Document:

Exhibit 10.1

 

FIRST
AMENDMENT AND WAIVER dated as of December 16, 2004 (the “Amendment”),
to the Amended and Restated Credit Agreement, dated as of August 19, 2004
(the “Credit Agreement”), among CHS/Community Health Systems, Inc. (the
“Borrower”), Community Health Systems, Inc. (“Parent”), the
several banks and other financial institutions from time to time parties
thereto (the “Lenders”), Bank of America, N.A., as documentation agent,
Wachovia Bank, National Association, as syndication agent, and JPMorgan Chase
Bank, as administrative agent for the Lenders thereunder (in such capacity, the
“Administrative Agent”).

 

W  I  T
N  E  S  S  E  T  H:

 

WHEREAS, the Borrower, Parent, the Administrative
Agent and the Lenders are parties to the Credit Agreement;

 

WHEREAS, Parent intends to issue unsecured, senior
subordinated notes in a minimum aggregate principal amount of approximately
$250,000,000;

 

WHEREAS, the Borrower and Parent in connection
therewith have requested that the Administrative Agent and the Required Lenders
agree to amend and waive certain provisions of the Credit Agreement; and

 

WHEREAS, the Administrative Agent and the Lenders
parties hereto are willing to agree to the requested amendments and waivers,
but only upon the terms and conditions set forth herein;

 

NOW, THEREFORE, for valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in consideration
of the premises contained herein, the parties hereto agree as follows:

 

I.                                        AMENDMENTS TO THE CREDIT AGREEMENT RELATING
TO THE HIGH YIELD SUBORDINATED NOTES

 

A.  Definitions. Unless otherwise defined
herein, terms defined in the Credit Agreement shall have their defined meanings
when used herein.

 

B.  Amendments
of Subsection 1.1 (Defined Terms). (1) Subsection 1.1 of the
Credit Agreement is hereby amended by adding the following new definitions, in
appropriate alphabetical order:

 

“First Amendment”: the First Amendment and
Waiver dated as of December 16, 2004 to this Agreement.

 

“First Amendment Effective Date”: as defined
in Section IV. A of the First Amendment.

 

 

“High Yield Subordinated Notes”: the Senior
Subordinated Notes due 2012, in a minimum aggregate principal amount of
approximately $250,000,000 as of the First Amendment Effective Date, issued by
Parent for sale to qualified institutional buyers in reliance on Rule 144A or
Regulation S under the Securities Act of 1933, as amended, and the indenture
therefor and any related documentation.

 

C.                                      Amendment of Subsection 5.9 (No Default). Subsection 5.9 of the Credit Agreement
is hereby amended by deleting the phrase “Neither the Borrower nor any of its
Subsidiaries” in the first and second sentences thereof and substituting, in
lieu thereof, the phrase “Neither Parent nor Borrower nor any of its
Subsidiaries”.

 

D.  Amendment
of Subsection 5.15 (Senior Debt). Subsection 5.15
of the Credit Agreement is amended by inserting at the end thereof the
following:

 

“and constitute “Senior Indebtedness” and “Guarantor
Senior Indebtedness” under and as defined in the indenture for the High Yield
Subordinated Notes.”

 

E.  Amendment
of Subsection 7.7 (Notices). Subsection 7.7 of the Credit
Agreement is hereby amended by (1) deleting in paragraphs (b) and (c) thereof
the phrase “the Borrower or any of its Subsidiaries” as it appears and substituting,
in lieu thereof, the phrase “Parent, the Borrower or any of its Subsidiaries”
and (2) inserting at the end of paragraph (e) thereof “or any High Yield
Subordinated Note.”

 

F.  Amendment
of Subsection 8.1 (Financial Condition Covenants). Subsection 8.1
(a) of the Credit Agreement is hereby amended be deleting the table therein in
its entirety and substituting, in lieu thereof, the following:

 

	
  “Fiscal Year Ending

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  December 31,
  2004

  	
   

  	
  4.50 to 1

  
	
  December 31,
  2005

  	
   

  	
  4.50 to 1

  
	
  December 31,
  2006

  	
   

  	
  4.25 to 1

  
	
  December 31,
  2007

  	
   

  	
  4.25 to 1

  
	
  December 31,
  2008

  	
   

  	
  4.00 to 1

  
	
  December 31,
  2009

  	
   

  	
  4.00 to 1

  
	
  December 31,
  2010

  	
   

  	
  3.75 to 1

  
	
  December 31,
  2011

  	
   

  	
  3.75 to 1”

  

 

G.  Amendments
of Subsection 8.2 (Indebtedness). (1)
Subsection 8.2(g) of the Credit Agreement is hereby amended by deleting
such subsection in its entirety and substituting, in lieu thereof, the
following:

 

“(g) other Indebtedness of the Borrower or any of
its Subsidiaries in an aggregate principal amount not to exceed $200,000,000 at
any time outstanding;”

 

2

 

(2)  Subsection 8.2(h) of the Credit
Agreement is hereby amended by deleting the text in clause (iii) thereof
preceding the proviso to Subsection 8.2(h) in its entirety and
substituting, in lieu thereof, the following:

 

“(iii) the High Yield Subordinated Notes or any
other subordinated debt issued by Parent (collectively, “High Yield
Subordinated Debt”)”.

 

(3)  Subsection 8.2(h) of the Credit
Agreement is hereby further amended by inserting at the end thereof the
following:

 

“(it being acknowledged and agreed that the terms
and provisions of the High Yield Subordinated Notes as in effect on the First
Amendment Effective Date shall be considered consistent with such market
terms)”.

 

(4)                                   Subsection 8.2(i) of the Credit
Agreement is hereby amended by inserting after the phrase “not to exceed
$500,000,000” the phrase “at any time outstanding”.

 

H.  Amendments of Subsection 8.4
(Contingent Obligations).

 

(1) 
Subsection 8.4(g) is amended by deleting at the end thereof the
word “and”.

 

(2) 
Subsection 8.4(h) is amended by inserting at the end thereof the
word “and”.

 

(3) 
Subsection 8.4 of the Credit Agreement is further amended by adding
at the end thereof the following:

 

“(i) Contingent Obligations of the Borrower and any
Subsidiary Guarantor pursuant to the High Yield Subordinated Notes.”

