Document:

MASTER LEASE AGREEMENT #193

  Exhibit
   10(ii)23

  

 THE VAUGHN GROUP,
   LTD.

 Master Lease
   Agreement No. 197

  

    
        This Master Lease Agreement is made the 7th
   day of April, 1999 between The Vaughn Group, Inc., 8240 Beckett Park Drive,
   Suite D, Hamilton, OH 45011 (the “Lessor”), and The IT Group, Inc.
   with its principal office at 2790 Mosside Boulevard, Monroeville, PA
   15146-2792 (the “Lessee”).

  

    
        The parties hereto, desiring legally to be
   bound, hereby agree as follows:

  

 1.  
     LEASE:

  

    
        Lessor agrees to lease to Lessee, and Lessee
   agrees to lease from Lessor, the Equipment described in one or more Lease
   Schedules between the parties incorporating this Lease by reference. Any
   reference to “Lease” shall mean this Master Lease Agreement, the
   Lease Schedule(s) and all Rider(s), Addenda, Amendment(s), or Supplement(s)
   hereto and thereto, if any. Each Lease Schedule shall constitute a separate
   and distinct lease on the terms herein and therein set forth.

  

 2.  
     DEFINITIONS:

  

    
        (a)  The “Equipment” means
   all the equipment described in the applicable Lease Schedule, together with
   all manuals, cables and associated equipment included and delivered
   therewith and associated software systems and programming.

  

    
        (b)  The “Installation Date
   ” means, except as otherwise provided herein, the date determined in
   accordance with the Lease Schedule.

  

    
        (c)  The “Base Term
   Commencement Date” means, as to all Equipment designated on any Lease
   Schedule, where the Installation Date for the item of Equipment last to be
   installed falls on the first day of the month, that date, or, in any other
   case, the first day of the month following the month in which the item of
   Equipment last to be installed is installed.

  

    
        (d)  The “Daily Rental”
   means 1/30th of the amount set forth as the monthly rental for each item of
   Equipment in the applicable Lease Schedule.

  

    
        (e)  A “Holdover” means,
   the event which shall have occurred should Lessee fail to deliver possession
   of any item of Equipment in a timely manner after giving Lessor proper
   notice that such Equipment shall be returned pursuant to the provisions of
   the Lease.

  

 3.  
     TERM OF LEASE:

  

    
        The term of this Lease as to each item of
   Equipment shall commence on the Installation Date for such item of
   Equipment, and shall continue for a base period (the “Base Term”)
   ending that number of months from the Base Term Commencement Date as is
   specified on the applicable Lease Schedule. The term of this Lease for all
   such Equipment shall be automatically extended for successive three (3)
   month periods until terminated by either party giving to the other not less
   than six (6) months, and no more than
 twelve (12) months prior written notice of termination. Any such termination
   shall be effective only on the last day of the Base Term or the last day of
   any such extended period. Rental for any Holdover by Lessee beyond such
   termination shall be at a daily rate equal to 125% of the Daily Rental, if
   such Holdover continues for a period less than five days or at 150% of the
   monthly rental if such Holdover continues for more than five (5) days. With
   respect to each Lease Schedule executed pursuant to this Master Lease
   Agreement, Lessee agrees to execute and deliver to Lessor, on or about the
   Installation Date, a Certificate of Delivery and Acceptance, and upon
   request by Lessor, an incumbency certificate and opinion of counsel, each in
   such form as is acceptable to Lessor.

  

 4.  
     PAYMENTS:

  

    
        The monthly rental for each item of Equipment
   payable hereunder is as set forth in the applicable Lease Schedule. Rental
   on each item of Equipment shall begin to accrue on the Installation Date of
   such item of Equipment and shall be due and payable in U.S. dollars in
   immediately available funds by Lessee in advance on the first day of each
   month. If the Installation Date does not fall on the first day of the month,
   the rental for that period of time from the Installation Date until the Base
   Term Commencement Date shall be an amount equal to the Daily Rental
   multiplied by the number of days from (and including) the Installation Date
   to (but not including) the Base Term Commencement Date and shall be due and
   payable on the Installation Date. Progress and deposit payments to vendors
   and reimbursement of payments already paid by Lessee shall be made by Lessor
   upon receipt of Lessee’s instruction to do so in form and substance
   acceptable to Lessor, together with purchase, payment and purchase
   assignment documentation requested by Lessor. The date on which a progress
   or deposit payment or reimbursement is made by Lessor shall be considered
   the Installation Date with respect to the portion of the entire cost of the
   Equipment for any Lease Schedule such payment represents; provided that the
   Base Term Commencement Date shall always follow the funding by Lessor of the
   entire such Lease Schedule. In addition to the monthly rental set forth in
   the Lease Schedule, Lessee shall pay to Lessor, when due, amounts equal to,
   and hold Lessor harmless from, all taxes, levies, imposts, duties, fees,
   assessments, and other charges or withholdings of any nature whatsoever,
   however designated (including, without limitation, franchise, sales, use,
   stamp, privilege or excise taxes), together with any penalties, fines or
   interest thereon, imposed against Lessor (or which Lessor is required to
   collect) by any federal, state or local government or taxing authority and
   which are levied or based on or relate to the rental, the Lease or the
   Equipment or its use, possession, lease, ownership, financing, operation,
   control or value; but excluding federal, state or local taxes or fees on, or
   measured by, the net income of Lessor. Personal property taxes assessed on
   the Equipment during the term of this Lease shall be paid by Lessee to
   Lessor or (upon notice and at Lessor’s option) directly to the
   appropriate taxing authority. Lessor may charge Lessee a reasonable
   administrative fee in connection with Lessor’s completion of the
   return, or payment of, and billing Lessee for, personal property taxes.
   Interest on any past due payments under this Lease shall accrue at the rate
   of 1 1/2% per month (but in no event less than $50.00 per occurrence), or if
   such rate shall exceed the maximum rate allowed by law, then at such maximum
   rate, and shall be payable on demand. Charges for taxes, levies, imposts,
   duties, fees, assessments or other charges, penalties and interest payable
   by Lessee hereunder shall be promptly paid by Lessee when due.

  

  5.  
     INSTALLATION, USE, MAINTENANCE, RETURN AND QUIET
   POSSESSION:

  

    
        (a)  Lessee, at its own expense,
   will provide the required electric current to operate the Equipment and
   appropriate facilities to house and care for the Equipment as specified by
   the manufacturer.

  

    
        (b)  Any equipment, cards, disks,
   tapes or other items not specified in the Lease Schedule which are used on
   or in connection with the Equipment must meet the specifications of the
   manufacturer and shall be acquired by Lessee at its own expense.

  

    
        (c)  Lessee will at all times keep
   the Equipment in its sole possession and control. The Equipment shall not be
   moved from the locations stated in the Lease Schedule without the prior
   written consent of Lessor (said consent not to be unreasonably withheld
   provided that: (i) such location is within the Continental United States in
   a state which has adopted the Uniform Commercial Code; and (ii) Lessee shall
   timely execute, and shall reimburse Lessor for its expense in preparing and
   filing, any Uniform Commercial Code Financing Statements or other
   instruments which Lessor requests to reflect such relocation).

  

    
        (d)  After prior notice to Lessor,
   Lessee may, at its own expense, make alterations in or add attachments to
   the Equipment, provided such alterations or attachments are readily
   removable and do not reduce the value of the Equipment or interfere with the
   normal and satisfactory operation or maintenance of the Equipment or with
   Lessee’s ability to obtain and maintain the maintenance contract
   required by Section 5(g) hereof. The manufacturer or other organization
   selected by Lessee and approved in writing by Lessor to maintain the
   Equipment (“Maintenance Organization”) may incorporate engineering
   changes or make temporary alterations to the Equipment upon request of
   Lessee. All such alterations and attachments shall be and become the
   property of Lessor at the expiration or termination of the Lease, or, at the
   option of Lessee, shall be removed (prior to the expiration or termination
   of the Lease) and retained by Lessee provided the Equipment is restored, at
   Lessee’s expense, to its original condition, reasonable wear and tear
   only excepted.

  

    
        (e)  So long as Lessee is not in
   default hereunder, neither Lessor nor any of its assignees hereof shall
   interfere with Lessee’s use or possession of the Equipment during the
   term of this Lease.

