Document:

Exhibit 10.1

      EMPLOYMENT AGREEMENT

      This Employment Agreement (as amended from time to time, this “Agreement”) is entered into this 1st day of August, 2007 with an effective date of August 27th, 2007 (the “Effective Date”) by and among Westell Technologies, Inc, a Delaware corporation (the “Company”), Westell, Inc., an Illinois corporation (the “Operating Subsidiary”) and Timothy R. Pillow (“Executive”).

      In consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as follows:

      SECTION 1.  EMPLOYMENT AND DUTIES.  Effective August 27th, 2007, the Company hereby employs Executive to serve as Chief Marketing & Strategy Officer of the Company as well as Chief Marketing & Strategy Officer of the Operating Subsidiary, during the Term (as such term is defined in Section 3). Executive accepts such employment on the terms and conditions set forth in this Agreement. Executive shall perform the duties of Chief Marketing & Strategy Officer of the Company and of the Operating Subsidiary and shall perform such other duties consistent with such positions as may be assigned to Executive from time to time by the Board of Directors of the Company or the Operating Subsidiary (individually a “Board,” and collectively, the “Boards”). Executive shall devote his best efforts and skills to the business and interests of the Company and the Operating
      Subsidiary on a full-time basis, provided, however, that, to the extent such activities do not adversely affect the performance of his responsibilities to the Company and the Operating Subsidiary hereunder, Executive may (i) manage his personal investments and participate in charitable and civic affairs and (ii) serve on the boards of directors of for-profit or non-profit corporations if approved by the Boards, such approval not to be unreasonably withheld. Executive shall at all times observe and abide by the Company’s and the Operating Subsidiary’s written policies and procedures as in effect from time to time.

      SECTION 2.  IN CONSIDERATION OF THE SERVICES TO BE PERFORMED BY EXECUTIVE HEREUNDER, EXECUTIVE SHALL RECEIVE FROM THE OPERATING SUBSIDIARY THE FOLLOWING COMPENSATION AND BENEFITS:

      2.1          Base Salary.  During the Term, Executive shall be paid an annual base salary by the Operating Subsidiary (the “Base Salary”) which shall be payable in installments consistent with the Operating Subsidiary’s payroll schedule. The Base Salary shall be Two Hundred Fifty Thousand Dollars ($250,000) per year, subject to review each year during the Operating Subsidiary’s annual salary review. The Operating Subsidiary may, in its sole discretion, increase the Base Salary as a result of any such review. Executive’s Base Salary shall not be reduced without Executive’s prior written consent.

       

      CHI99 4901830-1.043183.0010 

       

      
      

      

      

      

      	
                   
 	
                  2.2
 	
                  Benefits.
 

      

      (a)          During the Term, Executive shall be provided with employee benefits commensurate with those made generally available to other executives of the Operating Subsidiary. A list of the employee benefits provided generally to the executives of the Operating Subsidiary as of the Effective Date is attached hereto as Schedule 2.2, which Schedule is incorporated herein by reference for all purposes. In addition, Executive shall be provided certain special benefits (the “Special Benefits”) also listed on Schedule 2.2. Neither the Company nor the Operating Subsidiary has undertaken any actions, or intends to undertake any actions, designed to eliminate, reduce or otherwise limit any of the employee benefits described on Schedule 2.2, but it is understood that such benefits other than the
      Special Benefits may change from time to time, but will remain commensurate with benefits befitting of the Chief Marketing and Strategy Officer of a publicly held company of comparable size in the telecommunications industry.

      (b)          If during the first three years of the Term, Executive’s employment is terminated either by the Company without Cause or by Executive for “Good Reason”, Executive shall be entitled to (i) continued benefits under COBRA as it applies to the benefits provided under subparagraph (a) above for Executive and those of his dependents who were covered dependents as of the effective date of the termination (“COBRA Qualified Beneficiaries”) and (subject to the terms and conditions of the applicable benefit plans), the Company shall pay the Company portion of the required premium or contribution during the period in which the Executive is receiving severance payments from the Company or the COBRA period (whichever is shorter), in an amount which the Company was remitting on
      behalf of the Executive prior to his termination, except that Executive shall be required to continue to pay that portion of any premiums or contributions that the Executive was remitting prior to his termination to maintain such benefit (subject to any increases imposed by the benefit plan), and (ii) such other benefits as may be required by law or subject to the terms of any benefit or retirement plan or other arrangement that would by its terms apply to the Executive upon termination, provided that if a premium or contribution is required, Executive shall remit all required premiums and contributions in a manner required by the Company in order to continue that benefit.

      (c)          If Executive’s employment is terminated other than under the circumstances specified in subparagraph (b) above, or if Executive’s employment is terminated under the circumstances specified in subparagraph (b) above but does not execute, or Executive executes but revokes a release in the form of Exhibit A, Executive shall be entitled to (i) continued benefits under COBRA as it applies to the benefits provided under subparagraph (a) above for Executive and the COBRA Qualified Beneficiaries (subject to the terms and conditions of the applicable benefit plans), provided that Executive shall remit all required premiums or contributions in the manner required by the Company in order to continue that benefit, and (ii) such other benefits as may be required by law or subject to the terms
      of any benefit or retirement plan or other arrangement that would by its terms apply to the Executive upon termination, provided that if a premium or contribution is required, Executive shall remit all required premiums and contributions in a manner required by the Company in order to continue that benefit.

       

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      2.3          Bonuses.  Executive shall receive a signing bonus of Ninety Thousand Dollars ($90,000) upon the Effective Date of his employment, and shall be guaranteed  a bonus for fiscal year ending March 31, 2008. For the fiscal year ending March 31, 2008, Executive shall be guaranteed a bonus of One Hundred Fifty Thousand Dollars ($150,000), which amount (subject to applicable withholding) shall be paid to Executive in two installments as follows:  5/12 of $150,000 on his first day of employment (the “First Installment”) , and 7/12 of $150,000 based upon annual corporate performance (PLUS an additional amount as “true-up”  based upon his overachievement of objectives developed by the Company’s Board and Compensation Committee for the fiscal year) on
      or before May 1, 2008. For subsequent fiscal years during the Term, Executive shall be eligible to receive a bonus based upon the achievement of performance goals to be developed for each year by the Company’s Board and Compensation Committee. Except for payment of pro-rated bonuses in circumstances hereinafter described, eligibility for all bonuses, including the bonus for the fiscal year ending March 31, 2008 is subject to the Operating Subsidiary policy that the employee be employed on the “bonus payment date”, which for purposes hereof shall be the earlier of (i) the date such bonus is actually paid, or (ii) May 1 of each year.

      

      	
                   
 	
                  2.4
 	
                  Stock Awards and Options.
 

      

      (a)          On August 27, 2007 Executive shall receive a stock option award of 150,000 shares of Company Class A common stock pursuant to the Westell Technologies, Inc. 2004 Stock Incentive Plan (the “2004 Stock Incentive Plan”), one-fifth (30,000 shares) of which will vest on each August 27 from August 27, 2008 through August 27, 2012, so long as he remains an employee of the Company on the vesting date. The stock award shall also provide, among other things, that all unvested portions of the stock award shall fully vest upon (i) a Change of Control, or (ii) the termination of Executive’s employment with the Company by reason of (A) the termination of such employment by the Company without Cause, or (B) the termination of such employment by Executive for Good Reason.

      (b)          Executive will also be eligible to receive awards of options and other benefits under the 2004 Stock Incentive Plan as determined by the Compensation Committee of Company’s Board from time to time commencing April, 2008, it being understood that there is no commitment as to frequency or amount of any such awards.

      (c)          In the event of Executive’s death, all vested stock options referred to in Section 2.4(a) hereinabove shall, to the extent permitted by Section 11 of the 2004 Stock Incentive Plan and applicable law, become exercisable by the executor of Executive’s estate or Executive’s personal representative for a period of ninety (90) days following Executive’s death.

      

      	
                   
 	
                  SECTION 3.
 	
                  TERM
 

      

      3.1          Commencement.  The term of Executive’s employment hereunder shall commence on the Effective Date and continue until terminated in accordance with this 

       

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      Agreement. The term of Executive’s employment hereunder is referred to herein as the “Term.”

      3.2          Termination for Cause.  The Company may terminate Executive’s employment for Cause upon written notice specifying the cause for termination and the intended termination date. Upon termination for Cause, Executive shall be entitled to receive the Base Salary and benefits as set forth in Section 2.1 and Section 2.2(a), respectively, through the effective date of such termination, and such post termination benefits as are specified in Section 2.2(c).

      3.3          Termination by Company Without Cause.  The Company may terminate Executive’s employment without Cause at any time upon written notice within the first three years of the Term or upon at least thirty (30) days prior written notice after the first three years of the Term. If the Company terminates Executive’s employment without Cause, Executive shall be entitled to receive the Base Salary and benefits as set forth in Section 2.1 and Section 2.2(a), respectively, through the effective date of such termination, and such post termination benefits as are specified in Section 2.2(b) or 2.2(c), as applicable. If such termination occurs during the first three years of the Term, Executive shall also be entitled to receive as severance, upon execution of a release
      in the form attached as Exhibit A hereto and the expiration of any revocation period thereunder without revocation, and conditional upon Executive’s continued adherence to the post termination covenants in this Agreement, (A) an amount equal to one year’s Base Salary at the Base Salary rate in effect for Executive as of the effective date of the termination, payable in regular installments at the time salary would have been payable, provided, however, that such payments shall be deferred until the six-month anniversary of the date of Executive’s termination of employment if deferral to such anniversary date is required to comply with the provisions of Section 409A of the Internal Revenue Code and (B) a pro rata portion of Executive’s anticipated bonus under Section 2.3 for the fiscal year in which the termination occurs, the amount of which pro rata portion shall be equal to (x) the target bonus amount authorized and approved for Executive by the Company’s
      Compensation Committee for such fiscal year multiplied by (y) a fraction, the numerator of which is the number of days (through and including the effective date of the termination) in such fiscal year that Executive was employed by the Company, and the denominator of which is the number 365.

      3.4          Termination by Executive for Good Reason.  Executive may resign from and terminate his employment with the Company for Good Reason at any time upon at least ten (10) days prior written notice, provided that the Company fails to reasonably address and remedy the circumstances constituting “Good Reason” within such ten (10) day period. If Executive resigns for Good Reason, Executive shall be entitled to receive the Base Salary and benefits as set forth in Section 2.1 and Section 2.2(a), respectively, through the effective date of such termination, and such post termination benefits as are specified in Section 2.2(b) or 2.2(c), as applicable. If such termination occurs during the first three years of the Term, Executive shall also be entitled to receive,
      as severance, upon execution of a release in the form attached as Exhibit A hereto and the expiration of any revocation period thereunder without revocation, and conditional upon Executive’s continued adherence to the post termination covenants in this Agreement, (A) an amount 

       

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      equal to one year’s Base Salary at the Base Salary rate in effect for Executive as of the effective date of the termination, payable in regular installments at the time salary would have been payable, provided, however, that such payments shall be deferred until the six-month anniversary of the date of Executive’s termination of employment if deferral to such anniversary date is required to comply with the provisions of Section 409A of the Internal Revenue Code, and (B) a pro rata portion of Executive’s anticipated bonus under Section 2.3 for the fiscal year in which the termination occurs, the amount of which pro rata portion shall be equal to (x) the target bonus amount authorized and approved for Executive by the Company Board’s Compensation Committee for such fiscal year multiplied by (y) a fraction, the numerator of which is the number of calendar days (through and including the
      effective date of the termination) in such fiscal year that Executive was employed by the Company, and the denominator of which is the number 365.

