Document:

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SANFRANCISCO TECHNOLOGY
LICENSE AGREEMENT

License Reference Number:
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AGREEMENT between INTERNATIONAL BUSINESS
MACHINES CORPORATION, a New York corporation

("IBM"), and                     QAD Inc.
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              (Please print YOUR organization's full business name)

                          a Delaware Corporation
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    (Please print the city or county where YOU are incorporated or
otherwise authorized to do business)

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               (Please print type of business entity)

("YOU" or "YOUR").

IBM has certain programming code and technical information that is designed
to be used for building computer application programs and certain patents and
patent applications covered by such programming code and technical
information.  IBM wishes to license Version 1, including Releases and
modifications thereof, of such programming and technical information, listed
by product No., in ATTACHMENT A (the "SanFrancisco Product"), and patents
(defined hereinbelow) to YOU for the purpose of YOUR creating further
software products to be licensed by YOU to YOUR Customers.

YOU wish to receive certain licenses with respect to the SanFrancisco Product
for the aforesaid purposes.

In consideration of the premises and the mutual covenants contained in this
Agreement and its attachments IBM and YOU agree as follows:

Section 1.     DEFINITIONS
1.1     "APPLICATION DEVELOPMENT INFORMATION" shall mean the files listed in
the file named LICENSE.TXT which is located in the root directory of the
CD-ROM and in the ...com/ibm/sf/doc/ relative directory that results from the
installation of the SanFrancisco Product on YOUR computer where ... is the
prefix directory determined at install time by user specification of
directory preference and/or specific platform requirements under Section E,
"Application Development Information."  The contents of these lists and
subdirectories may be updated by IBM from time to time.

1.2     "BASE" shall mean the Code and Documentation listed in the file named
LICENSE.TXT which is located in the root directory of the CD-ROM and in the
 ...com/ibm/sf/doc/ relative directory that results from the installation of
the SanFrancisco Product on YOUR computer where ... is the prefix directory
determined at install time by user specification of directory preference
and/or specific platform requirements, under Section C, "Reshippable
Materials List," sublist 1.  The contents of these lists and subdirectories
may be updated by IBM from time to time.

1.3     "CD-ROM" shall mean a CD-ROM on which the SanFrancisco Product, or any
portion thereof is distributed.

1.4     "CODE" shall mean computer programming code.  Except as otherwise
specified,  Code shall include Source Code and Binary Code.
(a) "BINARY CODE" shall mean Code including but not limited to Java byte Code
    and Object Code in a form that is indirectly or directly executable by a
    computer, and is not readable or understandable by a programmer of ordinary
    skills.
(b) "OBJECT CODE" shall mean Code substantially or entirely in binary form,
    and includes header files of the type necessary for use or inter operation
    with other computer programs.  It is intended to be directly executable by
    a computer after processing or linking, but without interpretation,
    compilation or assembly.
(c) "SOURCE CODE" shall mean Code in a form which when printed out or
    displayed is readable and understandable by a programmer of ordinary
    skills.  It includes procedural and object oriented Code with associated
    comments describing the operation of the Code.

1.5     "CORE BUSINESS PROCESSES" or "CBP" shall mean the information and
files listed in the file named LICENSE.TXT which is located in the root
directory of the CD-ROM and in the ...com/ibm/sf/doc/ relative directory that
results from the installation of the SanFrancisco Product on YOUR computer
where ... is the prefix directory determined at install time by user
specification of directory preference and/or specific platform requirements
under Section C, "Reshippable Materials List," sublist 2.  The contents of
these lists and subdirectories may be updated by IBM from time to time.

1.6     "CUSTOMER" shall mean an end user authorized to use Your Product for
such end user's internal productive use and not for remarketing or
sublicensing.

1.7     "DERIVATIVE WORK" shall mean a work based upon one or more
preexisting works that would be a copyright infringement if prepared
without the authorization of the copyright owners of the preexisting work.
Derivative Works are subject to the ownership rights and licenses of others
in the preexisting work.

1.8     "DISTRIBUTORS" shall mean business entities used to distribute Your
Product.

1.9     "EFFECTIVE DATE" shall mean the date on which IBM has signed and
dated this Agreement.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

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1.10    "ERROR" shall mean any mistake, problem, or defect that causes
Licensed Binary Code in Your Product to malfunction.

1.11    "FIXPACKS" shall mean revisions that correct Errors or provide small
programming enhancements.

1.12    "FUTURES PERIOD" shall be three years starting from the Effective
Date.

1.13    "IBM PATENTS" shall mean all patents (but not including any design
patents or registrations) of IBM:
(a) issued or issuing on patent applications entitled to an effective filing
    date prior to the expiration of the Futures Period or to the termination or
    expiration of this Agreement, whichever comes first;
(b) which, but for this Agreement, would be infringed by YOUR making, using,
    importing, offering for sale, leasing, selling or otherwise transferring
    Your Product in the country in which such patent exists; and
(c) under which patents or the applications therefor IBM or any of its
    Subsidiaries now has, or hereafter obtains, the right to grant licenses to
    YOU of or within the scope granted herein without such grant or the
    exercise of rights thereunder resulting in the payment of royalties or
    other consideration by IBM or its Subsidiaries to third parties (except for
    payments between IBM and its Subsidiaries, and payments to third parties for
    inventions made by said third parties while employed by IBM or any of its
    Subsidiaries).