  

    
        (f)  Lessee, during the term of this
   Lease and at its expense, shall keep the Equipment in good working order and
   condition and make all necessary adjustments, repairs and replacements.
   Lessee shall not use or permit the Equipment to be used in any manner or for
   any purpose for which, in the opinion of the manufacturer, the Equipment is
   not designed or reasonably suitable, and Lessee shall use and operate the
   Equipment in conformity with the manufacturer’s specifications. Lessee
   shall comply with all governmental laws, rules and regulations in the use,
   maintenance, storage and operation of the Equipment. In case any additional
   or other equipment, appliance or alteration is required to be made or
   installed on any item of Equipment in order to comply with such laws,
   regulations, requirements and rules, Lessee agrees to make or install such
   equipment, appliance or alteration at its own cost and expense.

  

    
        (g)  Lessee shall, during the term
   of this Lease and at its own expense, enter into and maintain in force a
   contract with a Maintenance Organization covering at least prime shift
   maintenance of each item of
 Equipment. Such contract shall commence upon expiration of the manufacturer
   ’s warranty period, if any, relating to such item. Lessee shall furnish
   Lessor, from time to time upon Lessor’s request, a copy of such
   contract(s).

  

    
        (h)  At the termination of this
   Lease, Lessee shall, at its expense, return the Equipment to Lessor (at the
   location designated by Lessor within the Continental United States) in the
   same operating order, repair, condition and appearance as on the
   Installation Date, reasonable wear and tear only excepted, with all
   engineering and safety changes prescribed by the manufacturer incorporated
   herein; provided that, notwithstanding reasonable wear and tear, the
   Equipment shall be operable in conformity with the manufacturer’s
   original specifications and have a good general appearance free from any
   obvious damage. At such termination, Lessee shall obtain a certification
   from the manufacturer that the Equipment is eligible and acceptable for (and
   Lessee shall arrange and pay for any repairs and changes as are necessary
   for the manufacturer to accept the Equipment under) contract maintenance at
   its then standard rates.

  

 6.  
     OWNERSHIP AND INSPECTION:

  

    
        (a)  Lessee shall have no interest
   in the Equipment other than the rights acquired as a lessee hereunder. The
   Equipment is and shall always remain separate identifiable personalty.
   Lessee shall not permit any item of Equipment to be installed in, or used,
   stored or maintained with, any real property in such a manner or under such
   circumstances that any person might acquire any rights in such item of
   Equipment paramount to the rights of Lessor by reason of such item of
   Equipment being deemed to be real property or a fixture thereon. Lessee
   shall, promptly upon request of Lessor, obtain a written acknowledgment from
   the owner and/or mortgagee(s) of the real property in which such item of
   Equipment is located that such owner and/or mortgagee(s) will not at any
   time assert any interest in such item of Equipment or that such item of
   Equipment constitutes part of such real property. Lessee shall, at Lessor
   ’s request, affix to the Equipment in a prominent place or places,
   tags, decals, or plates furnished by Lessor evidencing Lessor’s
   ownership and Lessee shall not permit their removal or
   concealment.

  

    
        (b)  Lessee shall keep the Equipment
   free and clear of all liens and encumbrances except liens or encumbrances
   arising through Lessor. LESSEE SHALL NOT ASSIGN OR OTHERWISE ENCUMBER
   THIS LEASE OR ANY OF ITS RIGHTS HEREUNDER OR SUBLEASE THE EQUIPMENT WITHOUT
   THE PRIOR WRITTEN CONSENT OF LESSOR. Lessee agrees that, except as
   expressly authorized by Lessor, any assignment or sublease by Lessee shall
   materially impair the prospects of Lessee’s performance hereunder, and
   materially change the duty of, and materially increase the burden or risk
   imposed on, Lessor, and shall constitute the delegation by Lessee of its
   material obligations hereunder, notwithstanding any continued liability of
   Lessee therefor. No assignment or sublease (whether or not permitted hereby)
   shall relieve Lessee of any of its obligations hereunder and any permitted
   sublease shall be expressly subordinate to the terms hereof. For purposes of
   this Master Lease Agreement, the parties agree that the sale of all or
   substantially all of the assets of Lessee or of more than 50% of the voting
   stock of Lessee (whether in one transaction or several related transactions)
   or, in the case of a partnership, any change in the constitution of the
   partnership, shall be deemed an assignment for which Lessor’s prior
   consent shall be required.

  

     
        (c)  Lessor or its agents shall have
   free access to the Equipment at all reasonable times for the purpose of
   inspection and for any other purpose contemplated in this Lease.

  

 7.  
     WARRANTIES:

  

    
        (a)  Lessee represents, covenants
   and agrees that, at the Installation Date, it shall have (i) thoroughly
   inspected the Equipment, (ii) determined for itself that all items of
   Equipment are in good condition, working order and repair and are of a size,
   design, capacity and manufacture selected by it and (iii) satisfied itself
   that the Equipment is suitable for Lessee’s purposes. LESSOR LEASES
   THE EQUIPMENT AS IS AND MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS
   OR IMPLIED, AS TO THE EQUIPMENT’S MERCHANTABILITY, FITNESS FOR A
   PARTICULAR PURPOSE, DESIGN, CONDITION, QUALITY, CAPACITY, MATERIAL OR
   WORKMANSHIP OR AS TO PATENT INFRINGEMENT OR THE LIKE, it being agreed
   that all such risks, as between Lessor and Lessee, are to be borne by
   Lessee. Lessee agrees to look solely to the manufacturer or to suppliers of
   the Equipment for any and all warranty claims and any and all assignable
   warranties made by the manufacturer or the supplier to Lessor are hereby
   assigned to Lessee for the term of the applicable Lease Schedule. Lessee
   hereby assumes the sole responsibility for, and agrees that Lessor shall not
   be responsible for, the delivery, installation, maintenance, operation or
   service of this Equipment or for the delay or inadequacy of any or all of
   the foregoing. Lessor shall not be responsible for any indirect, special or
   consequential loss or damage resulting from any cause whatsoever, whether
   arising as a result of tort, breach of contract or otherwise.

  

    
        (b)  Lessee further represents,
   covenants and agrees that:

  

    
        (i)  Lessee is a corporation duly
   incorporated, validly existing and in good standing under the laws of the
   jurisdiction of its incorporation and has all requisite corporate power and
   authority to enter into and perform this Lease and the documents related
   thereto. Lessee is duly qualified as a foreign corporation and is in good
   standing under the laws of each jurisdiction in which the conduct of its
   business or the ownership of its assets requires such qualification,
   including the jurisdiction where the Equipment will be located.

  

    
        (ii)  the Equipment constitutes
   standard equipment manufactured by the manufacturers of such Equipment and
   has not been altered, modified or customized specifically for Lessee’s
   uses or purposes.

  

    
        (iii)  Lessee has the corporate
   power and authority to execute and perform this Lease and, in the case of a
   sale and leaseback, to sell the Equipment to Lessor and to lease the
   Equipment back from Lessor hereunder, and has duly authorized such sale and
   the execution, delivery and performance of this lease, the Certificate of
   Delivery and Acceptance, the Lease Schedule, and other related instruments
   and documents;

  

    
        (iv)  this Lease and the documents
   related hereto have been duly authorized, executed and delivered by Lessee
   and constitute valid, legal and binding agreements of Lessee, enforceable in
   accordance with their terms, except to the extent the enforcement of
   remedies may be limited under applicable bankruptcy and insolvency
   laws.

  

     
        (v)  the entering into and
   performance of this Lease and the documents related hereto will not violate
   any judgement, order, law or regulation applicable to Lessee or any
   provision of Lessee’s Articles of Incorporation or By-laws or result in
   any breach of, or constitute a default under, or result in the creation of
   any lien, charge, security interest or other encumbrance upon any assets of
   Lessee or on the Equipment pursuant to, any instrument to which Lessee is a
   party or by which it or its assets may be bound.

  

    
        (vi)  no consent or approval of,
   giving of notice to, registration with, or taking of any other action in
   respect of, any state, federal or other governmental authority or agency is
   required with respect to the execution, delivery and performance by the
   Lessee of this Lease or any of the documents related hereto or, if any such
   approval, notice, registration or action is required, it has been
   obtained.

  

    
        (vii)  there are no actions, suits
   or proceedings pending or, to the knowledge of the Lessee, threatened
   against or affecting the Lessee in any court or before any governmental
   commission, board or authority which, if adversely determined, will have a
   materially adverse effect on the financial condition or ability of the
   Lessee to perform its obligations under this Lease or any of the documents
   related hereto.