      3.5          Termination by Executive Without Good Reason.  Executive may resign from and terminate his employment with the Company without Good Reason at any time upon at least thirty (30) days prior written notice. If Executive resigns from the Company other than for Good Reason, Executive shall be entitled to receive the Base Salary and benefits as set forth in Section 2.1 and Section 2.2(a), respectively, through the effective date of such termination, and such post termination benefits as are specified in Section 2.2(c). In the event Executive resigns from the Company at any time, the Company shall have the right to make such resignation effective as of any date prior to the expiration of any required notice period.

      3.6          Termination by Executive Following Change of Control.  If Executive remains employed at the time of a Change of Control that occurs within five years from the date hereof, and within twelve months following the Change of Control, either the total of Executive’s Salary and target bonus are reduced without his written consent or Executive’s primary duties and responsibilities as President and Chief Executive Officer of the Company and the Operating Subsidiary are, without his written consent, materially reduced or modified in such a way as to be qualitatively beneath the duties and responsibilities befitting of the president and chief executive officer of a publicly held company of comparable size in the telecommunication industry in the United States,
      and if Executive resigns within six (6) months after such reduction in compensation or change in duties and responsibilities, he shall be entitled to receive (i) the Base Salary and benefits as set forth in Section 2.1 and Section 2.2(a), respectively, through the effective date of such termination, and such post termination benefits as are specified in Section 2.2(c), and (ii) upon execution of a release in the form attached as Exhibit A hereto and the expiration of any revocation period thereunder without revocation, and conditional upon Executive’s continued adherence to the post termination covenants in this Agreement, (A) an amount equal to one year’s Base Salary at the Base Salary rate in effect for Executive as of the effective date of the termination, payable in regular installments at the time salary would have been payable, provided, however, that such payments shall be deferred until the six-month anniversary of the date of Executive’s termination of
      employment if deferral to such anniversary date is required to comply with the provisions of Section 409A of the Internal Revenue Code, (B) 100% of the target bonus amount authorized and approved for Executive by the Company Board’s 

       

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      Compensation Committee for such fiscal year or for the prior fiscal year, if higher, and (C) if the Change of Control occurs within the first three years of the Term, the same post termination benefits as are set forth in Section 2.2(b).

      3.7          Death.  Executive’s employment with the Company shall automatically be terminated upon Executive’s death, in which case Executive’s estate or Heirs at Law shall be entitled to: (i) receive the Base Salary and benefits as set forth in Sections 2.1 and Section 2.2(a) , respectively, through the date of Executive’s death, (ii) receive a prorated bonus as set forth in Section 2.3 provided that the Audit Committee of the Board of the Company confirms bonuses would be granted had the Executive lived (iii)  exercise Executive’s stock options which are set forth in Section 2.4(a) pursuant to the terms set forth in Section 2.4(c), and (iv) receive such post termination benefits as are specified in Section 2.2(c).

      3.8          Disability.  Executive’s employment with the Company shall automatically be terminated upon Executive’s Disability, in which case Executive shall be entitled to: (i) receive the Base Salary and benefits as set forth in Sections 2.1 and Section 2.2(a), respectively, through the effective date of the termination, (ii) exercise Executive’s stock options which are set forth in Section 2.4(a) pursuant to the terms set forth in Section 2.4(c), and (iii) receive such post termination benefits as are specified in Section 2.2(c).

      3.9          Notice of Termination.  Any purported termination of Executive’s employment by the Company or by Executive shall be communicated by a written Notice of Termination to the other party hereto in accordance with Section 7.5 hereof. A “Notice of Termination” shall mean a written notice that indicates the specific termination provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances, if applicable, claimed to provide a basis for termination of Executive’s employment.

      

      	
                   
 	
                  SECTION 4.
 	
                  CERTAIN COVENANTS OF EXECUTIVE
 

      

      

      	
                   
 	
                  4.1
 	
                  Confidential Information.
 

      

      (a)          Executive acknowledges that the information, observations and data obtained by him during the course of his employment by the Company concerning the Business and affairs of the Westell Companies or of third parties that the Westell Companies may be required to keep confidential (the “Westell Company Information”) are confidential and are the property of the Westell Companies or of such third parties. Executive hereby agrees that he shall not  disclose to any unauthorized person or use for his own account or for the account of any third party any Westell Company Information without the Company’s prior written consent, unless and then only to the extent the Westell Company Information becomes generally known to and available for use by the public other than as a result of
      Executive’s acts or failure to act. Executive shall use his best efforts to prevent the unauthorized misuse, espionage, loss or theft of the Westell Company Information. Executive further agrees to deliver to the Company at the termination of his employment, or at any other time the Company may request in writing, 

       

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      all memoranda, notes, plans, records, reports and other documents (and copies thereof) relating to the Business of the Westell Companies that Executive may then possess or have under his control.

      4.2          No Competition.  During the Term, and  for twelve (12) months  following termination of Executive’s employment with the Company,  Executive agrees that Executive shall not, directly or indirectly, for himself, or for any Entity, without the prior written consent of the Board of Company through its Chairman (which may be given or denied in his sole discretion):

      (a)          engage in or Participate In the Business or any other business that directly competes with, or develops or offers products or services directly competitive with the products or services of the Business, from Illinois or any state or country in which the Westell Companies have Business or customers, or have solicited customers; or

      (b)          engage in or Participate In the Business or any other business that directly competes with, or develops or offers products or services directly competitive with the products or services of the Business, from any other location throughout the world; or

      (c)          call upon, solicit, serve, or accept business, from any customer or prospective customer (wherever located) of the Westell Companies for the purpose of selling products or services directly competitive with the products or services of the Business; or

      (d)          interfere with any business relationship of the Westell Companies, with any of their customers or prospective customers or induce any such customers or prospective customers to discontinue or reduce their relationship with the Westell Companies.

      To the extent that Executive is employed by or consults for an entity which is a subsidiary, division or other affiliate of a larger business enterprise, the determination as to whether the employment violates this Section 4.2 shall be made solely by reference to the business activities conducted by the particular subsidiary, division or affiliate by which Executive becomes employed or serves as consultant.

      4.3          No Solicitation.  Executive shall not, for twelve (12) months following termination: (i) induce or attempt to induce any person who is employed by the Westell Companies in any capacity to leave such person’s position, or in any way interfere with the relationship between the Westell Companies and such person, or (ii) hire directly or through another entity, in any capacity, any person who was employed by the Westell Companies within 12 months prior to termination of Executive’s employment or during the 12 months after termination, unless and until such person has been separated from employment with the Westell Companies for at least six months.

      4.4          Inventions.  Any methodologies, inventions, improvements, discoveries, processes, programs or systems developed or discovered by the Executive, whether during working hours or by using the Westell Companies’ facilities, equipment or trade secrets, shall be the sole and exclusive property of  the Operating Subsidiary. The 

       

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      Executive shall, upon reasonable request by the Company, execute and deliver such assignments and other documents necessary to vest, at the Company’s sole expense, all right, title and interest in any discovery or development in the Operating Subsidiary. The Westell Companies may, upon prior notice to the Executive and without any fee, film, videotape, photograph and record the Executive’s voice and likeness, and may utilize the Executive’s name and likeness, in connection with the promotion of the Westell Companies during employment upon prior notice. The Operating Subsidiary shall own all rights in any such film, videotape, photograph or record of the Executive’s voice and likeness for such use. The Executive acknowledges receipt of the notice provided by the Operating Subsidiary pursuant to the Employee Patent Act (765 Illinois Compiled Statutes, Act 1060), reproduced here:

      NOTICE TO EMPLOYEE:  This is to notify you that pursuant to the Employee Patent Act (765 Illinois Compiled Statutes, Act 1060), the provisions of this Agreement regarding the assignment of your rights in discoveries and inventions to the Operating Subsidiary DOES NOT APPLY to an invention for which no equipment, supplies, facilities or trade secret information of the Westell Companies was used and which was developed entirely on your own time, unless (a) the invention relates (i) to the business of the Westell Companies or (ii) to the Westell Companies’ actual or demonstrably anticipated research or development, or (b) the invention results from or is the product of any work performed by you for the Westell Companies in the scope of your efforts on behalf of the Company.

      4.5          Scope and Duration.  Executive acknowledges that the restrictions in this Section 4 are reasonable in scope, are necessary to protect the trade secrets and other confidential and proprietary information of the Westell Companies, that the benefits provided hereunder are full and fair compensation for these covenants and that these covenants do not impair Executive’s ability to be employed in other areas of his expertise and experience. Specifically, Executive acknowledges the reasonableness of the international scope of these covenants by reason of the international customer base and prospective customer base and activities of the Westell Companies, the widespread domestic and international scope of Executive’s contacts created during his employment with
      the Westell Companies, the domestic and international scope of Executive’s responsibilities with the Westell Companies and his access to marketing strategies of the Westell Companies. Notwithstanding the foregoing, if any court determines that any of the terms herein are unreasonable or unenforceable, such court may interpret, alter, amend or modify any or all of such terms to include as much of the scope, time period and intent as will render such restrictions enforceable, and then in such reduced form, enforce such terms. In the event of Executive’s breach of any covenant in this Section 4, the term of the covenant shall be extended for a period equal to the period that the breach continues.

      4.6          Equitable Relief.  Executive agrees that any violation by Executive of any covenant in this Section 4 may cause such damage to the Company as will be serious and irreparable and the exact amount of which will be difficult to ascertain, and for that reason, Executive agrees that the Company shall be entitled, as a matter of right, to a temporary, preliminary and/or permanent injunction and/or other injunctive relief, ex 

       

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      parte or otherwise, from any court of competent jurisdiction, restraining any further violations by Executive. Such injunctive relief shall be in addition to and in no way in limitation of, any and all other remedies the Company shall have in law and equity for the enforcement of such covenants and provisions.

      SECTION 5.     REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF EXECUTIVE.  Executive represents and warrants to the Company that (i) the performance of this Agreement will not breach any agreement or obligation by which Executive is bound to keep in confidence proprietary information acquired by Executive or in confidence or in trust prior to employment by the Company or any other agreement to which Executive is a party or is bound, and (ii) he has not taken and does not have in his possession or control any confidential information or property relating to any former employer. Executive agrees that he will not use confidential information or property of any other employer while employed by the Company.

      SECTION 6.     DEFINITIONS.  For the purposes of this Agreement, the following terms shall have the meanings indicated:

      (a)          “Business” means the design, development, manufacture and sale of DSL modem, broadband products and telco access products and related services of the Westell Companies as they exist or are being developed on the Effective Date, extensions of those products and services during Executive’s employment and new products and services commenced or in development during his employment.

      (b)          “Cause” shall mean (i) the failure by Executive to comply with a particular directive or request from the Board of either the Company or the Operating Subsidiary regarding a matter material to either company, and the failure thereafter by Executive to reasonably address and remedy such noncompliance within thirty (30) days (or such shorter period as shall be reasonable or necessary under the circumstances) following Executive’s receipt of written notice from such Board confirming Executive’s noncompliance; (ii) the taking of an action by Executive regarding a matter material to either the Company or the Operating Subsidiary, which action Executive knew at the time the action was taken to be specifically contrary to a particular directive or request from the Board of
      either the Company or the Operating Subsidiary, (iii) the failure by Executive to comply with the written policies of the Company or the Operating Subsidiary regarding a matter material to the Company or the Operating Subsidiary, including expenditure authority, and the failure thereafter by Executive to reasonably address and remedy such noncompliance within thirty (30) days (or such shorter period as shall be reasonable or necessary under the circumstances) following Executive’s receipt of written notice from such Board confirming Executive’s noncompliance, but such opportunity to cure shall not apply if the failure is not curable; (iv) Executive’s engaging in willful, reckless or grossly negligent conduct or misconduct which, in the good faith determination of the Company’s Board or the Operating Subsidiary’s Board, is materially injurious to the Company, the Operating Subsidiary, or one or more of the other Westell Companies, monetarily or otherwise; (v)
      the aiding or abetting or knowingly assisting any other person in aiding or abetting a competitor or other breach by the Executive of his fiduciary duties to the Company, the Operating Subsidiary or any 

       

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      other of the Westell Companies for which he serves as officer or director; (vi) a material breach by Executive of his obligations of confidentiality or nondisclosure or (if applicable) any breach of Executive’s obligations of noncompetition or nonsolicitation under this Agreement; (vii) the use or knowing possession by Executive of illegal drugs on the premises of any of the Westell Companies; or (viii) Executive is convicted of, or pleads guilty or no contest to, a felony or a crime involving moral turpitude.

