Document:

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                                                                   EXHIBIT 10.45

UICI
--------------------------------------------------------------------------------

                                December 31, 2000

PERSONAL AND CONFIDENTIAL

Mr. William J. Gedwed
1430 Bentley Court
Southlake, TX 76092

Dear Bill:

         This letter is submitted to acknowledge the substance of our recent
conversations concerning your transition as an Executive Vice President of UICI
("UICI" or the "Company") and your engagement as a consultant to The MEGA Life
and Health Insurance Company ("MEGA"), pursuant to which MEGA will engage your
services to serve as a consultant to MEGA from time to time as herein set forth.
For purposes of this agreement, you are sometimes herein referred to herein as
"Gedwed."

         You currently serve as Executive Vice President and a Director of UICI.
You currently hold

                  (a) options ("Options") to purchase 6,640 shares of UICI
         Common Stock at an exercise price of $15.00 per share, of which Options
         to purchase 2,656 shares are currently vested and exercisable;

                  (b) Options to purchase 8,700 shares of UICI Common Stock at
         an exercise price of $26.35 per share, of which 1,740 Options are
         currently vested and exercisable;

                  (c) Options to purchase 49,950 shares of UICI Common Stock at
         an exercise price of $6.625 per share, none of which Options are
         currently vested and exercisable; and

                  (d) 6,740 restricted shares of UICI common stock granted with
         respect to 1999 performance and up to 10,000 restricted shares proposed
         to be granted with respect to 2000 performance ("Restricted Stock"),
         all of which shares of Restricted Stock are subject to forfeiture.

         In accordance with our recent conversations, you and UICI have mutually
agreed to terminate your current relationship with UICI and its affiliates, and
you have agreed, having gained considerable knowledge and experience relating to
the business of UICI and its affiliates as a result of your prior affiliation
with UICI as an officer, to assist MEGA and its affiliates as a consultant by
providing certain advisory services to MEGA and its affiliates. Accordingly,
UICI, MEGA and Gedwed hereby agree as follows:

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         1. SEPARATION.

                  1.1. At the close of business effective as of December 31,
         2000 (the "Separation Date"), Gedwed agrees to resign as Executive Vice
         President of UICI. Gedwed shall be entitled to his regular compensation
         through December 31, 2000.

                  1.2. Notwithstanding the foregoing, Gedwed shall continue to
         serve as a director of UICI until his successor shall have been elected
         and duly qualified. Gedwed understands that the Company intends to
         place his name in nomination to serve an additional term as a director
         at the annual meeting of stockholders of UICI to be held in May 2001.

                  1.3. Effective February 1, 2001, Gedwed shall tender and UICI
         shall accept his resignation from each other executive offices
         committee and/or directorship of entities affiliated with UICI
         designated on Exhibit A attached hereto.

                  1.4. Notwithstanding the foregoing, for purposes of the
         Company's 1986 Amended and Restated Stock Option Plan, the Company's
         1998 Stock Option Plan and the Options and the Restricted Stock, Gedwed
         shall be deemed to be an "employee" of the Company commencing on the
         Separation Date and for so long as he shall serve as a director of the
         Company, and his Options shall become exercisable in accordance with
         such plans and his shares of Restricted Stock shall become vested as if
         he were such an employee of the Company at all times during such
         period.

         2. ACKNOWLEDGEMENT OF CERTAiN OBLIGATIONS.

                  2.1. Nothing hereunder shall be deemed to affect, impair or
         diminish in any respect (i) any rights to which Gedwed may be entitled
         in his capacity as a director or officer of UICI or any "affiliate" of
         UICI (as such term is defined under regulations promulgated under the
         Securities Act of 1933, as amended) (each of UICI and its affiliates is
         herein sometimes referred to as a "UICI Company") to indemnification,
         advancement of expenses and/or reimbursement under Delaware law (or the
         corporate law of any other jurisdiction that may govern a UICI
         Company), any UICI Company's Certificate or Articles of Incorporation
         or bylaws, (ii) any rights Gedwed may have under that certain
         Indemnification Agreement, dated as of September 1, 1999, between UICI
         and Gedwed, (iii) any vested rights as of the Separation Date or
         entitlement Gedwed may have under the UICI Employee Stock Ownership
         Plan, or (iv) any other vested rights as of the Separation Date Gedwed
         may have under any employee plan or program in which Gedwed has
         participated in his capacity as an employee of any UICI Company.