  

    
        (viii)  the financial statements of
   Lessee delivered to Lessor have been prepared in accordance with generally
   accepted accounting principles and are complete and correct in all material
   respects and fairly present the financial condition of Lessee as of the date
   thereof. Since the date of such financial statements, there has been no
   material adverse change in the financial condition of Lessee, or any
   consolidated group of companies of which the Lessee is a member.

  

    
        (ix)  all date-sensitive hardware,
   software, processes, procedures, interfaces and similar operating systems
   used within the Lessee’s operations contain acceptable design and
   performance specifications so that such systems will not abruptly end or
   provide invalid or incorrect results during the operation of Lessee’s
   business on or after January 1, 2000. All such operating systems have been
   designed to ensure year 2000 compatibility including, but not limited to:
   date data century recognition, calculations that accommodate same century
   and multi-century formulas and date values, date data interface values that
   reflect the century, and which include year 2000 leap year
   calculations.

  

    
        (x)  it has confirmed with all of
   its material suppliers that all date-sensitive hardware, software,
   processes, procedures, interfaces and similar operating systems used within
   the such supplier’s operations contain acceptable design and
   performance specifications so that such systems will not abruptly end or
   provide invalid or incorrect results during the operation of Lessee’s
   business on or after January 1, 2000 and that all such operating systems
   have been designed to ensure year 2000 compatibility including, but not
   limited to: date data century recognition, calculations that accommodate
   same century and multi-century formulas and date values, date data interface
   values that reflect the century, and which include year 2000 leap year
   calculations.

  

 8.  
     RISK OF LOSS:

  

    
        (a)  From the earlier of. (i) the
   date of delivery of the Equipment to Lessee; or (ii) the Installation Date
   of the Equipment, until the Equipment is returned to Lessor as provided in
   this Lease, Lessee shall bear
 all risks of physical damage to or loss or destruction of the Equipment,
   howsoever caused. During the term of this Lease as to any Lease Schedule,
   Lessee, at its own expense, shall keep in effect all risk and public
   liability insurance policies covering the Equipment designated in each Lease
   Schedule in such amounts as are reasonably acceptable to Lessor. The all
   risk insurance policy shall insure against all risks of loss or damage from
   every cause whatsoever and shall be for an amount equal to the greater of:
   (i) the Casualty Value as set in the Casualty Value Schedule attached as an
   Exhibit to the Schedule; or (ii) the full replacement cost of the Equipment
   subject of the Lease. Lessor, its successors and assigns shall be named as
   additional insureds and sole loss payee on such policies, which shall be
   written by an insurance company of recognized responsibility which is
   reasonably acceptable to Lessor. Evidence of such insurance coverage shall
   be furnished to Lessor no later than the Installation Date and from time to
   time thereafter as Lessor may demand. Such policies shall provide that no
   less than thirty days written notice shall be given Lessor prior to any
   expiration, modification, reduction termination or cancellation of such
   policies for any reason. Lessee hereby irrevocably appoints Lessor as Lessee
   ’s attorney-in-fact coupled with an interest for the sole purposes of
   making claim for, receiving payment of, and executing any and all documents
   that may be required to be provided to the insurance carrier in
   substantiation of any claim for loss or damage to the Equipment or related
   to the Lease under said insurance policies, and endorsing Lessee’s name
   to any and all drafts or checks in payment of such applicable loss
   proceeds.

  

    
        (b)  If any item of Equipment is
   rendered unusable as a result of any physical damage to, or loss or
   destruction of, the Equipment, or title thereto shall be taken by any
   governmental authority under the power of eminent domain or otherwise,
   Lessee shall give to Lessor immediate notice thereof and this Lease shall
   continue in full force and effect without any abatement of rental. Lessor
   shall determine, within thirty (30) days after the date of occurrence of any
   such damage or destruction, whether such item of Equipment can be repaired.
   In the event Lessor determines that the item of Equipment cannot be repaired
   or such Equipment was lost, destroyed or title thereto taken, Lessee, at its
   expense, shall, subject to Lessor’s consent, either: (i) promptly
   replace such item of Equipment with identical equipment of at least equal
   value and convey title to such replacement equipment to Lessor free and
   clear of all liens, claims, equities and encumbrances of every kind or
   nature whatsoever, and this Lease shall continue in full force and effect
   with respect to the replacement Equipment as though, subject to the
   provision of Section 12 hereof, such damage, loss, destruction or taking of
   title had not occurred; or (ii) pay to Lessor, in immediately available
   funds, the applicable Casualty Value as provided in a Casualty Value
   Schedule attached as an Exhibit to the applicable Lease Schedule. In the
   event Lessor determines that such item of Equipment can be repaired, Lessee
   shall cause such item of Equipment to be promptly repaired. All proceeds of
   insurance received by Lessor or Lessee under the policy referred to in the
   preceding paragraph of this Section shall be applied toward the cost of such
   repair or replacement.

  

    
        (c)  Lessee shall immediately notify
   Lessor of all details concerning any damage to, or loss of, the Equipment
   arising out of any event or occurrence whatsoever.

  

 9.  
     EVENTS OF DEFAULT AND REMEDIES:

  

    
        The occurrence of any one of the following
   shall constitute an Event of Default hereunder:

  

     
        (a)  Lessee fails to pay or Lessor
   does not receive any installment of rent on or before the fifth day
   following the date when the same becomes due and payable;

  

    
        (b)  Lessee attempts to remove,
   sell, assign, transfer, encumber, sublet or part with possession of the
   Equipment or any items thereof, except as expressly permitted
   herein;

  

    
        (c)  Lessee shall fail to procure
   and or maintain insurance in accordance with Section 8 hereof or such
   insurance shall be reduced, modified, canceled, terminated or
   lapsed;

  

    
        (d)  Any guarantor of any of Lessee
   ’s obligations under any Lease Schedule defaults in the performance of
   any covenant or obligation in favor of Lessor;

  

    
        (e)  Lessee shall fail to observe or
   perform any of the other obligations required to be observed or performed by
   Lessee hereunder and such failure shall continue uncured for ten (10) days
   after written notice thereof to Lessee by Lessor;

  

    
        (f)  Any representation or warranty
   made by Lessee herein or in any document or certificate furnished in
   connection herewith shall prove incorrect in any material
   respect;

  

    
        (g)  Lessee ceases doing business as
   a going concern, makes an assignment for the benefit of creditors, admits in
   writing its inability to pay its debts as they become due, files a voluntary
   petition in bankruptcy, is adjudicated a bankrupt or an insolvent, files a
   petition seeking for itself any reorganization, arrangement, composition,
   readjustment, liquidation, dissolution or similar arrangement under any
   present or future statute, law or regulation or files an answer admitting
   the material allegations of a petition filed against it in any such
   proceeding, consents to or acquiesces in the appointment of a trustee,
   receiver, or liquidator of it or of all or any substantial part of its
   assets or properties, or if it or its shareholders take any action looking
   to its dissolution or liquidation; or

  

    
        (h)  Within thirty (30) days after
   the commencement of any proceeding against Lessee seeking reorganization,
   arrangement, readjustments, liquidation, dissolution or similar relief under
   any present or future statute, law or regulation, such proceedings shall not
   have been dismissed, or if within thirty (30) days after the appointment,
   without Lessee’s consent or acquiescence, of any trustee, receiver or
   liquidator of it or of all or any substantial part of its assets and
   properties, such appointment shall not be vacated.

  

    
        (i)  Lessee or any guarantor shall
   default in the payment or performance of any other duties, obligations or
   liabilities of any indebtedness for borrowed money, or under conditional
   sales or installment contracts or similar agreements, leases or obligations
   evidenced by bonds, debentures, notes or other similar agreements or
   instruments to any creditor (including Lessor under any other agreement)
   after any and all applicable cure periods therefor shall have
   elapsed.