      (c)          “Change of Control” shall mean a change in control of either the Company or the Operating Subsidiary, which shall be deemed to exist at such time as (i) both of the following shall have occurred: (A) the members of the Penny Family shall collectively cease to be the direct or indirect “beneficial owners” (as defined in Rule 13d-3 under the Exchange Act) of common stock of the Company or the Operating Subsidiary representing at least 30% of the voting power represented by all outstanding shares of common stock of all classes of the Company or the Operating Subsidiary, and (B) any person or group (within the meaning of Rule 13d-5 under the Exchange Act and Sections 13(d) and 14(d) of the Exchange Act) other than the Penny Family becomes the direct or indirect
      “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of common stock of the Company representing greater than 30% of the total voting power represented by all outstanding shares of common stock of all classes of the Company or the Operating Company; or (ii) a merger or consolidation of the Company or the Operating Subsidiary with any other Entity shall occur in which both (A) the members of the Penny Family shall collectively cease to be the direct or indirect beneficial owners (as previously defined) of capital stock of the surviving entity representing at least 30% of the total voting power represented by all outstanding shares of the capital stock of all classes of the surviving entity, and (B) any person or group (as previously defined) other than the Penny Family becomes the direct or indirect beneficial owner (as previously defined) of capital stock of the surviving entity representing greater than 30% of the total voting power represented by all
      outstanding shares of the capital stock of all classes of the surviving entity; or (iii) the Board of Directors or stockholders of the Company or the Operating Subsidiary approve a plan of complete liquidation of the Company or the Operating Subsidiary or there shall occur a sale or disposition by the Company or the Operating Subsidiary of all or substantially all of their respective assets, or (iv) the Company or the Operating Subsidiary shall become insolvent, seek federal bankruptcy protection or be subject to an involuntary bankruptcy petition.

      (d)          “Disability” shall mean in the case of Executive, the condition of being mentally and/or physically disabled such that Executive shall be eligible to receive benefits either under a long term disability insurance plan maintained by the Operating Subsidiary or under the Social Security disability program.

      (e)          “Entity” means any business, whether a corporation, partnership, sole proprietorship, limited liability company, joint venture or other entity.

      

      	
                   
 	
                  (f)
 	
                  “Exchange Act” means the Securities Exchange Act of 1934, as amended.
 

      

      (g)          “Good Reason” shall mean the occurrence of any of the following events: (i) a material breach by either the Company or the Operating Subsidiary of one or more 

       

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      of its respective covenants or obligations under this Agreement, provided that the Company or the Operating Subsidiary shall have failed to reasonably cure such breach within the applicable cure period provided hereunder, if any; (ii) Executive’s Base Salary (as it may be increased from time to time), and benefits under this Agreement are reduced without Executive’s prior written consent (unless in the case of changes in benefits other than Special Benefits, such benefits are changed for Company and Operating Subsidiary executives generally); (iii) Executive’s primary duties and responsibilities as  Chief Marketing and Strategy Officer of the Company and the Operating Subsidiary are reduced so as to no longer be befitting of the Chief Marketing and Strategy Officer  of a publicly held company of comparable size in the telecommunication industry in the United States; (iv) Executive is required,
      without his consent, to relocate his principal office to a location, or commence principally working out of another office located, more than 35 miles from the Operating Subsidiary’s principal executive offices in Aurora, Illinois; (v) the Company and the Operating Subsidiary fail at any time during the Term to maintain officer and director liability insurance coverage for their officers and directors, provided that such coverage is available at reasonable cost; and (vi) Executive taking a leave of absence from the Company as permitted by the Family and Medical Leave Act of 1993.

      (h)          “Participate In” means the having of any direct or indirect interest in any Entity, whether as a partner, shareholder, member, operator, sole proprietor, agent, representative, independent contractor, consultant, franchiser, franchisee, joint venturer, owner or otherwise, or the rendering of any direct or indirect service or assistance to any Entity (whether as a director, officer, manager, supervisor, employee, agent, consultant or otherwise); provided that the term “Participate In” shall not include the mere ownership of less than 5% of the stock of a publicly-held corporation whose stock is traded on a national securities exchange or in the over-the-counter market.

      (i)           “Penny Family” means the Voting Trust, any beneficiary of the Voting Trust, the voting trustee of the Voting Trust and Robert C. Penny III (individually and as a trustee of any other trust), and “Voting Trust” means the Westell Technologies, Inc., f/k/a Electronic Information Technologies, Inc., Voting Trust Agreement dated February 23, 1994, as amended.

      (j)           “Westell Companies” means the Company, all of its direct and indirect subsidiary companies, and any of them.

      

      	
                   
 	
                  SECTION 7.
 	
                  MISCELLANEOUS
 

      

      7.1          Settlement of Disputes.  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Chicago Illinois, in accordance with the rules of the American Arbitration Association then in effect by a single arbitrator. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The arbitrator shall not have the power to award any punitive, consequential or punitive damages. Notwithstanding the foregoing, the Westell Companies shall have the right of equitable relief in the courts pursuant to section 4.6.

       

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      7.2          Entire Agreement; Amendment.  This Agreement represents the entire understanding of the parties hereto with respect to the employment of Executive and supersede all prior agreements with respect thereto. This Agreement may not be altered or amended except in writing executed by both parties hereto. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

      7.3          Assignment; Benefit.  This Agreement is personal and may not be assigned by either party. Notwithstanding the foregoing, but subject to the provisions herein pertaining to the occurrence of a Change of Control and the consequences thereof, the Company may, from time to time, cause a purchaser of the business and assets of the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company and the Operating Subsidiary would be required to perform it if no such assumption had taken place. In that event, such purchaser shall become primarily liable to Executive for payments hereunder, and the Company and the Operating Subsidiary shall be thereafter released from any further obligations under this Agreement.

      7.4          Applicable Law.  This Agreement shall be governed by the laws of the State of Illinois, without regard to the principles of conflicts of laws.

      7.5          Notice.  Notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (i) if to Executive, when personally delivered, or (ii) if to either party when delivered by recognized overnight courier such as Federal Express or when mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Company at its principal office and to Executive at Executive’s principal residence as shown in the Company’s personnel records, provided that all notices to the Company shall be directed to the attention of the Board of the Company with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in
      accordance herewith, except that notice of change of address shall be effective only upon receipt.

      7.6          Waiver.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and the Company. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

      7.7          Tax Effect.  All payments or benefits provided hereunder shall be subject to deduction for applicable withholding. Executive acknowledges that he is responsible for payment of all income taxes in connection with the stock award, and that either withholding from salary or payment to the Operating Subsidiary of such tax shall be due at such time as income is recognized.

       

      - 12 -

       

      
      

      

      

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date and year first above written.

       

      

      	
                  Westell Technologies, Inc.
 	
                   
 	
                   
 
	
                   
 	
                   
 	
                   
 
	
                   
 	
                   
 	
                   
 
	
                  By: /s/ Thomas E. Mader
 	
                   
 	
                   
 
	
                  Thomas E. Mader, Chief Executive Officer
 
	
                   
 	
                   
 	
                   
 
	
                   
 	
                   
 	
                   
 
	
                   
 	
                   
 	
                   
 
	
                   
 	
                   
 	
                   
 
	
                  Westell, Inc.
 	
                   
 	
                   
 
	
                   
 	
                   
 	
                   
 
	
                   
 	
                   
 	
                   
 
	
                  By: /s/ Thomas E. Mader
 	
                   
 	
                   
 
	
                  Thomas E. Mader, Chief Executive Officer
 
	
                   
 	
                   
 	
                   
 
	
                   
 	
                   
 	
                   
 
	
                  By: /s/ Timonty R. Pillow
 	
                   
 	
                   
 
	
                  Timothy R. Pillow
 
				

                  

       

       

      - 13 -

       

      
      

      

      

      SCHEDULE 2.2

      General executive benefits (In accordance with terms of the plans, certain of these benefits will require the Executive to pay all or some of the cost)

      Vacation (4 weeks)

      Section 125 Spending Accounts

      Medical coverage

      Vision Coverage

      Short Term Disability

      Long Term Disability

      Basic Life Insurance

      Supplemental Life Insurance based upon Executive’s contribution (with contributory coverage up to $1.5M)

      401(k) retirement savings plan

      US Savings bond payroll deduction

      Stock Purchase Plan

      Travel Assistance Program

      Tuition Reimbursement for monthly business-related cell phone charges, home internet connection charges and all other business related expenses

       

      CHI99 4901830-1.043183.0010 

       

      
      

      

      

      EXHIBIT A

      GENERAL RELEASE AGREEMENT

      This General Release (“Agreement”) is entered into by and between Westell Technologies, Inc. (the “Company”) and Timothy R. Pillow (the “Executive”). In consideration of the mutual promises set forth below, the Company and Executive agree and covenant as follows:

      1.          Executive, hereby resigns from all board seats and officer positions with the Company, Westell, Inc., an Illinois corporation and the wholly owned subsidiary of the Company (the “Operating Subsidiary”) and any other and any entity for which he has been so serving at the Company’s request.

      2.          Executive hereby on behalf of himself and his heirs, executors, administrators, attorneys, successors and assigns, hereby remises, releases, forever discharges and covenants not to sue the Company, the Operating Subsidiary, any of their its subsidiaries, and their current and former shareholders, directors, officers, attorneys, agents, employees, successors and assigns (the “Released Parties”), with respect to all claims, suits, demands, actions or causes of action of any kind or nature whatsoever which Executive has had or now claims, pertaining to or arising out of Executive’s employment by the Company or the Operating Subsidiary or Executive’s separation from employment with the Company or the Operating Subsidiary, whether under any local, state or federal common
      law, statute, regulation or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended (including the Older Workers Benefit Protection Act), 42 U.S.C. § 1981, the Civil Rights Act of 1991, the Family and Medical Leave Act, the Americans with Disabilities Act, the Employee Retirement Income Security Act, the Equal Pay Act, and the Illinois Human Rights Act, and any tort, contract or quasi-contract claims, except as hereinafter stated, or to any Workers’ Compensation Act claim Executive may have.

      Nothing herein shall however constitute a release by Executive of his rights under the Employment Agreement dated August 1, 2007 that arise in connection with termination without Cause or for Good Reason (as defined therein), nor shall it release the Company from any indemnification obligations it may have under Delaware law or the Company’s certificate of incorporation or bylaws with respect to Executive’s role as an officer or director of the Company, the Operating Subsidiary from any indemnification obligations it may have under Illinois law or the Operating Subsidiary’s articles of incorporation or bylaws with respect to Executive’s role as an officer or director of the Operating Subsidiary, any rights under options that remain exercisable following termination, or any vested benefits under the Company’s or the Operating Subsidiary’s qualified benefit plans.

