Document:

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Exhibit 10.37

ASSET PURCHASE AGREEMENT

         THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of the 27
day of July, 2000, by and between CARNEGIE INTERNATIONAL CORPORATION, or
assigns, a Colorado corporation ("Buyer") and Eileen Milsna ("Seller").

RECITALS
--------

     WHEREAS, Seller owns all of the assets of Phone Stop, Inc., an Illinois
corporation ("Company");

     WHEREAS, Seller believes that it will be in the best interests of Seller
and Company to sell all the Assets to Buyer;

     WHEREAS, Seller desires to sell, and Buyer desires to purchase, all of the
Shares, as hereinafter set forth; and

     WHEREAS, Buyer is a public holding company whose stock is traded on the
Over the Counter Bulletin Board exchange ("OTCBB") under the OTCBB symbol
"CGYC".

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

ARTICLE 1
PURCHASE AND SALE OF ASSETS

     Section 1.1. Closing Date. Subject to the terms and conditions hereof, the
consummation of the purchase and sale of the Assets (as defined in Section 1.2
below) provided for in this Agreement (the "Closing") will take place at the
offices of Blank Rome Comisky & McCauley, 250 West Pratt Street, Suite 1100,
Baltimore, Maryland 21202 on _______, 2000, or at such other place or time as
the parties hereto shall agree in writing. The time and date of the Closing are
herein referred to as the "Closing Date". The parties hereto agree to use their
best efforts to cause the Closing Date to occur as soon as possible consistent
with the provisions of this Agreement.

     Section 1.2. Purchased Assets. Subject to the terms and conditions hereof
and on the basis of and in reliance upon the covenants, agreements,
representations and warranties set forth herein, Seller shall sell, assign and
transfer to Buyer, at the Closing, and Buyer agrees to purchase, acquire and
accept from Seller, at the Closing, all of the assets of Company as more fully
described below:

          (a) All account receivables of Company;

          (b) All inventories of Company;

          (c) All equipment, owned by Company and used or operated in connection
     with the facility located at 1121 W. Lake St., Oak Park, IL 60301 and the
     facility located at same (collectively, the "Facility");

          (d) All contract rights of Company (subject to obligations imposed on
     Company) arising out of orders, purchase contracts, or otherwise, whether
     or not such orders have been commenced or completed;

          (e) All assignable permits, licenses, patents, copyrights, trademarks,
     tradenames, franchises and other intangible personal property of Company;

          (f) All books and records, operating data, sales and promotional data
     and advertising materials, customer lists, credit information, costs and
     pricing information, supplier lists, reference catalogs and software
     packages of Company; and

          (g) All other assets of Company appearing, or which should appear, on
     the financial statement of Company as of July 27, 2000.

For purposes of this Agreement, all of the foregoing assets shall be hereinafter
collectively referred to as the "Assets".

                                       1
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         Section 1.3. Liabilities Assumed. Except as identified on Schedule 1.3
                      -------------------
attached hereto and made a part hereof, Buyer shall not assume and shall not be
responsible for any liabilities of Company and Seller, which shall remain and be
obligations of Company and Seller. Buyer undertakes to perform only such duties
as are expressly set forth herein. Company and Seller agree that neither Buyer
nor any of its directors, officers, employees or agents (each, an "Indemnified
Party") shall not be responsible for any liabilities of Company and Seller.
Company and Seller agree, jointly and severally, to indemnify each Indemnified
Party and hold it harmless from and against any and all claims, other than those
identified on Schedule 1.3 attached hereto and made a part hereof, and from and
against any damage, penalties, judgments, liabilities, loss or expense
(including reasonable attorneys' fees and disbursements) incurred as a result of
the assertion of any claim, by any person or entity, arising out of, or
otherwise related to, any transaction contemplated by this Agreement.

         Section 1.4. Purchase Price; Payment of Purchase Price. The purchase
                      -----------------------------------------
price payable by Buyer to Seller for the Assets to be acquired pursuant to this
Agreement shall be the total sum of One Hundred Thousand Dollars ($100,000) (the
"Purchase Price"), which Purchase Price shall be payable by Buyer to (a) Seller
in warrants to acquire shares of common stock of Buyer equivalent to a
cumulative price of Twenty Five Thousand Dollars ($25,000) (the "Milsna
Warrants"), (b) Dennis Goldfarb ("Goldfarb") warrants to acquire shares of
common stock of Buyer equivalent to a cumulative purchase price of Fifty Five
Thousand Dollars ($55,000) (the "Goldfarb Warrants") and (c) Donald Kosar
("Kosar") warrants to acquire shares of common stock of Buyer equivalent to a
cumulative purchase price of Twenty Thousand Dollars ($20,000) (the "Kosar
Warrants" and together with the Milsna Warrants and the Goldfarb Warrants, the
"Warrants"). The Warrants shall be exercisable at any time from the date hereof
until one hundred twenty (120) days from the Closing Date. The Warrants shall be
restricted securities (the "Restricted Securities") as defined in Securities and
Exchange Commission Rule 144 promulgated under the Securities Act of 1933, as
amended (the "Securities Act").

          Section 1.5. Sales Tax. Buyer shall pay any and all sales tax, use
                       ---------
taxes and other similar charges or assessments levied by any governmental agency
with respect to the sale and purchase of the Assets under this Agreement.

ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------

         As a material inducement to Buyer to enter into and perform its
obligations under this Agreement, Seller hereby represents and warrants to Buyer
as follows:

         Section 2.1. Organization and Qualification, Etc. Seller is a
                      -----------------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Illinois, and has the power and authority to own the Assets
and to carry on its business as it is now being conducted.

         Section 2.2. Authority Relative to Agreement. The execution and
                      -------------------------------
delivery by Seller of this Agreement and the consummation of the transactions
contemplated on its part have been authorized by its Board of Directors. No
other corporate proceedings on its part or the part of its stockholders are
necessary to authorize the execution and delivery of this Agreement by it or the
consummation by it of the transactions contemplated on its part hereby. This
Agreement has been duly executed and delivered by Seller and is a valid and
binding agreement of Seller, enforceable in accordance with its terms.

         Section 2.3. Absence of Undisclosed Liabilities. Except as set forth on
                      ----------------------------------
Schedule 2.3 attached hereto, Seller has no obligation or liability (whether
accrued, absolute, contingent, unliquidated or otherwise, whether due or to
become due and whether or not insured) with respect to the Assets.

          Section 2.4. Title to Properties; Condition of Equipment. Seller has
                       -------------------------------------------
good and marketable title to all of the Assets, free and clear of all liens and
encumbrances.

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          Section 2.5. Contracts and Commitments.
                       -------------------------
                  (a) Except as set forth on Schedule 2.5 attached hereto, to
the best of Seller's knowledge, Seller is not a party to any: (i) agreement or
indenture relating to the mortgaging, pledging or otherwise placing a lien on
the Assets; (ii) oral or written direct or indirect guarantee of any obligation
with respect to the Assets; (iii) lease or agreement under which it is lessor of
or permits any third party to hold or operate the Assets, real or personal,
owned or controlled by it and (iv) oral or written contract or agreement for the
sale by Seller of the Assets.

                  (b) Except as expressly set forth on Schedule 2.5 attached
hereto, Seller has performed all obligations required to be performed by it and
is not in default under or in breach of nor in receipt of any claim of default
or breach under any agreement referred to in Section 2.5(a).

         Section 2.6. Litigation. Except as expressly set forth on Schedule 2.6
                      ----------
attached hereto, to the best of Seller's knowledge, there are no actions, suits,
proceedings, orders, investigations or claims pending or threatened against
Seller with respect to the Assets at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instrumentality,
or any arbitration proceedings pending under collective bargaining agreements or
otherwise.

         Section 2.7. Brokerage. There are no claims for brokerage commissions,
                      ---------
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement (oral or
written) binding upon Seller with respect to the Assets.

         Section 2.8. Licenses and Permits. All permits, licenses and franchises
                      --------------------
held by Seller, or by its officers, employees or agents, with respect to the
Facility are listed on Schedule 2.8 attached hereto. Except as set forth on
Schedule 2.8, such licenses, permits and franchises are transferable by Seller
subject to governmental and other applicable approvals.