  

    
        Upon the occurrence of an Event of Default,
   Lessor may at its option do any or all of the following: (i) by notice to
   Lessee terminate this Lease as to the subject Lease Schedule: (ii) whether
   or not this Lease is terminated as to any Lease Schedule, take possession of
   any or all of the Equipment listed on the subject
 Lease Schedule, wherever situated, and for such purpose, enter upon any
   premises without liability for so doing or Lessor may cause Lessee, and
   Lessee hereby agrees, to return the Equipment to Lessor as provided in this
   Lease; (iii) recover from Lessee, as liquidated damages for loss of a
   bargain and not as a penalty, an amount equal to the stipulated loss value
   as provided in the Stipulated Loss Value Schedule attached as an Exhibit to
   the applicable Lease Schedule, which payment shall become immediately due
   and payable; or (iv) sell, dispose of, hold, use or lease any Equipment as
   Lessor in its sole discretion may determine without, except as provided
   below, any duty to account to Lessee (and Lessor shall not be obligated to
   give preference to the sale, lease or other disposition of the Equipment
   over the sale, lease or other disposition of similar equipment owned or
   leased by Lessor). In any event, Lessee shall, without further demand, pay
   to Lessor an amount equal to all sums due and payable for all periods up to
   and including the date on which Lessor has declared this Lease to be in
   default. In the event that Lessee shall have paid to Lessor the liquidated
   damages referred to in clause (iii) above, Lessor hereby agrees to pay to
   Lessee, promptly after receipt thereof, all rentals or proceeds received
   from any reletting of the Equipment to the extent such rentals or proceeds
   are attributable to the balance of the Base Term (after deduction of all
   expenses incurred by Lessor and a reasonable sales commission to Lessor),
   said amount never to exceed the amount of the liquidated damages paid by
   Lessee. Lessee agrees that Lessor shall have no obligation to sell or lease
   the Equipment. In the event that Lessee has paid Lessor the amount set forth
   in (iii) above, and provided all other amounts due under the Lease have been
   paid, then Lessor shall deliver title to the Equipment to Lessee,
   unencumbered as to Lessor, “as is” and “where is”
   without recourse or representation.

  

    
        Lessee shall in any event remain fully liable
   for reasonable damages as provided by law and for all costs and expenses
   incurred by Lessor on account of such default including, but not limited to,
   all court costs and reasonable attorney’s fees. Lessee further agrees
   that, in any event, it will be liable for any deficiency after any sale,
   lease or other disposition by Lessor. The rights afforded Lessor hereunder
   shall not be deemed to be exclusive, but shall be in addition to any rights
   or remedies provided by law.

  

 10.  
     NET LEASE:

  

    
        Except as otherwise specifically provided in
   this Lease, it is understood that this is a net lease, and that, as between
   Lessor and Lessee, Lessee shall be responsible for all costs and expenses of
   every nature whatsoever arising out of or in connection with or related to
   this Lease or the Equipment (including, but not limited to, transportation
   in and out, transportation insurance, rigging, drayage, packing,
   installation and disconnect charges as well as reasonable UCC and other
   record search fees and related expenses incurred by Lessor with respect to
   Lessee in Lessor’s sole discretion). Lessee hereby agrees that in the
   event that Lessee fails to perform any obligation under this Lease, Lessor
   may at its option, pay or perform said obligation and any payment made or
   expense incurred by Lessor in connection therewith shall become additional
   rent which shall be due and payable by Lessee upon demand.

  

 11.  
     ASSIGNMENT:

  

    
        Lessee agrees that Lessor may transfer or
   assign all or any part of Lessor’s right, title and interest in, under
   or to the Equipment and this Lease and any or all sums due or to become due
   pursuant to any of the above, to any third party (the “Assignee”)
   for any reason. Lessee agrees that upon receipt of written notice
 from Lessor of such assignment, Lessee shall perform all of its obligations
   hereunder for the benefit of Assignee and, if so directed, shall pay all
   sums due or to become due hereunder directly to the Assignee or to any other
   party designated by the Assignee. Lessee hereby covenants, represents,
   warrants and agrees that the Assignee shall be entitled to rely on and shall
   be considered a third party beneficiary of the following covenants,
   representations and warranties: (i) Lessee’s obligations to Assignee
   hereunder are absolute and unconditional and are not subject to any
   abatement, reduction, recoupment, defense, offset or counterclaim available
   to Lessee for any reason whatsoever including, without limitation, operation
   of law, defect in the Equipment, the condition, design, operation or fitness
   for use thereof or any loss, taking, destruction or interference with the
   use of the Equipment or any part thereof, Lessor’s default or failure
   to perform any of its obligations hereunder or for any other cause or reason
   whatsoever, whether similar or dissimilar to the foregoing (Lessee reserving
   any of its rights to have separate recourse directly against Lessor on
   account of any thereof): nor, except as otherwise expressly provided herein,
   shall this Agreement terminate, or the respective obligations of Lessor or
   Lessee be otherwise affected, by reason of any of the foregoing or for any
   other cause whether similar or dissimilar to the foregoing, it being the
   intention of the parties hereto that the monthly rental, additional rental,
   and all other sums payable by Lessee hereunder shall continue to be payable
   in all events and at the times herein provided; (ii) Lessee shall not look
   to Assignee to perform any of Lessor’s obligations hereunder, unless
   otherwise expressly agreed and assumed by Assignee; (iii) Lessee will not
   amend or modify this Agreement without prior written consent of the
   Assignee; and (iv) Lessee will send a copy to Assignee of each notice which
   Lessee sends to Lessor. Upon receipt of notice of such assignment, Lessee
   agrees to execute and deliver to Lessor such documentation as Assignee may
   require, including, but not limited to, (i) an acknowledgment of, or consent
   to, assignment which may require Lessee to make certain representations or
   reaffirmations as to some of the basic terms and covenants contained in this
   Lease or as to the current status of the Lease and the Equipment; (ii) a
   certified copy of resolutions of Lessee authorizing Lessee to enter into the
   Lease, (iii) an opinion of counsel for Lessee as to customary matters; and
   (iv) a Certificate of Delivery and Acceptance. Nothing contained in such
   documentation required by Assignee shall be in derogation of any rights
   granted to Lessee hereunder. Notwithstanding such assignment, (i) Lessor
   shall not be relieved of any of its obligations hereunder; and (ii) the
   rights of Lessee hereunder, including its rights under Section 5(e) hereof,
   shall not be impaired.

  

 12.  
     TAX INDEMNITY:

  

 This Lease has been
   entered into, and the Equipment has been acquired by Lessor, on the basis
   that Lessor and/or any persons, firms, corporations or other entities to
   which Lessor transfers or has transferred title to all or any portion of the
   Equipment (the “Owner”) shall be entitled to such deductions,
   credits and other benefits as are provided to an owner of property (the
   “Tax Benefits”), including, without limitation, the accelerated
   cost recovery or depreciation deduction on the Equipment under various
   Sections of the Internal Revenue Code of 1986 as amended from time to time
   (the “Code”) based upon such depreciable lives, averaging
   conventions, methods of depreciation and other accounting methods as the
   Owner elects for tax purposes, and the deduction under Section 163 of the
   Code in the full amount of any interest paid or accrued by Owner in
   accordance with the Owner’s method of accounting for tax purposes with
   respect to any indebtedness incurred by the Owner in financing its purchase
   of the Equipment. (As used herein the term “Owner” includes Lessor
   in the event Lessor has not transferred title of all the Equipment.) If as a
   result of: (i) any act or failure to act of Lessee (including a sale or
   disposition of any unit of Equipment after
 an Event of Default or Bankruptcy of Lessee unless Lessor shall have been paid
   in full the Stipulated Loss or Termination Value, as the case may be, in
   accordance with the Lease); (ii) any physical damage to or loss or
   destruction of the Equipment; or (iii) the existence or operation of any
   early termination or early buy out provision contained in any Lease
   Schedule, the Owner (a) shall lose, have recaptured or disallowed, or not be
   entitled to the full use of the Tax Benefits, or (b) shall have its tax
   increased or accelerated on account of recomputation or recapture of such
   Tax Benefits in any year or years pursuant to the provisions of the Code,
   (each of the events referred to in (a) and (b) above being referred to as a
   “Loss”) then Lessee shall pay to the Owner, upon demand, a sum
   which after deduction therefrom for all federal, state and local income
   taxes payable by the Owner with respect to the receipt of such sum, shall be
   sufficient to restore the Owner to substantially the same positions the
   Owner would have been in had such Loss not been incurred after taking into
   account all relevant factors, including, without limitation, (i) the amount
   of the Tax Benefits so lost, recaptured, disallowed, recomputed or not so
   utilized, (ii) the increase or acceleration on the Owner’s tax on
   account thereof, (iii) penalties, interest or other charges imposed on the
   Owner, (iv) differences in tax years involved and (v) the Tax Benefits, if
   any, available to the Owner with respect to any replacement Equipment
   transferred to Lessor pursuant to Section 8 (b) hereof. The provisions of
   this Section 12 shall survive the expiration or earlier termination of this
   Lease. For the purpose of this Section 12, a Loss shall occur upon the
   earliest of (1) the happening of any event which may cause such Loss, (2)
   the payment by the Owner to the Internal Revenue Service of the tax increase
   resulting from such Loss or (3) the adjustment of the tax return of the
   Owner to reflect such Loss. Lessee represents and warrants for the benefit
   of Lessor, and will provide supporting documents reasonably satisfactory to
   Lessor to the effect that: (i) at the time Lessor becomes the owner of the
   Equipment, and at all times during the term of the Lease, the Lessor shall
   be entitled to take the maximum deductions for depreciation allowable
   pursuant to Section 167(a) of the Internal Revenue Code of 1986 (the
   “Code”); (ii) the deductions for depreciation of the Equipment
   shall be determined as provided in Section 168(a) of the Code; and (iii) the
   applicable “recovery period” for the Equipment as provided in
   Section 168(c) of the Code shall be as provided in the Lease
   Schedule.