IBM Patents shall include said patent applications, continuations in part of
said patent applications, and any patents reissuing on any of the aforesaid
patents.

1.14    "IHS PRODUCT" shall mean an Information Handling System or any
instrumentality or aggregate of instrumentalities (including, without
limitation, any component, subassembly, computer program or supply) designed
for incorporation in an Information Handling System.  Any instrumentality or
aggregate of instrumentalities primarily designed for use in the fabrication
(including testing) of an IHS Product licensed herein shall not be considered
to be an IHS Product.

1.15    "INFORMATION HANDLING SYSTEM" shall mean any instrumentality or
aggregate of instrumentalities primarily designed to compute, classify,
process, transmit, receive, retrieve, originate, switch, store, display,
manifest, measure, detect, record, reproduce, handle or utilize any form of
information, intelligence or data for business, scientific, control or other
purposes.

1.16    "INTERNAL PRODUCTION USE" shall mean any use of the SanFrancisco
Product or Your Product other than for the purposes of developing prototypes
or application programs.

1.17    "KNOW-HOW" shall include but not be limited to the information
contained in the files listed in the file named LICENSE.TXT which is located
in the root directory of the CD-ROM and in the ...com/ibm/sf/doc/ relative
directory that results from the installation of the SanFrancisco Product on
YOUR computer where "..." is the prefix directory determined at install time
by user specification of directory preference and/or specific platform
requirements under Section D, entitled "IBM's Know-How."  The contents of
these lists and subdirectories may be updated by IBM from time to time.
Know-How shall also include files, documents, summaries and other tangible
items labeled as described in Section 3.1.

1.18    "LICENSED CODE" shall mean all Code licensed by IBM to YOU in the
SanFrancisco Product.  Except as otherwise specified, Licensed Code shall
include Licensed Source Code and Licensed Binary Code.
(a) "LICENSED BINARY CODE" shall mean Binary Code included in the
    SanFrancisco Product.
(b) "LICENSED SOURCE CODE" shall mean Source Code included in the
    SanFrancisco Product.

1.19    "LICENSED MATERIALS" shall mean Licensed Technology and Licensed Code.

1.20    "LICENSED TECHNOLOGY" shall mean Know-How,  Application Development
Information and other technical information provided to YOU by IBM which is
incorporated in, or used in the design or provision of Your Product.
Licensed Technology does not include any Licensed Code.

1.21    "LICENSE REFERENCE NUMBER" shall mean a number assigned by IBM in
accordance with Section 8.1, and used to track and identify YOUR SanFrancisco
Technology License Agreement and all communications by YOU to IBM in
connection therewith.

1.22    "MAINTENANCE SERVICES" shall mean any service that redistributes
revisions to the SanFrancisco Product or provides revisions to Your Original
Code within Your Product, where such revisions correct Errors or provide
small programming enhancements.

1.23    "PUBLICLY ACCESSIBLE NETWORK" or "PAN" shall mean any configuration
of data processing devices and software adapted for information exchange that
is accessible for use by the public or other users unaffiliated with YOU,
with or without payment of subscription fees or other charges.

1.24    "RELEASE" shall mean the distribution via CD-ROM of a SanFrancisco
Product containing new software functions, enhancements to existing software
functions, new or enhanced tools, and/or additional reference material.

1.25    "SPECIFICATIONS" shall mean the document entitled SanFrancisco
Licensed Program Specifications.

1.26    "SPECIFIED OPERATING ENVIRONMENT" shall mean the machines and programs
with which the SanFrancisco Product is designed to operate, as described in
the applicable Specifications.

1.27    "SUBSIDIARY" shall mean a corporation, company or other entity:
(a) more than fifty percent (50%) of whose outstanding shares or securities
    (representing the right to vote for the election of directors or other
    managing authority) are, now or hereafter, owned or controlled, directly or
    indirectly, by a party hereto; or
(b) which does not have outstanding shares or securities, as may be the case
    in a partnership, joint venture or

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     unincorporated association, but more than fifty percent (50%) of whose
     ownership interest representing the right to make the decisions for such
     corporation, company or other entity is now or hereafter owned or
     controlled, directly or indirectly, by a party hereto, but such
     corporation, company or other entity shall be deemed to be a Subsidiary
     only so long as such ownership or control exists.

1.28 "TRADEMARKS" shall mean the common law and registered trademarks listed in
ATTACHMENT B.

1.29 "TRADEMARK USAGE GUIDELINES" shall mean the guidelines providing for the
use and display of the Trademarks. The current Trademark Usage Guidelines are
set forth in ATTACHMENT C.

1.30 "VERSION" shall mean new and enhanced products based upon one or more
existing SanFrancisco Products, distributed via CD-ROM and containing
significant new software functions, enhancements, new or enhanced tools and/or
additional reference materials. A Version may include multiple Releases. A new
Version shall be identified by new product and Version numbers.

1.31 "YOUR ORIGINAL CODE" shall mean Code created by YOU, or YOUR
subcontractors, to which YOU have a right to grant use licenses to others. Your
Original Code may include Code created or owned by third parties.