         Section 2.9. Compliance. Except as set forth on Schedule 2.9 attached
                      ----------
hereto, at all times prior hereto, the conduct and operation of Seller's
business with respect to the Assets were conducted and complied in all respects
with all applicable laws, regulations and requirements of all foreign, United
States, state and local authorities claiming jurisdiction thereof. Except as set
forth on Schedule 2.9, there are no pending or outstanding violations or notices
of violation of law, municipal ordinances, orders or requirements noted in or
issued by any governmental authority claiming to have jurisdiction over the
operations of the Facility, any property, rights or assets of Seller; and Seller
has neither received notice nor has knowledge of the intended issuance of
notices of violations of law, regulation, ordinances, criteria, orders or
requirements as aforesaid.

         Section 2.10. Effective Date of Warranties, Representations and
                       -------------------------------------------------
Covenants. Each warranty, representation, and covenant set forth in this Article
---------
2 shall be deemed to be made on and as of and speak on and as of the date hereof
and as of the Closing (except as otherwise specifically provided herein) and
shall not survive the Closing. Prior to the Closing, Seller will revise
counterparts of each Exhibit hereto so that such Exhibit shall, at the Closing,
reflect any material fact affecting such Exhibit occurring after the date hereof
and prior to the Closing.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------

         As a material inducement to Seller to enter into and perform its
obligations under this Agreement, Buyer represents and warrants to Seller as
follows:

          Section 3.1. Organization, Etc. Buyer is a corporation duly organized,
                       -----------------
validly existing and in good standing under the laws of the State of Colorado.

          Section 3.2. Authority Relative to Agreement. Buyer has the corporate
                       -------------------------------
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated on its part hereby. The execution and delivery by
Buyer of this Agreement and the consummation by it of the transactions
contemplated on its part hereby have been duly authorized by the members of
Buyer. No other proceedings on its part or the part of its members are necessary
to authorize the execution and delivery of this Agreement by it or the
consummation by it of the transactions contemplated on its part hereby. This
Agreement has been duly executed and delivered by Buyer and is the valid and
binding agreement of Buyer.

         Section 3.3. No Breach; Consents. The execution, delivery and
                      -------------------
performance of this Agreement by Buyer and the consummation of the transactions
contemplated hereby (a) do not and will not conflict with or result in any
breach of any of the provisions of, constitute a default

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under, result in a violation of, result in the creation of any lien, security
interest, charge or encumbrance upon the assets of Buyer under, or require any
authorization, consent, approval, exemption or other action by or notice to any
third party under the provisions of the Articles of Incorporation or by-laws of
Buyer or any license, indenture, mortgage, lease, loan agreement or other
agreement (oral or written) or instrument to which Buyer is a party and (b) do
not require any authorization, consent, approval, exemption or other action by
or notice to any court or governmental body under any law, statute, rule,
regulation or decree to which Buyer is subject.

          Section 3.4. Brokerage. There are no claims for brokerage commissions,
                       ---------
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Buyer.

ARTICLE 4
CONDITIONS TO CLOSING
---------------------

          Section 4.1. Conditions Precedent to Buyer's Obligations. The
                       -------------------------------------------
obligations of Buyer hereunder are expressly contingent upon the satisfaction,
by the Closing, of the following conditions:

                  (a) Each of the defined acts and undertakings of Seller to be
performed on or before the Closing hereunder shall have been duly performed in
every respect.

                  (b) The representations and warranties made by Seller in this
Agreement shall be true and correct of and as of the Closing, and those
representations and warranties shall not survive the Closing.

                  (c)  At the Closing, Buyer shall have received the following
documents:

                  (i) Copies of all necessary third party and governmental
consents that Seller is required to obtain in order to consummate the
transactions contemplated by this Agreement; and

                  (ii) A Bill of Sale, transferring all of Seller's right, title
and interest in and to the Assets.

         Section 4.2. Conditions Precedent to Seller's Obligations.  The
                      --------------------------------------------
obligations of Seller hereunder are expressly contingent upon the satisfaction,
by Closing, of the following conditions:

                  (a) Each of the material acts and undertakings of Buyer to be
performed on or before the Closing hereunder pursuant to the terms hereof shall
have been duly performed in every respect.

                  (b) The representations and warranties made by Buyer in this
Agreement shall be true and correct at and as of the Closing, and those
representations and warranties shall survive the Closing.

                  (c)  At Closing, Seller shall have received the following:

                  (i)  payment of the Purchase Price in the manner described in
Section 1.4 hereof; and

                  (ii) such certificates, documents, instruments and writings to
be delivered pursuant to this Agreement.

ARTICLE 5
PRE-CLOSING AGREEMENTS
----------------------

          Section 5.1. Best Efforts. The parties agree to use their best efforts
                       ------------
to cause all conditions to Closing to be satisfied and to cause the transactions
contemplated hereby to be consummated.

ARTICLE 6
POST-CLOSING AGREEMENTS
-----------------------

         Section 6.1. Further Assurances. Seller shall, at any time and from
                      ------------------
time to time on and after the Closing Date, upon request by Buyer and without
further consideration, through Seller's best efforts, take such actions or cause
others to do so, and execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, all transfers, conveyances, powers of attorney and
assurances, as may be required or desirable for the better conveying,
transferring, assigning, delivering, assuring and confirming to Buyer, or its
respective successors and

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assigns, or for aiding and assisting in collecting or reducing to possession,
the Assets, and any or all of Seller's obligations under this Agreement.

ARTICLE 7
MISCELLANEOUS
-------------

         Section 7.1. Survival. The representations and warranties of Seller
                      --------
set forth in this Agreement shall not survive Closing.

         Section 7.2. Termination. Anything herein or elsewhere to the contrary
                      -----------
notwithstanding, this Agreement may be terminated and abandoned at any time
prior to consummation of the transactions contemplated hereby by the mutual
consent of Buyer and Seller. Except as set forth below, any termination pursuant
to this Section 7.2 shall be without liability on the part of any party.

         Section 7.3. Expenses. Each party will pay all of its expenses in
                      --------
connection with the negotiation of this Agreement, the performance of its
obligations hereunder, and the consummation of the transactions contemplated by
this Agreement.

          Section 7.4. Amendments and Waivers. The parties hereto, by mutual
                       ----------------------
agreement in writing, may amend, modify and supplement this Agreement. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.

          Section 7.5. Notices. All notices or other communications required or
                       -------
permitted hereunder shall be in writing and shall be given by hand or by
registered mail, return receipt requested, addressed as follows:

                  If to Buyer:

                  Carnegie International Corporation
                  11350 McCormick Road
                  Executive Plaza III, Suite 1001
                  Hunt Valley, Maryland 21031
                  Attention:  Lowell Farkas
                  Fax No. 410.785.7415

         If to Seller:

                  Phone Stop, Inc.
                  1121 W. Lake Street
                  Oak Park, Illinois
                  Attention:  Eileen Milsna
                  Fax No. 708-445-9814

Any party hereto may specify in writing a different address for such purpose by
notice to the other parties.

          Section 7.6. Assignment. This Agreement and all of the provisions
                       ----------
hereof will be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, except that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by any party without the prior written consent of the other parties
hereto. Notwithstanding the foregoing, Buyer may assign its rights and
obligations hereunder to its corporate parent or any of Buyer's wholly-owned
subsidiaries with the effect that the purchase of the Assets contemplated hereby
may be made by such parent or subsidiary.

          Section 7.7. Severability. Whenever possible, each provision of this
                       ------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provision of this Agreement unless the
consummation of the transaction contemplated hereby is adversely affected
thereby.

          Section 7.8. Complete Agreement. This document and the documents
                       ------------------
referred to herein contain the complete agreement between the parties and
supersede any prior understandings, agreements or representations by or between
the parties, written or oral, which may have related to the subject matter
hereof in any way.

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          Section 7.9. No Third-Party Beneficiaries. This Agreement shall be for
                       ----------------------------
the benefit only of the parties hereto, and their respective successors and
assigns.

          Section 7.10. Governing Law. All questions concerning the
                        -------------
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement will be governed by the internal
laws, not the law of conflicts, of the State of Maryland.

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

                            SELLER:
                            PHONE STOP, INC.

                            By:                                         (SEAL)
                               -----------------------------------------
                            Name:    /s/
                                 ---------------------------------------
                            Title:
                                  --------------------------------------

                            BUYER:
                            CARNEGIE INTERNATIONAL CORPORATION

                            By:      /s/                                (SEAL)
                               -----------------------------------------
                                     Lowell Farkas, President

                                       6<PAGE>

Exhibit 10.38

                              EMPLOYMENT AGREEMENT

                                     Between

                       CARNEGIE INTERNATIONAL CORPORATION

                                       And

                                  LOWELL FARKAS

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT effective as of September 28, 2000 (the
"Agreement") is made by and between CARNEGIE INTERNATIONAL CORPORATION, a
Colorado corporation ("Company"), and LOWELL FARKAS ("Executive").