      3.           Subject to the such time constraints and other limitations as may be imposed on Executive by his business and personal commitments and obligations, Executive agrees to cooperate fully in any investigation or other legal proceeding relating to the Company, the Operating Subsidiary or any of their subsidiaries with respect to any matter that arose during his employment with the Company, or that may involve matters within his knowledge. If any claims are asserted by the Company or any of the Released Parties against a third party (or by a third party against the Company or any of the Released Parties) regarding such a matter, Executive 

       

      
      

      

      

      agrees to cooperate fully in the prosecution or defense of such claim by the Company and any of the Released Parties without additional charge other than reimbursement for out of pocket expenses.

      4.          Executive represents that Executive has not filed any charges, suits, claims or complaints against the Released Parties with respect to known claims released under Section 2, and agrees not to do so in the future with respect to any such claims.

      5.          Executive understands and expressly acknowledges that he is not releasing or waiving any rights or claims that may arise after the date this Agreement is executed. Executive understands and expressly acknowledges that, in exchange for Executive’s entry into this Agreement, Executive is receiving consideration in addition to anything of value to which Executive is already entitled.

      6.          Acknowledges that the Company has advised Executive to consult an attorney, at Executive’s expense, with respect to this Agreement. Executive further acknowledges that Executive has twenty-one (21) days from receipt of this Agreement to accept and sign this Agreement and that Executive has seven (7) days to revoke acceptance of this Agreement, including its waiver and release provisions after signing it. Notice of such revocation shall be provided to the attention of the vice president of Human Resources of the Company. Executive further acknowledges that Executive may waive the twenty-one day consideration period by requesting and executing a form for that purpose. The form may be requested from the vice president of Human Resources. This Agreement shall not become effective until
      the revocation period has expired.

      7.          This Agreement is not, and shall not in any way be construed as, an admission by the Company that it has acted wrongfully with respect to Executive.

      8.          Executive acknowledges that he has carefully read and fully understands all of the provisions of this Agreement, and that he is knowingly, voluntarily and willfully entering into this Agreement.

      9.          Executive acknowledges that in executing this Agreement, Executive has not relied upon any representation by the Company that is not set forth in this Agreement or in the Employment Agreement.

      10.        Agreement shall be construed and enforced pursuant to the substantive laws of the State of Illinois.

      PLEASE READ THIS AGREEMENT CAREFULLY

      IT CONTAINS A RELEASE OF ALL KNOWN CLAIMS

       

      
      

      

      

      
      

      

      	
                  Westell Technologies, Inc.
 
	
                  By: _____________________________________
 
	
                  Date: ____________________________________
 
	
                  _________________________________________
 
	
                  Executive
 
	
                  Date: ____________________________________
 
	
                  _________________________________________
 
	
                  Witness Signature
 
	
                  _________________________________________
 
	
                  Name of Witness (Printed)
 
	
                  _________________________________________
 
	
                  (Street Address)
 
	
                  _________________________________________
 
	
                  (City, State, Zip Code)PLEDGE AND SECURITY AGREEMENT

Exhibit 10.2

PLEDGE AND SECURITY AGREEMENT

between

Solitario Resources Corporation,

as Pledgor,

UBS AG, London Branch,

as Collars Office,

UBS AG, Stamford Branch,

as Collateral Agent

and

the other parties

named herein

1

<PAGE>

TABLE OF CONTENTS

                                                                                                                                   Page

	
SECTION 1.
	
Effectiveness of Certain Terms; Certain Definitions
	
1

	
SECTION 2.
	
Determination of Required Collateral
	
6

	
SECTION 3.
	
Delivery of Collateral
	
7

	
SECTION 4.
	
Representations, Warranties and Agreements
	
7

	
SECTION5.
	
The Security Interests
	
10

	
SECTION 6.
	
Entitlement Orders
	
11

	
SECTION 7.
	
Record Ownership of Pledged Securities
	
11

	
SECTION 8.
	
Voting Rights and Dividends
	
12

	
SECTION 9.
	
General Authority
	
13

	
SECTION 10.
	
No Performance Required of the Secured Parties
	
13

	
SECTION 11.
	
No Exercise or Transfer of Contract Rights
	
13

	
SECTION 12.
	
Defense of Title
	
14

	
SECTION 13.
	
Payment to the Collateral Agent
	
14

	
SECTION 14.
	
Further Assurances; Covenants
	
14

	
SECTION 15.
	
Remedies upon Event of Default
	
14

	
SECTION 16.
	
Application of Proceeds
	
17

	
SECTION 17.
	
Provision of Notice
	
18

	
SECTION 18.
	
Expenses
	
19

	
SECTION 19.
	
Appointment of Collateral Agent
	
19

	
SECTION 20.
	
Termination and Release of Collateral
	
20

	
SECTION 21.
	
Concerning the Collar Loans and the Lender
	
21

	
SECTION 22.
	
Notices
	
21

	
SECTION 23.
	
Waivers, Non-exclusive Remedies
	
22

	
SECTION 24.
	
Obligations Unconditional; Discharge of Obligations, etc.
	
23

	
SECTION 25.
	
Severability
	
23

	
SECTION 26.
	
Inconsistency
	
23

	
SECTION 27.
	
Miscellaneous
	
23

	
SECTION 28.
	
Governing Law; Suits; Jury Trial
	
23

Attachment I - Form of Amendment

Exhibit A - Form of Schedule I to Financing Statement

Exhibit B - Filing Offices

2

<PAGE>

PLEDGE AND SECURITY AGREEMENT

          PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of the date of the Master Agreement referred to herein, among UBS AG, London Branch (the "Collars Office"), pledgor(s) named on the signature page of this agreement (the "Pledgor"), UBS AG, Stamford Branch, as Collateral Agent for the Secured Parties (as defined herein) (the "Collateral Agent"), and, (A) when an Amendment in the form attached as Attachment I shall have been executed, UBS AG, New York Branch, or such other financial institution as may execute an Amendment (the "Lender") or (B) if a financial institution shall have executed this Agreement as a Securities Intermediary, as defined in the UCC (as defined below), such institution in its capacity as Securities Intermediary (the "Securities Intermediary").

          The Collars Office and the Pledgor have entered into a Master Agreement for Equity Collars dated as of the date hereof (the "Master Agreement"), pursuant to which the Collars Office and the Pledgor may enter into Collars (as defined in the Master Agreement) from time to time, which Collars will be evidenced by confirmations provided by The Collars Office ("Confirmations").  In addition, the Lender, the Pledgor or any Other Borrower (as defined herein) have entered into, or may in the future enter into, the Credit Terms (as defined herein), pursuant to which the Lender may make one or more Loans (as defined in the Credit Terms) to the Pledgor or Other Borrower, as the case may be, from time to time as evidenced by Notes and Loan Advices (as such terms are defined in the Credit Terms) and secured by the Pledged Securities, the Pledgor Contract Rights and other Collateral (as each term is defined herein).  Such Loans are referred to herein as "Collar Loans".

          The Collars Office and the Pledgor have agreed that the Pledgor shall secure certain of the obligations to the Collars Office under the Master Agreement and to the Lender under the Credit Terms in accordance with the terms of this Agreement; and the Master Agreement, the Credit Terms (if and when entered into) and each Collar Loan and Confirmation will supplement, form a part of, and be subject to, this Agreement so that this Agreement, together with all such Collar Loans, Confirmations, the Credit Terms and the Master Agreement will form a single agreement among the Collars Office, the Lender and the Pledgor.

          Accordingly, the parties hereto agree as follows:

          Section 1.  Effectiveness of Certain Terms; Certain Definitions.  (a)  If, at any time and so long as, there is not outstanding any Collar Loan the repayment of which is secured hereunder, (i) this Agreement shall be read to exclude all references hereunder to the terms Collar Loan, Credit Terms, Note, Loan Advice and Lender and (ii) Sections 11, 13 and 21 shall be of no force and effect.

          (b)  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Master Agreement.  In addition, as used in this Agreement, the following terms will have the meanings set forth below:

          "30-Day LIBOR" means the rate determined by the Lender for any date of determination as the rate for deposits for a period of thirty days in U.S. Dollars which appears on Telerate Page 3750 as of 11:00 a.m., London time, on the day that is two London Banking Days preceding that date of determination.  If such rate does not appear on the Telerate Page 3750, the rate for that date of determination will be determined as if the parties had specified the LIBOR-Reference Banks Rate as the applicable rate.

          "Agreements" means this Agreement, the Credit Terms and the Master Agreement, as well as any Note and any Loan Advice (as each is defined in the Credit Terms), collectively.

          "Authorized Officer" of any Company means any officer, trustee or general partner (or officer thereof), as the case may be, as to whom such Company shall have delivered notice to the Collateral 

3

<PAGE>

Agent that such officer, trustee or general partner (or officer thereof) is authorized to act hereunder on behalf of such Company.

          "Collar Loans" has the meaning set forth in the first recital hereof.

          "Collar Loan Obligations" means all now existing or hereafter arising debts, obligations, covenants and duties of payment or performance of every kind, matured or unmatured, direct or contingent, owing, arising, due or payable to the Lender by or from the Pledgor or any Other Borrower, (including any interest or other amounts that accrue after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Pledgor or any Other Borrower), arising out of or under any Collar Loan, including, without limitation, all principal of and interest on such Collar Loans.

          "Collateral" has the meaning set forth in Section 5(a) hereof.

          "Collateral Notice" means a notice, which may be oral, from the Lender or Collars Office to the Pledgor requiring the Pledgor to post additional Collateral of a type, in an amount and by the time set forth in such notice.

          "Company" means a corporation, a partnership, an association, a trust or any other entity or organization.

          "Credit Terms" means the General Terms and Conditions between the Pledgor and the Lender and any schedules or attachments thereto as the same may be subsequently amended, supplemented or modified or such other agreement evidencing Collar Loan Obligations as may be executed from time to time.

          "Delivery" means (a) in the case of certificated Pledged Securities (as defined below) registered in the name of the Pledgor, delivery of certificates representing such Pledged Securities, free and clear of all liens, security interests or other encumbrances of any kind (other than the Security Interests (as defined below)), to the Securities Intermediary, accompanied by any required transfer tax stamps, and in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank, with signatures appropriately guaranteed, all in form and substance satisfactory to the Collateral Agent, and the crediting of such Pledged Securities to the Securities Account, (b) in the case of uncertificated Pledged Securities registered in the name of the Pledgor, by transmission by the Pledgor of an instruction to the issuer of such Pledged Securities instructing such issuer to register such Pledged Securities in the name of the Securities Intermediary or its nominee, accompanied by any required transfer tax stamps, and such issuer's compliance with such instructions and the crediting of such Pledged Securities to the Securities Account, (c) in the case of Pledged Securities in respect of which security entitlements are held by the Pledgor through a securities intermediary, the crediting of such Pledged Securities, free and clear of all liens, security interests or other encumbrances of any kind (other than the Security Interests), accompanied by any required transfer tax stamps, to a securities account of the Securities Intermediary at such securities intermediary or at another securities intermediary satisfactory to the Securities Intermediary and the crediting of such Pledged Securities to the Securities Account and (d) in the case of cash, in accordance with such delivery instructions as the Collars Office may give to the Pledgor from time to time by written notice hereunder.  The terms "Deliver," "Delivered" and "Delivering" have corresponding meanings.

          "Equivalent Securities" means, with respect to Pledged Securities, Securities of the same class and issue, issuer, series, and, to the extent applicable, maturity, principal amount and redemption price.

          "Event of Default" means an Event of Default as defined in the Credit Terms or an Event of Default or Termination Event as defined in the Master Agreement (without regard to the application of Paragraph 9.3 of the Master Agreement) and also means any breach, repudiation, misrepresentation or 

4

<PAGE>

default by the Pledgor (howsoever characterized), or any breach by the Pledgor of any of its representations, warranties, covenants or other obligations, under this Agreement.