 

I.   Amendment
of Subsection 8.7 (Limitation on Investments, Loans and Advances).
Subsection 8.7(m) of the Credit Agreement is hereby amended by deleting
“$25,000,000” in clause (ii) thereof and substituting, in lieu thereof,
“$50,000,000”.

 

J.   Amendment
of Subsection 8.8 (Capital Expenditures).
Subsection 8.8 of the Credit Agreement is hereby amended by deleting the
initial part of the first sentence thereof preceding the phrase “plus, in each
case an amount equal to” and substituting, in lieu thereof, the following:

 

“Make or commit to make Capital Expenditures (other
than Replacement Capital Expenditures) in any fiscal year exceeding (i)
$200,000,000 for fiscal year 2004 of the Borrower, (ii) $275,000,000 for fiscal
year 2005 of the Borrower, (iii) $325,000,000 for fiscal year 2006 of the
Borrower, (iv) $350,000,000 for fiscal year 2007 of the Borrower, (v)
$375,000,000 for fiscal year 2008 of the Borrower, (vi) $425,000,000 for fiscal
year 2009 of the Borrower, (vii) $475,000,000 for

 

3

 

fiscal
year 2010 of the Borrower and (viii) $525,000,000 for fiscal year 2011 of the
Borrower,”

 

K.  Amendment of Subsection 8.9
(Limitation of Dividends’). Subsection 8.9(c)
of the Credit Agreement is hereby amended by deleting in the second proviso
thereof the phrase “from and after the Closing Date does not exceed in the
aggregate $300,000,000” and substituting, in lieu thereof, the following: “from
and after the First Amendment Effective Date does not exceed in the aggregate
$200,000,000”.

 

L.  Amendment
of Subsection 8.10 (Transactions with Affiliates).
Subsection 8.10 of the Credit Agreement is hereby amended by deleting the
phrase “subsections 8.4(a) and (f)” in clause (b) thereof and substituting, in
lieu thereof, the phrase “subsections of 8.4(a), (f) and (i)”.

 

M.  Amendment
of Subsection 8.12 (Subordinated Note; Additional Subordinated Notes;
Convertible Subordinated Debt). (1)
Subsection 8.12(a) of the Credit Agreement is hereby amended to add the
phrase “or any Additional Subordinated Note” after the phrase “Subordinated
Note” in clause (ii)(z) thereof.

 

(2) 
Subsection 8.12(b) of the Credit Agreement is amended by deleting
such subsection in its entirety and substituting, in lieu thereof, the
following

 

“(b)(i)  Make
any payment in violation of any of the subordination provisions of the
Convertible Subordinated Debt or the High Yield Subordinated Debt; or (ii)
waive or otherwise relinquish any of its rights or causes of action arising
under or arising out of the terms of the Convertible Subordinated Debt or the
High Yield Subordinated Debt; or (iii) consent to any amendment, modification
or supplement to the terms of the Convertible Subordinated Debt or the High
Yield Subordinated Debt except with the consent of the Required Lenders,
provided, that no such consent shall be required so long as (A) no Default or
Event of Default shall have occurred and be continuing and (B) such amendment,
modification or supplement is not materially adverse to the Lenders (it being
understood that any increase of the interest rate, shortening of the tenor,
addition of prepayment requirements, guarantees or collateral, or change to the
terms and provisions relating to subordination, of any such Convertible
Subordinated Debt or High Yield Subordinated Debt shall be deemed materially
adverse to the Lenders); or (iv) make any optional payment or prepayment on or
redeem or otherwise acquire, purchase or defease the Convertible Subordinated
Debt or the High Yield Subordinated Debt, provided that Parent may optionally
prepay, redeem or acquire the Convertible Subordinated Debt or the High Yield
Subordinated Debt (A) with the proceeds of (I) any and all prepayments,
redemptions and acquisitions of the Subordinated Note or, as applicable, an
Additional Subordinated Note by the Borrower pursuant to clause (a)(iii) above,
(II) issuances of any Convertible Subordinated Debt or any High Yield Subordinated
Debt or (III) any public offering of shares of common stock of Parent net of
any fees or expenses (including underwriting commissions) incurred in
connection with the issuance thereof, in each case to the extent the Net

 

4

 

Proceeds
thereof are not required to be used to make a prepayment required by
subsection 4.6, or (B) in exchange for shares of common stock of Parent.”

 

(3)  Subsection 8.12 of the Credit Agreement
is hereby further amended by inserting at the end thereof the following:

 

“(c) Fail to make a prepayment of any Loans
outstanding hereunder in the amount and to the extent Parent would, but for
such prepayment, be required to prepay, make an offer to repurchase, redeem or
otherwise acquire or defease any High Yield Subordinated Debt pursuant to the
asset disposition provisions of the indenture for the High Yield Subordinated
Notes.”

 

II.                                    AMENDMENTS TO THE CREDIT AGREEMENT WITH
RESPECT TO PERMITTED JOINT VENTURES

 

A.  Definitions.
Unless otherwise defined herein, terms defined in the Credit Agreement shall
have their defined meanings when used herein.

 

B.  Amendments
of Subsection 1.1 (Defined Terms). (1) Subsection 1.1 of the
Credit Agreement is hereby amended by adding the following new definitions, in
appropriate alphabetical order:

 

“Permitted Joint Venture Subsidiary”: a
Subsidiary of the Borrower formed in connection with a Permitted Joint Venture
or any existing Subsidiary of the Borrower that becomes a Permitted Joint
Venture Subsidiary as a result of a Permitted Joint Venture.

 

“Total Tangible Assets”: as of any date of
determination, the aggregate amount of all assets of Parent and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP, but
excluding any asset which is treated as an intangible asset in accordance with
GAAP, including, without limitation, goodwill, patents, patent applications,
trademarks, tradenames, copyrights and licenses.

 

(1)  The
definition of “Borrower Pledge Agreement” contained in Subsection 1.1 of
the Credit Agreement is hereby amended by deleting clauses (iii) and (iv) of
subsection (x) thereof in their entireties and substituting, in lieu
thereof, the following:

 

“or (iii) a Permitted Joint Venture Subsidiary,
Permitted Syndication Subsidiary or a Securitization Subsidiary in each case to
the extent the pledge of the capital stock or other equity interests of such
Subsidiary is prohibited by any applicable Requirement of Law or Contractual
Obligation,”

 

(2)  The
definition of “Material Subsidiaries” contained in Subsection 1.1 of the
Credit Agreement is hereby amended by deleting clause (i) thereof in its
entirety and substituting, in lieu thereof, the following:

 

5

 

“(i)
any Permitted Joint Venture,”.