         WHEREAS, the Company currently employs the Executive pursuant to an
employment agreement executed by the parties on the 15th of May, 1997 as amended
on the 30th of June 1998 (collectively, the "Existing Agreement").

         WHEREAS, the Company desires to employ Executive as its President and
Chief Executive Officer upon the terms and subject to the conditions set forth
herein.

         NOW, THEREFORE, in consideration of the promises and the mutual
agreements contained herein, the Company and Executive hereby agree as follows:

                                   DEFINITIONS

The terms set forth below have the following meanings (such meanings to be
applicable to both the singular and plural forms, except where otherwise
expressly indicated):

1.1 "Accrued Annual Bonus" means the amount of any Annual Bonus earned but not
     --------------------
yet paid with respect to the Year ended prior to the Date of Termination.

1.2 "Accrued Base Salary" means the amount of Executive's Base Salary which is
     -------------------
accrued but not yet paid as of the Date of Termination.

1.3 "Affiliate" means any Person directly or indirectly controlling, controlled
     ---------
by, or under direct or indirect common control with, the Company. For the
purposes of this definition, the term "control" when used with respect to any
Person means the power to direct or cause the direction of management or
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.

1.4 "Agreement" -- see the recitals to this Agreement.
     ---------

1.5 "Agreement Date" means the date that is specified in the recitals to this
     --------------
Agreement.

1.6 "Anniversary Date" means any annual anniversary of the Agreement Date.
     ----------------

1.7 "Annual Bonus" -- see Section 4.2(a).
     ------------

1.8 "Annualized Total Compensation" means, as of any date, the sum of
     -----------------------------
Executive's Base Salary as of such date and the Annual Bonus applicable to the
Year that includes such date.

1.9 "Base Salary" -- see Section 4.1.
     -----------

1.10 "Beneficiary" -- see Section 10.3.
      -----------

1.11 "Board" means the Board of Directors of the Company.
      -----

1.12 "Cause" means any of the following:
      -----

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(a) Executive's conviction of a felony or of a misdemeanor involving a fraud,
dishonesty or moral turpitude, or

(b) Executive's willful or intentional material breach of this Agreement that
results in financial detriment that is material to the Company and its
Affiliates taken as a whole.

For purposes of clause (b) of the preceding sentence, Cause shall not include
any one or more of the following:

(i)                Bad judgment

(ii)               Negligence

(iii) Any act or omission that Executive believed in good faith to have been in
or not opposed to the interest of the Company (without intent of Executive to
gain therefrom, directly or indirectly, a profit to which he was not legally
entitled), or

(iv) Any act or omission of which any member of the Board who is not a party to
such act or omission has had actual knowledge for at least twelve (12) months.

1.13     "Change of Control" means any of the following events:
          -----------------

(a) Any person (as such term is used in Rule 12d-5 under the Exchange Act) or
group (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act), other than a Subsidiary or any employee benefit plan (or any related
trust) of the Company or a Subsidiary, becomes the beneficial owner of 20% or
more of the Common Stock or of securities of the Company that are entitled to
vote generally in the election of directors of the Company, or with respect to
significant activities of the Company ("Voting Securities") representing 20% or
                                        -----------------
more of the combined voting power of any class of Voting Securities of the
Company.

(b) Individuals who, as of the Agreement Date, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute a majority of the
 -------------------
members of the Board; provided that any individual who becomes a director after
the Agreement Date whose election or nomination for election by the Company's
shareholders was approved by a majority of the members of the Incumbent Board
(other than an election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened "election contest"
relating to the election of the directors of the Company (as such terms are used
in Rule 14a-11 under the Exchange Act), "tender offer" (as such term is used in
Section 14(d) of the Exchange Act) or a proposed Merger (as defined below) shall
be deemed to be members of the Incumbent Board; or

(c)       Approval by the stockholders of the Company of either of the
following:

(i) A merger, reorganization, consolidation or similar transaction (any of the
foregoing, a "Merger") as a result of which the Persons who were the respective
              ------
beneficial owners of the outstanding Common Stock and Voting Securities of the
Company immediately before such Merger are not expected to beneficially own,
immediately after such Merger, directly or indirectly, more than 60% of,
respectively, the comparable securities of the entity resulting from such Merger
in substantially the same proportions as immediately before such Merger, or

(ii) A plan of liquidation of the Company or plan or agreement for the sale or
other disposition of all or a substantial portion of the assets of the Company.

Notwithstanding the foregoing, there shall not be Change in Control if, in
advance of such event, Executive agrees in writing that such event shall not
constitute a Change in Control.

1.14 "Code" means the Internal Revenue Code of 1986, as amended from time to
      ----
time.

1.15 "Committee" means the Compensation Committee of the Board.
      ---------

1.16 "Common Stock" means the common stock, no par value, of the Company.
      ------------

1.17 "Company" -- see the recitals to this Agreement.
      -------

1.18 "Date of Termination" means the effective date of a Termination of
      -------------------
Employment for any reason, including death or Disability, whether by either the
Company or the Executive.

1.19 "Disability" means a mental or physical condition which, in the good faith
      ----------
opinion of the board, renders Executive unable or incompetent to carry out the
material job responsibilities which such Executive held or the material duties
to which Executive was assigned at the time the disability was incurred, which
has existed for at least three months and which in the opinion of

                                       2
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a physician mutually agreed upon by the Company and Executive (provided that
neither party shall unreasonably withhold his agreement) is expected to be
permanent or to last for an indefinite duration or a duration in excess of six
months.

1.20     "Employment Period" -- see Section 3.1.
          -----------------

1.21     "Exchange Act" means the Securities Exchange Act of 1934.
          ------------

1.22     "Executive" -- see the recitals to this Agreement.
          ---------

1.23 "Fair Market Value" means, as of any date, (a) the average of the high and
low prices of the Common Stock for the previous twenty (20) days as reported on
the NASDAQ Stock Market (or, if no sale of the Common Stock was reported for
such date, on the next preceding date on which such a sale of such security was
reported), (b) if the Common Stock is not listed on the NASDAQ Stock Market, but
is listed on a national securities exchange, the average of the high and low
prices of the Common Stock for the previous twenty (20) days as reported on such
exchange, (c) if the Common Stock is not listed on the NASDAQ Stock Market or
any national securities exchange, the average of the high bid and low asked
quotations for the Common Stock for the previous twenty (20) days as reported in
the over-the-counter market (or, if no quotation of the Common Stock was
reported for such date, on the next preceding date on which such a quotation of
such security was reported), or (d) if there is no public market for the Common
Stock, the fair market value of the Common Stock determined by the Committee in
the good faith exercise of its discretion.

1.24 "Good Reason" means the occurrence of any one or more of the following
events unless Executive specifically agrees in writing that such event shall not
be Good Reason:

(a) Any material breach of this Agreement by the Company, including:

(i) The failure of the Company to comply with the provisions of Articles H, IH,
IV, V, VI or VH of this Agreement:

(ii) Any significant change in the status, responsibilities or perquisites of
Executive;

(iii) Any failure to nominate or elect Executive as Chief Operating Officer of
the Company or as a member of the Board;

(iv) Causing or requiring Executive to report to anyone other than the Board; or

(v) Assignment of duties materially inconsistent with his position and duties
described in this Agreement,

(b) The failure of the Company to assign this Agreement to a successor to the
Company, or the failure of a successor to the Company to explicitly assume and
agree to be bound by this Agreement,

(c) Requiring Executive to be principally based at any office or location more
than 25 miles from the current offices of the Company in Hunt Valley, Maryland,

(d) The delivery to Executive of a Notice of Consideration pursuant to Section
8.1(b) if, within a period of ninety (90) days thereafter, the Board fails for
any reason to terminate Executive for Cause in compliance with all of the
substantive and procedural requirements of Section 8.1, or

(e) A Termination of Employment of the Executive for any reason or no reason
during the twelve (12) month period after closing of a Change of Control
transaction.

Any reasonable determination by Executive that any of the foregoing events has
occurred and constitutes Good Reason shall be conclusive and binding for all
purposes.

1.25     "including" means including without limitation.
          ---------

1.26     "Initial Option" -- see Section 5.1.
          --------------

1.27     "Notice of Consideration" -- see Section 8.1(b).
          -----------------------

1.28     "Option" means an option to purchase shares of Common Stock.
          ------

1.29     "Option Term" -- see Section 5.2(d).
          -----------

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1.30 "Outplacement Services" means full use of a national outplacement
      ---------------------
consultant (e.g., Manchester, Right Associates) or other consultant mutually
agreeable to the Company and Executive; office space, secretarial support;
technological support; equipment and supplies of a quality substantively equal
to those provided during the Employment Period, and continuation of expense
reimbursement for professional and trade association participation on the same
terms as during the Employment Period.