                  2.2. Reference is made to that certain promissory note, dated
         June 15, 1999, payable from Gedwed to UICI in the aggregate principal
         amount of $203,154.57, which note matures in accordance with its terms
         on the earlier of May 26, 2005 or upon the occurrence of certain events
         as therein provided (the "Note"). The proceeds of the Note were used to
         finance the purchase of 8,700 shares of UICI Common Stock. Gedwed
         acknowledges and agrees that the Note remains in full force and effect
         and is enforceable in accordance with its terms.

         3. CONSULTING ARRANGEMENT. Effective upon the Separation Date, MEGA
hereby engages Gedwed on an independent contractor basis as a consultant to
MEGA, and Gedwed hereby accepts such engagement and agrees to perform his duties
and responsibilities hereunder in accordance with the terms and conditions
hereinafter set forth.

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                  3.1. Consulting Term. The term of engagement shall commence
         upon the Separation Date, and shall continue for a term ending on
         December 31, 2002, unless earlier terminated pursuant to Section 3.5 of
         this Agreement (the "Consulting Term").

                  3.2. Duties and Responsibilities. Gedwed's position shall be
         as a consultant to MEGA, in which capacity he agrees to consult with
         and assist senior management of MEGA in providing (a) assistance and
         consultation with respect to MEGA's insurance and insurance agency
         businesses, (b) advice with respect to insurance regulatory matters,
         and (c) assistance with respect to any other matters as requested from
         time to time by Greg Mutz, Glenn Reed and/or Phil Myhra. As part of his
         duties hereunder, Gedwed agrees to fully cooperate with MEGA in any and
         all internal or external investigations, subpoenas, requests for
         information, discovery requests, etc., and to make himself available
         upon the request of the Company to appear in any and all administrative
         or judicial proceedings with respect to activities or claims accruing
         prior to the Separation Date. Gedwed shall report to the assigning
         individual on a regular, periodic basis and keep such individual
         reasonably informed as to the status and progress of each assignment.
         MEGA acknowledges and agrees that the consulting relationship created
         hereby is not exclusive, and Gedwed may perform similar services for
         other clients so long as he is otherwise in compliance with Section 8.1
         hereof.

                  3.3. Consulting Fee. For his services hereunder, MEGA agrees
         to pay to Gedwed the amount of $120,000 annually (or such lesser
         amount, as provided in Section 3.6), payable in equal monthly
         installments in the amount of $10,000, payable on the first day of each
         month, commencing February 1, 2001. In addition, MEGA will promptly
         reimburse Gedwed for all reasonable out-of-pocket expenses incurred by
         Gedwed in connection with his duties hereunder, and Gedwed agrees to
         submit to MEGA written evidence of all expenses incurred on a monthly
         basis. Monthly payments of consulting fees and expenses hereunder shall
         be made by mail to the address set forth below.

                  3.4. Taxes. Gedwed is an independent contractor hereunder and
         shall be responsible for payment of all federal and state taxes due on
         amounts paid hereunder and MEGA shall not withhold any amounts for
         federal, state or local income taxes or taxes or assessments that might
         be payable or be required to be withheld if Gedwed were an employee of
         MEGA. Gedwed shall indemnify MEGA for and hold MEGA harmless from and
         against any costs, damages or liabilities relating to any such taxes or
         assessments.

                  3.5. Termination of Consulting Arrangement. The consulting
         arrangement created hereby may be terminated prior to the end of the
         Consulting Term as follows:

                  (a) by MEGA at any time for "cause;"

                  (b) by MEGA at any time without cause, upon not less than 30
                      days' prior written notice to Gedwed; or

                  (c) upon the death of Gedwed.

         For purposes of this Agreement, termination for "cause" shall mean
         termination for reason of the failure of Gedwed to materially observe
         the provisions of Section 4, 7 or 8 of this Agreement or termination
         for reason of theft, proven dishonesty, gross misconduct, embezzlement,
         fraud,

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         conviction of a felony involving fraud, theft, bodily harm or damage to
         property (whether connected with the consulting relationship or not),
         or use of the facilities or premises of MEGA or a subsidiary for the
         conduct of unlawful or unauthorized activities or transactions.

                  3.6. Effect of Termination of Consulting Arrangement.

                  3.6.1.   In the event the consulting arrangement provided
                           herein is terminated by MEGA prior to the end of the
                           Consulting Term as provided in Section 3.5(a), then
                           in such event Gedwed shall be entitled only to such
                           portion of the compensation set forth in Section 3.3
                           of this Agreement for the portion of the Consulting
                           Term that he continued as a consultant hereunder.
                           Upon termination pursuant to Section 3.5(a), Gedwed
                           shall have 30 days to exercise all or any portion of
                           Options otherwise vested on the date of termination.