1.32 "YOUR PATENTS" shall mean all patents (but not including any design patents
or registrations) of YOURS:

(a)  issued or issuing on patent applications entitled to an effective filing
     date prior to the expiration of the Futures Period or to the termination or
     expiration of this Agreement, whichever come first; and

(b)  under which patents or the applications therefor YOU or any of your
     Subsidiaries now has, or hereafter obtains, the right to grant licenses to
     IBM of or within the scope granted herein without such grant or the
     exercise of rights thereunder resulting in the payment of royalties or
     other consideration by YOU or your Subsidiaries to third parties (except
     for payments between YOU and your Subsidiaries, and payments to third
     parties for inventions made by said third parties while employed by YOU or
     any of your Subsidiaries).

Your Patents shall include said patent applications, continuations in part of
said patent applications, and any patents reissuing on any of the aforesaid
patents.

1.33 "YOUR PRODUCT" shall mean a computer application program that is licensed
or otherwise distributed to end users for use by such end users and that
contains Licensed Code or was developed using Licensed Technology, or contains,
incorporates, invokes, calls, or otherwise causes execution of any version of
the Licensed Code, or any portion thereof. Your Product shall include
Maintenance Services, but shall not include any other services.

1.34 "YOUR PRODUCT REVENUE" shall mean the gross revenue obtained by YOU from
the licensing or other distribution of Your Products. In no event, however,
shall Your Product Revenue be less than 60% of the total revenue obtained by YOU
from the licensing or other distribution of Your Product and other products
and/or services related to or associated with the SanFrancisco Product.
Notwithstanding the foregoing, the following shall not be considered Product or
Services related to or associated with the SanFrancisco Products:

(a)  Sales of computer hardware that are separately invoiced at market prices

(b)  Products that call SanFrancisco through an IBM Application Program
     Interface (API) solely for purposes of co-existence of complementary
     non-SanFrancisco and SanFrancisco based applications

(c)  Services revenue for education, project management, e-business consulting,
     end-user training OR any services related to the non-SanFrancisco based
     products referenced above in clause (b).

1.35 "YOUR PRODUCT SELLING PRICE" shall mean the bona fide gross selling price,
after prompt payment discounts (not to exceed 3%) and quantity discounts
actually allowed, at which YOU license or otherwise distribute or provide Your
Product, subject to the following:

(a)  If Your Product was not separately itemized and priced and was incorporated
     in other items (whether or not said other item was also Your Product), Your
     Selling Price shall be the price at which YOU so provided such other item.

(b)  If YOU sell or provide identical versions of Your Products at more than one
     such price, Your Product Selling Price shall mean the total revenue with
     respect to each of such identical ones of Your Products from said sales in
     the relevant accounting period divided by the number of Your Products sold
     in said period.

SECTION 2.        LICENSE GRANTS AND RESTRICTIONS

2.1 Within thirty (30) days after execution of this Agreement, IBM shall furnish
to YOU, via Your Technical Coordinator as identified in Section 8.3, one copy of
the CD-ROM containing Licensed Materials. IBM further agrees to furnish to YOU a
reasonable number of additional copies of the CD-ROM containing Licensed
Materials within thirty (30) days of YOUR request for such additional copies.
IBM hereby authorizes YOU to download further Licensed Materials which may be
located via the URL http://www.software.ibm.com/ad/sanfrancisco on the Internet.
Any materials received pursuant to this Agreement and not expressly rejected by
YOU within thirty (30) days of receipt shall be deemed accepted.

2.2 YOU may not use the licenses granted herein internally or make them
available to YOUR affiliates for such internal use, without first purchasing
additional licenses.

2.3 Subject to the provisions of Sections 3 and 6, IBM grants to YOU a
nonexclusive, nontransferable, worldwide

(a)  know-how license to use the Licensed Materials internally for the sole
     purpose of enabling YOU to develop Your Product based upon the Licensed
     Technology;

(b)  copyright license to prepare Derivative Works based upon the Licensed
     Technology for the sole purpose of expressing to YOUR Customers how to use
     Your Product; provided, however, that YOU distribute copies of such
     Derivative Work only in combination with Your Products;

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(c)  copyright license to prepare Derivative Works based upon the Application
     Development Information, and to reproduce and distribute the Application
     Development Information internally for the purposes of developing,
     preparing and providing Your Products based on the SanFrancisco Product;
     and

(d)  subject to Section 3.2, right to prepare Derivative Works of the Know-How
     and reproduce, distribute, perform and display such Derivative Works
     internally.

(e)  right to distribute to Customers and Distributors, perform and display
     externally Binary Code versions of Derivative Works of Source Code included
     in Know-How.

Notwithstanding the foregoing, no right is granted to you to extend the use of
Your Product to others on a PAN. Any such use shall be the subject of a
separate license agreement with IBM.

2.4 Subject to the provisions of Sections 4 and 6, IBM grants to YOU and YOUR
Distributors a nonexclusive, nontransferable, worldwide copyright license to
reproduce and distribute copies of the Base in combination with significant
amounts of Your Original Code (as required by Section 4.1(a)) included in Your
Product and distribute such copies, as part of Your Product, to Customers and
Distributors and not as a stand-alone product.