1.31 "Permitted Transferee" means the spouse of Executive, a lineal descendant
      --------------------
of Executive or a spouse of a lineal descendant of Executive or a trust, limited
partnership or other entity principally benefiting all or a portion of such
individuals.

1.32 "Person" means any individual, sole proprietorship, partnership, joint
      ------
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government instrumentality,
division, agency, body or department.

1.33 "Prorata Annual Bonus" means (a) the product of the amount of the Annual
      --------------------
Bonus to which Executive would have been entitled if he had been employed by the
Company on the last day of the Year that includes the Date of Termination
multiplied by (b) a fraction of which the numerator is the numbers of days which
have elapsed in such Year through the Date of Termination and the denominator is
365.

1.34 "Severance Payment" means the payment of a multiple of Executive's
      -----------------
Annualized Total Compensation pursuant to Section 8.3(b) or Section 8.4, as
applicable.

1.35 "Severance Period" means the interval of time between the Date of
      ----------------
Termination and the expiration of the Employment Period, without giving the
effect to any Termination of Employment; provided that, for purposes of Section
8.3, the Severance Period shall in no event be less than three years if a
Termination of Employment occurs after a Change of Control.

1.36 "Shareholder" or "Stockholder" means an owner of the Company's securities.
      -----------      -----------

1.37 "Subsequent Options" -- see Section 5.1(a).
      ------------------

1.38 "Subsidiary" means, with respect to any Person, (a) any corporation of
      ----------
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned by
such Person, and (b) any partnership in which such Person has a direct or
indirect interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50%.

1.39 "Supplemental Retirement Benefit" -- see Section 7.1.
      -------------------------------

1.40 "Taxes" means the incremental United States federal, state, and local
      -----
income, excise and other taxes payable by Executive with respect to any
applicable item of income.

1.41 "Tax Gross-Up Payment" means an amount payable to Executive such that,
      --------------------
after payment of Taxes on such amount, there remains a balance sufficient to pay
the Taxes being reimbursed.

1.42 "Termination For Good Reason" means a Termination of Employment by
      ---------------------------
Executive for a Good Reason.

1.43 "Termination of Employment"  means a termination by the Company or by
      -------------------------
Executive of Executive's  employment by the Company.

1.44 "Termination Without Cause" means a Termination of Employment by the
      -------------------------
Company for any reason other than Cause or Executive's death or Disability,
including a Termination of Employment at the end of the Employment Period after
the Company's giving a Notice of Non-Renewal.

1.45 "Withholding Taxes" means any United States federal, state, local or
      -----------------
foreign withholding taxes and other deductions required to be paid in accordance
with applicable law by reason of compensation received pursuant to this
Agreement.

1.46 "Year" means a calendar year period ending on December 31.
      ----

                                   Article II.

                                     DUTIES

2.1 Duties. The Company shall employ Executive during the Employment Period as
    ------
its President and Chief Executive Officer. During the Employment Period,
Executive shall perform the duties

                                       4
<PAGE>

properly assigned to him hereunder, shall devote significant business time,
attention and effort to the affairs of the Company and shall use his reasonable
best efforts to promote the interests of the Company. The Company acknowledges
that the Executive shall be entitled to pursue other business interests during
the Employment Period, provided that such activities do not individually or in
the aggregate significantly interfere with the performance of his duties under
this Agreement.

2.2 Board Seat. So long as the Executive is employed by the Company under this
    ----------
Agreement, the Executive shall be entitled to serve on the Company's Board of
Directors. It is contemplated that, in connection with each annual meeting of
Shareholders of the Company during the Employment Period, the Board will
nominate Executive for election as a member of the Board, and the Shareholders
of the Company will re-elect Executive as a member of the Board.

2.3 Other Activities. Executive may serve on corporate, civic or charitable
    ----------------
boards or committees, deliver lectures, fulfill speaking engagements, teach at
educational institutions, or manage personal investments; provided that such
activities do not individually or in the aggregate significantly interfere with
the performance of his duties under this Agreement.

                                  Article III.

                                EMPLOYMENT PERIOD

3.1 Employment Period. Subject to Section 3.2 and the termination provisions
    -----------------
hereinafter provided, the term of Executive's employment under this Agreement
(the "Employment Period") shall begin on the Agreement Date and end on the
      -----------------
Anniversary Date which is three (3) years after such date, or, if applicable, at
the end of any extension pursuant to Section 3.2. The employment of Executive by
the Company shall not be terminated other than in accordance with Article VIII.

3.2 Extension of Employment Period. Commencing on the first Anniversary Date,
    ------------------------------
and on each Anniversary Date thereafter, if on or before that date the Company
has not delivered to Executive, and Executive has not delivered to Company, a
written notice that the Employment Period will not be extended, the Employment
Period will be automatically extended for one (1) year from its then scheduled
expiration date.

                                   Article IV.

                                  COMPENSATION

4.1 Salary. The Company shall pay Executive in accordance with its normal
    ------
payroll practices (but not less frequently than monthly) an annual salary (i)
through December 31, 2000 at a rate of $200,000 per year, and (ii) commencing
January 1, 2001 at a rate of $300,000 per year (in each case, the "Base
Salary"). During the Employment Period, the Base Salary shall be reviewed at
least annually by the Committee after consultation with Executive and may from
time to time be increased as determined by the Committee, provided that the
Executive shall receive an increase in Base Salary annually by multiplying the
Base Salary for the preceding employment year by a fraction, the numerator of
which shall be the CPI (as defined below as in effect on the Anniversary Date,
and the denominator of which shall be the CPI as in effect on the first day of
the employment year ending on the day before the Anniversary Date. For purposes
of this Agreement, the term "CPI" shall mean the Consumer Price Index for Urban
Wage Earners and Clerical Workers, Baltimore, Maryland, All Items (1967 = 100),
published by the Bureau of Labor Statistics, U.S. Department of Labor, or any
comparable successor index. Effective as of the date of any such increase, the
Base Salary as so increased shall be considered the new Base Salary for all
purposes of this Agreement and may not thereafter be reduced. Any increase in
Base Salary shall not limit or reduce any other obligation of the Company to
Executive under this Agreement.

4.2  Annual Bonus.
     ------------

(a) The Company shall pay Executive an annual cash bonus ("Annual Bonus") in
                                                           ------------
accordance with the terms hereof for each Year of the Employment Period.
Executive shall be eligible for an Annual Bonus ranging from zero to 100% of his
Base Salary, as determined in good faith by the Committee.

(b) The Company shall pay the entire Annual Bonus that is payable with respect
to a Year in a lump-sum cash payment within thirty (30) days after the Committee
determines the amount of such Annual Bonus, which in all events shall be within
ninety (90) days after the end of the Year.

                                       5
<PAGE>

                                   Article V.

                                  STOCK GRANTS

5.1 Option Grants. As an inducement to Executive to enter into this Agreement,
    -------------
the Company shall grant to Executive, effective as of the Agreement Date or such
date as Executive and Company agree, an Option to purchase One Million Five
Hundred Thousand (1,500,000) shares of Common Stock (the "Initial Option"). In
                                                          --------------
addition, the Committee may at any time in its discretion consider Executive for
possible future annual or other grants of Options (such Options collectively,
the "Subsequent Options") and, commencing in the Year 2002, shall at least once
     ------------------
during each Year consider Executive for a grant of a Subsequent Option.

5.2  Terms and Conditions of Options.
     -------------------------------
(a) The Initial Option and each Subsequent Option shall be subject to the terms
and conditions specified in paragraphs (b) or (c) of this Section, respectively,
and shall also be subject to the terms and conditions specified in paragraph (d)
of this Section.

(b) The Initial Option:

(i) Shall have an exercise price equal to Fifty-Eight Cents ($0.58) per share;
and

(ii) Shall become fully vested and exercisable as to 33 1/3% of the number of
shares of Common Stock immediately upon the execution of this Agreement, and
again upon each of the first two Anniversary Dates, if Executive remains
employed by the Company as of such date, provided that the Initial Option shall
immediately become fully vested and exercisable upon a Termination of Employment
by reason of the death or Disability of Executive, a Termination Without Cause,
a Termination for Good Reason, or a Change of Control.