                  3.6.2.   In the event the consulting arrangement provided
                           herein is terminated by MEGA as provided in Section
                           3.5(b) or as provided in Section 3.5(c), then in such
                           event Gedwed shall be entitled to the balance of the
                           compensation set forth in Section 3.3 of this
                           Agreement, payable in monthly installments as
                           provided in Section 3.3 hereof. Upon termination
                           pursuant to Section 3.5(b), 50% of all Options which
                           are otherwise unvested shall vest, and Gedwed shall
                           thereafter have 30 days to exercise all vested
                           Options held by him. Upon termination pursuant to
                           Section 3.5(c), 100% of all Options which are
                           otherwise unvested shall vest, and the estate of, or
                           other successor to, Gedwed shall thereafter have 60
                           days to exercise all vested Options held by such
                           estate or successor.

                  3.7. Approval of Oklahoma Insurance Department.
         Notwithstanding anything in the foregoing to the contrary, the
         consulting arrangement contemplated hereby and the terms of this
         Agreement are expressly made subject to the approval of the Oklahoma
         Insurance Department, the receipt of which is a condition to the
         effectiveness hereof.

         4. CONFIDENTIALITY.

                  4.1. Confidential Information. Gedwed acknowledges that, by
         reason of his employment by UICI and its affiliates and of his
         engagement as a consultant to MEGA under this Agreement, he will or may
         have access to confidential and proprietary information of the Company,
         including, without limitation, client and customer lists, developments,
         information pertaining to services and products, improvements of new or
         existing services and products, know-how, specifications, profit and
         other financial figures, and other information treated as proprietary
         or confidential by MEGA which is not otherwise readily available from
         public or published sources. Gedwed agrees that he will maintain in
         confidence all such confidential or proprietary information and that he
         will not, for any reason, during his engagement by MEGA or thereafter,
         directly or indirectly, use for his benefit, or for any person, firm,
         corporation, partnership, joint venture or other entity whatsoever, or
         disclose to any person, firm, corporation, partnership, joint venture
         or other entity whatsoever, any confidential or proprietary information
         relating to the business or affairs of MEGA or any of MEGA's
         affiliates without the prior written authorization of MEGA.
         Notwithstanding the foregoing, nothing hereunder shall prohibit Gedwed
         from disclosing (i) information that has become generally available to
         the public other than as a result of disclosure by Gedwed or (ii)
         information required to be disclosed by applicable law or legal

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         process, provided that MEGA shall have been afforded reasonable notice
         in advance of such disclosure and had the opportunity to contest the
         scope of any legal request to require such disclosure.

                  4.2. Return of Materials. Upon termination of Gedwed's
         engagement as a consultant hereunder, for whatever reason, Gedwed
         agrees promptly to surrender to MEGA all notes, memoranda, customer
         lists, records, reports, computer programs and all other documents and
         material, and all copies thereof, whether prepared by Gedwed or others,
         which contain or relate to confidential or proprietary information of
         MEGA of which the Gedwed has obtained possession during the course of
         performing Gedwed's obligations hereunder.

         5. REPRESENTATIONS AND WARRANTIES.

                  5.1. Representation of Gedwed. Gedwed hereby represents and
         warrants to MEGA that he is not a party or otherwise subject to any
         employment or other agreement or subject to any duty or duties to
         another person or entity of which the subject matter hereof could be in
         violation.

                  5.2. Representation of MEGA. MEGA hereby represents and
         warrants to Gedwed that (a) neither it nor any affiliate of MEGA is a
         party or otherwise subject to any agreement or subject to any duty or
         duties to another person or entity of which the subject matter hereof
         could be in violation, and (b) this Agreement has been duly authorized,
         executed and delivered by MEGA.

         6. DISCLOSURE. Gedwed acknowledges that the principal terms of the
arrangement contemplated by this Agreement may be subject to disclosure under
the rules and regulations of the Securities and Exchange Commission promulgated
under the Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended. Gedwed further acknowledges and understands that the terms of
this Agreement constitute a "material transaction" with a "related party" in
accordance with the policies and procedures respecting related party
transactions adopted by the UICI Board of Directors and, as a result, this
Agreement is subject to the approval by the Outside Disinterested Directors of
UICI.