2.5 During the term of this Agreement only, and subject to YOUR full compliance
with the terms and conditions of this Agreement, IBM licenses YOU to make, use,
import, offer to sell, lease, sell or otherwise distribute Your Products under
any patent (including divisions, continuations, reissues and corresponding
patents of other countries) issuing from the IBM Patents which are necessarily
infringed, and which infringement arises solely and exclusively from, YOUR use
of the Licensed Technology pursuant to Sections 2.2(a), 2.2(d), 2.3 and 2.4
and/or YOUR licensed use of the Licensed Code pursuant to Sections 2.3 and 2.4.
YOUR rights under this Section 2.5 are personal, nonassignable and
nontransferable.

2.6 With the exception of the rights granted in Sections 2.2, 2.3, 2.4, 2.5, 2.7
and 11.1, no license or other right is granted by IBM to YOU under this
Agreement, either directly or by implication, estoppel, or otherwise, under any
other intellectual property rights including patents, trademarks,
copyrights (including, but not limited to, the right to prepare Derivative
Works), registered semiconductor mask works, know-how or trade secrets.

2.7 The licenses granted herein include the right for YOU to sublicense YOUR
Subsidiaries and the right of such sublicensed Subsidiaries to sublicense other
Subsidiaries of YOURS. Each Subsidiary so sublicensed shall be bound by the
terms and conditions of this Agreement as if it were named herein in the place
of YOU, provided that YOU shall pay and account to IBM for royalties hereunder
in respect of the exercise by any Subsidiary of any sublicense granted to it
hereunder. Any sublicense granted to a Subsidiary shall terminate on the earlier
of the date such Subsidiary ceases to be a Subsidiary or the date this Agreement
terminates or expires.

2.8 YOU shall have a right to license third parties to prepare Derivative Works
of Your Product(s) if such third party licensees have obtained a license to
prepare Derivative Works of the SanFrancisco Product from IBM.

SECTION 3.        KNOW-HOW; NONDISCLOSURE

3.1 All documents, resumes and other tangible items containing Know-How shall be
clearly marked with the words "KNOW-HOW" or a similar restrictive legend. IBM
does not wish to receive any information considered confidential by YOU. In the
event this becomes necessary, the parties will enter into a separate agreement
with respect to such information. All information received from YOU that is not
subject to a separate agreement shall be considered as nonconfidential
information.

3.2 Subject to the provisions of Sections 3.4 and 3.5, for a period of twenty
(20) years from the date of each receipt of Know-How, YOU shall use the same
care and discretion to avoid disclosure, publication or dissemination of such
received Know-How as YOU use with information of YOUR own that YOU do not wish
to publish, disclose or disseminate.

3.3 Subject to the provisions of Sections 3.4 and 3.5, for a period of five (5)
years from the Effective Date, YOU shall use the same care and discretion to
avoid disclosure, publication or dissemination of ATTACHMENT D of this
Agreement, as YOU use with information of YOUR own that YOU do not wish to
publish, disclose or disseminate.

3.4 Disclosure by YOU of Know-How is permissible if:

(a)  such disclosure is in response to a valid order of a court or other
     governmental body or otherwise required by law. YOU, however, will give IBM
     prompt notice to allow IBM a reasonable opportunity to obtain a protective
     order; or

(b)  such disclosure is to other Know-How licensees of the SanFrancisco
     Product. It shall be YOUR sole responsibility to determine if a third party
     is a licensee of such Know-How. YOU shall have absolute liability for any
     damages to IBM caused by YOUR malfeasance or misfeasance in disclosure to a
     third party.

3.5 The obligations specified in Sections 3.2 and 3.3 shall not apply to any
information that:

(a)  is already in YOUR possession or the possession of any of YOUR Subsidiaries
     without obligation of confidence;

(b)  is independently developed by YOU or any of YOUR Subsidiaries;

(c)  is or becomes publicly available without breach of this Agreement;

(d)  is rightfully received by YOU from a third party without obligation of
     confidence; or

(e)  is released for disclosure by IBM with its written consent.

3.6 Upon any termination of this Agreement pursuant to Sections 9.1, 9.2 or 9.3,
YOU shall promptly return to IBM or destroy all documents and other tangible
items containing Know-How and/or Licensed Materials in the possession of YOU or
YOUR sublicensed Subsidiaries.

SECTION 4.        YOUR OBLIGATIONS

4.1 YOU shall:

(a)  integrate the Licensed Code into Your Product such that in IBM's discretion
     Your Product is substantially different from, and includes the addition of
     valuable function in addition to that contained in the Licensed Code
     PER SE;

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(b)  provide the Licensed Code in Binary Code form only under YOUR license
     agreement as part of the Your Product;

(c)  not remove IBM copyright and other notices from the Licensed Code;

(d)  use all commercially reasonable efforts to ensure that all YOUR
     employees comply with the terms of this Agreement;

(e)  not make any representations or warranties on behalf of IBM about IBM or
     the Licensed Materials;

(f)  not reverse assemble, reverse compile or translate any Binary Code
     except as permitted by law without the possibility of contractual waiver;

(g)  not insert, delete, replace, change or otherwise alter any files in the
     directories and subdirectories of the SanFrancisco Product;

(h)  not modify, change or otherwise alter the directory structure of the
     SanFrancisco Product;

(i)  not modify, change, prepare Derivative Works of or otherwise alter any
     Binary Code files included with the SanFrancisco Product; and

(j)  provide sufficient support, service and documentation to YOUR Customer
     to eliminate any right, permission or authorization your Customer may
     have in the absence of such support, service and documentation under the
     national or regional law of the places where YOU or YOUR Customer do
     business to reverse assemble, reverse compile or translate Your Product.