          "Existing Transfer Restrictions" means the Transfer Restrictions, if any, on the Securities (or security entitlements in respect thereof) pledged or to be pledged hereunder as described in the Confirmation evidencing the related Collar or in the Shareholder Representation Letter or any other written representation that has been acknowledged by the Collars Office.

          "LIBOR-Reference Banks Rate" means that the rate for any date of determination will be determined on the basis of the rates which deposits in U.S. Dollars are offered by the Reference Banks at approximately 11:00 a.m., London time, on the day that is two London Banking Days preceding that date of determination to prime banks in the London interbank market for a period of thirty days commencing on that date of determination and in the Representative Amount.  The Lender will request the principal London office of each of the Reference Banks to provide a quotation of its rate.  If at least two such quotations are provided, the rate for that date of determination will be the arithmetic mean of the quotations.  If fewer than two quotations are provided as requested, the rate for that date of determination will be the arithmetic mean of the rates quoted by major banks in New York City, selected by the Lender, at approximately 11:00 a.m., New York City time, on that date of determination for loans in U.S. Dollars to leading banks for a period of thirty days commencing on that date of determination and in the Representative Amount.

          "Location" means, with respect to any party, the place such party is "located" within the meaning of Section 9-307 of the UCC.

          "London Banking Day" means any day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in the city of London.

          "Other Borrower" means any person or entity (other than the Pledgor) that obtains a Loan (as defined in the Credit Terms) from the Lender that is secured by the Pledgor in accordance with this Agreement.

          "Pledged Securities" means (a) the Securities specified in the Confirmation evidencing the related Collar and (b) all Securities that become Pledged Securities pursuant to Section 5(b) hereof.

          "Pledgor Contract Obligations" means all now existing or hereafter arising debts, obligations, covenants and duties of payment or performance of any kind, matured or unmatured, direct or contingent, owing, arising, due or payable to the Collars Office by or from the Pledgor (including any interest or other amounts that accrue after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Pledgor) arising out of or under any Collar.

          "Pledgor Contract Rights" means all now existing or hereafter arising debts, obligations, covenants and duties of payment or performance of any kind, matured or unmatured, direct or contingent, owing, arising, due or payable to the Pledgor by or from the Collars Office (including any interest or other amounts that accrue after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Collars Office) arising out of or under any Collar.

          "Proceeds" means all proceeds, including cash, instruments, securities and other property, from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the exercise or disposition of any or all of the Collateral.

          "Potential Event of Default" means any event which, with the giving of notice or passage of time or both, would constitute an Event of Default.

          "Reference Banks" means, for the purposes of determining any LIBOR rate, four major banks in the London interbank market.

          "Representative Amount" means, for the purposes of determining any LIBOR rate for which a Representative Amount is relevant, an amount that is representative of the outstanding obligation to which such LIBOR rate is being applied.

          "Required Collateral" means (i) in respect of any Collar and any time, the types and amounts of Collateral required by the Collars Office as security for the Pledgor's obligations under that Collar at such time as specified in the applicable Confirmation, and (ii) in respect of any Collar Loan, the type and amount of Collateral specified in accordance with the Credit Terms, and in either case, as may be specified from time to time in a Collateral Notice.

          "Secured Obligations" means the obligations secured under this Agreement including (a) all Collar Loan Obligations, (b) all Pledgor Contract Obligations, (c) all amounts payable by the Pledgor hereunder, (d) other indebtedness, obligations or liabilities of any kind, now or hereafter existing, of the Pledgor or any Other Borrower, as the case may be, to UBS AG, whether absolute or contingent and however arising or acquired by UBS AG, and (e) any renewals or extensions of any of the foregoing.

          "Secured Parties" means the Collateral Agent, the Collars Office and the Lender.

          "Security" or "Securities" has the meaning set forth in Section 8-102(a)(15) of the UCC.

          "Securities Account" means the account in the name of the Pledgor or the Collateral Agent, as the case may be, at the Securities Intermediary in or to which certain of the Collateral is to be deposited or credited in accordance with an agreement among the relevant parties.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Security Interests" means the security interests in the Collateral granted hereunder securing the Secured Obligations.

          "Telerate" means, when used in connection with any designated page and LIBOR, the display page so designated on the Dow Jones Telerate Service (or such other page or locator as may replace that page on that service), or such other service as may be nominated as the information vendor, for the purpose of displaying rates or prices comparable to LIBOR.

          "Termination Event" has the meaning set forth in the Master Agreement.

          "Transaction" means any Collar or Collar Loan.

          "Transfer Restriction" means, with respect to any Security (or security entitlements in respect thereof) or other item of collateral pledged or to be pledged hereunder, any condition to or restriction on the ability of the holder thereof to sell, assign or otherwise transfer such Security (or security entitlements in respect thereof) or other item of collateral or to enforce the provisions thereof or of any document related thereto whether set forth in such item of collateral itself or in any document related thereto, including, without limitation, (i) any requirement that any sale, assignment or other transfer or enforcement of such Security (or security entitlements in respect thereof) or other item of collateral be consented to or approved by any person, including, without limitation, the issuer or underwriter thereof or any other obligor thereon, (ii) any limitations on the type or status, financial or otherwise, of any purchaser, pledgee, assignee or transferee of such Security (or security entitlements in respect thereof) or other item of collateral, (iii) any requirement of the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document of any person to the issuer of, any other obligor on or any registrar or transfer agent for, such Security (or security entitlements in respect thereof) or other item of collateral, prior to the sale, pledge, assignment or other transfer or enforcement of such Security (or security entitlements in respect thereof) or other item of collateral and (iv) any registration or qualification requirement or prospectus delivery requirement for such Security (or security entitlements 

5

<PAGE>

in respect thereof) or other item of collateral pursuant to any federal, state or foreign securities law (including, without limitation, any such requirement arising as a result of Rule 144 or Rule 145 under the Securities Act); provided that the required delivery of any assignment, instruction or entitlement order from the seller, pledgor, assignor or transferor of such Security (or security entitlements in respect thereof) or other item of collateral, together with any evidence of the corporate or other authority of such person, shall not constitute a "Transfer Restriction".

          "UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York.

          Section 2.  Determination of Required Collateral.  (a) Unless otherwise specified in the applicable Confirmation or otherwise determined by either the Collars Office or the Lender in its discretion from time to time, the Required Collateral in respect of any Collar and at any time shall be a quantity of the Underlying Shares (as defined in the Master Agreement) equal to the number of the Underlying Shares that are the subject of such Collar.

          (b) If at any time either the Collars Office or the Lender determines in its discretion that the Collateral securing the Pledgor's and any applicable Other Borrower's obligations under a particular Transaction or group of Transactions is insufficient, the Collars Office or the Lender may by Collateral Notice require the Pledgor to deliver additional Collateral in respect of that Transaction or group of Transactions, of the types and in the amounts set forth in such Collateral Notice.

          Section 3.  Delivery of Collateral. 

          (a)          On or prior to the Trade Date with respect to each Collar (as defined in the Confirmation with respect to such Collar), the Pledgor shall Deliver the Required Collateral, if any, with respect thereto.

          (b)          Upon entering into any Collar Loan, the Pledgor shall Deliver the Required Collateral, if any, with respect thereto.

          (c)          On the date specified in any Collateral Notice, the Pledgor shall Deliver the Required Collateral specified therein.

          (d)          If any Delivery is required to be made on a day on which the financial institution or clearing facility through which a Delivery is to be effected is not open for business, such Delivery shall instead be required to be made on the first following Business Day on which such entity is open for business.

          Section 4.  Representations, Warranties and Agreements.   (a) The Pledgor agrees that each of the Collateral Agent, the Collars Office and the Lender may rely upon the Pledgor's representations and warranties to the Collars Office in the Master Agreement as if such representations were provided directly to them and were set out in full in this Agreement.  

          (b)          The Pledgor further represents and warrants to, and agrees with, each Secured Party that: 

                    (i)          the Pledgor has and will have the power to grant to the Collateral Agent for the benefit of each Secured Party a perfected security interest in, and lien on, any Collateral Delivered or at any time to be Delivered hereunder and has taken, and will take, all necessary actions to authorize the granting of that security interest and lien; 

                    (ii)          the Pledgor (A) owns and, at all times prior to the release of the Collateral pursuant to the terms of this Agreement, will own the Collateral free and clear of any liens, security interests or other encumbrances of any kind (other than the Security Interests and Existing Transfer Restrictions) and (B) is not and will not become a party to or otherwise bound by any agreement, other than the Agreements and the Existing Transfer Restrictions, that (x) restricts in any manner the rights of

6

<PAGE>

any present or future owner of the Collateral with respect thereto or (y) provides any person other than the Pledgor, the Secured Parties or the Securities Intermediary (but in the case of such Securities Intermediary only in respect of Collateral held through it) with control (as defined in Section 8-106 of the UCC) with respect to any Collateral; 

                    (iii)          All Securities at any time pledged hereunder (or in respect of which security entitlements are pledged hereunder) are and will be either (i) certificated (and the certificate or certificates in respect of such securities are and will be located in the United States) and registered in the name of Pledgor or held through a securities intermediary whose securities intermediary's jurisdiction (within the meaning of Section 8-110(e) of the UCC) is located in the United States or (ii) uncertificated and either registered in the name of Pledgor or held through a securities intermediary whose securities intermediary's jurisdiction (within the meaning of Section 8-110(e) of the UCC) is located in the United States;

                    (iv)          the Pledgor has not performed and will not perform any acts that might prevent any Secured Party from enforcing any of the terms of this Agreement or that might limit any Secured Party in any such enforcement; 

                    (v)          other than financing statements or other similar or equivalent documents or instruments with respect to the Security Interests, no financing statement, security agreement or similar or equivalent document or instrument covering all or any part of the Collateral is on file or of record in any jurisdiction in which such filing or recording would be effective to perfect a lien, security interest or other encumbrance of any kind on such Collateral; 

                    (vi)          upon the execution and delivery of this Agreement by the parties hereto and (i) in the case of Collateral consisting of investment property (as defined in Section 9-102(a)(49) of the UCC), the Delivery of such Collateral to the Securities Intermediary and (ii) in the case of Collateral consisting of general intangibles (as defined in section 9-102(a)(42) of the UCC), the filing of financing statements in the form of Exhibit A hereto in the filing offices specified in Exhibit B hereto, the Collateral Agent will have valid and perfected security interests in, and, in the case of any such Collateral consisting of investment property, control (within the meaning of Section 8-106 of the UCC) with respect to, the Collateral for the benefit of the Secured Parties, subject to no prior lien, security interest or other encumbrance of any kind; 

                    (vii)          no registration, recordation or filing with any governmental body, agency or official is required in connection with the execution and delivery of this Agreement or any Transaction or necessary for the validity or enforceability hereof or thereof or for the perfection or enforcement of the Security Interests other than the filing of financing statements in the form of Exhibit A hereto in the filing offices specified in Exhibit B hereto;

                    (viii)          the Location of the Pledgor is the address set forth under its name on the signature page of this Agreement, and under the Uniform Commercial Code as in effect in such Location, no local filing is required to perfect a security interest in Collateral consisting of general intangibles;

                    (ix)          the Pledgor does not know or have any reason to believe that any issuer of Pledged Securities has not complied with the reporting requirements contained in Rule 144(c)(1) under the Securities Act; and

                    (x)          Upon request, Pledgor shall provide the Collars Office with a certified copy of the Credit Terms, a specimen copy of each Note executed thereunder and all related documentation within ten (10) Business Days of the execution of such documents.