         7. NON-COMPETITION AGREEMENT.

                  7.1.Non-Competition. Gedwed acknowledges that he has and may
         through this consulting engagement develop significant skills in or
         knowledge of MEGA's insurance and other businesses, and that the future
         application and engagement of those skills and that knowledge by him
         are a valid concern of MEGA. Gedwed agrees that, until expiration or
         earlier termination of the Term in accordance with Section 3.5 hereof,
         he will not, directly or indirectly, for himself or others, or as
         owner, stockholder, partner, officer, director, employee, consultant,
         joint venturer, independent contractor, advisor, agent, or otherwise,
         without the prior written consent of MEGA:

                           (a) contact or seek to do business with any
                  competitor of MEGA with which he may have contact during his
                  engagement hereunder, or who is known to him to be a
                  competitor of MEGA, for the purpose of interfering with,
                  diverting or acquiring any portion of the business of MEGA,
                  or use the information, material or strategies generated or
                  produced by MEGA for the benefit of such other competitor of
                  MEGA; or

                           (b) directly or indirectly, or for or with any other
                  person, firm, corporation, partnership, joint venture or other
                  entity whatsoever, knowingly solicit or endeavor to

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                  entice away from MEGA any person employed by MEGA, or with
                  whom MEGA has a business relationship, in order to accept
                  employment or establish an association with him, or any other
                  person, firm, corporation, partnership, joint venture or
                  entity whatsoever, and approach any such person for any such
                  purpose or authorize or knowingly cooperate with the taking of
                  any such action by any other person, firm, corporation,
                  partnership, joint venture or entity whatsoever.

                  7.2. Sole Remedy for Breach. MEGA acknowledges that its sole
         remedy for any breach of the foregoing restriction contained in this
         Section 7 shall be its right to terminate the consulting arrangement
         created hereby in accordance with Section 3.5.

         8. INDEMNIFICATION.

                  8.1. Indemnification by Gedwed. Gedwed hereby agrees to
         indemnify and hold MEGA harmless from and against any claim, cost,
         expense, damage, liability, loss or deficiency suffered or incurred by
         MEGA (including, without limitation, reasonable attorneys' fees and
         other reasonable costs and expenses incident to any suit, action,
         proceeding or claim) arising out of or resulting from, and will pay
         MEGA on written demand the full amount of any sum which MEGA may pay or
         may become obligated to pay in respect of, (i) any material inaccuracy
         in any representation or the breach of any warranty made by Gedwed
         pursuant to this Agreement or (ii) any failure by Gedwed duly to
         perform or observe any term, provision, covenant, agreement or
         condition in this Agreement to be performed or observed by Gedwed.

                  8.2. Indemnification by MEGA. MEGA hereby agrees to indemnify
         and hold Gedwed harmless from and against any claim, cost, expense,
         damage, liability, loss or deficiency suffered or incurred by Gedwed
         (including, without limitation, reasonable attorneys' fees and other
         reasonable costs and expenses incident to any suit, action, proceeding
         or claim) arising out of or resulting from, and will pay Gedwed on
         written demand the full amount of any sum which Gedwed may pay or may
         become obligated to pay in respect of, (i) any material inaccuracy in
         any representation or the breach of any warranty made by MEGA pursuant
         to this Agreement, (ii) any failure by MEGA duly to perform or observe
         in any material respect any term, provision, covenant, agreement or
         condition in this Agreement to be performed or observed by MEGA or
         (iii) any other such claim, cost, expense, damage, liability, loss or
         deficiency arising out of Gedwed's services to be provided to MEGA as a
         consultant hereunder (except, and only to the extent, that such other
         claim, cost, expense, damage, liability, loss or deficiency arises
         primarily from Gedwed's gross negligence, IT BEING EXPRESSLY UNDERSTOOD
         THAT THE INDEMNITY SET FORTH IN THIS CLAUSE (iii) INCLUDES MATTERS
         BASED ON GEDWED'S ORDINARY NEGLIGENCE).

         9. GENERAL PROVISIONS.

                  9.1. Survival. Notwithstanding the termination of the
         consulting arrangement hereby created upon or prior to expiration of
         the Consulting Term for any reason, the covenants contained in Sections
         3, 4 and 7 hereof shall survive and remain in full force and effect.

                  9.2. Binding Effect; Assignment. This Agreement shall be
         binding upon and inure to the benefit of Gedwed, the Company and MEGA
         and their respective heirs, executors, administrators, successors and
         assigns.

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                  9.3. Entire Agreement; Amendments. This Agreement contains the
         entire agreement and understanding between the Company, MEGA and Gedwed
         relating to the termination of Gedwed's employment and the engagement
         of Gedwed by MEGA as a consultant and supersedes all prior agreements
         between the Company, MEGA and Gedwed relating to the subject matter
         hereof. This Agreement may not be amended, modified or supplemented in
         any respect except by a subsequent written agreement executed by the
         party affected thereby.