4.2    For Your Product that may be distributed in the U.S. or to U.S.
Government users, YOU will include on Your Product:

(a)  a copyright notice in the form specified by 17 U.S.C. Chapter 4; and

(b)  a U.S. Government user limited and restricted rights notice that
     complies with DFAR 227.7202 for military agencies and F.A.R. 12.212 for
     civilian agencies.

4.3    At IBM's request, YOU will provide to IBM for review and approval
copies of YOUR standard form and variations of YOUR standard form license
agreements used to license Your Product. YOU will obtain the Customer's
assent (either by signature or by any other legally enforceable means) to
YOUR license agreements all of which shall include the substance of the
following:

(a)  authorization to use, execute, perform, and display and to make one copy
     of Your Product for backup or archival purposes only;

(b)  subject to Section 2.8, prohibition from any preparation of derivative
     works, or modifying of Your Product or sublicensing, distributing,
     leasing, renting, or otherwise transferring Your Product;

(c)  prohibition from copying Your Product unless the Customer has been
     licensed to do so by YOU;

(d)  direction to destroy all copies of Your Product, other than one archival
     copy, within one month after license termination;

(e)  prohibition from reverse assembling, reverse compiling or translating
     Your Product except as permitted without the possibility of contractual
     waiver by the national or regional law of the places where YOU or YOUR
     Customer do business; and

(f)  statements that:

     (1)  Your Product is copyrighted and licensed; it is not sold, YOU do
          not pass title to Your Product;

     (2)  Your Product may contain materials licensed by a third party and YOU
          have assumed responsibility for these materials and their use in Your
          Product;

     (3)  third party suppliers disclaim all implied warranties, including
          the implied warranties of noninfringement, merchantability and
          fitness for a particular purpose; and

     (4)  limit liabilities to a reasonable amount and state in comparable
          words, "The collective liabilities of the seller/licensor's third
          party suppliers shall be limited to no more than one hundred
          thousand ($100,000.00) dollars and is subject to all other
          limitations of liabilities described in this agreement. Third party
          suppliers disclaim all liability for consequential or other indirect
          damages. The third party supplier is an intended beneficiary of the
          limitations and disclaimers and the limitation of liabilities for
          seller/licensor and its third party suppliers are not cumulative."

4.4    YOU agree to notify IBM within ten (10) business days if YOU become
aware of any acts of infringement of the IBM Patents or copyright
infringement of the Licensed Materials.

Section 5.     TECHNICAL SUPPORT

5.1    IBM shall provide orientation materials on the CD-ROM.

5.2    During the Futures Period at no additional charge to YOU (other than
the payments specified in Sections 6 and 5.6 of this Agreement), and provided
that YOU have registered with IBM, IBM shall through its Internet website,
provide access to:

(a)  a frequently asked questions (FAQ) file;

(b)  a Hints and Techniques (HAT) file;

(c)  technical road maps and papers;

(d)  downloadable Fixpacks for the Version and Release of the SanFrancisco
     Product that is then being distributed to the public by IBM (hereinafter
     the "Then Current Version and Release");

(e)  downloadable Fixpacks for the Version and Release of SanFrancisco
     Product immediately previous to the Then Current Version and Release for
     a period of one hundred and eighty (180) days after public availability
     of the Then Current Version and Release; and

(f)  a public forum. IBM shall have no obligation whatsoever to respond to any
     questions posted on such public forum.

Registration and further instructions on how to access the foregoing
electronic support services may be obtained via the URL
http://www.software.ibm.com/ad/sanfrancisco on the Internet.

5.3    IBM shall have no obligation: to provide technical assistance except
as set forth in Sections 5.1 and 5.2; to provide technical assistance to YOUR
Customers; and/or to have direct contact with any of YOUR Customers. In no
event shall any information provided by YOU to IBM under this Section 5 be
deemed confidential information or Know-How of YOU or any third party.

5.4    IBM shall use commercially reasonable efforts to perform its
obligations under Sections 5.1 and 5.2. In no event shall IBM be liable on
account of any technical information provided pursuant to this Section 5, or
its inability to provide technical assistance.

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5.5    YOU shall be responsible for all service to YOUR Customers.

5.6    IBM shall provide the technical support set forth in Section 5.2 until
eighteen (18) months from the Effective Date. IBM will thereafter provide
such technical services during immediately successive periods of 12 month
duration, only so long as the total royalties paid by YOU pursuant to Section
6 in respect of the four quarterly accounting periods immediately preceding
each such successive periods of 12 month duration equal or exceed $3,600;
PROVIDED, HOWEVER, if such total royalties do not equal or exceed $3,600, then
YOU will pay the difference between $3,600 and royalties actually paid in
respect of such four quarterly accounting periods, which payment is due
within thirty days of the end of the last of such four quarterly accounting
periods.

