined  by  reference  to,
among  other  things,  whether the  misstatement  or alleged  misstatement  of a
material  fact or the  omission  or alleged  omission  to state a material  fact
relates to information  supplied by Counterparty or by Citibank and the parties'
relative intent, knowledge,  access to information and opportunity to correct or
prevent such  statement or omission.  The amount paid or payable by a party as a
result of the losses, claims, damages and liabilities referred to above shall be
deemed to include,  subject to the  limitations  set forth  above,  any legal or
other fees or  expenses  reasonably  incurred by such party in  connection  with
investigating  or defending any action or claim. The parties agree that it would
not be just and equitable if  contribution  pursuant to this  paragraph (d) were
determined by method of  allocation  that does not take account of the equitable
considerations  referred to in this  paragraph.  No person  guilty of fraudulent
misrepresentation  (within the meaning of Section 11(f) of the  Securities  Act)
shall be  entitled  to  contribution  from any person who was not guilty of such
fraudulent misrepresentation.

                  12.      Representations:
                           ---------------

         (a)     Each party represents (which representations will be  deemed to
 be repeated on each Tranche Date) to the other party that:

         (i)      It is acting as principal for its own account and not as agent
                  when entering into this Transaction;

         (ii)     It has sufficient  knowledge and expertise to enter  into this
                  Transaction  and  it  is  entering  into  this  Transaction in
                  reliance upon  such tax, accounting,  regulatory,  legal,  and
                  financial  advice  as  its  deems  necessary  and not upon any
                  view expressed by the other. It has made  its own  independent
                  decision  to  enter  into  this  Transaction,  is  acting   at
                  arm's  length and is not relying on any communication (written
                  or oral) of the other party as a  recommendation or investment
                  advice  regarding this  Transaction.  It has the capability to

                                       17
<PAGE>

                  evaluate  and  understand  (on  its  own behalf or through in-
                  dependent  professional  advice),  and  does  understand,  the
                  terms, conditions and risks of this Transaction and is willing
                  to  accept   those  terms   and  conditions  and   to   assume
                  (financially  and  otherwise)  those risks.   It  acknowledges
                  and agrees that the other  party is not acting as  a fiduciary
                  or advisor to it in connection with this  Transaction.   It is
                  entering into this  Transaction  for the  purposes of  hedging
                  its underlying  assets or liabilities,  or in  connection with
                  a line of  business  or a share  repurchase  program,  and not
                  for  purposes of speculation; and

         (iii)    It is an "accredited investor" as defined in Section 2(15)(ii)
                  of the  Securities Act  and  an "eligible swap participant" as
                  such term is defined in 17 C.F.R.ss 35.1(b)(2).

         (b)      Counterparty represents (which representations will  be deemed
                  to be repeated on each Tranche Date) to Citibank that:

         (i)      It understands no obligations of Citibank to it hereunder will
                  be entitled to the benefit of deposit  insurance and that such
                  obligations  will  not  be  guaranteed  by  any  affiliate  of
                  Citibank or any governmental agency;

         (ii)     Its  financial  condition  is such  that  it has no  need  for
                  liquidity with respect to its  investment in this  Transaction
                  and no need to dispose of any  portion  thereof to satisfy any
                  existing or  contemplated  undertaking  or  indebtedness.  Its
                  investments in and liabilities in respect of this Transaction,
                  which  it  understands  is  not  readily  marketable,  is  not
                  disproportionate  to its net worth, and it is able to bear any
                  loss in connection with this  Transaction,  including the loss
                  of its entire investment in this Transaction;

         (iii)    It understands  that this  Transaction and, except as provided
                  in  paragraph 10  ("Securities  Laws and  Registration"),  the
                  transactions  contemplated herein will not be registered under
                  the  Securities  Act  or any  state  securities  law or  other
                  applicable federal securities law;

         (iv)     IT  UNDERSTANDS  THAT THIS  TRANSACTION  IS SUBJECT TO COMPLEX
                  RISKS  WHICH MAY  ARISE  WITHOUT  WARNING  AND MAY AT TIMES BE
                  VOLATILE   AND  THAT   LOSSES   MAY  OCCUR   QUICKLY   AND  IN
                  UNANTICIPATED  MAGNITUDE  AND IS WILLING TO ACCEPT  SUCH TERMS
                  AND CONDITIONS  AND ASSUME  (FINANCIALLY  AND OTHERWISE)  SUCH
                  RISKS; and

         (v)      Its present  intention is to direct Full  Physical  Settlement
                  under paragraph 6(a)  ("Counterparty  Unwind Period Settlement
                  Option") in connection with this Transaction.