                  9.4. Notices. All notices, requests, demands and other
         communications required or permitted to be given hereunder shall be by
         hand-delivery, certified or registered mail; return receipt requested,
         telex, telecopier, or air courier to the parties set forth below. Such
         notices shall be deemed given: at the time delivered by hand, if
         personally delivered; at the time received if sent certified or
         registered mail; when answered back, if telexed; when receipt
         acknowledged, if telecopied; and the third business day after timely
         delivery to the courier, if sent by air courier.

                           If to the Company:

                           UICI
                           4001 McEwen Drive
                           Suite 200
                           Dallas, Texas 75244

                           Attn.: Mr. Gregory T. Mutz
                           Telephone: (972) 392-6798
                           Telecopy: (972) 392-6717

                           If to MEGA:

                           The MEGA Life and Health Insurance Company
                           C/o UICI
                           4001 McEwen Drive
                           Suite 200
                           Dallas, Texas 75244

                           Attn.: Mr. Glenn W. Reed
                           Telephone: (972) 392-6719
                           Telecopy: (972) 392-6717

                           If to Gedwed:

                           1430 Bentley Court
                           Southlake, TX 76092

                  9.5. Execution in Counterparts. This Agreement may be executed
         simultaneously in two or more counterparts, each of which shall be
         deemed an original agreement, but all of which together shall
         constitute one and the same instrument.

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<PAGE>   8

                  9.6. Titles and Headings. Titles and headings to sections
         herein are for purposes of reference only, and shall in no way limit,
         define, or otherwise affect the provisions herein.

                  9.7. Governing Law; Submission to Jurisdiction. This Agreement
         shall be governed by and construed and enforced in accordance with the
         laws of the State of Texas. Each of Gedwed, the Company and each UICI
         Company hereby submits to the exclusive jurisdiction of the United
         States District Court for the Northern District of Texas and of any
         Texas state court sitting in Dallas, Texas for the purposes of all
         legal proceedings arising out of or relating to the Agreement or the
         transactions contemplated hereby. Each of Gedwed, the Company and each
         UICI Company irrevocably waives, to the fullest extent permitted by
         law, any objection which any of such parties may now or hereafter have
         to the laying of the venue of any such proceeding brought in such a
         court and any claim that any such proceeding brought in such a court
         has been brought in an inconvenient forum.

                  9.8. Severability. If any provision of this Agreement or
         application thereof to anyone or under any circumstances is adjudicated
         to be invalid or unenforceable, such invalidity or unenforceability
         shall not affect any other provision or application of this Agreement
         which can be given effect without the invalid or unenforceable
         provision or application.

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         Please acknowledge your agreement to the foregoing by signing and
returning to the undersigned the enclosed copy of this letter.

                                            UICI

                                            By:
                                               ---------------------------------
                                            Name: Glenn W. Reed
                                            Its: Executive Vice President and
                                                   General Counsel

                                            The MEGA Life and Health Insurance
                                            Company

                                            By:
                                               ---------------------------------
                                            Name: Glenn W. Reed
                                            Its: Vice President

Agreed and acknowledged as of this 31st day of December 2000.

----------------------------------
        William J. Gedwed

                                        9

<PAGE>   10

                                                                       EXHIBIT A

<TABLE>
<CAPTION>
         CORPORATION                                                 POSITION
         -----------                                                 --------
<S>                                                         <C>
The Chesapeake Life Insurance Company                       Director, Chairman of the Board
                                                            Executive Committee
                                                            Investment/Finance Committee

The MEGA Life and Health Insurance                          Director, Chairman of the Board
  Company                                                   Executive Committee
                                                            Investment/Finance Committee

Mid-West National Life Insurance                            Director, Chairman of the Board
  Company of Tennessee                                      Executive Committee
                                                            Investment/Finance Committee

Fidelity First Insurance Company                            Director, Chairman of the Board
                                                            Executive Committee
                                                            Investment/Finance Committee

UICI Marketing, Inc.                                        Director, Chairman of the Board
                                                            and Chief Executive Officer

Benefit Administration for the Self                         Board of Managers
  Employed, L.L.C.

WinterBrook Holdings, Inc.                                  Director, Secretary

UICI Funding Corp. 2                                        Director

Impact Productions, Inc.                                    Director
</TABLE>

                                       10<PAGE>   1
                                                                 EXHIBIT 10.46

                                      UICI

                           2000 RESTRICTED STOCK PLAN

                                       1
<PAGE>   2

                         UICI 2000 RESTRICTED STOCK PLAN

                                    SECTION 1

                                     GENERAL

         1.1 Purpose. The UICI 2000 Restricted Stock Plan (the "Plan") has been
established by UICI, a Delaware corporation (the "Company") to:

         (a)      attract and retain employees and other persons providing
                  services to the Company and the Related Companies (as defined
                  below);

         (b)      motivate Eligible Participants, by means of appropriate
                  incentives, to achieve long-range goals;

         (c)      provide incentive compensation opportunities that are
                  competitive with those of other major corporations; and

         (d)      further identify Eligible Participants' interests with those
                  of the Company's other stockholders through compensation that
                  is based on the Company's common stock;

and thereby promote the long-term financial interest of the Company and the
Related Companies, including the growth in value of the Company's equity and
enhancement of long-term stockholder return. The term "Related Company" means
any company during any period in which it is a "subsidiary corporation" (as that
term is defined in Code section 434(f)) with respect to the Company.