 

(3)  The definition of “Permitted Acquisition”
contained in Subsection 1.1 of the Credit Agreement is hereby amended by
deleting clause (1) of the proviso thereto in its entirety and substituting, in
lieu thereof, the following:

 

“(1) the Borrower or a Domestic Subsidiary shall
directly own (and retain the right to vote), beneficially and of record, more
than 50% of the aggregate ordinary voting power and aggregate equity value
represented by the outstanding capital stock or other equity interests of any
acquired or newly formed corporation or other entity that acquires or leases
such Person, division or line of business;”

 

(4)  The definition of “Permitted Interest
Transfer” contained in Subsection 1.1 of the Credit Agreement is hereby
amended by deleting the phrase “the applicable requirements of the definition
of “Non-Restricted Joint Venture Subsidiary”, “Restricted Joint Venture
Subsidiary”,” and substituting, in lieu thereof, the phrase “the applicable
requirements of the definition of “Permitted Joint Venture”,”.

 

(5)  The definition of “Permitted Joint Venture”
contained in Subsection 1.1 of the Credit Agreement is hereby amended by
deleting clause (2) of the proviso thereto in its entirety and substituting, in
lieu thereof, the following:

 

“(2) the aggregate value of the investments, loans
and advances made by the Borrower and its Subsidiaries in (including assets
transferred to) any Permitted Joint Venture, in each case, measured as of the
date of each such investment, loan or advance (net of any repayments or return
of capital in respect thereof actually received in cash by the Borrower or its
Subsidiaries (net of applicable taxes) after the Closing Date) (the “Net
Investment Amount”), when added to the aggregate Net Investment Amounts of
all Permitted Joint Ventures consummated after the Closing Date, does not
exceed an amount equal to 10% of Total Tangible Assets.”

 

(6)  The definition of “Subsidiary Guarantor”
contained in Subsection 1.1 of the Credit Agreement is hereby amended by
deleting in clause (iii) thereof the phrase “Securitization Subsidiary,
Restricted Joint Venture Subsidiary or Non-Restricted Joint Venture Subsidiary”
and substituting, in lieu thereof, the phrase “Securitization Subsidiary or
Permitted Joint Venture Subsidiary”.

 

(7)  The definition of “Subsidiary Pledge
Agreement” contained in Subsection 1.1 of the Credit Agreement is hereby
amended by deleting clauses (iii) and (iv) of clause (x) thereof in their
entireties and substituting, in lieu thereof, the following:

 

“or (iii) a Permitted Joint Venture Subsidiary,
Permitted Syndication Subsidiary or a Securitization Subsidiary in each case to
the extent the pledge of the capital stock or other equity interests of such
Subsidiary is prohibited by any applicable Requirement of Law or Contractual
Obligation,”

 

6

 

(8)  Subsection 1.1 of the Credit Agreement
is hereby amended by deleting the definitions of “Non-Restricted Joint Venture
Subsidiary”, “Permitted Non-Restricted Joint Venture”, “Permitted Restricted
Joint Venture” and “Restricted Joint Venture Subsidiary” in their entireties.

 

C.  Amendment of Subsection 5.11
(Subsidiaries). Subsection 5.11 of the Credit Agreement
is hereby amended by deleting the second sentence thereof in its entirety and
substituting, in lieu thereof, the following:

 

“Each Domestic Subsidiary that, as of the Closing
Date, is a Non-Significant Subsidiary, a Syndication Subsidiary or a Permitted
Joint Venture Subsidiary is indicated as such (or, in the case of a Permitted
Joint Venture Subsidiary, is indicated as either a “Restricted Joint Venture
Subsidiary” or a “Non-Restricted Joint Venture Subsidiary”) on
Schedule 5.11 (a).”

 

D.  Amendment of Subsection 7.8
(Additional Subsidiary Guarantors: Pledge of Stock of Additional Subsidiaries).
Subsection 7.8(c) of the Credit Agreement is hereby amended by deleting
the phrase “or any Non-Restricted Joint Venture Subsidiary” in clause (y) of
the first parenthetical thereof, deleting clause (z) immediately following such
clause (y) in its entirety and substituting, in lieu thereof, the following:

 

“(z) any capital stock of, or other equity interest
in, any Permitted Syndication Subsidiary, any Securitization Subsidiary or any
Permitted Joint Venture Subsidiary in each case to the extent the pledge of the
capital stock of, or other equity interest in, such Subsidiary is prohibited by
any applicable Contractual Obligation or Requirement of Law”.

 

E.  Amendment of Subsection 8.2
(Indebtedness). Subsection 8.2(k) of the Credit
Agreement is hereby amended by (i) inserting the phrase “or Permitted Joint
Venture” after the phrase “Permitted Acquisition” each time it appears therein;
and (ii) deleting the proviso contained therein in its entirety and
substituting, in lieu thereof, the following:

 

“provided that the aggregate principal amount
of such Indebtedness shall not exceed $200,000,000 at any time outstanding”.

 

F.  Amendments of Subsection 8.3
(Limitation on Liens). (1)       
Subsection 8.3(h) of the Credit Agreement is hereby amended by
inserting at the end of the proviso contained in clause (i) thereof the phrase
“at any time outstanding”.

 

(2) Subsection 8.3(k) of the Credit Agreement
is hereby amended by inserting the phrase “or Permitted Joint Venture” after
the phrase “Permitted Acquisition” each time it appears therein.

 

G.  Amendment of Subsection 8.4
(Contingent Obligations). Subsection 8.4(b) of the Credit
Agreement is amended by deleting such subsection in its entirety and
substituting, in lieu thereof, the following:

 

7

 

“(b) Contingent Obligations of the Borrower and its
Subsidiaries incurred in the ordinary course of business or in connection with
a Permitted Acquisition or Permitted Joint Venture for an aggregate amount not
to exceed $100,000,000 at any time outstanding;”

 

H.  Amendment of Subsection 8.6
(Prohibition on Sale of Assets). Subsection 8.6(j)
of the Credit Agreement is hereby amended by deleting the phrase “a
Non-Restricted Joint Venture Subsidiary, a Restricted Joint Venture Subsidiary”
and substituting, in lieu thereof, the phrase “a Permitted Joint Venture
Subsidiary”.