(c) Each Subsequent Option:

(i) Shall become fully vest and exercisable in whole or in any part, upon a
Termination of Employment by reason of the death or Disability of Executive, a
Termination Without Cause, a Termination for Good Reason, or a Change of
Control; and

(ii) Shall in other respects be on terms and conditions that are no less
favorable to Executive than the terms and conditions applicable to Options
granted at or about the same time to other senior executives of the Company.

(d) The Initial Option and each Subsequent Option:

(i) Shall have a term (the "Option Term") of at least five (5) years from the
date it becomes fully vested;

(ii) May be exercised at any time after it has vested (after giving effect to
any acceleration of vesting and/or exercisability by reason of the Termination
of Employment):

(A) In the event of a Termination of Employment by reason of death or
Disability, a Termination Without Cause, or a Termination for Good Reason, at
any time or from time to time before the expiration of the applicable Option
Term or,

(B) In the event of any other Termination of Employment, at any time or from
time to time during the one year period commencing on the Date of Termination,
but not after the expiration of the applicable Option Term;

(iii) Shall not be transferable by Executive during his lifetime except to a
Permitted Transferee, and

(iv) Shall at the election of the Executive and subject to the reasonable
administrative requests of the Company, be eligible for deferral of receipt of
shares of Common Stock subject to the Option, or deferral of gains on such
Options.

(v) Shall be canceled in the event of a merger or consolidation pursuant to the
terms of which cash is to be paid for each share of Common Stock then
outstanding, such cancellation to be effective immediately before the
consummation of such merger or consolidation, subject to the immediate payment
by the Company of a cash amount to Executive equal to the Option Spread (as
defined below). The "Option Spread" applicable to an Option shall equal the
product of the number of shares of Common Stock subject to such Option
multiplied by the positive difference, if any, between the cash amount to be
paid for each share of Common Stock in such merger or consolidation and the
exercise price of such Option.

                                       6
<PAGE>

5.3 Manner of Exercise Options. Any Option or any part thereof shall be
    --------------------------
exercised by Executive, his Permitted Transferee or, if after his death, a
Beneficiary by a written notice to the Company stating the number of shares of
Common Stock with respect to which the Option is being exercised and the form of
payment of the exercise price of the Option and any related Withholding Taxes.
Such payment may be made in any one or more of the following forms:

(a) Cash,

(b) Previously-owned shares of Common Stock, (which if acquired from the Company
or an Affiliate, shall have been held by Executive for at least six months
valued at their Fair Market Value on the date of exercise), or

(c) Pursuant to a so-called "cashless exercise" arrangement whereby the
Executive, a Permitted Transferee or a Beneficiary, as applicable, submits an
irrevocable notice of exercise which includes instructions to deliver promptly
to the Company a number of purchased shares of Common Stock sufficient to pay
the exercise price of the purchased shares of Common Stock, or Withholding
Taxes, as applicable.

The Company shall deliver the purchased shares of Common Stock promptly after
its receipt of notice of exercise and payment. The Company shall use its
reasonable best efforts to cause all shares of Common Stock issued upon the
exercise of Options to be registered or qualified under all applicable
securities laws so that all such shares of Common Stock shall be unrestricted
and freely transferable.

5.4 Adjustment of Options. If any dividend is declared on the Common Stock which
    ---------------------
is payable in Common Stock, the number of shares of Common Stock to which any
Option is subject shall be multiplied by (and the exercise price of such Option
shall be divided by) the sum of the number 1.0 plus the number of shares of
Common Stock (including any fraction thereof) payable as a dividend on each
share of Common Stock. In the event of any change in the number or kind of
outstanding shares of Common Stock by reason of any recapitalization,
reorganization, merger, consolidation, stock split or any similar change
affecting the Common Stock (other than a dividend payable in Common Stock), the
Company shall make an appropriate adjustment in the number of shares of Common
Stock and exercise price applicable to each Option so that, after such
adjustment, the Option shall represent a right to receive, upon payment of the
same aggregate exercise price as in effect immediately before such adjustment,
the same value that Executive would have received in connection with such
recapitalization, reorganization, merger, consolidation, stock split or any
similar change if he had owned on the applicable record date a number of shares
of Common Stock equal to the number of shares of Common Stock subject to such
Option prior to such adjustment.

5.5 Registration Rights.
    -------------------

(a) Executive may at any time during the Employment Period or before the first
anniversary of the date of any Termination of Employment (other than by the
Company for Cause or by Executive without Good Reason), including a Termination
of Employment as a result of Executive's death or Disability, request in writing
that the Company prepare and file as soon as reasonably practicable and in any
event within sixty (60) days after the Company's receipt of Executive's request
a registration statement under the Securities Act of 1933 ("Registration
                                                            ------------
Statement") to register the offer and sale of shares of Common Stock then owned
---------
by Executive pursuant to a firm-commitment underwritten public offering. The
Company shall not be required to undertake more than one registration pursuant
to this Section nor shall it be required to undertake any registration of less
than 500,000 shares of Common Stock.

(b) Subject to the next sentence of this paragraph, the Company shall be
entitled to postpone, for a reasonable period of time, the filing or
effectiveness of, or suspend the rights of Executive to make sales pursuant to
the Registration Statement otherwise required to be prepared, filed and made and
caused to become effective by it pursuant to this Section; provided, however,
that the duration of such postponement or suspension may not exceed the earlier
to occur of (i) 15 days after the cessation of the circumstances described in
the next sentence of this paragraph on which such postponement or suspension is
based or (ii) 90 days after the date of the determination of the Board referred
to in the next sentence. Such postponement or suspension may be effected only if
the Board determines that the filing or effectiveness of, or sales pursuant to,
such Registration Statement would (i) materially impede, delay or interfere with
any material financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction involving the Company or any of
its Subsidiaries (a "Significant Transaction") or (ii) require the Company to
                     -----------------------
make public disclosures or file publicly-available documents with the Securities
and Exchange Commission sooner than otherwise required by applicable securities
laws, which disclosure or filings, as applicable, would materially impede, delay
or interfere with any Significant Transaction or otherwise have a material
adverse effect

                                       7
<PAGE>

on the Company and its Subsidiaries taken as a whole; provided however that the
Company shall not be entitled to such postponement suspension more than once in
any 12-month period.

(c) The Company will use its reasonable best efforts to cause the Registration
Statement to be declared effective on the date requested by Executive. The
Company and Executive shall enter into an underwriting agreement containing
customary terms, representations and covenants (including customary
indemnification provisions and customary contribution provisions based on the
relative fault of the parties) with one or more managing underwriters selected
by the Company (subject to the approval of the Executive, which approval shall
not unreasonably be withheld). The Company shall pay all of the legal,
accounting, printing, filing and other fees and expenses of such registration,
except that Executive shall pay all underwriters' discounts and commissions
relating to the sale of his Common Stock and the fees and disbursements of his
legal counsel, if any. No other securities of the Company except equity
securities to be offered and sold for the account of the Company and any equity
securities of the Company held by any Person having "piggy-back" registration
rights pursuant to any contractual obligation of the Company shall be included
in the Registration Statement.

                                   Article VI.

                                 OTHER BENEFITS

6.1 Incentive, Savings and Retirement Plans. In addition to Base Salary and an
    ---------------------------------------
Annual Bonus, Executive shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans, practices, policies and
programs that are from time to time applicable to other senior management
executives of the Company.

6.2 Welfare Benefits. During the Employment Period, Executive and/or his family,
    ----------------
as the case may be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and programs provided
by the Company (including medical, prescription, dental disability, salary
continuance, employee life, group life, dependent life, accidental death and
travel accident insurance plans and programs) applicable to other senior
management executives of the Company.

6.3 Fringe Benefits. During the Employment Period, Executive shall be entitled
    ---------------
to all fringe benefits that are from time to time available to other senior
management executives of the Company.

6.4 Vacation. During the Employment Period, Executive shall be entitled to paid
    --------
vacation time in accordance with the plans, practices, policies, and programs
applicable to other senior executives of the Company, but in no event shall such
vacation time be less than four weeks per calendar year.

6.5 Expenses. During the Employment Period, Executive shall be entitled to
    --------
receive prompt reimbursement for all reasonable employment related expenses
incurred by Executive upon the receipt by the Company of receipts and reasonable
supporting detail in accordance with practices, policies and procedures
applicable to other senior executives of the Company.

6.6 Office; Support Staff. During the Employment Period, Executive shall
    ---------------------
entitled to an office or offices of a size and with furnishings and other
appointments, and to personal secretarial and other assistance, appropriate to
his position and duties under this Agreement.