  

 13.  
     INDEMNIFICATION AND WAIVER:

  

    
        Lessee hereby agrees to assume liability for,
   and does hereby agree to indemnify, protect, save and keep harmless Lessor
   and its respective successors, assigns, legal representatives, agents and
   servants, from and against any and all liabilities, obligations, losses,
   damages, claims, costs, or expenses (including legal fees and expenses) of
   any kind and nature whatsoever which may be imposed on, incurred by or
   asserted against Lessor or any of its respective successors, assigns, legal
   representatives, agents or servants (whether or not such person is also
   indemnified by any other person), or in any way relating to or arising out
   of this Lease or any documents contemplated hereby, or the performance or
   enforcement of any of the terms hereof, or in any way relating to or arising
   out of the Equipment or the acceptance, rejection, return, lease,
   possession, use, condition, operation, ownership or disposition of the
   Equipment or any accident in connection therewith (including, without
   limitation, latent and other defects, whether or not discoverable):
   provided, however, that Lessee shall not be required to indemnify Lessor or
   its respective successors, assigns, legal representatives, agents and
   servants, for loss or liability in respect of any item of Equipment arising
   from acts or events which occur after possession of such item of Equipment
   has been returned to Lessor or loss or liability resulting from the active
   willful misconduct of the party otherwise to be indemnified hereunder.
   Lessee agrees that, in order to induce Lessor to enter into each lease of
   Equipment
 hereunder, and recognizing that Lessor is not the manufacturer of the
   Equipment: Lessor shall not be liable to Lessee for any liability, claim,
   loss, damage or expense of any kind or nature arising directly or indirectly
   from (and Lessor shall not be in default hereunder as a result of) any
   inadequacy or deficiency of the Equipment or any defect therein or any delay
   or failure in providing or delivering the Equipment. Lessee agrees that this
   Lease is a “finance lease” as that term is defined in Section 13
   10.01 of the Ohio Revised Code. Lessee acknowledges that the supplier of the
   equipment may have rights under the contract with Lessee and Lessor may
   contact the supplier for a description of any rights or warranties under the
   supply contract. Lessee waives any and all rights and remedies granted under
   Section 1310.54 to 1310.68 of the Ohio Revised Code, including, but not
   limited to, any of Lessee’s rights to (i) reject or revoke acceptance
   of the Equipment; (ii) accept partial delivery of the Equipment; and (iii)
   “cover” and substitute for the Equipment.

  

 14.  
     TRUE LEASE—SECURITY INTEREST:

  

    
        It is the intention of the parties hereto that
   the lease of the Equipment pursuant to each Lease Schedule be a true lease.
   However, in the event (and only in the event) that is finally determined by
   a court of competent jurisdiction that this Lease does not create a true
   lease with respect to any Equipment, then the parties agree that, with
   respect to any such Equipment, Lessee hereby grants to Lessor (effective
   upon the Installation Date) a purchase money security interest in such
   Equipment to secure repayment of all amounts due, and the performance of all
   of Lessee’s other obligations hereunder and under such Lease
   Schedule.

  

 15.  
     MISCELLANEOUS:

  

    
        (a)  Neither this Lease nor any
   consent or approval provided for herein shall be binding upon Lessor unless
   signed on its behalf by a duly authorized officer. This Agreement shall be
   governed in all respects by the laws of Ohio, in the county of Hamilton,
   without giving effect to principles of choice of law.

  

    
        (b)  This Lease constitutes the
   entire agreement between Lessee and Lessor with respect to the Equipment,
   and no covenant, condition or other term or provision may be waived or
   modified orally. No waiver of any of the terms and conditions hereof shall
   be effective unless in writing and signed by the party against whom such
   waiver is sought to be enforced. Any waiver of the terms hereof shall be
   effective only in the specific instance and for the specific purpose given.
   The waiver by Lessor or Lessee of any breach of any obligation of Lessee or
   Lessor shall not be deemed a waiver of such obligation or of any subsequent
   breach of the same or any obligation. The subsequent acceptance of rental
   payments hereunder by Lessor shall not be deemed a waiver of any prior
   existing breach by Lessee regardless of Lessor’s knowledge of such
   prior existing breach at the time of acceptance of such rental
   payments.

  

    
        (c)  All notices hereunder shall be
   in writing and shall be delivered in person or sent by registered or
   certified mail, postage prepaid, to the address of the other party as set
   forth herein or to such other address as such party shall have designated by
   proper notice.

  

    
        (d)  This Lease shall be binding
   upon and inure to the benefit of Lessor and Lessee and their respective
   successors and assigns (including any subsequent assignee of
   Assignee).

  

     
        (e)  If any term or provision of
   this Lease or the application thereof to any person is, to any extent,
   invalid or unenforceable, the remainder of this Lease, or the application of
   such provision to the persons other than those to which it is invalid or
   unenforceable, shall not be affected thereby, and each provision of this
   Lease shall be valid and be enforced to the fullest extent permitted by
   law.

  

    
        (f)  Lessor is hereby authorized by
   Lessee to cause this Lease or other instruments, including Uniform
   Commercial Code Financing Statements, to be filed or recorded for the
   purposes of showing Lessor’s interest in the Equipment and Lessee
   agrees to execute and deliver all such instruments at the request of Lessor
   and that Lessor may execute and deliver such instruments for and on behalf
   of Lessee.

  

    
        (g)  In the event that the
   Installation Date does not occur within forty-five (45) days of the
   projected Installation Date (as set forth in the applicable Lease Schedule),
   then Lessor, at its option, may terminate the applicable Lease Schedule and
   this Lease (to the extent that it applies to said Lease Schedule) without
   further obligation to Lessee.

  

    
        (h)  In the event of any conflict
   between the terms and conditions of this Master Lease Agreement and the
   terms and conditions of any Lease Schedule, the terms and conditions of such
   Lease Schedule shall prevail.

  

    
        (i)  Each year during the term of
   this Lease, Lessee hereby agrees to deliver to Lessor a copy of: (i) Lessee
   ’s quarterly unaudited financial statements within sixty (60) days of
   Lessee’s quarter-ends; (ii) annual audited financial statements within
   one hundred twenty (120) days of Lessee’s fiscal year-end; and (iii)
   within a reasonable period of time, any other financial information Lessor
   requests from time to time

  

    
        (j)  The obligations which Lessee is
   required to perform during the term of this Lease shall survive the
   expiration or other termination of this Lease, to the extent that such
   obligations remain unperformed as of the expiration or termination of this
   Lease.

  

    
        (k)  Lessee hereby acknowledges and
   agrees that (i) certain of its wholly-owned subsidiaries will guaranty the
   obligations of Lessee hereunder on terms and conditions satisfactory to
   Lessor; and (ii) at any time after the date hereof, upon the request of
   Lessor and on terms and conditions satisfactory to Lessor, Lessee shall
   cause such other of its wholly-owned subsidiaries as Lessee shall direct to
   guaranty its obligations under this Lease.

  

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

  

 	LESSOR: THE VAUGHN
     GROUP, INC.	    	LESSEE: THE IT
     GROUP, INC.
	 