 

I.  Amendment
of Subsection 8.9 (Limitation of Dividends).
Subsection 8.9(d) of the Credit Agreement is hereby amended by deleting
the phrase “any Non-Restricted Joint Venture Subsidiary, Restricted Joint
Venture Subsidiary” and substituting, in lieu thereof, the phrase “any
Permitted Joint Venture Subsidiary”.

 

J.  Amendment
of Subsection 8.16 (Clauses Restricting Subsidiary Distributions).
Subsection 8.16 of the Credit Agreement is hereby amended by deleting the
parenthetical “(other than any Non-Restricted Joint Venture Subsidiary)”
thereof and substituting, in lieu thereof, the parenthetical “(other than any
Permitted Joint Venture Subsidiary”).

 

K. Amendments of Subsection 9 (Events of
Default). (1) Subsection 9(e) of the Credit
Agreement is hereby amended by deleting the phrase “The Borrower or any of its
Subsidiaries (other than any Non-Restricted Joint Venture Subsidiary)” and
substituting, in lieu thereof, the phrase “Parent, the Borrower or any of its
Subsidiaries”.

 

(2) Subsection 9(f) of the Credit Agreement is
hereby amended by deleting the parenthetical in its clause (i) and
substituting, in lieu thereof, the following:

 

“(other than any Subsidiary which is a
Non-Significant Subsidiary within the meaning of clause (i) of the definition
thereof)”.

 

III.                               WAIVER AND AGREEMENT.

 

A. Waiver of Subsection 4.6 (Mandatory
Prepayments). (1) The provisions of paragraphs (a), (d)
and (e) of subsection 4.6 of the Credit Agreement are hereby waived with
respect to the application of proceeds from the issuance of High Yield
Subordinated Notes to the mandatory prepayment of the Loans and, in lieu
thereof, the Borrower, the Administrative Agent and the Lenders hereby agree as
follows:

 

(a)  The
Borrower shall apply an amount equal to 100% of the aggregate cash Net Proceeds
in respect of the issuance of High Yield Subordinated Notes to the prepayment
of the Loans.

 

(b)  Amounts
to be applied in connection with prepayments made pursuant to paragraph (a)
above shall be applied, first, to the prepayment of Revolving Credit
Loans then outstanding (without any accompanying reduction of the Revolving
Credit Commitments) and second, to the

 

8

 

ratable
prepayment of the Term Loans. Partial prepayments of the Term Loans shall be
applied first, to the installments thereof scheduled to be paid during
the next twelve months after the date of such prepayment, in the order that
such installments are scheduled to be paid, and second, to the remaining
installments on a pro  rata basis.

 

(2)
The Issuance of the High Yield Subordinated Notes and the related Additional
Subordinated Notes shall not count against the “Debt Issuance Prepayment
Trigger” (which as of the First Amendment Effective Date remains unused at
$200,000,000).

 

IV.                                 CONDITIONS.

 

A.  Conditions to Effectiveness.
This Amendment shall become effective upon the satisfaction of the following
conditions precedent (the effective date of this Amendment, the “First
Amendment Effective Date”):

 

(1)  Amendment.
The Administrative Agent shall have received counterparts of this Amendment
executed by the Borrower, Parent and the Administrative Agent and consented to by the Required Lenders as of the date hereof.

 

(2)  Reaffirmation
of Guarantee and Collateral Agreement. The Administrative
Agent shall have received a reaffirmation of the Parent Guarantee and the
Subsidiary Guarantees with reference to the Credit Agreement as amended and
waived by this Amendment (the “Reaffirmation”), executed and delivered by an
authorized officer of Parent, the Borrower and each other Credit Party
signatory to the Parent Guarantee and/or the Subsidiary Guarantee,
substantially in the form attached to the Credit Agreement as Exhibit J, mutatis
mutandis, which Reaffirmation shall include a confirmation that such
guarantees shall rank senior to any obligations of such Credit Parties in
respect of or related to the High Yield Subordinated Notes.

 

(3)  Representations
and Warranties. Each of the representations and warranties
made by Parent and the Borrower in or pursuant to this Amendment shall be true
and correct in all material respects on and as of the First Amendment Effective
Date.

 

(4)  Fees.
The Administrative Agent shall have received, on behalf of itself and the
Lenders party hereto, all fees required to be paid, including an amendment fee
in an amount equal to 0.075% of each such Lender’s aggregate Revolving Credit
Commitment and Term Loans outstanding, and all expenses for which invoices have
been presented, on or before the First Amendment Effective Date shall have been
paid.

 

(5)  Issuance
of High Yield Notes. Concurrently herewith, Parent shall complete
the offering of High Yield Subordinated Notes in a minimum aggregate principal
amount of approximately $250,000,000 and advanced the proceeds thereof to
Borrower pursuant to an Additional Subordinated Note, all on terms and
conditions reasonably satisfactory to the Administrative Agent.

 

9

 

V.                                     REPRESENTATIONS AND WARRANTIES.
In order to induce the Administrative Agent and the Lenders to enter into this
Amendment, the Borrower hereby represents and warrants to the Administrative
Agent and the Lenders the following:

 

A.  Representations
in the Credit Agreement.  The
representations and warranties contained in the Credit Documents are true and
correct in all material respects on and as of the First Amendment Effective
Date (after giving effect hereto) as if made on and as of the First Amendment
Effective Date (except where such representations and warranties expressly
relate to an earlier date in which case such representations and warranties
were true and correct in all material respects as of such earlier date); provided
that all references to the “Credit Agreement” in any Credit Document shall be
and are deemed to mean the Credit Agreement as amended hereby;

 

B.  Subsidiaries.  The Subsidiaries of the Borrower listed on
Schedule 5.l l(c) constitute all of the Domestic Subsidiaries of the
Borrower, and the Subsidiaries listed on Schedule 5.1 l(d) constitute all
of the Foreign Subsidiaries of the Borrower as of the First Amendment Effective
Date. Each Domestic Subsidiary that, as of the First Amendment Effective Date,
is a Non-Significant Subsidiary, a Syndication Subsidiary or a Permitted Joint
Venture Subsidiary is indicated as such (or in the case of a Permitted Joint
Venture Subsidiary, is indicated as either a “Restricted Joint Venture Subsidiary”
or a “Non-Restricted Joint Venture Subsidiary”) on Schedule 5.1 l(c).