6.7 Tax Gross-Up Payment. If it shall be determined that any payment to
    --------------------
Executive pursuant to this Agreement or any other payment or benefit from the
Company, any Affiliate, any shareholder of the Company or any other person would
be subject to the excise tax imposed by section 4999 of the Code or any similar
tax payable under any United States federal, state, local or other law, then
Executive shall receive reimbursement for such excise taxes and a Tax Gross-Up
Payment with respect to reimbursements of all such excise taxes and similar
taxes; provided however, that in the event that a limitation on such Tax
Gross-Up Payment can be determined by Certified Public Accountants (CPA)
representing each of the Executive and the Company to result in Executive
receiving a larger after-tax benefit under this Agreement, then such limitation
shall be imposed by operation of this Agreement. In the event that the two CPAs
cannot agree on the limitation, the matter shall be settled by a third
"national" CPA chosen by the two CPAs.

                                  Article VII.

                             RETIREMENT BENEFITS AND
                         DEFERRED COMPENSATION AGREEMENT

7.1 Supplemental Retirement Benefits. Executive shall be entitled to benefits
    --------------------------------
under, any other supplemental defined benefit retirement plans of the Company
which are not qualified under

                                       8
<PAGE>

Section 401(a) of the Code, on terms substantially equal to, or more favorable
to Executive than, other employees of the Company.

7.2 Deferred Compensation. Executive and the Company agree that as a material
    ---------------------
inducement to convince Executive to execute this Agreement, Executive shall be
entitled to receive the deferred compensation in an amount equal to 50% of Base
Salary under terms and conditions mutually agreeable to the parties, subject to
insurance underwriting at standard issuance rates and entry into a Deferred
Compensation Agreement substantially in the form of Exhibit A attached hereto
and made a part hereof.

                                  Article VIII.

                              TERMINATION BENEFITS

8.1 Termination for Cause or Other Than for Good Reason, etc.
    ---------------------------------------------------------

(a) If the Company terminates Executive's employment for Cause or Executive
terminates his employment other than for Good Reason, death or Disability, the
Company shall pay to Executive immediately after the Date of Termination an
amount equal to the sum of Executive's Accrued Base Salary and Accrued Annual
Bonus, and Executive shall not be entitled to receive any Severance Payment.

(b) The Company may not terminate Executive's employment for Cause unless:

(i) No fewer than thirty (30) days prior to the Date of Termination, the Company
provides Executive with written notice (the "Notice of Consideration") of its
                                             -----------------------
intent to consider termination of Executive's employment for Cause, including a
detailed description of the specific reasons which form the basis for such
consideration;

(ii) For a period of not less than fifteen (15) days after the date Notice of
Consideration is provided, Executive shall have the opportunity to appear before
the Board, with or without legal representation, at Executive's election, to
present arguments and evidence on his own behalf, and

(iii) Following the presentation to the Board as provided in (ii) above or
Executive's failure to appear before the Board at a date and time specified in
the Notice of Consideration, Executive may be terminated for Cause only if (x)
the Board, by the affirmative vote of its members (excluding Executive, and any
other member of the Board reasonably believed by the Board to be involved in the
events leading the Board to terminate Executive for Cause), determines that the
actions or inactions of Executive specified in the Notice of Termination
constituted occurred, that such actions or inactions constitute Cause, and the
Executive's employment should accordingly be terminated for Cause; and (y) the
Board provides Executive with a written determination (a "Notice of Termination
                                                          ---------------------
for Cause") setting forth in specific detail the basis of such Termination of
---------
Employment, which Notice of Termination for Cause shall be consistent with the
reasons set forth in the Notice of Consideration.

Unless the Company establishes both (i) its full compliance with the substantive
and procedural requirements of this Section 8.1 prior to a Termination of
Employment for Cause, and (ii) that Executive's action or inaction specified in
the Notice of Termination for Cause did occur and constituted Cause, any
Termination of Employment shall be deemed a Termination Without Cause for all
purposes of this Agreement.

(c) After providing a Notice of Consideration pursuant to the provisions of
Section 8.1(b), the Board may, by the affirmative vote of all of its members
(excluding for this purpose, Executive and any other member of the Board
reasonably believed by the Board to be involved in the events issuing the Notice
of Consideration), suspend Executive with pay until a final determination
pursuant to such Section 8. 1(b) has been made.

8.2 Termination for Death or Disability. If Executive's employment terminates
    -----------------------------------
during the Employment Period due to his death or Disability, the Company shall
pay to Executive or his Beneficiaries, as the case may be immediately after the
Date of Termination an amount which is equal to the sum of Executive's Accrued
Base Salary, Accrued Annual Bonus and Prorata Annual Bonus.

8.3 Termination Without Cause or for Good Reason. In the event of a Termination
    --------------------------------------------
Without Cause or Termination for Good Reason, to the maximum extent permitted by
law, Executive shall become fully vested under all plans and programs sponsored
by the Company, and the Executive shall receive the following:

                                       9
<PAGE>

(a) Immediately after the Date of Termination, a lump-sum amount in immediately
available funds equal to the sum of Executive's Accrued Base Salary, Accrued
Annual Bonus and Prorate Annual Bonus;

(b) Immediately after the Date of Termination, a lump-sum amount in immediately
available funds equal to the product of the number of whole and fractional years
included in the Severance Period multiplied by Executive's Annualized Total
Compensation;

(c) Immediately after the Date of Termination, a lump-sum amount in immediately
available funds equal to the total amount (if any) of Executive's unvested
benefits under any plan or program sponsored by the Company which is forfeited
on account of Executive's employment being terminated.

(d) The continuation of the benefits (or, if such benefits are not available,
the after-tax economic equivalent thereof) specified in Sections 6.1, 6.2 and
6.3 to which Executive is entitled as of the Date of Termination for the entire
duration of the Severance Period or, at the election of Executive, an immediate
lump-sum cash payment equal to the value of such benefits; provided that with
respect to any benefit to be provided on an insured basis, such value shall be
the present value of the premium expected to be paid for such coverage, and with
respect to other benefits, such value shall be the present value of the expected
net cost to the Company of providing such benefits.

(e) Immediately after the Date of Termination, a lump-sum amount in immediately
available funds of any amount then payable to Executive pursuant to Section 6.7;
and

(f) For a period of twelve (12) months from the Date of Termination, but no
later than the point at which the Executive is employed on a substantively full
time basis, Outplacement Services.

8.4 Termination After a Change of Control. If a Termination Without Cause or a
    -------------------------------------
termination for Good Reason occurs within two years after a Change of Control,
then Executive shall receive the payments required by Section 8.3, except as
follows:

(a) For purpose of Section 8.3(b), Executive shall receive a multiple of his
Annualized Total Compensation equal to the greater of three (3.0) or the number
of whole and fractional years remaining in the Employment Period; and

(b) In determining Executive's Prorated Annual Bonus for purposes of Section
8.3(a), and in determining Executive's Annualized Total Compensation for
purposes of Section 8.3(b) and 8.4(a), the actual Annual Bonus for the preceding
Year shall be used.

8.5 Other Termination Benefits. In addition to any amounts or benefits payable
    --------------------------
upon a Termination of Employment hereunder, Executive shall, except as otherwise
specifically provided herein, be entitled to any payments or benefits provided
hereunder or under the terms of any plan, policy or program of the Company or as
otherwise required by applicable law.

                                   Article IX.

                              RESTRICTIVE COVENANTS

9.1 Non-Solicitation of Employees: Confidentiality; Non-Competition.
    ---------------------------------------------------------------

(a) Executive covenants and agrees that at no time during the Employment Period,
will Executive:

(i) Directly or indirectly employ or seek to employ any person employed at that
time by the Company or any of its Subsidiaries or otherwise encourage or entice
any such person to leave such employment;

(ii) Become employed by, enter into a consulting arrangement with or otherwise
agree to perform personal services for a Competitor (as defined in section
9.1(b)).

(iii) Acquire an ownership interest in a Competitor, other than a publicly
traded Competitor, provided that Executive's ownership position in such publicly
traded Competitor does not exceed five percent (5%), or

(iv) Solicit any customers or vendors of the Company on behalf of or for the
benefit of a Competitor.

(b) For purposes of the Section, "Competitor" means any Person which sells goods
                                  ----------
or services which are directly competitive with those sold by a business that
(i) is being conducted by the

                                       10
<PAGE>

Company or any Subsidiary at the time in question and (ii) was being conducted
at the Date of Termination and, for the Company's most recently completed fiscal
year, contributed more than 10% of the Company's consolidated revenues.
Notwithstanding anything to the contrary in this Section, goods or services
shall be deemed to be competitive with those of the Company (A) solely as a
result of Executive being employed by or otherwise associated with a business of
which a unit is in competition with the Company or any Subsidiary but as to
which unit Executive does not have direct or indirect responsibilities for the
products or services involved or (B) if the activity contributes less than 10%
of the consolidated revenues for the most recently completed fiscal year of the
business by which Executive is employed or with which he is otherwise
associated.