	By:  
             /s/ John V. Handelsman
             
   

               
      John V. Handelsman	    	By:  
             /s/ Richard R. Conte 
              
   

               
         Richard  R. 
      Conte
	   
      
	Title: 
              President and
     CEO            
         	    	Title: 
              Vice
     President, Treasurer       
      

  FORM OF
   GUARANTY

  

 [Subsidiary Name] (
   “Guarantor”)

  

 The Vaughn Group,
   Inc. (“Lessor”)

  

 The IT Group, Inc. (
   “Lessee”)

  

    
        1.  In consideration of the
   execution and delivery of Master Lease Agreement No. 193 dated as of April
   7, 1999 between Lessee and The Vaughn Group, Inc. (hereinafter called
   “Lessor”), an Ohio corporation, with its principal place of
   business at 8240 Beckett Park Drive, Suite D, Hamilton, Ohio 45011 (said
   Master Lease Agreement, as modified, amended or supplemented from time to
   time in accordance with the provisions thereof, and together with all Lease
   Schedules and Delivery and Acceptance Certificates executed pursuant
   thereto, being hereafter collectively called the “Lease”), and for
   other valuable consideration, the receipt of which is hereby acknowledged,
   Guarantor does hereby unconditionally guarantee to Lessor and its successors
   and assigns, without offset or deduction: (a) the prompt payment when due,
   whether by acceleration or otherwise, of all rent, and all other amounts
   whatsoever payable by Lessee under or pursuant to the Lease, the guaranty
   under this clause (a) constituting hereby a continuing guaranty of payment
   and not of collection; and (b) that Lessee will perform punctually and
   faithfully each and every duty, agreement, covenant and obligation of Lessee
   under or pursuant to the Lease (the “Obligations”). Guarantor does
   hereby agree that upon the occurrence of an Event of Default under the
   Lease, Guarantor will promptly pay the rent and all other amounts whatsoever
   due under or pursuant to the Lease, or will otherwise provide for and bring
   about promptly when due such payment, and will perform, or will otherwise
   provide for and bring about promptly the performance of such duties,
   agreements, covenants and obligations of Lessee under or pursuant to the
   Lease which are in default thereunder.

  

    
        2.  This guaranty is a continuing
   one and shall terminate only upon full payment of all rents and all other
   sums due under the Lease and the performance of all of the terms, covenants
   and conditions therein required to be kept, observed, or performed by the
   Lessee, including such payment and performance under schedules made a part
   of said Lease after the satisfaction of all obligations under the Lease and
   all earlier schedules thereto.

  

    
        3.  Guarantor further agrees that
   this Guaranty shall remain and continue in full force and effect as to any
   amendments, modifications, renewals or extensions by the Lessee, and that no
   assignment or transfer of the Lease or any interest therein shall operate to
   extinguish or diminish the liability of the Guarantor. No notification by
   Lessor to Guarantor of such amendment, modification, renewal or extension
   shall be required. The undersigned waives presentment, protest, demand for
   payment, any right of set-off, notice of dishonor or default, notice of
   acceptance of this Guaranty and notice of any other kind in connection with
   the Lease or this Guaranty. The undersigned also waives any right to require
   a commercially reasonable disposition of any collateral securing the
   Obligations.

  

    
        4.  Guarantor waives any right to
   require Lessor to: (a) proceed against Lessee; (b) proceed against or
   exhaust any security held from Lessee; (c) pursue any other remedy in Lessor
   ’s power whatsoever; or (d) notify Guarantor of any default by Lessee
   in the payment of any rent or other sums reserved in the Lease or in the
   performance of any term, covenant or condition therein required to be kept,
   observed or performed by Lessee. Guarantor waives any defense arising by
   reason of any disability or other defense of Lessee or by reason of the
   cessation from any cause whatsoever of the liability of Lessee. Until the
   payment of all rents and all other sums due under the Lease and the
   performance of all of the terms, covenants and conditions therein required
   to be kept, observed or performed by Lessee, Guarantor shall have no right
   of subrogation, and waives any right to enforce any remedy which Lessor now
   has or may hereafter have against Lessee, and waives any benefit of and any
   right to participate in any security now or hereafter held by Lessor.
   Guarantor waives all presentments, demands for performance, notices of
   nonperformance, protests, notices or protest, notices of dishonor, notices
   of acceptance of this guaranty and of the existence, creation or
   continuations of new or additional leases.

  

     
        5.  This absolute, continuing,
   unconditional, and unrestricted guaranty is a guaranty of payment and not a
   guaranty of collection. Upon Lessee’s failure to pay the Obligations
   promptly when due, Lessor, at its sole option, may proceed against the
   undersigned (or any one or more of them if more than one) to collect the
   Obligations, with or without proceeding against the Lessee, or co-surety or
   co-guarantor, or any collateral held as security for the Obligations. Any
   and all payments under the Lease made by the lessee, the undersigned, or any
   other person, and the proceeds of any and all collateral securing the
   payment of the Obligations and this guaranty, may be applied by Lessor in
   whatever manner it may determine in its sole discretion. The undersigned
   agrees to reimburse Lessor for all costs and expenses of any nature
   whatsoever, including, without limitation attorneys’ fees, incurred or
   paid by Lessor in exercising any right, power, or remedy conferred by this
   Guaranty.

  

    
        6.  The obligations of Guarantor are
   independent of the obligations of Lessee. A separate action or actions may
   be brought and prosecuted against Guarantor, whether an action is brought
   against Lessee or whether Lessee be joined in any such action or actions;
   and Guarantor waives the benefit of any statute of limitations affecting its
   liability hereunder or the enforcement thereof.

  

    
        7.  The undersigned agrees that this
   guaranty shall continue to be effective or be reinstated, as the case may
   be, if at any time payment, or any part thereof, of rent or any other amount
   with respect to the Obligations is rescinded or must otherwise be restored
   by Lessor upon the bankruptcy or reorganization of lessee, any other person
   or otherwise. The undersigned agrees that this guaranty shall continue to be
   effective or be reinstated, as the case may be, if at any time payment, or
   any part thereof, of rent or any other amount with respect to the lease is
   rescinded or must otherwise be restored by Lessor upon the bankruptcy or
   reorganization of Lessee, any other person or otherwise.

  

    
        8.  As a specifically bargained
   inducement for Lessor to extend credit to lessee: (a) THE UNDERSIGNED HEREBY
   EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING
   RELATED TO THIS GUARANTY OR ARISING IN ANY WAY FROM THE LEASE OR
   TRANSACTIONS INVOLVING LESSOR AND THE LESSEE AND (b) THE UNDERSIGNED HEREBY
   DESIGNATE(S) ALL COURTS OF RECORD SITTING IN CINCINNATI, OHIO, AND HAVING
   JURISDICTION OVER THE SUBJECT MATTER, STATE AND FEDERAL, AS FORUMS WHERE ANY
   ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING FROM OR OUT OF THIS
   GUARANTY, ITS MAKING, VALIDITY OR PERFORMANCE, MAY BE PROSECUTED AS TO ALL
   PARTIES, THEIR SUCCESSORS AND ASSIGNS, AND BY THE FOREGOING DESIGNATION THE
   UNDERSIGNED CONSENT(S) TO THE JURISDICTION AND VENUE OF SUCH
   COURTS.

  

    
        9.  This Guaranty shall inure to the
   benefit of Lessor, its successors and assigns, and shall be binding upon the
   heirs, personal representatives, successors and assigns of
   Guarantor.

  

    
        10.  This Guaranty: (a) may not be
   assigned by Guarantor; and (b) may be assigned by Lessor and by its
   successors or assigns, in whole or in part, without the consent of
   Guarantor, and in the event of any such assignment each of Lessor’s
   successors or assigns shall have and may enforce against Guarantor all of
   the rights of Lessor hereunder with respect to the guaranty of the payment
   and performance of such of the obligations as are covered by such
   assignment.

  

    
        11.  Notwithstanding the foregoing,
   neither this Guaranty nor the obligations of Guarantor hereunder shall be
   construed in any manner which would render the Guarantor
   insolvent.

  

    
        IN WITNESS HEREOF, each of the undersigned has
   duly executed this guaranty this       
   day of            
            , in the presence
   of:

  

 	 	    	[Subsidary
     Name]
	 
	  
             /s/ James M. Redwine 
                 
   

   Attest    	    	By:  
             /s/ Richard R. Conte 
                 
                 
                 
                 
                 
                 
                 
                 
                
   

               
           Richard  R. 
      Conte
	   
      
	 	    	Title: 
          Vice President, TreasurerFORM OF NON-QUALIFIED STOCK OPTION AGREEMENT

 EXHIBIT 10(iii)7

 

  

 THE IT GROUP, INC.
 

 NON-QUALIFIED STOCK OPTION AGREEMENT
 

 Pursuant to the
 

 1996 STOCK INCENTIVE PLAN

           This
   Non-Qualified Stock Option Agreement ("Agreement") is made and entered into
   as of the Date of Grant indicated on Attachment A by and between The IT
   Group, Inc., a Delaware corporation (the "Company"), and the person named on
   Attachment A as Optionee.