 

C.  Accuracy
of Information. All information, taken as a whole, that has
been made available to the Administrative Agent by the Borrower, Parent or any
of their representatives in connection with this Amendment does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not materially misleading in
light of the circumstances under which such statements are made.

 

VI.                                 MISCELLANEOUS.

 

A.  Counterparts.  This Amendment may be executed by one or
more of the parties to this Amendment on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Amendment signed by the parties hereto shall be delivered to the Borrower and
the Administrative Agent. The execution and delivery of this Amendment by any
Lender shall be binding upon each of its successors and assigns (including
transferees of its Commitments and/or Loans in whole or in part prior to
effectiveness hereof) and binding in respect of all of its Commitments and
Loans, including any acquired subsequent to its execution and delivery hereof
and prior to the effectiveness hereof.

 

B.  Fees
and Expenses. The Borrower agrees to pay or reimburse the
Administrative Agent for all of its reasonable out-of-pocket costs and expenses
in connection with the negotiation, preparation, execution and delivery of this
Amendment,

 

10

 

including
without limitation the reasonable fees and expenses of Simpson Thacher &
Bartlett LLP.

 

C.  References to Joint Venture Subsidiaries
in other Credit Documents. Any reference in a
Credit Document to “Restricted Joint Venture Subsidiary” or “Non-Restricted
Joint Venture Subsidiary” shall instead refer, mutatis  mutandis,
to “Permitted Joint Venture Subsidiary”.

 

D.  Continuing Effect, No Other Amendments or
Waivers. Except as expressly set forth in this First
Amendment, all of the terms and provisions of the Credit Agreement are and
shall remain in full force and effect and the Borrower shall continue to be
bound by all of such terms and provisions. The amendments and waivers provided
for herein are limited to the specific subsections of the Credit Agreement
specified herein and shall not constitute an amendment or waiver of, or an
indication of the Administrative Agent’s or the Lenders’ willingness to amend
or waive, any other provisions of the Credit Agreement or the same subsections
for any other date or purpose.

 

E.  GOVERNING LAW.
THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.

 

11

 

IN
WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered by their respective duly authorized officers as of the day and year
first above written.

 

	
   

  	
   

  	
  CHS/COMMUNITY
  HEALTH SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James W. Doucette

  
	
   

  	
   

  	
   

  	
  Title:

  	
  James W. Doucette

  
	
   

  	
   

  	
   

  	
  Vice President &  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMMUNITY
  HEALTH SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James W. Doucette

  
	
   

  	
   

  	
   

  	
  Title:

  	
  James W.
  Doucette

  
	
   

  	
   

  	
   

  	
  Vice President
  & Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JPMORGAN
  CHASE BANK,

  as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Dan Lee Lum

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK
  OF AMERICA, N.A., 

  
	
   

  	
   

  	
  as
  Documentation Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Kevin Wagley

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
							

 

 

	
   

  	
   

  	
  WACHOVIA
  BANK, NATIONAL

  
	
   

  	
   

  	
  ASSOCIATION,

  
	
   

  	
   

  	
  as
  Syndication Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jeanette A. Griffin

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Jeanette A. Griffin

  
	
   

  	
   

  	
   

  	
  DirectorExhibit 10.20

                             SLOAN SECURITIES CORP.

                               TWO EXECUTIVE DRIVE

                         FORT LEE, NEW JERSEY 07024-3308

December 7, 2004

PocketSpec Technologies, Inc.
3225 E. 2nd Avenue
Denver, CO  80206
Attn: Janet Brophy, Chief Executive Officer and President

Re: Investment Banking Agreement

Dear Ms. Brophy:

This letter confirms the agreement ("Agreement") of PocketSpec Technologies,
Inc. and its successors, subsidiaries and affiliates (referred to herein as the
"Company") to retain Sloan Securities Corp. ("SSC"), to provide during the Term
(as hereinafter defined), the services described below.

1.   Services SSC agrees to perform such of the following financial advisory and
     investment  banking  services  ("Services")  as the Company  reasonably and
     specifically requests:

     1.1. Advisory  Services.  SSC will (i) familiarize  itself to the extent it
          deems   appropriate  and  feasible  with  the  business,   operations,
          properties,  financial  condition and  prospects of the Company;  (ii)
          advise the Company's management in corporate finance,  structuring the
          nature,  extent and other  parameters  of any  transaction;  and (iii)
          evaluate  financial  matters and assist in financial  arrangements and
          investment banking transactions,  including assistance and advice with
          regard  to  maximization  of  shareholder  value,  which  may  include
          effectuation of a reverse merger  transaction.  Advisory services will
          also be rendered by SSC in the context of the Acquisition  Transaction
          described below.

     1.2. Acquisition   Transaction.   SSC  will  seek  to   identify  a  target
          corporation   ("Target")  with  whom  it  is   contemplated   that  an
          Acquisition  Transaction  will be  consummated.  For  purposes of this
          Agreement, "Acquisition Transaction" shall mean: (i) any merger, share
          exchange, consolidation,  reorganization or other business combination
          pursuant to which the  businesses  of Target is combined  with that of
          the Company;  (ii) the  acquisition,  directly or  indirectly,  by the
          Company of all or a substantial portion of the assets or common equity
          of Target by way of  negotiated  purchase or  otherwise;  or (iii) the
          acquisition, directly or indirectly, by Target of all or a substantial
          portion  of the  assets or  common  equity  of the  Company  by way of
          negotiated purchase or otherwise.

<PAGE>

          In  connection  with  the  proposed  Acquisition  Transaction,   SSC's
          advisory  services  will,  at  the  Company's  request,   include  the
          following:  (i)  assistance in the  evaluation of a third party from a
          financial  point of view;  (ii)  assistance and advice with respect to
          the  form  and  structure  of  the  Acquisition  Transaction  and  the
          financing  thereof;  (iii)  conducting  discussions  and  negotiations
          regarding an Acquisition Transaction; and (iv) providing other related
          advice  and  assistance  as the  Company  may  reasonably  request  in
          connection with an Acquisition Transaction.