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          (c) The Securities Intermediary represents and warrants to, and agrees with, each of the Collateral Agent, the Collars Office, the Lender and the Pledgor that:

                    (i)          the Securities Intermediary is a corporation, duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to enter into, and perform its obligations under, this Agreement;

                    (ii)          the execution, delivery and performance by the Securities Intermediary of this Agreement have been duly authorized by all necessary corporate action on the part of the Securities Intermediary (no action by the shareholders of the Securities Intermediary being required) and do not and will not violate, contravene or constitute a default under any provision of applicable law or regulation or of the charter or by-laws of the Securities Intermediary or of any material agreement, judgment, injunction, order, decree or other instrument binding upon the Securities Intermediary;

                    (iii)          this Agreement constitutes a valid and binding agreement of the Securities Intermediary enforceable against the Securities Intermediary in accordance with its terms;

                    (iv)          the Securities Intermediary hereby agrees that (i) all liens, pledges and other security interests of any kind or nature held by it in any of the Collateral securing any obligation to the Securities Intermediary (either in such capacity or in any other capacity), other than liens securing the obligations of the Pledgor to it hereunder (collectively, "Other Liens") shall be subordinate and junior to the liens, pledges and security interest in the Collateral arising hereunder and that the Securities Intermediary will take no action to enforce any Other Lien so long as any obligation under the Agreements or hereunder (whether or not then due) should remain unsatisfied and (ii) its obligation to Pledgor in respect of any Collateral will not be subject to deduction, set-off, recoupment, banker's lien or any other right in respect of obligations owed by Pledgor or any other person to the Securities Intermediary; and

                    (v)          the Securities Intermediary is not and will not become a party to or otherwise bound by any agreement, other than this Agreement, that provides any person with control (as defined in Section 8-106 of the UCC) with respect to any of the Collateral.

          Section 5.  The Security Interests. (a)  In order to secure the full and punctual payment of the Secured Obligations in accordance with their terms and the performance of all the obligations of the Pledgor hereunder, the Pledgor hereby assigns,  pledges and grants to the Collateral Agent, as agent of and for the benefit of the Secured Parties security interests in and to, and a lien upon and right of set-off against, and transfers to the Collateral Agent, for the benefit of the Secured Parties as and by way of a security interest having priority over all other security interests, with power of sale, all of its right, title and interest in and to (i) the Pledged Securities and all security entitlements in respect of the Pledged Securities; (ii) all of the Pledgor Contract Rights; (iii) the Securities Account and all financial assets (as defined in Section 8-102 of the UCC), funds, property and other assets from time to time held therein; (iv) all additions to and substitutions for the foregoing; (v) all income, Proceeds and other proceeds and collections received or to be received, or derived or to be derived, now or any time hereafter (whether before or after the commencement of any proceeding under applicable bankruptcy, insolvency or similar law, by or against Pledgor, with respect to Pledgor) from or in connection with any of the items mentioned in (i) through (v) (including, without limitation, any shares of capital stock issued in respect of any Securities (or security entitlements in respect thereof) constituting Collateral or any cash, Securities or other property distributed in respect of or exchanged for any Securities (or security entitlements in respect thereof) constituting Collateral, or into which any such Securities (or security entitlements in respect thereof) are converted, in connection with any Change (as defined in the Master 

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Agreement) and any security entitlements in respect of any of the foregoing); and (vi) all powers, rights and privileges of the Pledgor, now or hereafter acquired, including rights of enforcement, with respect to the foregoing (collectively, the "Collateral").

          (b)          If any issuer of Pledged Securities at any time issues to the Pledgor in respect of any Pledged Securities or security entitlements in respect thereof, or the Pledgor receives or becomes entitled to receive in respect of any Pledged Securities or security entitlement in respect thereof, or the Pledgor receives any Proceeds in respect of any Pledged Securities or security entitlements in respect of Pledged Securities consisting of, any additional or substitute Securities of any kind (or security entitlements in respect thereof ), the Pledgor shall immediately pledge and Deliver to the Securities Intermediary all such Securities (and security entitlements) as additional security for the Secured Obligations.  All such Securities (and security entitlements) shall constitute Pledged Securities (or security entitlements in respect thereof ) and are subject to all provisions of this Agreement.

          (c)          The Security Interests are granted as security only and shall not subject any Secured Party to, or transfer or in any way affect or modify, any obligation or liability of the Pledgor with respect to any of the Collateral or any transaction in connection therewith.

          (d)          The Securities Intermediary and the other parties hereto expressly agree that all rights, assets and property held at any time in the Securities Account shall be treated as a financial asset as described in Section 8-102(a)(9) of the UCC.

          (e)          Deleted.

          (f)          The parties hereto hereby agree that the Securities Intermediary's jurisdiction (within the meaning of Section 8-110(e) of the UCC) in respect of the Securities Account is New York and each such party represents that it has not and agrees that it will not enter into any agreement to the contrary. 

          Section 6.  Entitlement Orders.  

          (a)          he Securities Intermediary agrees that it will comply with entitlement orders originated by the Collateral Agent in respect of any Collateral without further consent from the Pledgor or any other person.  The Pledgor hereby consents to the foregoing agreement.

          (b)          Each of the Securities Intermediary and Pledgor agree that the Securities Intermediary shall not comply with entitlement orders of the Pledgor in respect of the Collateral until the Securities Intermediary shall receive notice from the Collateral Agent that it may comply with such entitlement orders.

          (c)          The Pledgor agrees that it shall not (1) create or permit to exist any lien, security interest or other encumbrance of any kind upon or with respect to the Collateral, except for those created hereunder, (2) sell or otherwise dispose of, or grant any option with respect to, any of the Collateral (other than pursuant to the Master Agreement) or (3) enter into a consent to any agreement pursuant to which any person other than the Collateral Agent has or will have control (within the meaning of Section 8-106 of the UCC) in respect of any Collateral, including, without limitation, the Securities Account and the financial assets and other property held in the Securities Account.

          Section 7.  Record Ownership of Pledged Securities.  The Collateral Agent may at any time or from time to time, in its sole discretion, upon the occurrence and during the continuation of a Potential Event of Default or an Event of Default, cause any or all of the Pledged Securities (or security entitlements in respect thereof) to be registered, or held through a securities intermediary, in the name of the Pledgor or its nominee to be transferred of record into, or held through a securities intermediary in, the name of the Collateral Agent or its nominee.  The Pledgor shall promptly give to the Collateral Agent copies of any notices or other communications received by the Pledgor with respect to Pledged Securities (or security entitlements in respect thereof ) registered, or held through a securities 

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intermediary, in the name of the Pledgor or its nominee and the Collateral Agent shall promptly give to the Pledgor copies of any notices and communications received by it with respect to Pledged Securities (or security entitlements in respect thereof) registered, or held through a securities intermediary, in the name of the Collateral Agent or its nominee.

          Section 8.  Voting Rights and Dividends. (a) The Collateral Agent shall have the right to receive and retain as Collateral hereunder all Proceeds other than ordinary cash dividends or interest (such ordinary cash dividends or interest, "Dividend Proceeds") of the Collateral and, upon the occurrence and during the continuance of a Potential Event of Default or an Event of Default, all Proceeds of the Collateral including Dividend Proceeds and the Pledgor shall take all such action as the Collateral Agent shall deem necessary or appropriate to give effect to such right.  All such Proceeds, including, without limitation, all dividends and other payments and distributions that are received by the Pledgor shall be received in trust for the benefit of the Secured Parties and, if the Collateral Agent so directs (but only, in the case of Dividend Proceeds, upon the occurrence and during the continuance of a Potential Event of Default or Event of Default), shall be segregated from other funds of the Pledgor and shall, forthwith upon demand by the Collateral Agent (but only, in the case of Dividend Proceeds, during the continuance of a Potential Event of Default or Event of Default), be paid over to the Collateral Agent as Collateral in the same form as received (with any necessary endorsement).  After all Potential Events of Default and Events of Default have been cured, the Collateral Agent's right to retain Dividend Proceeds under this Section 8(a) shall cease and the Collateral Agent shall pay over to the Pledgor any such Collateral consisting of Dividend Proceeds retained by it during the continuance of a Potential Event of Default or Event of Default.

          (b) (i)          Unless a Potential Event of Default or an Event of Default shall have occurred and be continuing, the Pledgor shall have the right, from time to time, to vote and to give consents, ratifications and waivers with respect to the Pledged Securities (or security entitlements in respect thereof), and the Collateral Agent shall, upon receiving a written request from the Pledgor accompanied by a certificate of the Pledgor (or if Pledgor is a Company, an Authorized Officer of the Pledgor) stating that no Potential Event of Default or Event of Default has occurred and is continuing, deliver to the Pledgor or as specified in such request such proxies, powers of attorney, consents, ratifications and waivers in respect of any of the Pledged Securities (or security entitlements in respect thereof ) that are registered, or held through a securities intermediary, in the name of the Collateral Agent or its nominee as shall be specified in such request and be in form and substance satisfactory to the Collateral Agent.

          (ii)          If a Potential Event of Default or an Event of Default shall have occurred and be continuing, the Collateral Agent shall have the right, to the extent permitted by law, and the Pledgor shall take all such action as may be necessary or appropriate to give effect to such right, to vote and to give consents, ratifications and waivers, and to take any other action with respect to any or all of the Pledged Securities (or security entitlements in respect thereof ) with the same force and effect as if the Collateral Agent were the absolute and sole owner thereof.

          Section 9.  General Authority.  The Pledgor hereby irrevocably appoints the Collateral Agent its true and lawful attorney, with full power of substitution, in the name of the Pledgor, any Secured Party or otherwise, for the sole use and benefit of the Secured Parties, but at the expense of the Pledgor, to the extent permitted by law, to exercise, at any time and from time to time while an Event of Default has occurred and is continuing, all or any of the following powers with respect to all or any of the Collateral:

          (a)          to demand, sue for, collect, receive and give acquittance for any and all monies due or to become due upon or by virtue thereof,

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          (b)          to settle, compromise, compound, prosecute or defend any action or proceeding with respect thereto,

          (c)          to sell, transfer, assign, exercise rights of election pertaining thereto (including without limitation the exercise of any Collar or option included in the Collateral) or otherwise deal in or with the same or the proceeds or avails thereof, as fully and effectually as if the Collateral Agent were the absolute owner thereof (including, without limitation, the giving of instructions and entitlement orders in respect thereof), and

          (d)          to extend the time of payment of any or all thereof and to make any allowance and other adjustments with reference thereto; provided that the Collateral Agent shall give the Pledgor not less than one day's prior written notice of the time and place of any sale or other intended disposition of any of the Collateral, except any Collateral that threatens to decline speedily in value, including, without limitation, equity securities, or is of a type customarily sold on a recognized market.  The Collateral Agent and the Pledgor agree that such notice constitutes "reasonable notification" within the meaning of Section 9-611(b) of the UCC.  The power of attorney granted pursuant to this Section 9 is coupled with an interest and shall (i) survive and not be affected by the subsequent death, incapacity or disability of the Pledgor granting such power of attorney and (ii) extend to the Pledgor's successors, assigns and legal representatives.

          Section 10.  No Performance Required of the Secured Parties.  The Pledgor will remain liable to perform all of its obligations under the Transactions and any of the Collateral.  None of the Secured Parties will have any obligation under the Transactions or any of the Collateral by reason of this Agreement. 

          Section 11.  No Exercise or Transfer of Contract Rights.  The Pledgor agrees that, notwithstanding any provision of the Master Agreement (or any other provision or agreement) to the contrary, so long as any Collar Loan Obligations are outstanding, it shall not exercise any of the Pledgor Contract Rights (other than on the Expiration Date of the relevant Collars) or transfer or assign any of the Pledgor Contract Rights, except with the prior written consent of the Lender.