         (c)      With respect to this  Transaction, each  representation  under
the Agreement made or deemed made on each date on which a Transaction is entered
into shall be deemed made on each Tranche Date.

                  13.      Accounts for Payment:
                           --------------------

                  To Citibank:              Citibank, N.A.
                                            ABA# 021000089
                                            For credit to Equity Derivatives
                                            DDA# 00167679

                                       18
<PAGE>

                  To Counterparty:  To be advised.

                  14.      Transfer Instructions:
                           ---------------------

         Unless  otherwise  directed  in  writing,   any  Common  Shares  to  be
transferred hereunder shall be transferred as follows:

                  To Citibank:              To be advised.

                  To Counterparty:          To be advised.

                  15.      Addresses for Notices:
                           ---------------------

         For  purposes  of  Section  12(a) of the  Agreement,  unless  otherwise
directed in writing,  all notices or  communications to Counterparty or Citibank
shall be delivered as specified in Part 4 of the Agreement.

                         Yours sincerely,

                         CITIBANK, N.A.

                         By:
                             ------------------------------
                             Authorized Representative

                         By:
                             ------------------------------
                             Authorized Representative

Confirmed as of the date first above written:

CITIZENS UTILITIES COMPANY

By:
     ---------------------------------------
   Name:
   Title:

                                       19
<PAGE>

                                    EXHIBIT A
                                     FORM OF
                               BEACON CONFIRMATION

                                  CONFIRMATION

Date:             _________________

To:               Citizens Utilities Company

Telefax No.:      [                ]

Attention:        [                ]

From:             Citibank, N.A.

Telefax No.:      _________________

Transaction Reference Number:  ____________________

                  The  purpose of this  communication  is to set forth the terms
and  conditions of the  above-referenced  Transaction  entered into on the Trade
Date specified below (the "Transaction") between you and us. This communication,
together  with  the  Master  Confirmation  (as  defined  below),  constitutes  a
"Confirmation" as referred to in the Master Confirmation.

                  1. The  definitions  and  provisions  contained  in the Master
Confirmation  are  incorporated  into  this  Confirmation.  In the  event of any
inconsistency  between those  definitions and provisions and this  Confirmation,
this Confirmation will govern.

                  2. This  Confirmation  supplements,  forms a part of,  and is
subject to a Basic Equity Acquisition  Contract  ("BEACON") dated as of February
24,  2000  (the  "Master  Confirmation")  between  you  and us.  All  provisions
contained  in  the   Agreement  (as  modified  and  as  defined  in  the  Master
Confirmation) shall govern this Confirmation except as expressly modified below.

                  For the purposes of this Confirmation,  "Citibank" means
Citibank,  N.A. and "Counterparty" means Citizens Utilities Company.
                                                  -----------------

                  3. The  particular  Transaction  to which this  Confirmation
relates is a Basic  Equity  Acquisition  Contract ("BEACON"), the terms of which
are as follows:

       Trade Date:                 [ ].

       Initial Reset Date:         [     ] [The  three-month  anniversary of the
                                   Tranche  Date  for  the first Tranche Amount]
                                   (or, if such date is  not a Trading Day,  the
                                    next Trading Day).

       Notice Date:                [ ] (or, if such date is not a Business  Day,

<PAGE>

                                   the next Business Day).

       Optional Unwind Date:       [1 year after the Initial Tranche Date]  (or,
                                   if such date is not a  Trading Day, the  next
                                   Trading Day).

       Maturity Date:              [3 years   after the  Initial  Tranche  Date]
                                   (or, if such  date is not a Trading  Day, the
                                    next  Trading Day).

       Carrying Spread:            [0.95]% per annum.

       Commitment Fee Amount:      [not applicable].

       Tranche Fee Rate:           $[0.025].