          The Company  agrees that if,  during the period SSC is retained by the
          Company or, within one (1) year thereafter, an Acquisition Transaction
          is consummated with a third party introduced,  directly or indirectly,
          by SSC (a  "SSC  Introduced  Party"),  or the  Company  enters  into a
          definitive  agreement  with a SSC  Introduced  Party which at any time
          thereafter results in an Acquisition Transaction, the Company will pay
          SSC a transaction  fee equal to 20% of the  Consideration  paid and/or
          payable in the Acquisition Transaction.  For purposes hereof, the term
          "Consideration"  shall  mean the  aggregate  value,  whether  in cash,
          securities, assumption (or purchase subject to) of debt or liabilities
          (including,  without  limitation,  indebtedness  for  borrowed  money,
          pension liabilities and guarantees) or other property,  obligations or
          services,  paid or  payable  directly  or  indirectly  (in  escrow  or
          otherwise)  or otherwise  assumed in  connection  with an  Acquisition
          Transaction.  The value of such  Consideration  shall be determined as
          follows:  (a)  the  value  of  securities,  liabilities,  obligations,
          property  and  services  shall  be the fair  market  value as we shall
          mutually  agree  upon at the date of the  closing  of the  Acquisition
          Transaction; and (b) the value of indebtedness, including indebtedness
          assumed,  shall be the face amount. See section 6.8. In addition,  the
          Company  will  pay  5%  to  David  Lowenstein's   company,   Strategic
          Initiatives

          If the Consideration  payable in an Acquisition  Transaction  includes
          contingent  payments to be calculated by reference to uncertain future
          occurrences,  such as future financial or business  performance,  then
          any fees of SSC relating to such Consideration shall be payable at the
          earlier of the: (i) receipt of such  Consideration;  or (ii) time that
          the amount of such Consideration can be determined.

          The  parties  acknowledge  and agree that the phrase  "SSC  Introduced
          Party" as used  herein is  intended  to  include  any person or entity
          directly or indirectly  introduced  to the Company by SSC,  including,
          without  limitation,  situations  where (i) SSC has taken any steps to
          develop or communicate a specific transaction with the Company to that
          person or entity,  even if that third party has previously  been known
          to the Company or (ii) SSC merely  brings such person or entity to the
          attention  of the  Company,  provided  that the  Company  had no prior
          contacts with the third party.

     1.3  Reasonable  Efforts.  SSC agrees to devote such time and effort to the
          affairs of the  Company as is  reasonable  and  adequate to render the
          Services  contemplated by this agreement.  The Company understands and
          agrees that SSC shall not be  responsible  for the  performance of any
          services which may be rendered hereunder without the Company providing
          the  necessary  information  in writing prior  thereto,  nor shall SSC
          include  any  services  that  constitute  the  rendering  of any legal
          opinions or performance of work that is in the ordinary purview of the
          Certified  Public  Accountant  retained by the  Company.  SSC does not
          guarantee  results  on  behalf  of  the  Company,   but  shall  pursue
          reasonable avenues available through its network of contacts.  At such
          time as an interest  is  expressed  by a third party in the  Company's
          needs,  SSC shall notify the Company and advise it as to the source of
          such interest and any terms and conditions of such interest.

                                        2
<PAGE>

          The Company acknowledges that SSC's  responsibilities shall be limited
          to the  foregoing,  and  that SSC  shall  have no  responsibility  for
          fulfilling  any  reporting  or  filing  requirements  of  the  Company
          pursuant to applicable federal and state securities laws. In addition,
          the Company  expressly  acknowledges and agrees that SSC's obligations
          hereunder are on a reasonable effort basis only and that the execution
          of this  Agreement  does not ensure  that a Target  will be located by
          SSC.

2.   Term

     2.1. This Agreement shall take effect  immediately upon execution and shall
          continue for an initial  term of one year  ("Term").  Thereafter,  the
          Agreement  will  terminate  unless  renewed by the parties in writing.
          Notwithstanding  the expiration or termination of this Agreement,  the
          indemnification, contribution, reimbursement and "tail" obligations of
          the Company shall  survive and all  previously  paid fees  (including,
          without limitation,  any securities previously issued to SSC) shall be
          retained by SSC on a non-accountable basis.

3.   Information

     3.1. In  connection  with SSC's  engagement  hereunder,  the  Company  will
          furnish SSC and any prospective Target with any information concerning
          the Company that SSC reasonably deems appropriate and will provide SSC
          and  prospective  Entities  with  reasonable  access to the  Company's
          officers, directors,  accountants, counsel and other advisors, subject
          to the Company's  non-disclosure  agreement. In addition, SSC shall be
          kept fully informed of any events that are reasonably likely to have a
          material effect on the financial condition of the Company. The Company
          represents  and warrants to SSC that all such  information  concerning
          the Company and all  materials  used in  attempting to locate a Target
          for an Acquisition Transaction ("Materials") will be true and accurate
          in all material  respects and will not contain any untrue statement of
          a material fact or omit to state a material fact necessary in order to
          make  the   statements   therein  not   misleading  in  light  of  the
          circumstances  under  which  such  statements  are made.  The  Company
          acknowledges   and  agrees  that  SSC  will  not  undertake  any  "due
          diligence"  investigation  and  will be  using  and  relying  upon the
          information  supplied  by the  Company  and its  officers,  agents and
          others, the Materials,  and any other publicly  available  information
          concerning the Company.

                                        3
<PAGE>

4.   Non-Circumvent.

     4.1. In order to prevent the Company from circumventing SSC's position with
          a Target,  the  Company  agrees  that  whether or not any  Acquisition
          Transaction  concerning  the Company is completed,  for a twelve month
          period  commencing from the date of this Agreement,  without the prior
          express  written consent of SSC, that the Company will not (a) contact
          a Target  introduced  to the  Company  by SSC  during the term of this
          Agreement  in order  to (i)  deprive  SSC of the  fees it is  entitled
          pursuant  to  this  Agreement  or  (ii)  arrange  any  other  type  of
          transaction  with a Target  introduced  to the  Company by SSC; or (b)
          otherwise  circumvent  SSC's  right  to  earn a fee  pursuant  to this
          Agreement or otherwise  with  respect to Entities,  introduced  to the
          Company by SSC, in any manner whatsoever.