          Section 12.  Defense of Title.  (a) The Pledgor shall warrant and defend its title to the Collateral, subject to the rights of the Secured Parties, against the claims and demands of all persons.

          (b)          The Collateral Agent may elect, but without an obligation to do so, to discharge any lien, security interest or other encumbrance of any kind of any third party on any of the Collateral.

          Section 13.  Payment to the Collateral Agent.   Notwithstanding any provision in the Master Agreement to the contrary, the Pledgor directs the Collars Office, and the Collars Office agrees, until the Collar Loan Obligations or other Obligations (as defined by the Credit Terms) have been paid in full, to pay all amounts payable to the Pledgor pursuant to the Collars (without reduction or offset by amounts that may be payable to the Collars Office), directly to the Collateral Agent and the Collateral Agent agrees to retain such amounts as Collateral for the benefit of the Lender without exercising any offset, counterclaim, recoupment or other similar right.

          Section 14.  Further Assurances; Covenants. (a)  The Pledgor agrees that it shall, at its expense and in such manner and form as the Collateral Agent may require, execute, deliver, file and record any financing statement, specific assignment or other paper and take any other action that may be necessary or desirable, or that the Collateral Agent may request, in order to create, preserve, perfect, confirm or validate any Security Interest or to enable the Collateral Agent to exercise and enforce its rights on behalf of the Secured Parties hereunder with respect to any of the Collateral.  To the extent permitted by applicable law, the Pledgor hereby authorizes the Collateral Agent to execute and file, in the name of the Pledgor or otherwise, financing statements or continuation statements (which may be carbon, 

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photographic, photostatic or other reproductions of this Agreement or of a financing statement relating to this Agreement) that the Collateral Agent, in its sole discretion, may deem necessary or appropriate to further perfect any of the Security Interests; and further, to execute and file in the name of the Pledgor or otherwise any other document (including, without limitation, any notice on Form 144 or any filing required pursuant to Sections 13 or 16 of the Securities Exchange Act of 1934, as amended) that the Collateral Agent, in its sole discretion, may deem necessary or appropriate in connection with the Collateral Agent's authority conferred by Section 9 hereof.

          (b) The Pledgor agrees that it shall not change its name, identity, Location or, if the Pledgor is a Company, its organizational structure, unless in either case (1) it shall have given the Collateral Agent not less than 30 days' prior notice thereof and (2) such change shall not cause any of the Security Interests to become unperfected or subject to any other lien, security interest or other encumbrance of any kind.

          Section 15.  Remedies upon Event of Default. (a)  If any Event of Default shall have occurred and be continuing, the Collateral Agent may, on behalf of the Secured Parties, exercise all the rights of a secured party under the Uniform Commercial Code (whether or not in effect in the jurisdiction where such rights are exercised) and, in addition, the Collateral Agent may, without being required to give any notice, except as herein provided or as may be required by mandatory provisions of law,

          (1)          if any Secured Obligations consist of obligations to deliver Pledged Securities (or security entitlements in respect thereof), deliver all Collateral consisting of Pledged Securities (or security entitlements in respect thereof) (but not in excess of the number thereof deliverable under the Secured Obligations) to the applicable Secured Party on the date upon which such delivery of Pledged Securities (or security entitlements in respect thereof) is due (whether pursuant to the terms of such Secured Obligations, upon acceleration as provided with respect thereto or otherwise) or on any date thereafter, against receipt by the Collateral Agent, on behalf of the Secured Parties, of the cash amount, if any, required to be paid by such Secured Party in respect of such delivery, in settlement of the Pledgor's obligations to deliver Pledged Securities (or security entitlements in respect thereof) under such Secured Obligations, whereupon such Secured Party shall hold such Pledged Securities (or security entitlements in respect thereof) absolutely free from any claim or right of whatsoever kind, including any equity or right of redemption of Pledgor that may be waived or any other right or claim of Pledgor, and Pledgor, to the extent permitted under applicable law, hereby waives all rights of redemption, stay or appraisal that it has or may have under any law now existing or hereafter adopted; and 

          (2)          if such delivery shall be insufficient to satisfy in full all of the obligations of the Pledgor under the Secured Obligations consisting of obligations to deliver Pledged Securities (or security entitlements in respect thereof) and, in any event, in respect of all Secured Obligations that do not consist of obligations to deliver Pledged Securities (or security entitlements in respect thereof), (A)   apply the cash, if any, then held by it as Collateral as specified in Paragraph 13 hereof or otherwise and  (B)   if there shall be no such cash or if such cash shall be insufficient to pay in full all the Secured Obligations not satisfied by delivery of Pledged Securities (or security entitlements in respect thereof), sell the Collateral or any part thereof at public or private sale or at any broker's board or securities exchange, for cash, upon credit or for future delivery, and at such price or prices as the Collateral Agent (after conferring with the Lender and the Collars Office) may deem satisfactory or, in the case of the Pledgor Contract Rights, to the extent permitted under applicable law, exercise rights with respect thereto.

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          Any Secured Party may be the purchaser of any or all of the Collateral so sold at any public sale (or, if the Collateral is of a type customarily sold in a recognized market or is of a type that is the subject of widely distributed standard price quotations, at any private sale).  The Collateral Agent is authorized, in connection with any such sale,
          (A)          to restrict the prospective bidders on or purchasers of any of the Collateral constituting "securities" within the meaning of the Securities Act to a limited number of sophisticated investors who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or sale of any of such Collateral,

          (B)          to cause to be placed on certificates for any or all of the Pledged Securities or on any other securities pledged hereunder a legend to the effect that such security has not been registered under the Securities Act and may not be disposed of in violation of the provisions of said Act, and

          (C)          to impose such other limitations or conditions in connection with any such sale as the Collateral Agent deems necessary or advisable in order to comply with the Securities Act or any other law.

          The Pledgor covenants and agrees that it shall execute and deliver such documents and take such other action as the Collateral Agent (after conferring with the Lender and the Collars Office) deems necessary or advisable in order that any such sale may be made in compliance with law.  Upon any such sale, the Collateral Agent shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold.  Each purchaser at any such sale shall hold the Collateral so sold absolutely and free from any claim or right of whatsoever kind, including any equity or right of redemption of the Pledgor that may be waived, and the Pledgor, to the extent permitted by law, hereby specifically waives all rights of redemption, stay or appraisal that the Pledgor has or may have under any law now existing or hereafter adopted.  The notice (if any) of such sale shall (1) in case of a public sale, state the time and place fixed for such sale, (2) in case of a sale at a broker's board or on a securities exchange, state the board or exchange at which such sale is to be made and the day on which the Collateral, or the portion thereof so being sold, will first be offered for sale at such board or exchange, and (3) in the case of a private sale, state the day after which such sale may be consummated.  Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix in the notice of such sale.  At any such sale the Collateral may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may determine.  The Collateral Agent shall not be obligated to make any such sale pursuant to any such notice.  The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned.  In case of any sale of all or any part of the Collateral on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the selling price is paid by the purchaser thereof, but the Collateral Agent shall not incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice.  The Collateral Agent, instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the Security Interests and sell the Collateral, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction.

          (b)          An Event of Default under this Agreement will be deemed to be an Event of Default under the Credit Terms and an Event of Default under the Master Agreement.  In such an event, the Collars Office may exercise any or all of the rights reserved to the Collars Office under the Master 

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Agreement, including, but not limited to, all rights under Section 8 of the Master Agreement; provided, however, that if an Event of Default shall have occurred and be continuing under the Credit Terms, and upon notice to the Collars Office, the Lender may direct the Collars Office to exercise its rights under the Master Agreement and the Collars Office shall be bound by such direction.  The parties agree that the Collateral Agent will apply the proceeds of any termination or acceleration under the Master Agreement or any sale of Collateral in accordance with the terms of Paragraph 16 hereof.

          (c)          Until the Collar Loan Obligations have been satisfied in full (as determined by the Lender), the Pledgor and the Collars Office shall not, without the written consent of the Lender, modify any of the terms of the Master Agreement relating to the Pledgor Contract Rights, or permit the early termination or acceleration of any Collar.

          Section 16.  Application of Proceeds.  Upon the occurrence and during the continuance of an Event of Default,

          (a)          the proceeds of any sale of, or other realization upon, all or any part of the Collateral, including any cash received and held by the Collateral Agent in respect of Collateral (other than Pledgor Contract Rights and any Collateral received as proceeds thereof or as substitution therefor) shall be applied by the Collateral Agent in the following order of priorities:
          first, to the payment of any expenses of such sale or other realization, including reasonable compensation to the Collateral Agent and counsel for each Secured Party, and all expenses, liabilities and advances incurred or made by any Secured Party in connection therewith, and any other unreimbursed expenses for which any Secured Party is to be reimbursed pursuant to the Credit Terms, the Master Agreement or Section 18 hereof;

          second, to the payment of all Secured Obligations owed to the Collars Office for which such Collateral is Required Collateral; 

          third,  to the payment of all Secured Obligations owed to the Lender for which such Collateral is Required Collateral;

          fourth, to the payment of (or if a future or contingent obligation, to cash collateralize) any other Secured Obligations; and

          fifth, to the payment to the Pledgor or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining.

          (b)          the proceeds of any sale of, or other realization upon, all or any part of the Collateral consisting of Pledgor Contract Rights shall be applied by the Collateral Agent in the following order of priorities:
          first, to the payment of any expenses of such sale or other realization, including reasonable compensation to the Collateral Agent and counsel for each Secured Party, and all expenses, liabilities and advances incurred or made by any Secured Party in connection therewith, and any other unreimbursed expenses for which any Secured Party is to be reimbursed pursuant to the Credit Terms, the Master Agreement or Section 18 hereof;

          second, to the payment of all Secured Obligations owed to the Lender; 
          third,  to the payment of all Secured Obligations owed to the Collars Office;

          fourth, to the payment of (or if a future or contingent obligation, to cash collateralize) any other Secured Obligations; and

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          fifth, to the payment to the Pledgor or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining.

          Section 17.  Provision of Notice. The Pledgor agrees that, until all outstanding Collar Loans have been repaid in full, it will notify the Lender and the Collars Office immediately upon the occurrence of any of the following events:

          (a)          the Pledgor fails to fulfill or discharge any of its obligations or agreements under or relating to any of the Agreements;

          (b)          any representation made or repeated or deemed to have been made or repeated by the Pledgor under the Agreements is or becomes incorrect or misleading in any material respect;

          (c)          any event occurs that would cause any Collar Loans to become immediately payable without demand or notice to the Pledgor;

          (d)          the Security Interests fail at any time to constitute valid and perfected security interests in all of the Collateral securing all obligations purported to be secured thereby, subject to no prior or equal lien, security interest or other encumbrance of any kind and as to which the Collateral Agent will have control (as defined in Section 8-106 of the UCC); or

          (e)          any Potential Event of Default or Event of Default by the Pledgor occurs under the Agreements.

          Section 18.  Expenses. (a) The Pledgor agrees that it shall forthwith upon demand pay to the Collateral Agent for the accounts of the respective Secured Parties:
          (i)          the amount of any taxes or other amounts that any Secured Party may have been required to pay by reason of the Security Interests or to free any of the Collateral from any lien, security interest or other encumbrance of any kind thereon, and

          (ii)          the amount of any and all out-of-pocket expenses, including the fees and disbursements of counsel and of any other experts, that any Secured Party may incur in connection with (A) the enforcement of this Agreement, including such expenses as are incurred to preserve the value of the Collateral and the validity, perfection, rank and value of any Security Interest, (B) the collection, sale or other disposition of any of the Collateral, (C) the exercise by the Collateral Agent or any Secured Party of any of the rights conferred upon it hereunder or (D) any Potential Event of Default or Event of Default.