                  4.  Counterparty  hereby agrees (a) to check this Confirmation
carefully and immediately  upon receipt so that errors or  discrepancies  can be
promptly  identified  and  rectified  and  (b) to  confirm  that  the  foregoing
correctly  sets forth the terms of the agreement  between us with respect to the
particular  Transaction to which this  Confirmation  relates by manually signing
this Confirmation and providing any other information requested herein or in the
Master  Confirmation  and  immediately  sending a facsimile  transmission  of an
executed copy to Confirmation Unit  416-941-7432,  with an executed copy sent to
Citibank,  N.A., Citibank Place, 123 Front Street West, Toronto, Ontario M5J2M3,
Attention: Confirmation Unit.

                           Yours sincerely,

                           CITIBANK, N.A.

                           By:
                              ------------------------------
                              Authorized Representative

                           By:
                              ------------------------------
                              Authorized Representative

Confirmed as of the date first above written:

CITIZENS UTILITIES COMPANY

By:
     ---------------------------------------
   Name:
   Title:

                                       2
<PAGE>

                            BEACON Account Schedule A
                            -------------------------
[Date]

Citizens Utilities Company
[                ]
[                ]
[                ]
Attention: [                ]
Facsimile: [                ]

                  Counterparty  hereby  agrees  (a) to  check  this  Schedule  A
carefully  and  immediately  upon receipt to confirm that pursuant to "Procedure
for  Updating  Schedule A" of the Master  Confirmation  dated as of February 24,
2000, as supplemented by the Confirmation  with a Trade Date of _______,  _____,
between  Citibank,   N.A.  and  Citizens   Utilities  Company   (together,   the
"Confirmation")  the  Transaction  amount has been  increased as shown below and
otherwise  so that  errors  or  discrepancies  can be  promptly  identified  and
rectified and (b) to confirm that the following  correctly  sets forth the terms
of the agreement  between us by manually signing this Schedule A and immediately
sending a  facsimile  transmission  of an  executed  copy to  Confirmation  Unit
416-941-7432,  with an executed copy sent to Citibank, N.A., Citibank Place, 123
Front  Street West,  Toronto,  Ontario  M5J2M3,  Attention:  Confirmation  Unit.
Capitalized terms used herein that are not otherwise defined shall be defined as
provided in the Confirmation.

                                                                     Tranche
 Citibank                Number of      Tranche                      Initial
Reference    Tranche      Common        Price Per      Tranche       Funding
 Number       Date        Shares         Share          Amount        Rate
 ------      ------      -------         -----         -------        ----

                                Yours sincerely,

                                CITIBANK, N.A.

                                By:
                                    --------------------------------
                                    Authorized Representative

                                By:
                                    --------------------------------
                                    Authorized Representative

Confirmed as of the date first above written:

CITIZENS UTILITIES COMPANY

By:
     ---------------------------------------
     Name:
     Title:EXHIBIT 10.38

TO:        ___________________      DATE:   ___________ 2001

FROM:      ___________________

SUBJECT:   Performance Stock

In order to provide incentive compensation specifically directed
toward the achievement of long term performance goals, you have
been granted a conditional right to receive as many as ______
shares of Global Marine common stock.  The company will issue and
deliver to you none, some or all of these shares at the time of
the first regular meeting of the company's board of directors in
2004, depending on the extent to which the performance objectives
set forth in the attached terms and conditions have been
achieved.

This grant amounts to an incremental opportunity to earn
significant compensation, provided that we are able to achieve
the ambitious targets established for relative total shareholder
return and cumulative net income over the period 2001-2003.
These long term performance goals were established by the
Compensation Committee of the board of directors and are designed
so the management team wins if the company's stockholders win.

The attachment contains the terms and conditions of your grant
under this incentive arrangement.  I look forward to working with
you in an effective mutual effort to assure that the target goals
are more than accomplished.

Attachment

<PAGE>
                                                       Form 1C(4)
                                                           (2-01)
                        GLOBAL MARINE INC.