Section 6.     PAYMENTS

6.1    As partial consideration for the licenses granted by IBM to YOU in
Sections 2.2, 2.3, 2.4, 2.5, 2.7 and 11.1, YOU shall pay, as hereinafter
provided, royalties to IBM in respect of each Your Product licensed by YOU or
YOUR sublicensees for use by end-users or used for Internal Production Use.

6.2    YOU shall pay IBM running royalties calculated as a percentage
("Royalty Rate") of Your Product Revenue as set forth in ATTACHMENT D. If YOU
ship product that uses Base and/or provides Maintenance Services, YOU shall
pay royalties under Rate Code A. If YOU ship product that uses both Base and
CBP or CBP alone, YOU shall pay royalties under Rate Code B. Your Product
Revenue Step shall be determined in accordance with the year to date (YTD)
amount  of Your Product Revenue (in U.S. dollars) for all of Your Products
which use the Licensed Code ("Your Product Revenue Step"). Your Product
Revenue shall be calculated starting at zero as of January 1 of each year in
which royalties are due IBM. A royalty must be paid in respect of each Your
Product Revenue Step in Attachment D. A royalty must be paid in respect of
each Your Product Revenue Step before a reduced royalty is available for the
next subsequent Your Product Revenue Step.

(a)  YOU may create Derivative Works of programs obtained from third parties
     who are also licensed by IBM to create works based upon the SanFrancisco
     Product ("Other Company"). In such event, YOU may deduct from Your
     Product Revenue payments made to such Other Company and on which
     royalties were paid to IBM by such Other Company under a SanFrancisco
     Technology License Agreement for their products upon which Your Product
     is based.

In no case, shall the "Royalty Rate" in ATTACHMENT D be increased by more
than 20% for a period of five years from the Effective Date of this Agreement
without the mutual consent of YOU and IBM.

6.3    Royalties payable pursuant to Section 6.1 shall accrue when Your
Product is first sold, licensed or otherwise distributed (internally or
externally). A quarterly accounting period shall end on the last day of each
March, June, September and December during the term of this Agreement.
Within thirty (30) days after the end of each such period, YOU shall furnish
to IBM a written report certified by YOU, one of YOUR officers or another
individual authorized to legally bind YOU, in the forms set forth in
ATTACHMENT E and ATTACHMENT F. In respect to each of Your Products in
addition to YOUR Name, License Reference Number, Date of the Report and
Period covered, the Statement of Royalty Form of ATTACHMENT E shall specify:

(a)  the name of Your Product for which royalties are being paid, including a
     type number or other description that uniquely describes the product
     (Column 1);

(b)  revenue for Your Product during the accounting period. You shall enter
     the total revenue for the accounting period and the year to date (YTD)
     total revenue for all SanFrancisco based products licensed or otherwise
     distributed by YOU at the bottom of the column. If YOU are paying
     royalties for Your Product based upon Other Company products pursuant to
     Section 6.2(a), revenue shall be calculated using the worksheet of
     ATTACHMENT F (Column 2). Otherwise, the revenue for Your Product shall
     be calculated as the product of Column 3 and Column 5;

(c)  the number of copies of Your Product, exclusive of copies licensed or
     otherwise distributed at no charge and reported in accordance with
     Section 6.3(d), licensed or otherwise distributed to Distributors or
     directly to Customers or otherwise indirectly to Customers by YOUR
     sublicensees (Column 3);

(d)  the number of copies of Your Product licensed or otherwise distributed
     without charge or other payment to YOUR Customers (Column 4);

(e)  the Licensed Product Selling Price per copy of such Your Product
     (Column 5);

(f)  identification of the Rate Code at which royalties are being paid
     (Column 6);

(g)  the applicable royalty rate (Column 7);

(h)  the amount of royalties due (Column 2 multiplied by Column 7);

(i)  Section 5.6 fee due if any; and

(j)  the total due for all of Your Product(s) and any Section 5.6 fee which
     shall be entered at the bottom of the column.

YOU shall pay IBM the royalty payment within 30 days of each quarterly
accounting period ending March, June, September and December, for Your
Products for which payment has been received by YOU. Royalty payments will be
made within 120 days of each quarterly accounting period ending March, June,
September and December, regardless of payment received for Your Products that
have been sold, licensed or otherwise distributed. Payments should be made
concurrently with the submission of your royalty report.

With respect to each copy licensed without charge, YOU shall, on or before
the end date of the next quarterly accounting period, either (a) charge the
Customer based on Your Product Selling Price and remit royalty payment in due
course' (b) terminate each such Customer's license with respect to such copy,
or (c) treat such copies as sold at Your Selling Price and pay royalties on
such copies in accordance with Section 6.2.