          (b)          Any such amount not paid on demand shall bear interest (computed on the basis of the number of days elapsed over a period of  360 days) at a rate per annum equal to 30-day LIBOR plus 500 basis points.

          Section 19.  Appointment of Collateral Agent.  (a)  The Lender and the Collars Office hereby irrevocably appoint and authorize the Collateral Agent to take such action on their behalf and to exercise such powers under this Agreement as are delegated to the Collateral Agent by the terms hereof, together with all such powers as are reasonably incidental thereto. 

          (b)          The Secured Parties (other than the Collateral Agent) shall indemnify the Collateral Agent (to the extent not reimbursed by the Pledgor) against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from the Collateral Agent's gross negligence or willful misconduct) that the Collateral Agent may suffer or incur in connection with any action taken or omitted by the Collateral Agent hereunder. 

          (c)          So long as any Collar Loans are outstanding, the Collateral Agent shall follow the instructions of the Lender with respect to the Collateral.  The Collateral Agent may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any 

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action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.

          (d)          Neither the Collateral Agent nor any of its directors, officers, agents, or employees shall be liable for any action taken or not taken by it in connection with this Agreement with the consent or at the request of the Secured Parties (other than the Collateral Agent) or in the absence of its own gross negligence or willful misconduct.  The Collateral Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper party or parties.

          (e)          Any corporation or association into which the Collateral Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its agency business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, shall, subject to the prior written consent of the Secured Parties, be and become a successor Collateral Agent hereunder and vested with all of the title to the Collateral and all of the powers, discretions, immunities, privileges and other matters as was its predecessor without, except as provided above, the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

          (f)          Beyond the exercise of  reasonable care in the custody thereof, the Collateral Agent shall have no duty as to any Collateral in its possession or control or in the possession or control of any agent, bailee, clearing corporation or securities intermediary or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.  The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if the Collateral is accorded treatment substantially equal to that which it accords its own property, and shall not be liable or responsible for any loss or damage to any of the Collateral, or for any diminution in the value thereof, by reason of the act or omission of any agent, bailee, clearing corporation or securities intermediary selected by the Collateral Agent in good faith (or selected by an agent, bailee, clearing corporation or securities intermediary so selected by the Collateral Agent).

          Section 20.  Termination and Release of Collateral. 

          (a)          Upon the satisfaction in full of all Secured Obligations and the termination of any commitments of the Secured Parties under the Credit Terms, each Collar and this Agreement, the Security Interests shall terminate and all rights to the Collateral shall revert to the Pledgor, subject to the conditions of the Master Agreement. 

          (b)          At any time and from time to time prior to such termination of the Security Interests, the Collateral Agent may, with the prior consent of the Collars Office and the Lender, release any of the Collateral or control thereof.  Upon any such termination of the Security Interests or release of Collateral, the Secured Parties shall, at the expense of the Pledgor, execute and deliver to the Pledgor such documents as the Pledgor shall reasonably request to evidence the termination of the Security Interests or the release of such Collateral or control, as the case may be. 

          (c)          Upon execution of this Agreement, the Pledgor shall provide the Collateral Agent with written instructions for the delivery of Collateral that has been released from the Security Interests.  These instructions may be modified from time to time by written notice.  The Collateral Agent shall be entitled to rely on the latest such instructions received by the Collateral Agent.

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          (d)          At any time the Secured Parties release Collateral consisting of Pledged Securities in accordance with this Section 20 in respect of any Transaction, the Secured Parties may Deliver Equivalent Securities instead of the Pledged Securities.

          Section 21.  Concerning the Collar Loans and the Lender. (a) Notwithstanding any other term or provision of this Agreement or the other Agreements to the contrary, the Collars Office hereby consents to the making of Collar Loans  and the creation of the Security Interests only upon the satisfaction of each of the following terms and conditions and the Lender hereby agrees as follows: 

                    (i)          the interest of the Lender in and to the Collateral (other than the Pledgor Contract Rights) shall, in all respects, be junior, subject and subordinate to the interest of the Collars Office in and to the Collateral as set forth herein;

                    (ii)          except as otherwise expressly provided herein, the Collars Office shall have no agency or other fiduciary relationship with, or responsibility to, the Lender and, without limiting the foregoing, shall not be obligated in any way to seek the consent of the Lender, consult with or notify the Lender, or act on behalf of the Lender in connection with the exercise by the Collars Office of any rights granted to it by Pledgor under the Master Agreement or which the Collars Office may have under the UCC or other applicable law; and 

          (b)          The Lender and the Pledgor each represent, warranty and agree that:

                    (i)          each Collar Loan complies and will comply in all respects with all applicable provisions of Regulations T, U and X of the Board of Governors of the Federal Reserve System; and

                    (ii)          the Lender shall have no right to exercise any of its remedies with respect to the Collateral hereunder or under the Credit Terms, any Note or any Loan Advice (or any related documentation) unless all Secured Obligations (other than those described in clause (d) of the definition of Secured Obligations) owed or owing to the Collars Office for which such Collateral is Required Collateral have been satisfied in full.

          Section 22.  Notices. All notices and other communications provided for hereunder shall be given or made, as the case may be, in the manner contemplated by Section 13 of the Master Agreement or paragraph VII(d) of the Credit Terms, as the case may be, a copy of which the Collars Office shall deliver to the Lender and the Collateral Agent.

          Section 23.  Waivers, Non-exclusive Remedies.  No failure on the part of any Secured Party to exercise, and no delay in exercising and no course of dealing with respect to, any right under any of the Agreements shall operate as a waiver thereof; nor shall any single or partial exercise by any Secured Party of any right under any of the Agreements preclude any other or further exercise thereof or the exercise of any other right.  The rights in the Agreements are cumulative and are not exclusive of any other remedies provided by law.

          Section 24.  Obligations Unconditional; Discharge of Obligations, etc.  (a) The obligations of the Pledgor hereunder are unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by:

                    (i)          any modification or amendment of or supplement to the Credit Terms, the Master Agreement or any Collar, Note or Loan Advice;

                    (ii)          the existence of any claim, set-off or other rights that the Pledgor may have at any time against any Secured Party or any other person, whether in connection herewith or with any related or unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; or

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                    (iii)          any other act or omission to act or delay of any kind by any Secured Party or any other person or any other circumstance whatsoever that might, but for the provisions of this paragraph 24, constitute a legal or equitable discharge of the Pledgor's obligations hereunder. 

          (b)          The Pledgor's obligations hereunder shall remain in full force and effect until all outstanding Collar Loans and Collars shall have terminated and all Secured Obligations shall have been paid in full.  If at any time any payment of any principal, interest or any other amount payable by the Pledgor under any Collar Loans or any payment or delivery by the Pledgor under any Collars is rescinded or must be otherwise restored or returned upon the insolvency or bankruptcy of the Pledgor or otherwise, the Pledgor's obligations hereunder with respect to such payment or delivery shall be reinstated as though such payment or delivery had been due but not made at such time.

          (c)          The Pledgor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein.

          Section 25.  Severability.   The provisions of this Agreement are severable.  If any clause or provision is held to be invalid and unenforceable in whole or in part by a court of competent jurisdiction, then that invalidity or unenforceability will affect only that clause or provision, or part thereof, in such jurisdiction, and will not in any manner affect such clause or provision in any other jurisdiction or any other clause or provision in any jurisdiction.

          Section 26.  Inconsistency. In the event of any inconsistency between the provisions of the Credit Terms or the Master Agreement (and related documents), on the one hand, and the provisions of this Agreement on the other, this Agreement shall control.

          Section 27.  Miscellaneous.  This Agreement:
          (a)          cannot be altered, amended or modified in any way, except by a writing signed by all of the parties;

          (b)          will be binding upon the Pledgor and its successors and assigns, and will inure to the benefit of the Secured Parties and their nominees, successors and assigns; and

          (c)          may be executed in one or more counterparts, each of which when executed will be deemed to be an original, but all of which taken together will constitute one and the same document.

          Section 28. Governing Law; Suits; Jury Trial.  UNLESS OTHERWISE AGREED BY THE PARTIES IN WRITING, ALL THE RIGHTS AND OBLIGATIONS OF THE LENDER AND THE PLEDGOR WITH RESPECT HERETO OR UNDER ANY OTHER DOCUMENT, AND WITH RESPECT TO ANY OBLIGATION OR OTHER TRANSACTION OR RELATIONSHIP (ALL SUCH DOCUMENTS, OBLIGATIONS, TRANSACTIONS AND RELATIONSHIPS BEING REFERRED TO HEREIN COLLECTIVELY AS THE "RELATIONSHIP") SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CHOICE OF LAW DOCTRINE.  The Pledgor hereby submits to the nonexclusive personal jurisdiction of, and agrees that any action or proceeding related in any way to the Relationship shall, if the Lender so chooses, be brought and enforced in, the Supreme Court of the State of New York for New York County or the United States District Court for the Southern District of New York, and hereby waives any objection to jurisdiction or venue in any such proceeding commenced in said courts.  The Pledgor hereby waives personal service of any summons, complaint or other process and agrees that any process required to be served on the Pledgor for purposes of any such proceeding may be served on the Pledgor, with the same effect as personal service within the State of New York, by certified mail or by courier service providing evidence of delivery addressed to the Pledgor at the Pledgor's address for notices as provided in paragraph VII(d) of the Credit Terms or Section 13 of the Master Agreement and shall be deemed to have been served when received or delivered at such address.  THE PLEDGOR AND THE LENDER EACH HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THE RELATIONSHIP, OR ANY OTHER CLAIM OR DISPUTE WITH RESPECT HERETO OR THERETO HOWSOEVER ARISING, TO WHICH THE PLEDGOR AND THE LENDER ARE PARTIES.  If any provision hereof is invalid or unenforceable under applicable law, the other provisions hereof shall remain in full force and effect.  All rights and remedies granted to the Lender  hereunder, under any other document and under applicable law shall be cumulative and may be exercised by the Lender from time to time.

[signature page follows]

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

INDIVIDUALS:

                                                                                                                                                      

Pledgor Signature                                                  Signature of Joint Owner, if Collar

                                                                               Agreement entered into jointly

                                                                                                                                                      

Name:                                                                     Name of Joint Owner:

PARTNERSHIPS, CORPORATIONS 

   OR TRUSTS:

Solitario Resources Corporation                   

Name and address of Pledgor 

4251 Kipling St., Suite 390                          

Wheat Ridge, CO 80033                               

                                                                      

By:/s/ Christopher E. Herald                         

     Name:Christopher E. Herald

     Title:CEO

Colorado                                                        

Jurisdiction of Incorporation or Organization

UBS AG, London Branch, 

  as Collars Office

	
By: /s/ Hina Mehta

       Name:Hina Mehta

       Title:Director and Counsel, Region Americas

                Legal Fixed Income Section
	 
	
By:  /s/ Cynthia A. Curran

        Name: Cynthia A. Curran

       Title:Director, Region Americas Legal Equity

                Derivatives & Structured Products
	 

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UBS AG, Stamford Branch,

  as Collateral Agent

	
By:  /s/ Louis DeLuca                                   

Name: Louis DeLuca

       Title: Associate Director Collateral Management

	 
	
By:  Alan Chapman                                             

Name: Alan Chapman

       Title: Associate Director

	 

The undersigned agrees to act as Securities Intermediary 

in accordance with the Agreement:

UBS Financial Services Inc. 

 [name of Securities Intermediary]

	
By:  /s/David Frieden                                           

Name: David Frieden

       Title:Regional Supervisory Officer

	 
	
By:                                                                        

Name:

       Title:

	 

 

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