                      TERMS AND CONDITIONS
                                OF
                     PERFORMANCE STOCK GRANT
                  (Performance Period 2001-2003)

     GLOBAL MARINE INC. (the "Company"), desiring to afford you a
conditional right to receive shares of the Company's common
stock, $.10 par value per share (the "Common Stock"), as added
incentive to achieve the long-term objectives of the Company and
its subsidiaries, has established the following terms and
conditions under which it will issue and deliver shares of Common
Stock to you under the Global Marine 1998 Stock Option and
Incentive Plan (the "Plan").

     1.   CONDITIONAL RIGHT TO RECEIVE SHARES.  At the time of the
     first regular meeting of the Company's board of directors
     held in 2004, the Company will issue and deliver shares of
     the Common Stock to you, up to the full number of shares
     stated in the first paragraph of the cover page of this
     memorandum (the "Shares"), subject to the terms and
     conditions outlined in this memorandum and the terms and
     conditions of the Plan as amended from time to time in
     accordance with its terms.

     2.   NUMBER OF SHARES TO BE ISSUED AND DELIVERED.  A percentage
     of the total number of Shares stated in the first paragraph
     of the cover page of this memorandum will be issued and
     delivered to you, depending on actual performance of the
     Company and its subsidiaries during the period 2001-2003 as
     measured against the long-term performance goals of Relative
     Total Shareholder Return and Cumulative Net Income (the
     "Performance Goals"), which were established by the
     Compensation Committee of the Company's board of directors
     (the "Compensation Committee"). The percentage will be
     determined according to the following grid.  The exact
     percentage of your recommended award earned under each
     Performance Goal will be calculated based on straight-line
     interpolation between the percentages shown on the grid.
<TABLE>
<CAPTION>
                                              Percent of Recommended Award Earned
     Performance           Weighting           25%              75%               100%
     Measurement            Factor

<S>                               <C>      <S>            <S>                <S>
Relative Total Shareholder
Return 2001-2003 (1)              50%      Peer Median    Peer 75th Pctile   Peer Maximum
Cumulative Net Income 2001-2003   50%        $575 MM          $750 MM           $925 MM

(1) Versus performance of peer group companies: Global Marine
Inc., Transocean Offshore Drilling, Inc., Diamond Offshore
Drilling, Inc., Rowan Companies, ENSCO International Inc., Nabors
Industries Inc., Noble Drilling Corp., Santa Fe International
Corporation.
</TABLE>

3.  NON-TRANSFERABLE.  You may not transfer your right to
    receive Shares under this memorandum other than by will or
    by the laws of descent and distribution.

4.  TERMINATION OF EMPLOYMENT.  You will not be entitled to
    receive any of the Shares after termination of your
    employment with the Company and its subsidiaries unless such
    termination is by reason of early retirement not objected to
    by the Compensation Committee, normal retirement, disability
    or death, or unless your employment with the Company and its
    subsidiaries is terminated by the Company or any such
    subsidiary other than for cause (to mean acts of misconduct
    harmful to
 <PAGE>
    the Company, inadequate performance or incompetence).
    If your employment is terminated by reason
    of early retirement not objected to by the Compensation
    Committee, normal retirement or disability, or by the
    Company or any of its subsidiaries other than for cause, the
    number of Shares that the Company would otherwise issue and
    deliver to you at the time of the Company's first regular
    board meeting held in 2004 will be prorated based on your
    months of employment completed during the period 2001-2003
    compared to 36 months, and the Company will issue and
    deliver to you or your legal representative or
    representatives, at the time of said board meeting, a
    reduced number of Shares based on such proration.  If your
    employment is terminated by reason of your death, the total
    number of Shares stated in the first paragraph of the cover
    page of this memorandum will be multiplied by 50% and the
    resulting number will be prorated based on your months of
    employment completed during the period 2001-2003 compared to
    36 months, and the Company will issue and deliver to the
    appropriate person or persons named under your last will and
    testament or determined under applicable intestate laws, as
    soon as practicable following your death, a reduced number
    of Shares based on such multiplication and proration.
    Termination of your "employment" with the Company and its
    subsidiaries will be deemed to occur at the close of
    business on the earliest of (i) the last day on which you
    are assigned to a position with the Company or any of its
    subsidiaries for the purpose of performing your occupation,
    in the case of termination by reason of your early or normal
    retirement, disability or death, (ii) the last day of the
    period during which you are entitled to receive salary
    continuation under any agreement, policy, plan or other
    arrangement with the Company or any of its affiliates, in
    the case of any termination entitling you to such salary
    continuation, (iii) the last day of an approved leave of
    absence if you do not resume the performance of your
    occupation for the Company or any of its subsidiaries on or
    before the next business day, and (iv) the last day on which
    you are assigned to a position with the Company or any of
    its subsidiaries for the purpose of performing your
    occupation in any other case.  For purposes of this
    paragraph, the term "disability" shall mean any physical or
    mental condition which totally and permanently prevents you
    from engaging in any substantial gainful activity, as
    reasonably determined in good faith by the Compensation
    Committee.