         1.2 Participation. Subject to the terms and conditions of the Plan, the
Board (as described in Section 4) shall determine and designate, from time to
time, from among the Eligible Individuals, those persons who will be granted one
or more Restricted Stock awards under Section 2 of the Plan, and thereby become
"Eligible Participants" in the Plan. For purposes of the Plan, the term
"Eligible Individual" shall mean any employee of the Company or a Related
Company and any other person providing material services to the Company or a
Related Company that is designated by the Board as eligible for participation in
the Plan.

                                    SECTION 2

                             RESTRICTED STOCK AWARDS

         2.1. Restricted Stock Awards. Subject to the following provisions of
this Section 2, awards of Restricted Stock under the Plan shall be made to
persons selected by the Board in accordance with subsection 1.2 and shall be
subject to the applicable provisions of subsection 2.2. For purposes of the
Plan, "Restricted Stock" awards under the Plan are grants of Stock to Eligible
Participants, the vesting of which is subject to such conditions as may be
established by the Board, with some or all of those conditions relating to
events (such as performance, satisfaction of Company performance targets
established by lenders or continued employment) occurring after the date of
grant. The period beginning on the date of a grant of Restricted Stock is
referred to as the "Restricted Period."

         2.2. Terms and Conditions of Awards. In addition to any other terms and
conditions determined by the Board, all shares of Restricted Stock granted to
Eligible Participants under the Plan shall be subject to the following terms and
conditions, to the extent applicable:

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<PAGE>   3

         (a)      Except as otherwise provided, Restricted Stock granted to
                  Eligible Participants under the Plan may not be sold,
                  assigned, transferred, pledged, hypothecated or otherwise
                  encumbered during the Restricted Period, except as designated
                  by the Eligible Participant by will or by the laws of descent
                  and distribution or pursuant to a qualified domestic relations
                  order as defined by the Internal Revenue Code, Title I of the
                  Employee Retirement Income Security Act or the rules
                  thereunder. During the Restricted Period, the Eligible
                  Participant shall have all the rights of a stockholder,
                  including but not limited to the right to vote such shares
                  and, except as otherwise provided by the Board, the right to
                  receive all dividends paid on such shares.

         (b)      Except as otherwise determined by the Board, an Eligible
                  Participant who ceases to perform services for the Company and
                  the Related Companies prior to the end of the Restricted
                  Period for any reason shall forfeit all shares of Restricted
                  Stock remaining subject to any outstanding Restricted Stock
                  award.

         (c)      The Company may require a written statement that the Eligible
                  Participant is acquiring shares of Restricted Stock for
                  investment and not with the intention of distributing the
                  shares, except for a sale to a purchaser who makes the same
                  representation in writing, and that the holder of the shares
                  of Restricted Stock will not dispose of such shares in
                  violation of the registration requirements of the Securities
                  Act of 1933, as amended, or any other applicable law.

                                    SECTION 3

                                OPERATION OF PLAN

         3.1. Effective Date. The Plan shall be effective as of January 1, 2000,
subject to approval of the Company's stockholders. The Plan shall be unlimited
in duration and, in the event of Plan termination, shall remain in effect as
outstanding and not fully vested.

         3.2. Shares Subject to Plan. The shares of Stock with respect to which
awards may be made under the Plan shall be shares currently authorized but
unissued or currently held or subsequently acquired by the Company as treasury
shares, including shares purchased in the open market or in private
transactions. Subject to the provisions of subsection 4.4, the number of shares
of Stock, which may be issued with respect to awards under the plan shall not
exceed 100,000 shares in the aggregate. In the event that shares of Stock that
are delivered under the Plan are thereafter reacquired by the Company pursuant
to rights reserved upon the award thereof, such reacquired shares shall again be
available for awards under the Plan.