(c) Executive covenants and agrees that at no time during the Employment Period
nor at any time following any Termination of Employment will Executive
communicate, furnish, divulge or disclose in any manner to any Person any
Confidential Information (as defined in Section 9.1(d)) without the prior
express written consent of the Company. After a termination of Employment,
Executive shall not, without the prior written consent of the Company, or as may
otherwise be required by law or legal process, communicate or divulge such
Confidential Information to anyone other than the Company and its designees.

(d) For purposes of this Section, "Confidential Information" shall mean
                                   ------------------------
financial information about the Company, contract terms with vendors and
suppliers, customer and supplier lists and data, trade secrets and such other
competitively-sensitive information to which Executive has access as a result of
his positions with the Company, except that Confidential Information shall not
include any information which was or becomes generally available to the public
(i) other than as a result of a wrongful disclosure by Executive, (ii) as a
result of disclosure by Executive during the Employment Period which he
reasonably and in good faith believes is required by the performance of his
duties under this Agreement, or (iii) any information compelled to be disclosed
by applicable law or administrative regulation; provided that Executive, to the
extent not prohibited from doing so by applicable law or administrative
regulation, shall give the Company written notice of the information to be so
disclosed pursuant to clause (iii) of this sentence as far in advance of its
disclosure as is practicable.

9.2 Injunction. Executive acknowledges that monetary damages will not be an
    ----------
adequately remedy for the Company in the event of a breach of this Article IX,
and that it would be impossible for the Company to measure damages in the event
of such a breach. Therefore, Executive agrees that, in addition to other rights
that the Company may have, the Company is entitled to an injunction preventing
Executive from any breach of this Article IX.

                                   Article X.

                                  MISCELLANEOUS

10.1 Full Settlement. The Company's obligation to make the payments provided for
     ---------------
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any circumstances, including set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
Executive or others. In no event shall Executive be obligated to seek other
employment or take any other action to mitigate the amounts payable to Executive
under any of the provisions of this Agreement, nor shall the amount of any
payment hereunder be reduced by any compensation earned as result of Executive's
employment by another employer, except that any continued welfare benefits
provided for by Section 6.2 shall not duplicate any benefits that are provided
to Executive and his family by such other employer and shall be secondary to any
coverage provided by such other employer.

10.2 Legal Fees; Late Payments.
     -------------------------

(a) All reasonable costs and expenses (including fees and disbursements of
counsel) incurred by Executive in negotiating the terms and conditions of this
Agreement shall be promptly paid on behalf of, or reimbursed to, Executive by
the Company.

(b) If Executive incurs legal or other fees and expenses in an effort to secure,
preserve or establish entitlement to compensation and benefits under this
Agreement, the Company shall, regardless of the outcome of such effort,
reimburse Executive for such fees and expenses and shall pay Executive a Tax
Gross-Up Payment in respect of the Taxes incurred by Executive with respect to
such reimbursement of fees and expenses. The Company shall reimburse Executive
for such fees and expenses on a monthly basis within ten (10) days after his
request for reimbursement accompanied by evidence that the fees and expenses
were incurred. If Executive does not prevail (after exhaustion of all available
judicial remedies) in respect of a claim by Executive or by the Company
hereunder, and the Company establishes before a court of competent jurisdiction,
by clear and convincing evidence, that Executive had no reasonable basis for his
claim hereunder, or for his response to the Company's claim hereunder, and acted
in bad faith, no further reimbursement for legal fees and expenses shall be due
to Executive in respect of such

                                       11
<PAGE>

claim and Executive shall refund any amounts previously reimbursed hereunder
with respect to such claim.

(c) If the Company fails to pay any amount provided under this Agreement when
due, the Company shall pay interest on such amount at a rate equal to (i) the
highest rate of interest charged by the Company's principal lender plus 200
basis points, or (ii) in the absence of such a lender, 300 basis points over the
prime commercial lending rate announced by Mercantile Bank on the date such
amount is due or, if no such rate shall be announced on such date, the
immediately prior date on which Mercantile Bank announced such a rate; provided,
however, that if the interest rate determined in accordance with this Section
exceeds the highest legally-permissible interest rate, then the interest rate
shall be the highest legally-permissible interest rate.

10.3 Beneficiary. If Executive dies prior to receiving all of the amounts
     -----------
payable to him in accordance with the terms of this Agreement, such amounts
shall be paid to one or more beneficiaries (each, a "Beneficiary") designated by
                                                     -----------
Executive in writing to the Company during his lifetime, or if no such
Beneficiary is designated, to Executive's estate. Such payments shall be made in
a lump sum to the extent so payable and, to the extent not payable in a lump
sum, in accordance with the terms of this Agreement. Executive, without the
consent of any prior Beneficiary may change his designation of Beneficiary or
Beneficiaries at any time or from time by submitting to the Company a new
designation in writing.

10.4 Assignment; Successors. The Company may not assign its rights and
     ----------------------
obligations under this Agreement without the prior written consent of Executive
except to a successor of the Company's business which expressly assumes the
Company's obligations hereunder in writing. This Agreement shall be binding upon
and inure to the benefit of Executive, his estates and Beneficiaries, and the
Company and its successors and permitted assigns, including without limitation,
any successor by way of merger, consolidation, share exchange, reorganization or
sale of all or substantially all of the assets of the Company.

10.5 Nonalienation. Benefits payable under this Agreement shall not be subject
     -------------
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, prior to actually being received by Executive or a
Beneficiary, as applicable, and any such attempt to dispose of any right to
benefits payable hereunder shall be void.

10.6 Severability. If one or more of this Agreement are declared by any court or
     ------------
government authority to be unlawful or invalid, such unlawfulness or invalidity
shall not invalidate any part of this Agreement so declared to be unlawful or
invalid. Any part so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such part to the
fullest extent possible while remaining lawful and valid.

10.7 Captions.  The names of the Articles and Sections of this Agreement are for
     --------
convenience of reference only and do not constitute a part hereof.

10.8 Amendment; Waiver. This Agreement shall not be amended or modified except
     -----------------
by written instrument executed by the Company and Executive. A waiver of any
term, covenant or condition, and any waiver of any default in any such term,
covenant or condition shall not be deemed a waiver of any later default thereof.

10.9 Notices. All notices hereunder shall be in writing and delivered by hand,
     -------
by nationally-recognized delivery service that guarantees overnight delivery, or
by first-class, registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

If to the Company, to:              Carnegie International Corporation
                                    11350 McCormick Road, EP3, Suite 1001
                                    Hunt Valley, MD  21031

With a copy to:                     James R. Deveney, II, Esquire
                                    Blank Rome Comisky & McCauley LLP
                                    250 W. Pratt Street, Suite 1100
                                    Baltimore, MD  21201

If to Executive to:                 Lowell Farkas
                                    100 Harborview Drive, Apt. 1703
                                    Baltimore, Maryland 21230

Either party may from time to time designate a new address by notice given in
accordance with this Section. Notice shall be effective when actually received
by the addressee.

                                       12
<PAGE>

10.10 Counterparts. This Agreement may be executed in several counterparts, each
      ------------
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

10.11 Entire Agreement. This Agreement forms the entire agreement between the
      ----------------
parties hereto with respect to the subject matter contained in this Agreement
and supercedes and replaces the Existing Agreement on the Agreement Date.
Notwithstanding the foregoing sentence, this Agreement has no effect on any
stock options granted under the Existing Agreement and such options shall remain
outstanding and in full force and effect in accordance with the terms of the
Existing Agreement.

10.12 Applicable Law. This Agreement shall be interpreted and construed in
      --------------
accordance with the laws of the State of Maryland, without regard to its choice
of law principles.

10.13 Survival of Executive's Rights. All of Executive's rights hereunder,
      ------------------------------
including his rights to compensation and benefits, and his obligations under
Section 9.1 hereof, shall survive the termination of Executive's employment
and/or the termination of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.