5.  ADJUSTMENTS.  Except as provided in the following paragraph,
    if outstanding shares of the class then subject to the
    conditional right to receive Shares outlined herein are
    increased, decreased, changed into or exchanged for a
    different number or kind of shares or securities of the
    Company through reorganization, recapitalization,
    reclassification, stock dividend, stock split or reverse
    stock split, then there will be substituted for each Share
    then subject to such right and for each share upon which any
    of the Performance Goals are then based the number and class
    of shares or securities into or for which each share of the
    class subject to such right shall be so changed or
    exchanged.  Such adjustments will become effective on the
    effective date of any such transaction; except that in the
    event of a stock dividend or of a stock split effected by
    means of a stock dividend or distribution, such adjustments
    will become effective immediately after the record date
    therefor.

    Upon a dissolution or liquidation of the Company, or upon a
    reorganization, merger or consolidation of the Company with
    one or more corporations as a result of which the Company is
    not the surviving company, your right to acquire Shares and
    the obligations of the Company hereunder will terminate,
    unless provision is made in writing in connection with such
    transaction for the assumption of such obligations, or the
    substitution for such obligations of similar obligations
    involving the stock of a successor employer corporation, or
    a parent or subsidiary thereof, with appropriate adjustments
    as to the conditions thereof and the number and kind of
    Shares and prices, in which event your right to acquire
    Shares and the obligations of the Company hereunder will
    continue in the manner and under the terms so provided.

    Adjustments under this Section 5 will be made by the
    Compensation Committee, whose determination as to what
    adjustments will be made, and the extent thereof, will be
    final, binding and
<PAGE>
    conclusive.  No fractional shares of stock will be issued
    pursuant to any right to receive Shares hereunder or in
    connection with any adjustment contemplated herein.

6.  LIMITATION.  You will not be entitled to the privileges of
    stock ownership in respect of any of the Shares until they
    have been issued and delivered pursuant to the terms and
    conditions of this memorandum and the Plan.

7.  REQUIREMENTS OF LAW AND STOCK EXCHANGES.  Your right to
    acquire the Shares and the issuance and delivery of the
    Shares will be subject to compliance with all applicable
    requirements of law.  In addition, the Company will not be
    required to issue or deliver any certificate or certificates
    for any of the Shares prior to the admission of such Shares
    to listing on notice of issuance on any stock exchange on
    which shares of the same class are then listed.

    By accepting receipt of any of the Shares as contemplated
    herein, you will be representing and agreeing for yourself
    and your transferees by will or by the laws of descent and
    distribution that, unless a registration statement under the
    Securities Act of 1933, as amended (the "Securities Act"),
    is in effect as to the Shares received, any and all Shares
    so acquired will be acquired for investment and not for sale
    or distribution, and each such acquisition will be
    accompanied by a representation and warranty in writing,
    signed by the person entitled to make such acquisition, that
    the Shares are being so acquired in good faith for
    investment and not for sale or distribution.  In the event
    the Company's legal counsel, at the Company's request,
    advises it that registration of the acquired Shares under
    the Securities Act is required prior to issuance thereof,
    the Company will not be required to issue or deliver the
    Shares unless and until such legal counsel advises it that
    such registration has been completed or is not required.

    By accepting receipt of any of the Shares, you also will be
    representing and agreeing for yourself and your transferees
    by will or the laws of descent and distribution that if you
    are an officer of the Company or any other person who might
    be deemed an "affiliate" of the Company under the Securities
    Act at the time any Shares that have been acquired are
    proposed to be sold, you or they will not sell such Shares
    (a) without giving thirty days advance notice in writing to
    the Company, and (b) until the Company has advised you or
    them that such sale may be made without registration under
    the Securities Act or, if such registration is required,
    that such registration has been effected.