           WHEREAS,
   Optionee is an employee or director of the Company or any of its
   subsidiaries or affiliates; and

           WHEREAS,
   pursuant to the Company's 1996 Stock Incentive Plan (the "1996 Plan"), the
   committee of the Board of Directors of the Company administering the 1996
   Plan (the "Committee") has approved the grant to Optionee of a non-qualified
   option to purchase shares of the Common Stock, par value $.01 per share, of
   the Company (the "Common Stock"), on the terms and conditions set forth
   herein.

           NOW,
   THEREFORE, in consideration of the foregoing recitals and the covenants
   set forth herein, the parties hereto hereby agree as follows:

           1. 
            Grant of Option;
   Certain Terms and Conditions. The Company hereby grants to Optionee,
   and Optionee hereby accepts, as of the Date of Grant indicated on Attachment
   A, an option or options (the "Option") to purchase the number of shares of
   Common Stock indicated on Attachment A (the "Option Shares") at the Exercise
   Price per share indicated on Attachment A, which Exercise Price shall not be
   less than the market value of the Option Shares on the Date of Grant. The
   Option shall expire at 5:00 p.m., Pittsburgh time, on the Expiration Date
   indicated on Attachment A and shall be subject to all of the terms and
   conditions set forth in this Agreement. The Option is not intended to
   qualify as an incentive stock option under Section 422 of the Internal
   Revenue Code. On each anniversary of the Date of Grant, the Option shall
   become exercisable to purchase ("vest with respect to") that number of
   Option Shares (rounded to the nearest whole share) equal to the total number
   of Option Shares multiplied by the Annual Vesting Rate indicated on
   Attachment A.

           2. 
            Acceleration and
   Termination of Option.

             
             (a)  
           Termination of
   Employment.

             
               
         (i)       
       Retirement. In the event that Optionee shall
   cease to be an employee of the Company or any of its subsidiaries or
   affiliates (such event shall be referred to herein as the "Termination" of
   such employee's "Employment") by reason of retirement, which retirement, if
   Optionee is an employee of the Company or any of its subsidiaries, is in
   accordance with the Company's then-current retirement practices, then the
   Option shall fully vest with respect to all Option Shares upon the date of
   such Termination of Employment and shall terminate on the second anniversary
   of the date of such Termination of Employment.

             
               
         (ii)       
       Death or Permanent Disability. If Optionee's
   Employment is
 Terminated by reason of the death or Permanent Disability (as hereinafter
   defined) of Optionee, then the Option shall fully vest with respect to all
   Option Shares upon the date of such Termination of Employment, shall be
   exercisable by Optionee or, in the event of death, the person or persons to
   whom Optionee's rights under the Option shall have passed by will or by the
   applicable laws of descent or distribution, and shall terminate on the first
   anniversary of the date of such Termination of Employment. "Permanent
   Disability" shall mean the inability to engage in any substantial gainful
   activity by reason of any medically determinable physical or mental
   impairment which can be expected to result in death or which has lasted or
   can be expected to last for a continuous period of not less than twelve (12)
   months. The Optionee shall not be deemed to have a Permanent Disability
   until proof of the existence thereof shall have been furnished to the
   Committee in such form and manner, and at such times, as the Committee may
   require. Any determination by the Committee that Optionee does or does not
   have a Permanent Disability shall be final and binding upon the Company and
   Optionee.

             
               
         (iii)      
        Termination for Cause. If Optionee's
   Employment is Terminated for cause, then (A) the portion of the Option
   that has not vested on or prior to the date of such Termination of
   Employment shall terminate on such date and (B) the remaining vested
   portion of the Option shall terminate one (1) month from the date of
   such Termination of Employment.

             
               
         (iv)       
       Other Termination. If Optionee's Employment
   is Terminated for any reason other than those enumerated in (i) through
   (iii) of this Section 2(a), then (A) the portion of the Option
   that has not vested on or prior to the date of such Termination of
   Employment shall terminate on such date and (B) the remaining vested
   portion of the Option shall terminate ninety (90) days after the date of
   such Termination of Employment.

             
             (b)  
           Termination of Director
   Status.

             
               
         (i)       
       Retirement, Permanent Disability or Death. In
   the event the Optionee shall cease to be a director of the Company or any of
   its subsidiaries or affiliates (such event shall be referred to herein as
   the "Termination" of such director's "Status") by reason of retirement as a
   director, death or Permanent Disability, the provisions applicable to
   employees of the Company or any of its subsidiaries or affiliates set forth
   in Sections 2(a)(i) and 2(a)(ii) shall be applicable, as appropriate. As
   used in this Section 2(b)(i), if Optionee is a director of the Company or
   any of its subsidiaries, retirement of a director shall mean such director
   has completed his or her term(s) as a director of the Company or any of its
   subsidiaries in accordance with the charter and bylaws of the Company or any
   such subsidiary.

             
               
         (ii)       
       Other Termination. In the event the Optionee
   shall cease to be a director of the Company or any of its subsidiaries or
   affiliates for any other reason, the provisions applicable to employees of
   the Company or any of its subsidiaries or affiliates set forth in Section
    2(a)(iv) shall be applicable, as appropriate.

             
             (c)  
           Death Following
   Termination of Employment. Notwithstanding anything to the contrary in
   this Agreement, if Optionee shall die at any time after the Termination of
   his or her Employment or Status and prior to the Expiration Date, then the
   remaining vested but unexercised portion of the Option shall terminate on
   the earlier of the Expiration Date or the first anniversary of the date of
   such death.

             
             (d)  
           Acceleration of Option
   Upon a Change of Control. The Committee, in its
 sole discretion, may accelerate the exercisability of the Option at any time
   and for any reason. In addition, the Option shall fully vest with respect to
   all Option Shares immediately prior to a Change of Control (as hereinafter
   defined), provided that no such vesting shall occur (A) in the case of a
   Change of Control of the type described in (ii) or (iii) below, if a
   two-thirds majority of the members of the Company's Board of Directors
   affirmatively recommends such Change of Control to the Company's
   stockholders, or (B) in the case of a Change of Control of the type
   described in (i) or (v) below, if a two-thirds majority of the Company's
   Board of Directors approves such Change of Control. A "Change    of Control"
   shall mean the first to occur of the following events:

             
               
         (i)       
       any date upon which the directors of the Company who
   were nominated by the Board of Directors for election as directors and/or
   were elected by the holders of the Cumulative Convertible Participating
   Preferred Stock of the Company cease to constitute a majority of the
   directors of the Company;

             
               
         (ii)       
       a reorganization, merger or consolidation of the
   Company the consummation of which results in the outstanding securities of
   any class then subject to the Option being exchanged for or converted into
   cash, property and/or securities not issued by the Company,

             
               
         (iii)      
        the acquisition of substantially all of the
   property and assets of the Company by any person or entity;

             
               
         (iv)       
       the dissolution or liquidation of the Company; or

             
               
         (v)       
       the date of the first public announcement that any
   person or entity, together with all Affiliates and Associates (as such
   capitalized terms are defined in Rule 12b-2 promulgated under the Exchange
   Act) of such person or entity, shall have become the Beneficial Owner (as
   defined in Rule 13d-3 promulgated under the Exchange Act) of voting
   securities of the Company representing 35% or more of the voting power of
   the Company; provided, however, that the terms "person" and "entity," as
   used in this subsection (v), shall not include (x) the Company, any of its
   subsidiaries, The Carlyle Group and its Affiliates (y) any employee benefit
   plan of the Company or any of its subsidiaries, or (z) any entity holding
   voting securities of the Company for or pursuant to the terms of any such
   plan.

             
             (e)  
           Other Events Causing
   Termination of Option. Notwithstanding anything to the contrary in this
   Agreement, the Option shall terminate on the thirtieth day following the
   date of the consummation of either of the following events, or upon such
   later date as shall be determined by the Committee:

             
               
         (i)       
       the dissolution or liquidation of the Company;

             
               
         (ii)       
       the acquisition of substantially all of the property
   and assets of the Company by any person or entity, unless the terms of such
   acquisition shall provide otherwise.

           3. 
           
    Adjustments. In the event that the outstanding securities
   of the class then subject to the Option are increased, decreased or
   exchanged for or converted into cash, property or a different number or kind
   of shares or securities, or if cash, property, shares or securities are
   distributed in respect of such outstanding securities, in either case as a
   result of a reorganization,
 merger, consolidation, recapitalization, restructuring, reclassification,
   dividend (other than a regular, quarterly cash dividend) or other
   distribution, stock split, reverse stock split, spin-off or the like, or,
   subject to the other provisions of this Agreement, in the event that
   substantially all of the property and assets of the Company are sold, then,
   unless the terms of such transaction shall provide otherwise, the Committee
   shall make appropriate and proportionate adjustments in the number and type
   of shares or other securities or cash or other property that may thereafter
   be acquired upon the exercise of the Option; provided, however, that any
   such adjustments in the Option shall be made without changing the aggregate
   Exercise Price of the then unexercised portion of the Option.