6.4    If YOU are paying royalties to IBM for Your Product based upon Other
Company products pursuant to Section 6.2(a) YOU shall have the following
additional reporting obligations which together with YOUR Name, License

                                       6

<PAGE>

Reference Number, Date of the Report and Period covered, shall be reported on
the form of ATTACHMENT F:

    (a) identification of Your Product for which royalties are being paid,
        including a type number or other description that uniquely describes
        the product (Column A);

    (b) the amount of Your Product Revenue received by YOU (Column B);

    (c) identification of the Other Company paying royalties to IBM for the
        product upon which Your Product is based (Column C);

    (e) identification of the Other Company product that Your Product is
        based upon (Column D);

    (f) the payment paid to the  Other Company that is deductible under
        Section 6.2(a) (Column E); and

    (g) the net of Your Product Revenue upon which royalty is paid (Column E
        subtracted from Column B) and such amount shall also be entered into
        Column 2 of ATTACHMENT E, where it shall be marked with an asterisk
        ("*") for each of Your Product(s) for which the deduction allowed
        under 6.2(a) is being taken.

6.5   YOU may report all royalties in YOUR local currency. All payments by
YOU shall be made in US dollars. All conversions to US dollars shall be at
the exchange rate for bank transfers between such currencies as quoted by the
head office of Citibank N.A., New York, USA, at the close of banking on the
last day of such accounting period (or the first business day thereafter if
such last day is a non-business day). These rates shall be stated with YOUR
quarterly royalty report. These Citibank rates should be available, from
YOUR local bank, YOUR local financial newspapers, or directly from Citibank
at its United  States office, which is currently reachable at (516) 377-2000.
The Citibank URL is currently http:\www.Citibank.com.

6.6   YOU shall keep records in sufficient detail to permit the determination
of royalties payable hereunder and at the request and expense of IBM will
permit an independent auditor selected by IBM, or any other person acceptable
to both IBM and YOU, to examine such records during ordinary business hours
once in each calendar year to verify or determine royalties paid or payable
under this Agreement. Such examination shall include the right to examine and
inspect any materials required to verify YOUR obligations under Sections 4.3
and 11.3. If no request for examination of such records for a particular
accounting period has been made by IBM within three (3) years after the end
of said period, the right to examine, and the obligation to keep, such
records for said period shall terminate.

6.7   YOU shall be liable for interest on any overdue royalty commencing on
the date such royalty becomes due, i.e., thirty (30) days after the end of
the applicable accounting period, at an annual rate which is the greater of
ten percent (10%) or one percentage point higher than the prime interest rate
as quoted by the head office of Citibank N.A., New York, at the close  of
banking on such date, or on the first business day thereafter if such date
falls on a non-business day. If such interest rate exceeds the maximum legal
rate in the jurisdiction where a claim therefor is being asserted, the
interest rate shall be reduced to such maximum legal rate.

6.8   YOU shall bear and pay all taxes (including, without limitation, sales
and value added taxes but excluding income tax as specified below) imposed by
the national government, including any political subdivision thereof, of any
country in which YOU are doing business as the result of the existence of the
Agreement or the exercise of rights hereunder. YOU shall not bear and pay any
income tax imposed by such national government upon the payments made
pursuant to this Sections 6 to the extent that such income tax is to be
credited to taxes payable by IBM to its national government.  You may deduct
such income tax from said payments and You shall furnish IBM with a tax
certificate for such income tax. YOU shall also bear and pay all other fees
or charges, including, but not limited to, the fees charged by financial
institutions, incurred by YOU or on YOUR behalf in association with your
payment of royalty under this Agreement or as the result of the existence of
this Agreement or the exercise of rights hereunder.

SECTION 7.   OPTION GRANTED

7.1   YOU grant to IBM the right to obtain a patent license under Your
Patents to make, use, import, offer to sell or lease, sell, lease or
otherwise distribute any IHS Product. Said license shall be under terms and
conditions no less favorable than those granted to YOU herein or any
amendment hereto and shall include royalty rates no less favorable than one
percent per patent (up to the maximum set by Rate Code A in Attachment D) of
the actual selling price of IBM products to unaffiliated customers, and the
greater of actual selling price or fair market value in sales to affiliated
customers. For the purposes of this Section 7.1, each one of Your Patents,
and its corresponding patents in other countries, shall be deemed to be one
of Your Patents.

SECTION 8.   COMMUNICATIONS

8.1   Upon execution of this Agreement IBM shall assign a License Reference
Number. This number shall be included in any report, payment or other
communication YOU make to IBM concerning this Agreement.

8.2   Payment shall be made by electronic funds transfer and shall include in
the payment details YOUR License Reference Number. Any notice or other
communication required or permitted to be made or given to either party
hereto pursuant to this Agreement shall be sent to such party by facsimile or
registered airmail, postage prepaid, addressed to it at its address set forth
in 8.2(b) below, or to such other address as it shall designate by written
notice given to the other party. Payment shall be deemed to be made on the
date of electronic funds transfer. Notices or other communications shall be
deemed to have been given or provided on the date of sending. The addresses
are as follows:

    (a)  For electronic funds transfers of payments:

             IBM, Director of Licensing
             The Bank of New York
             48 Wall Street
             New York, New York 10286
             United States of America
             Credit Account No. 890-0209-674
             ABA No. 0210-0001-8

    (b)  Mailing addresses and facsimile numbers:

                                     7
<PAGE>

         For IBM:
                 Director of Licensing
                 Intellectual Property & Licensing
                 IBM Corporation
                 North Castle Drive, MD - NC123
                 Armonk, NY 10504 - 1785
                 United States of America
                 Facsimile #: 914-765-4419
                 E-mail: sfrantia@us.ibm.com

NOTE: PLEASE REFER TO THE INSTRUCTIONS FOR THE CORRECT ADDRESS TO WHICH THIS
AGREEMENT SHOULD BE SENT TO COMPLETE ITS EXECUTION.