5.   Indemnification

     5.1. The Company shall indemnify SSC under the  indemnification  provisions
          attached hereto as Schedule A and made a part hereof.

6.   General Provisions.

     6.1. Any and all claims,  disputes,  or  controversies  arising out of this
          Agreement  will  be  resolved  by  arbitration   before  the  American
          Arbitration   Association  ("AAA")  and  that  with  respect  to  this
          Agreement,  a party may seek injunctive  relief and ancillary  damages
          before the AAA.  Each party  irrevocably  consents  to subject  matter
          jurisdiction  before the AAA. The parties shall restrict themselves to
          claims for  compensatory  damages  and no claims  shall be made by any
          party for  punitive or similar  damages.  The  parties  agree that any
          award or  decision  by the AAA  shall be final  and  binding  upon the
          parties  and a  judgment  may  be  entered  in a  court  of  competent
          jurisdiction  upon such award or decision.  The parties agree that the
          situs of any arbitration or legal  proceedings  hereunder shall be the
          City of New York.

     6.2. This Agreement may not be amended or modified except in writing signed
          by both parties to the Agreement.

     6.3. All notices and other  communications  hereunder shall be deemed given
          upon  (a)  the  sender's   confirmation  of  receipt  of  a  facsimile
          transmission to the recipient's  facsimile number set forth below, (b)
          confirmed  delivery by a standard overnight carrier to the recipient's
          address set forth below,  or (c)  delivery by hand to the  recipient's
          address  set  forth  below  (or,  in each  case,  to or at such  other
          facsimile  number or address  for a party as such party may specify by
          notice given in accordance with this Section 6.3):

          If to the Company, to:

              PocketSpec Technologies, Inc.
              3225 E. 2nd Avenue
              Denver, CO  80206
              Attn: Janet Brophy, Chief Executive Officer and President
              Fax: 303.393.1700

                                        4
<PAGE>

           If to SSC, to:

              James C. Ackerman
              Sloan Securities Corp.
              Two Executive Drive
              Fort Lee, NJ 07024
              Fax: (201) 592-0695

     6.4. SSC shall perform its services hereunder as an independent  contractor
          and not as an employee of the Company or an affiliate  thereof.  It is
          expressly  understood  and agreed to by the  parties  hereto  that SSC
          shall have no authority  to act for,  represent or bind the Company or
          any  affiliate  thereof  in any  manner,  except  as may be  agreed to
          expressly by the Company in writing from time to time.

     6.5. The Company  hereby  represents  that it is a  sophisticated  business
          enterprise that has retained SSC for the limited purposes set forth in
          this  letter,  and  the  parties  acknowledge  and  agree  that  their
          respective  rights and  obligations  are  contractual in nature.  Each
          party  disclaims an intention to impose  fiduciary  obligations on the
          other by virtue of the engagement contemplated by this letter.

     6.6. Neither the  execution  and delivery of this  Agreement by the Company
          nor the  consummation of the  transactions  contemplated  hereby will,
          directly or indirectly,  with or without the giving of notice or lapse
          of time, or both:  (i) violate any  provisions of the  Certificate  of
          Incorporation  or By-laws of the Company;  or (ii)  violate,  or be in
          conflict  with, or constitute  default under,  any  agreement,  lease,
          mortgage,  debt or  obligation  of the Company or require the payment,
          any pre-payment or other penalty with respect thereto. The Company has
          all  requisite  power and  authority  to enter  into and  perform  its
          obligations  under  this  Agreement.  This  Agreement  has  been  duly
          executed and delivered and constitutes  valid and binding  obligations
          of the Company ,  enforceable  against the Company in accordance  with
          their respective terms.

     6.7. In the event that other  services  are  required  and/or  transactions
          which are the  result of SSC's  efforts  that are not as  contemplated
          herein,  the parties hereto shall negotiate in good faith to determine
          a mutually acceptable level of compensation in such an eventuality.

     6.8. With regard to  compensation  for a pending  company Target - bio-tech
          company  it is  agreed  that  fees to SSC shall be equal to 20% of the
          receipts  PocketSpec's  present  shareholders  receive  in the form of
          stock in the new company,  with not less than 10% being free  trading.
          No credit or fees will be  generated  for the "spin  off" of the asset
          owned by PocketSpec, specifically Color-Spec Technologies Inc. SSC has
          had the opportunity to investigate this assets in a recent SEC filing.

                                        5
<PAGE>

If the foregoing is acceptable to you, please sign and return the enclosed copy
of this letter to my attention.

Very truly yours,

SLOAN SECURITIES CORP.

By:   /s/ James C. Ackerman
      -------------------------------------
      James C. Ackerman
      Chief Executive Officer and President

AGREED AND ACCEPTED THIS
10th DAY OF DECEMBER, 2004:

POCKETSPEC TECHNOLOGIES, INC.

By:   /s/ Janet Brophy
     -------------------------------------
     Janet Brophy
     Chief Executive Officer and President

                                        6
<PAGE>

                                   Schedule A

James C. Ackerman
Sloan Securities Corp.
Two Executive Drive
Fort Lee, NJ 07024
Fax: (201)592-0695

Ladies and Gentlemen:

     In connection  with our  engagement of Sloan  Securities  Corp.  ("SSC") as
Investment  Bankers,  we hereby agree to indemnify and hold harmless SSC and its
affiliates,  and the respective directors,  officers,  shareholders,  agents and
employees of SSC (collectively the "Indemnified Persons"),  from and against any
and all claims, actions,  suits,  proceedings (including those of shareholders),
damages,  liabilities  and  expenses as incurred by any of them  (including  the
reasonable fees and expenses of counsel) which (A) relate to or arise out of (i)
any actions taken or omitted to be taken  (including any untrue  statements made
to any  Indemnified  Person) in  connection  with our  engagement of SSC, or (B)
otherwise  relate to or arise out of SSC's  activities on our behalf under SSC's
engagement,  and we shall  reimburse  any  Indemnified  Person for all  expenses
(including  the  reasonable  fees and  expenses  of counsel) as incurred by such
Indemnified Person in connection with investigating,  preparing or defending any
such claim, action , suit or proceeding  (collectively a "Claim"), in connection
with  pending or  threatened  litigation  in which any  Indemnified  Person is a
party.  We will not,  however,  be  responsible  for any Claim  which is finally
judicially  determined to have resulted exclusively from the gross negligence or
willful misconduct of any person seeking  indemnification  hereunder. We further
agree  that no  Indemnified  Person  shall  have any  liability  to us for or in
connection with our engagement of SSC except for any Claim incurred by us solely
as a direct  result of any  Indemnified  Person's  gross  negligence  or willful
misconduct.