           4. 
            Exercise.
   The Option shall be exercisable during Optionee's lifetime only by Optionee,
   by his or her guardian or legal representative, and after Optionee's death
   only by the person or entity entitled to do so under Optionee's last will
   and testament or applicable intestate law. The Option may only be exercised
   by the delivery to the Company of a written notice of such exercise pursuant
   to the notice procedures set forth in Section 6 hereof, which notice shall
   specify the number of Option Shares to be purchased (the "Purchased Shares")
   and the aggregate Exercise Price for such shares (the "Exercise  Notice"),
   together with payment in full of such aggregate Exercise Price in cash or by
   a cashier's or certified bank check payable to the Company; provided,
   however, that payment of such aggregate Exercise Price may instead be made,
   in whole or in part at, the election of the Optionee, either (A) by the
   delivery to the Company of a certificate or certificates representing shares
   of Common Stock, duly endorsed or accompanied by a duly executed stock
   powers, which delivery effectively transfers to the Company good and valid
   title to such shares, free and clear of any pledge, commitment, lien, claim
   or other encumbrance or (B) by authorizing the withholding by the Company of
   shares of Common Stock that otherwise would be issued to the Optionee as a
   result of the exercise of the Option (such shares to be valued in either
   case on the basis of the aggregate fair market value thereof on the date of
   such exercise), provided that (i) Optionee shall have obtained the prior
   written approval of the Committee to pay the Exercise Price pursuant to the
   methods set forth in clauses (A) or (B) of this Section 4 and (ii) the
   Company is not then prohibited from purchasing or acquiring such shares of
   Common Stock.

           5. 
            Payment of
   Withholding Taxes. If the Company is obligated to withhold an amount
   on account of any federal, state or local tax imposed as a result of the
   exercise of the Option, including, without limitation, any federal, state or
   other income tax, or any F.I.C.A., state disability insurance tax or other
   employment tax, then Optionee shall, concurrently with such exercise, pay
   such amount to the Company in cash or by cashier's or certified bank check
   payable to the Company; provided however, that payment of such amount may
   instead be made, in whole or in part, at the election of the Optionee, (A)
   either by the delivery to the Company of a certificate or certificates
   representing shares of Common Stock, duly endorsed or accompanied by a duly
   executed stock powers, which delivery effectively transfers to the Company
   good and valid title to such shares, free and clear of any pledge,
   commitment, lien, claim or other encumbrance or (B) by authorizing the
   withholding by the Company of shares of Common Stock that otherwise would be
   issued to the Optionee as a result of the exercise of the Option (such
   shares to be valued in either case on the basis of the aggregate fair market
   value thereof on the date of such exercise), provided that (i) the Company
   is not then prohibited from purchasing or acquiring such shares of Common
   Stock, and (ii) Optionee shall have obtained the prior written approval of
   the Committee to pay such amount pursuant to the methods set forth in
   clauses (A) or (B) of this Section 5.

           6. 
            Notices.
   Any notice given to the Company shall be addressed to the Company at 2790
   Mosside Boulevard, Monroeville, Pennsylvania 15146, Attention: Secretary, or
   at such other address as the Company may hereinafter designate in writing to
   Optionee. Any notice given to Optionee shall be sent to the address set
   forth below Optionee's signature hereto, or at such other address as
   Optionee may hereafter designate in writing to the Company. Any such notice
   shall be deemed duly given when sent by prepaid certified or registered mail
   and deposited in a post office or branch post office regularly maintained by
   the United States Government.

           7. 
            Stock Exchange
   Requirements; Applicable Laws. Notwithstanding anything to the
   contrary in this Agreement, no shares of stock purchased upon exercise of
   the Option, and no certificate representing all or any part of such shares,
   shall be issued or delivered if (a) such shares have not been admitted to
   listing upon official notice of issuance on each stock exchange upon which
   shares of that class are then listed or (b) in the opinion of counsel to the
   Company, such issuance or delivery would cause the Company to be in
   violation of or to incur liability under any federal, state or other
   securities law, or any requirement of any stock exchange listing agreement
   to which the Company is a party, or any other requirement of law or of any
   administrative or regulatory body having jurisdiction over the Company.

           8. 
           
    Nontransferability. Neither the Option nor any interest
   therein may be sold, assigned, conveyed, gifted, pledged, hypothecated or
   otherwise transferred in any manner other than by will or the laws of
   descent and distribution.

           9. 
            1996 Plan.
   The Option is granted pursuant to the 1996 Plan, as in effect on the Date of
   Grant, and is subject to all the terms and conditions of the 1996 Plan, as
   the same may be amended from time to time; provided, however, that no such
   amendment shall deprive Optionee, without his or her consent, of the Option
   or of any of Optionee's rights under this Agreement provided that no such
   consent shall be required if the Committee determines in its sole discretion
   and prior to the date of any Change of Control that such amendment is not
   reasonably likely to significantly diminish the benefits provided under such
   Option, or that any such diminishment has been adequately compensated. The
   interpretation and construction by the Committee of the 1996 Plan, this
   Agreement, the Option and such rules and regulations as may be adopted by
   the Committee for the purpose of administering the 1996 Plan shall be final
   and binding upon Optionee. Until the Option shall expire, terminate or be
   exercised in full, the Company shall, upon written request therefor, send a
   copy of the 1996 Plan, in its then-current form, to Optionee or any other
   person or entity then entitled to exercise the Option.

           10. 
            Stockholder
   Rights. No person or entity shall be entitled to vote, receive
   dividends or be deemed for any purpose the holder of any Option Shares until
   the Option shall have been duly exercised to purchase such Option Shares in
   accordance with the provisions of this Agreement.

           11. 
            Employment
   Rights. No provision of this Agreement or of the Option granted
   hereunder shall (a) confer upon Optionee, if Optionee is an employee of the
   Company or any of its subsidiaries, any right to (i) continue in the
   employ of the Company or any of its subsidiaries or (ii) participate in
   any employee welfare or benefit plan or other program of the Company or any
   of its subsidiaries other than the 1996 Plan, (b) affect the right of the
   Company and each of its subsidiaries to terminate the employment of
   Optionee, with or without cause, (c) confer upon Optionee, if Optionee is an
   employee or director of any of the Company's affiliates, any right to
 continue his or her relationship with the Company notwithstanding that
   Optionee remains an employee or director of an affiliate of the Company, (d)
    if Optionee is an employee or director of an affiliate of the Company,
   affect the right of the Company to discontinue its relationship with such
   Optionee or Optionee's employer or (e) confer upon Optionee, if
   Optionee is a director of the Company or any of its subsidiaries, any right
   to continue as a director of the Company or any of its subsidiaries, if such
   Optionee's status as a director has otherwise terminated. The Optionee,
   if Optionee is an employee of the Company or any of its subsidiaries, hereby
   acknowledges and agrees that the Company and each of its subsidiaries may
   terminate the employment of Optionee at any time and for any reason, or for
   no reason, unless Optionee and the Company or such subsidiary are parties to
   a written employment agreement that expressly provides otherwise.

           12. 
            Governing Law.
   This Agreement and the Option granted hereunder shall be governed by and
   construed and enforced in accordance with the laws of the State of
   Delaware.

           IN WITNESS
   WHEREOF, the Company and Optionee have duly executed this Agreement as
   of the Date of Grant.

 

 THE IT GROUP, INC.
 

 NON-QUALIFIED STOCK OPTION AGREEMENT
 

 Pursuant to the
 

 1996 STOCK INCENTIVE PLAN

 ATTACHMENT A

  

  

 Optionee:

 Grant Number
 

 Date of Grant:
 

 No. of Shares Purchasable:
 

 Exercise Price Per Share:
 

 Expiration Date:
 

 Annual Vesting Rate:

  

  

 	The IT Group, Inc.	 	Optionee
	 	 	 	 
	By:	 	 	 
	 	 
 	 	 
 
	 	James G. Kirk
   

   Secretary	 	Name (Signature)
	 	 	 	 
	 	 	 	 
 
	 	 	 	Street Address
	 	 	 	 
	 	 	 	 
 
	 	 	 	City, State and Zip Code
	 	 	 	 
	 	 	 	 
 
	 	 	 	Social Security Number

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