8.  RESTRICTIONS ON SHARE TRANSFER BY CERTAIN PERSONS.  Until
    six months have elapsed after the date of the Company's
    unconditional issuance of Shares to you, you may not
    transfer such Shares in a transaction that would constitute
    a "sale" under Section 16 of the Securities Exchange Act of
    1934, as amended (the "Exchange Act"), if you are at the
    time of the sale a person subject to the provisions of
    Section 16 of the Exchange Act.

9.  WAGE WITHHOLDING AND EMPLOYMENT TAXES.  Your acquisition of
    any of the Shares as outlined herein may result in ordinary
    income at the time of acquisition.  Such ordinary income
    will be subject to both wage withholding and employment
    taxes, and the Company or your employer may be required to
    effect such withholding and/or deduct such taxes.  Except as
    set forth below, you may make an irrevocable election to
    satisfy, in whole or in part, your obligation to reimburse
    the Company or your employer for such taxes (an "Election")
    by (i) making a cash payment to the Company, (ii) having the
    Company deduct the required amount from any cash
    compensation that the Company or any of its subsidiaries may
    owe you, (iii) surrendering your right to acquire either a
    specified number of the Shares or Shares having a specified
    value, in each case with a value not in excess of your
    related tax liability, (iv) tendering shares previously
    issued pursuant to the Plan or other shares of the Company's
    common stock owned by you, or (v) combining any or all of
    the foregoing in any fashion; provided, however, that, if
    you are at the time the withholding obligation arises a person
<PAGE>
    subject to the provisions of Section 16 of the
    Exchange Act, you must satisfy such obligation by
    surrendering your right to acquire such number of Shares as
    will have a value sufficient to satisfy such obligation, but
    not in excess of such liability.  The Compensation Committee
    may disapprove of any Election or suspend or terminate the
    right to make Elections at any time or from time to time.
    All withheld or surrendered Shares and other shares tendered
    in payment will be valued at their Fair Market Value on the
    date the withholding obligation arises.  "Fair Market Value"
    with regard to stock of the Company on a particular date
    shall mean the average of the high and low quotations at
    which the stock is traded on that particular date as
    reported in the "NYSE-Composite Transactions" section of the
    Southwest Edition of The Wall Street Journal for that date
    (corrected for obvious typographical errors), or, if no
    prices are quoted for that date, on the last preceding date
    for which such prices of shares of stock are so quoted.  In
    the event "NYSE-Composite Transactions" cease to be reported
    as such, or in the event that the Company's stock is no
    longer quoted on the New York Stock Exchange, an appropriate
    substitute published stock quotation system will be selected
    by the Compensation Committee, consistent with appropriate
    regulatory provisions.

10. CONTINUED EMPLOYMENT AND FUTURE GRANTS.  Neither the
    granting to you of a right to receive stock nor the other
    arrangements outlined herein give you the right to remain in
    the employ of the Company or any of its subsidiaries or to
    be selected to receive similar or identical grants in the
    future.

11. GLOBAL MARINE 1998 STOCK OPTION AND INCENTIVE PLAN, THE
    BOARD AND THE COMMITTEE.  The conditional right to receive
    Shares outlined in this memorandum has been granted to you,
    and any issuance and delivery of Shares will be made, under
    and pursuant to the Plan as the same shall have been amended
    from time to time in accordance with its terms.  The
    decision of the Company's board of directors or the
    Committee on any questions concerning the interpretation or
    administration of the Plan or any matters covered in this
    memorandum will be final and conclusive.  No amendment to
    the Plan or decision of the board or the Committee will
    deprive you, without your consent, of any rights hereunder.

    A copy of the Plan in its present form is available at the
    Company's principal office for inspection during business
    hours by you or other persons who may be entitled to acquire
    any of the Shares as contemplated herein.

References in this Exhibit A to "this memorandum" (and indirect
references such as "hereof," "hereunder" and "herein") refer to
the attached cover page of this memorandum and this Exhibit A,
each of which constitutes an integral part of this memorandum.

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