<TABLE>
<S>                                                   <C>
WITNESS/ATTEST:                                       Company:

                                                      CARNEGIE INTERNATIONAL
                                                      CORPORATION

__________________________________                    By:__________________________              (SEAL)
                                                           E. David Gable, Chairman and
           Chief Operating Officer

                                                      Executive:

__________________________________                    _____________________________              (SEAL)
Lowell Farkas
</TABLE>

                                       13
<PAGE>

EXHIBIT A
---------

                         DEFERRED COMPENSATION AGREEMENT

         THIS DEFERRED COMPENSATION AGREEMENT is executed effective as of this
______ of October, 2000, by and between CARNEGIE INTERNATIONAL CORPORATION, a
Colorado corporation (the "Corporation"), and LOWELL FARKAS (the "Executive").

         WHEREAS, the Executive is employed by the Corporation;

         WHEREAS, the Corporation recognizes the valuable services to be
performed for it by the Executive and wishes to encourage his continued
employment;

         WHEREAS, as a condition of his employment by the Corporation, the
Executive wishes to be assured that he or his family will be entitled to a
certain amount of deferred compensation for some definite period of time from
and after (i) his retirement from active employment with the Corporation, (ii)
his death, (iii) his disability, or (iv) termination of employment;

         WHEREAS, the parties hereto wish to provide the terms and conditions
upon which the Corporation shall pay such deferred compensation to the Executive
after his retirement, disability, or upon termination of employment, or to his
family upon termination of his employment by reason of his death.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Corporation and
the Executive, intending to be legally bound, agree as follows:

         1. Recitals. The foregoing recitals are made a part of this Agreement.
            --------

         2. Deferred Compensation. In addition to any payments of current
            ---------------------
compensation for services that may be paid by the Corporation to the Executive
from time to time, the Corporation agrees to pay to, or on behalf of, the
Executive, the deferred compensation payments described in Section 3 hereof,
subject nevertheless to all of the contingencies, conditions, qualifications and
disclaimers stated in this Agreement. The Executive has had no individual option
to defer the payments, such option being solely in the discretion of
Corporation.

         3. Compensation Amount.
            -------------------

            3.1 Subject to the provisions of Section 3.2, in the event that the
Executive (i) retires from employment with Corporation (as defined below), (ii)
becomes disabled (as defined below), (iii) dies, or (iv) his employment
relationship with the Corporation terminates pursuant to the provisions of the
Employment Agreement by and between the Corporation and the Executive of even
date herewith (the "Employment Agreement") (each such event individually a
"Trigger Event'), the Executive or the beneficiary or beneficiaries designated
by the Executive pursuant to Section 6 hereof, as the case may be, shall receive
an amount equal to [50% of the amount of the Executive's Base Salary at the time
of the Trigger Event - how long is Deferred Comp. paid for?], less such sums as
may be required to be deducted or withheld under the provisions of federal,
state or local law. [Twenty percent (20%) of such amount shall be payable within
sixty (60) days of the determination of such amount by the Accountant and the
balance shall be payable in four (4) consecutive equal semi-annual installments,
without interest, beginning six (6) months after the Trigger Date.]

            3.2 For purposes of this Agreement, "disabled" or "disability" shall
have the same meaning as given to the term "disability" in the disability
insurance policy(ies) maintained by the Corporation under which the Executive is
insured (the "Disability Policy") on the date of the occurrence of the
disability. "Retirement" shall mean the retirement from employment with the
Corporation, at any time after the completion of [ten (10) years] of service
with the Corporation (measured from the date the Executive commences employment
with the Corporation).

         4. Corporation's Right to Obtain Insurance on Executive. For its
            ----------------------------------------------------
convenience in accumulating the assets necessary to make such deferred
compensation payments to the Executive, the Corporation may, but shall not be
obligated to, purchase one or more life insurance or disability insurance
policies on the Executive on which the Corporation is the named beneficiary
(collectively the "Policies").

         Notwithstanding anything to the contrary contained herein, it is
understood and agreed that the Policies shall be, and at all times and for all
purposes shall remain, the absolute property of the Corporation or its
successors and, as exclusive owner thereof, the Corporation hereby reserves to
itself all rights, options and benefits under the Policies or permitted by the
insurance company, including, but not limited to, the right to name and change
the beneficiary,

                                      14
<PAGE>

to transfer ownership, to borrow against the cash surrender value and to receive
all benefits due thereunder for the Corporation's sole benefit. The
Corporation's obligation to make the deferred compensation payments described in
this Agreement shall not in any way be contingent upon its having purchased or
maintained any such Policies, but it shall remain obligated to make such
deferred compensation payments whether or not any such Policies shall be in
effect at the time or times any such payments become due.

         5. Designation of Beneficiary. The Executive shall have the right to
            --------------------------
designate a beneficiary or beneficiaries to receive any payments provided after
his death pursuant to Section 3 hereof. Such designation of beneficiary shall be
in writing, signed by the Executive, and shall be delivered to the Corporation
at its principal office and shall be effective when received by the Corporation.
The Executive shall have the right to change such designation by filing a new
designation, in the same manner, with the Corporation. Any such change will be
deemed to revoke all prior designations, unless a contrary intention is
expressly stated in the change of designation. In the event the Executive fails
to validly designate a beneficiary, or if no designated beneficiary survives the
Executive, or if the designated beneficiary dies prior to the receipt of all
payments provided under Section 3 hereof, any remaining payments under this
Agreement to be paid after the death of the Executive or his designated
beneficiary, as the case may be, shall be paid by the Corporation to the
Executive's wife should she survive him, and if the Executive's wife dies prior
to the payment of any or all of the deferred compensation installments, the
remainder of such payments shall be made to the Executive's then living
descendants per stirpes.

6. Corporation's Obligation to be Unsecured. It is further understood and agreed
   ----------------------------------------
that the Corporation's obligations under this Agreement shall not be secured or
guaranteed in any manner. Neither the Policies nor any other asset of the
Corporation shall be placed in trust or in escrow or otherwise physically or
legally segregated for the benefit of the Executive, and the eventual payment of
the deferred compensation payments described in this Agreement to the Executive,
his beneficiary or any other person shall not be secured to him or them by the
issuance of any negotiable instrument or other evidence of indebtedness of the
Corporation prior to the date that deferred compensation payments commence.
Neither the Executive, his beneficiary, nor any other person shall be deemed to
have any property interest, legal or equitable, in the Policies or in any other
specific asset of the Corporation, and, to the extent that any person acquires
any right to receive payments under the provisions of this Agreement, such right
shall be no greater than, nor shall it have any preference or priority over, the
rights of any unsecured general creditor of the Corporation.

7. Alienation or Encumbrance. No payments, benefits or rights under this
   -------------------------
Agreement shall be subject in any manner to anticipation, sale, transfer,
assignment, mortgage, pledge, encumbrance, charge or alienation by the
Executive, his beneficiary or any other person who could or might possibly
receive future payments or benefits under this Agreement. If the Corporation
determines that any such person entitled to any payments under this Agreement
has become insolvent, bankrupt, or has attempted to anticipate, sell, transfer,
assign, mortgage, pledge, encumber, charge or otherwise in any manner alienate
any amount payable to him under this Agreement or that there is any danger of
any levy, attachment or other court process or encumbrance on the part of any
creditor of such person entitled to payments hereunder, against any benefit or
other amounts payable to such person, the Corporation may, in its discretion, at
any time, withhold any or all such payments or benefits and apply the same for
the benefit of such person, in such manner and in such proportion as the
Corporation may deem proper.

8. Cooperation of Parties. Each party agrees to take any and all further action
   ----------------------
and to execute any and all additional documents that may be necessary or
desirable to effectuate the terms of this Agreement.

9. Choice of Law. This Agreement shall be governed by and construed in
   -------------
accordance with the laws of the State of Maryland.

10. Assignment. Neither party may assign any of its rights or obligations
    ----------
hereunder without the prior written consent of the other party. All of the
provisions hereof shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective heirs, personal representatives, successors
and permitted assigns.

11. Amendment. This Agreement may not be modified, altered or amended except by
    ---------
a subsequent written instrument executed by each of the parties hereto.

12. Severability. Subject to the provisions of Section 5 hereof, the invalidity
    ------------
or unenforceability of any particular provision or subprovision of this
Agreement shall not affect the other provisions hereof, and the Agreement shall
be construed in all respects as though such invalid or unenforceable provisions
or subprovisions were omitted.

                                      15
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed or caused their duly
authorized representatives to execute this Agreement as of the day and year
first above written.

WITNESS/ATTEST:                    Company:

                                   CARNEGIE INTERNATIONAL
                                   CORPORATION

________________________________   By:_________________________(SEAL)
                                        E. David Gable, Chairman and
                                   Chief Operating Officer

                                   Executive:

________________________________   ____________________________(SEAL)
                                   Lowell Farkas

                                      16

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