     We further  agree that we will not,  without the prior  written  consent of
SSC,  settle,  compromise or consent to the entry of any judgment in any pending
or threatened Claim in respect of which indemnification may be reasonably sought
hereunder (whether or not any Indemnified Person is an actual or potential party
to such  Claim),  unless  such  settlement,  compromise  or consent  includes an
unconditional,  irrevocable release of each Indemnified Person against whom such
claim may be brought  hereunder  from any and all liability  arising out of such
claim.

     Promptly upon receipt by an  Indemnified  Person of notice of any complaint
or  the   assertion  or   institution   of  any  Claim  with  respect  to  which
indemnification is being sought hereunder,  such Indemnified Person shall notify
us in writing of such complaint or of such assertion or institution  but failure
to do so  notify  us  shall  not  relieve  us from any  obligations  we may have
hereunder,  unless and only to the extent such failure results in the forfeiture
by us of substantial  rights and defenses,  and will not in any event relieve us
from any other obligation or liability we may have to any Indemnified Person, we
will assume the  defense of such  Claim,  including  the  employment  of counsel
reasonably satisfactory to such Indemnified Person and the payment of reasonable
fees and expenses of such counsel. In the event,  however, that such Indemnified
Person reasonably  determines that having common counsel with the Company and/or
another  Indemnified  Person  would  present  such  counsel  with a conflict  of
interest  or if the  defendant  in, or target of, any such  Claim,  includes  an
Indemnified Person and us, and such Indemnified  reasonably concludes that there

                                        7
<PAGE>

may be legal defenses  available to it or other  Indemnified  Persons  different
from or in addition to those available to us, then such  Indemnified  Person may
employ its own separate  counsel to represent or defend it in any such Claim and
we shall pay the reasonable  fees and expenses of such counsel.  Notwithstanding
anything  herein to the  contrary,  if we fail timely or  diligently  to defend,
contest, or otherwise protect against any Claim, the relevant Indemnified Person
shall have the right, but not the obligation,  to defend,  contest,  compromise,
settle,  assert cross Claims,  or counterclaims or otherwise protect against the
same,  and  shall  be  fully  indemnified  by us  therefore,  including  without
limitation,  for the reasonable fees and expenses of its counsel and all amounts
paid as a result of such Claim or the compromise or settlement  thereof.  In any
Claim in which we assume the  defense,  the  Indemnified  Person  shall have the
right to  participate  in such Claim and to retain its own counsel  therefore at
its own expense.

     We agree that if any indemnity sought by an Indemnified Person hereunder is
held by a court to be  unavailable  for any reason,  then (whether or not SSC is
the Indemnified Person), we and SSC shall contribute to the Claim for which such
indemnify is held  unavailable  in such  proportion as is appropriate to reflect
the  relative  benefits  to us,  on the  one  hand,  and  SSC on the  other,  in
connection with SSC's  engagement  referred to above, and the relative fault, as
between us and the  Indemnified  Person in respect of the Claim,  subject to the
limitation that in no event shall the amount of SSC's contribution to such Claim
exceed the amount of fees  actually  received  by SSC from us  pursuant to SSC's
engagement.  We hereby agree that the relative  benefits to us, on the one hand,
and SSC on the other,  with respect to SSC's engagement shall be deemed to be in
the same  proportion  as (a) the  total  value  paid or  proposed  to be paid or
received by us or our stockholders as the case may be, pursuant to the Financing
(whether or not consummated)  for which SSC is engaged,  to (b) the fee actually
paid to SSC in connection with such engagement; provided, however, that under no
circumstances  whatsoever  shall SSC be required to contribute to any such claim
any  amount  in  excess  of the  fee  actually  paid  in  connection  with  such
engagement.

     Our  indemnity,  reimbursement  and  contribution  obligations  under  this
Agreement  shall be in  addition  to,  and  shall in no way  limit or  otherwise
adversely  affect,  any rights that any Indemnified  Party may have at law or at
equity.

     Should SSC or its  personnel  be  required  or  requested  by us to provide
documentary evidence or testimony in connection with any proceeding arising form
or relating to SSC's engagement,  we agree to pay all actual reasonable expenses
(including fees incurred for legal counsel) in complying therewith.

     Any  and  all  claims,  disputes,  or  controversies  arising  out of  this
Agreement  will be  resolved  by  arbitration  before the  American  Arbitration
Association  ("AAA") and that with respect to this  Agreement,  a party may seek
injunctive  relief and ancillary  damages before the AAA. Each party irrevocably
consents  to subject  matter  jurisdiction  before the AAA.  The  parties  shall
restrict  themselves to claims for  compensatory  damages and no claims shall be
made by any party for punitive or similar  damages.  The parties  agree that any
award or decision  by the AAA shall be final and binding  upon the parties and a
judgment may be entered in a court of competent  jurisdiction upon such award or
decision.  The  parties  agree  that  the  situs  of any  arbitration  or  legal
proceedings hereunder shall be the City of New York.

     It is  understood  that, in connection  with SSC's  engagement,  SSC may be
engaged to act in one or more  additional  capacities  and that the terms of the
original engagement or any such additional  engagement may be embodied in one or
more separate written  agreements.  The provisions of this Agreement shall apply
to the original engagement, any such additional engagement and any modifications

                                        8
<PAGE>

of the original engagement or such additional engagement and shall remain in
full force and effect following the completion or termination of SSC's
engagement(s).

Very truly yours,

SLOAN SECURITIES CORP.

By:       /s/ James C. Ackerman
          ---------------------------------------
          James C. Ackerman
          Chief Executive Officer and President

Confirmed and agreed to:

POCKETSPEC TECHNOLOGIES, INC.

By:       /s/ Janet Brophy
          ---------------------------------------
           Janet Brophy
           Chief Executive Officer and President

                                        9

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