         3.3. Adjustments to Shares. In the event of any merger, consolidation,
reorganization, recapitalization, spinoff, stock dividend, stock split, reverse
stock split, exchange or other distribution with respect to shares of Stock or
other change in the corporate structure or capitalization affecting the Stock,
the type and number of shares of stock which are or may be subject to awards
under the Plan and the terms of any outstanding awards shall be equitably
adjusted by the Board, in its sole discretion, to preserve the value of benefits
awarded or to be awarded to Eligible Participants under the Plan; provided,
however, in the event of a merger or a sale of substantially all of the assets
of the Company, the Board, in its sole discretion, may substitute awards of
equal value for outstanding awards under the Plan or cancel outstanding awards,
provided that the Eligible Participant receives an amount that the Board
believes is reasonable payment therefor.

                                       3
<PAGE>   4

         3.4. Limit on Distribution. Distribution of shares of Stock or other
amounts under the Plan shall be subject to the following:

         (a)      Notwithstanding any other provision of the Plan, the Company
                  shall have no liability to deliver any shares of Stock under
                  the Plan or make any other distribution of benefits under the
                  Plan unless such delivery or distribution would comply with
                  all applicable laws and the applicable requirements of any
                  securities exchange or similar entity.

         (b)      In the case of an Eligible Participant who is subject to
                  Section 16(a) and 16(b) of the Securities Exchange Act of
                  1934, the Board may, at any time, add such conditions and
                  limitations to any award to such Eligible Participant, or any
                  feature of any such award, as the Board, in its sole
                  discretion, deems necessary or desirable to comply with
                  Section 16(a) or 16(b) and the rules and regulations
                  thereunder or to obtain any exemption therefrom.

         (c)      To the extent that the Plan provides for issuance of
                  certificates to reflect the transfer of shares of Stock, the
                  transfer of such shares may be effected on a non-certificated
                  basis, to the extent not prohibited by applicable law or the
                  rules of any stock exchange.

         3.5. Withholding. All awards under the plan are subject to withholding
of all applicable taxes, which withholding obligations may be satisfied, with
the consent of the Board, through the surrender of shares of Stock, which the
Eligible Participant already owns or to which a Participant is otherwise
entitled under the Plan.

         3.6. Agreement With Company. At the time of an award to an Eligible
Participant under the Plan, the Board may require an Eligible Participant to
enter into an agreement with the Company (the "Agreement") in substantially the
form as attached hereto as Exhibit A or otherwise as specified by the Board,
agreeing to the terms and conditions of the Plan and to such additional terms
and conditions, not inconsistent with the Plan, as the Board may, in its sole
discretion, prescribe.

         3.7. Limitation of Implied Rights.

         (a)      Neither an Eligible Participant nor any other person shall, by
                  reason of the Plan, acquire any right in or title to any
                  assets, funds or property of the Company or any Related
                  Company whatsoever, including, without limitation, any
                  specific funds, assets, or other property which the Company or
                  any Related Company, in its sole discretion, may set aside in
                  anticipation of a liability under the Plan. An Eligible
                  Participant shall have only a contractual right to the
                  amounts, if any, payable under the Plan, unsecured by any
                  assets of the Company and any Related Company. Nothing
                  contained in the Plan shall constitute a guarantee by the
                  Company or any Related Company that the assets of such
                  companies shall be sufficient to pay any benefits to any
                  person.

         (b)      The Plan does not constitute a contract of employment, and
                  selection as an Eligible Participant will not give any
                  employee the right to be retained in the employ of the Company
                  or any Related Company, nor any right or claim to any benefit
                  under the Plan, unless such right or claim has specifically
                  accrued under the terms of the Plan. Except as otherwise
                  provided in the Plan, no award under the Plan shall confer
                  upon the holder thereof any right as a stockholder of the
                  Company prior to the date on which he or she fulfills all
                  service requirements and other conditions for receipt of such
                  rights and shares of Stock are registered in his or her name.

                                       4
<PAGE>   5

         3.8. Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information, which the person acting
on it considers pertinent and reliable, and signed, made or presented by the
proper party or parties.

         3.9. Action by Company or Related Company. Any action required or
permitted to be taken by the Company or any Related Company shall be by
resolution of its board of directors, or by action of one or more members of the
board (including a committee of the board) who are duly authorized to act for
the board or (except to the extent prohibited by applicable law or the rules of
any stock exchange) by a duly authorized officer of the company.

         3.10. Gender and Number. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.

                                    SECTION 4

                                 ADMINISTRATION

         The authority to control and manage the operation and administration of
the Plan shall be vested in the Board of Directors of the Company, subject to
the following:

         (a)      Subject to the provisions of the Plan, the Board will have the
                  authority and discretion to select employees to receive
                  awards, to determine the time or times of receipt, to
                  determine the number of shares covered by the awards, to
                  establish the terms, conditions, performance criteria,
                  restrictions, and other provisions of such awards, and to
                  cancel or suspend awards. In making such award determinations,
                  the Board may take into account the nature of services
                  rendered by the respective employee, his present and potential
                  contribution to the Company's success and such other factors
                  as the Board deems relevant.

         (b)      The Board will have the authority and discretion to interpret
                  the Plan, to establish, amend and rescind any rules and
                  regulations relating to the Plan, to determine the terms and
                  provisions of any agreements made pursuant to the Plan and to
                  make all other determinations that may be necessary or
                  advisable for the administration of the Plan.

         (c)      Any interpretation of the Plan by the Board and any decision
                  made by it under the Plan is final and binding on all persons.

         (d)      Except as otherwise expressly provided in the Plan, where the
                  Board is authorized to make a determination with respect to
                  any award, such determination shall be made at the time the
                  award is made, except that the Board may reserve the authority
                  to have such determination made by the Board in the future
                  (but only if such reservation is made at the time the award is
                  granted and is expressly stated in the Agreement reflecting
                  the award);

provided, however, the Board, in its sole discretion, may delegate any or all of
its authority under the Plan to a committee of the Board and, to the extent so
delegated, references to the Board hereunder shall be deemed to refer such
committee. Except to the extent prohibited by applicable law or the rules of any
stock exchange, the Board or, if applicable, the committee of the Board, may
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Board or committee, if applicable, at any time.

                                       5
<PAGE>   6

                                    SECTION 5

                                CHANGE IN CONTROL

         Except as otherwise provided in the Agreement reflecting the applicable
award, upon the occurrence of a Change in Control, all restrictions on
outstanding Restricted Stock awards shall lapse. For purposes of the Plan, a
"Change in Control" shall be deemed to occur on the earliest of the existence of
one of the following events:

         (a)      (i) any "person" (as such term is used in Sections 13(d) or
                  14(d) of the Exchange Act), other than one or more Permitted
                  Holders (as defined below), is or becomes the beneficial owner
                  (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
                  directly or indirectly, of more than 35% of the total voting
                  power of the Voting Stock (as defined below) of the Company
                  and (ii) the Permitted Holders "beneficially own" (as defined
                  in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
                  indirectly, in the aggregate a lesser percentage of the voting
                  power of the Voting Stock of the Company than such other
                  person an do not have the right or ability by voting power,
                  contract or otherwise to elect or designate for election a
                  majority of the Board of Directors of the Company;

         (b)      individuals who, as of the date hereof, constitute the Board
                  (as of the date hereof the "Incumbent Board") cease for any
                  reason to constitute at least a majority of the Board,
                  provided that any individual becoming a director subsequent to
                  the date hereof whose election, or nomination for election by
                  the Company's shareholders, was approved by a vote of at least
                  a majority of the directors then comprising the Incumbent
                  Board shall be considered as though such individual were a
                  member of the Incumbent Board, but excluding, for this
                  purpose, any such individual whose initial assumption of
                  office is in connection with an actual or threatened "election
                  contest" relating to the election of the directors of the
                  Company (as such term is used in Rule 14a-11 of Regulation 14A
                  promulgated under the Exchange Act); or

         (c)      approval by the Company's shareholders of a reorganization,
                  merger or consolidation of the Company, in each case, with
                  respect to which all or substantially all of the individuals
                  and entities who were the respective beneficial owners of the
                  common stock and voting securities of the Company immediately
                  prior to such reorganization, merger or consolidation do not,
                  following such reorganization, merger or consolidation,
                  beneficially own, directly or indirectly, more than 70% of,
                  respectively, the then outstanding shares of common stock or
                  the combined voting power of the then outstanding voting
                  securities entitled to vote generally in the election of
                  directors, as the case may be, of the corporation resulting
                  from such reorganization, merger or consolidation, or of a
                  complete liquidation or dissolution of the Company or of the
                  sale or other disposition of all or substantially all of the
                  assets of the Company.

         For purposes of this Section 5, the term "Permitted Holders" means
Ronald L. Jensen, his spouse and any child of Ronald L. Jensen and any person or
entity controlled by, under common control with or controlling Ronald L. Jensen
or any of the foregoing persons. The term "Voting Stock" of the Company means
all classes of capital stock of the Company then outstanding and normally
entitled to vote in the election of directors.

                                       6
<PAGE>   7

                                    SECTION 6

                            AMENDMENT AND TERMINATION

         The Board may, at any time, amend or terminate the Plan, provided that,
subject to subsection 3.3 (relating to certain adjustments to shares), no
amendment or termination may materially adversely affect the rights of any
Participant or beneficiary under any award made under the Plan prior to the date
such amendment is adopted by the Board.

                                       7

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