For YOU:

             David Myers
---------------------------------------
   (Please print name of contact)

Sr. Director of e-business Operations
---------------------------------------
  (Please print title of contact)

          David M. Myers
---------------------------------------
(Please print your full business name)

         6450 Via Real
---------------------------------------
   (Please print address)

    Carpinteria, CA 93013
---------------------------------------
   (Please print address)

---------------------------------------
   (Please print address)

Telephone #: 609-841-3901
           ----------------------------
 Cell            (Please print)

Facsimile #: 805-684-0694
           ----------------------------
                 (Please print)

E-mail:  dmm@qad.com
      ---------------------------------
                 (Please print)

8.3   Your Technical Coordinator is as follows:

Name: Karen Longshore
     ----------------------------------
           (Please print)

Title: Director of Development
     ----------------------------------
           (Please print)

Address:  6450 Via Real
     ----------------------------------
          (Please print)

        Carpinteria, CA 93013
---------------------------------------
           (Please print)

---------------------------------------
           (Please print)

---------------------------------------
           (Please print)

Telephone #: 805-566-6820 or 650-525-2131
           ------------------------------
           (Please print)

Facsimile #: 805-684-0694
           -----------------------------
           (Please print)

E-mail:   KLL@qad.com
          ------------------------------
          (Please print)

YOU will promptly advise IBM in writing of any change in Technical
Coordinator or addresses.

SECTION 9.   TERM AND TERMINATION

9.1   This Agreement shall be from the Effective Date until twenty (20) years
after such date, unless earlier terminated under the provisions of the
Agreement. Termination or expiration of this Agreement does not affect
previously granted paid-up rights and licenses to Customers authorized by
this Agreement, including without limitation licenses granted in the last
quarterly accounting period of a calendar year for which royalties are paid
in accordance with Section 6 even if such payment occurs after expiration of
this Agreement. Termination of this license shall also terminate previously
granted rights of Customers authorized by this Agreement who have licensed
Your Product under periodic license payments. YOU shall promptly notify such
Customers of the termination of such previously granted rights.

9.2   In the event that YOU materially breach this Agreement, IBM shall
give written notice of the breach and, if such breach is not cured within
ninety (90) days of said notice, IBM shall have the right to terminate this
Agreement by giving fifteen (15) days written notice.

9.3   YOU shall have the right to terminate this Agreement without cause at
any time by giving written notice; provided, however, that such termination
shall be subject to YOUR payment obligations under Section 6 (which shall
become immediately due and payable) and to the provisions of Section 13.14.

                                     8

<PAGE>
9.4     Upon termination or expiration of this Agreement, YOU shall provide
IBM with proof of the destruction of all existing packages, cartons,
containers, point of sale displays, advertising, labels, stencils, cut-outs,
forms and the like which bear the Trademark or are or can be used in the
application or reproduction of the Trademark, and shall provide IBM with
proof of the obliteration or removal of the Trademark from all products. For
the purposes of this Section 9.4, a written statement fully describing such
destructions and obliterations, certified by YOU, one of YOUR officers or
another individual authorized to legally bind YOU, shall constitute
acceptable proof to IBM.

9.5     IBM hereby agrees to make available a new license to YOU for
the Version of the SanFrancisco Product that is being licensed by IBM as of
the date of termination of this Agreement, under IBM's then current terms and
conditions, PROVIDED THAT:
(a) IBM shall have no obligation to make available such new license if IBM
    is not then offering such licenses to others;
(b) all outstanding intellectual property claims between IBM and YOU have been
    resolved to IBM's satisfaction as of the date of termination of this
    Agreement; and
(c) all outstanding claims between IBM and YOU under this Agreement have been
    resolved to IBM's satisfaction as of the date of termination of this
    Agreement.

9.6     In the event IBM ceases all marketing, licensing and support of all
Versions of the SanFrancisco Product and does not establish or otherwise
provide for a successor to provide support, then this Agreement shall be
amended:
(a) to extend its term to the life of the copyright of the Version of
    SanFranciso Product last provided to you under this Agreement, except that
    any licenses granted in such amended agreement shall be only to
    intellectual property, including, patents, trademark, copyright and
    Know-How covered under this Agreement and existing at the effective date of
    such amendment;
(b) to delete sections 2.1, 5.2, 5.6, 9.5, 9.7, 10.1, 10.4 and 13.6; and
(c) to the extent IBM has the right to do so, to provide access to YOU under
    license to the Source Code of those portions of the last Version of the
    SanFrancisco Product previously supplied to YOU only as Licensed Binary Code
    under this Agreement.

Notwithstanding the foregoing, IBM shall have no obligation to provide such
amended agreement unless: (i) all outstanding intellectual property claims
between IBM and YOU have been resolved to IBM's satisfaction as of the date
IBM ceases support, marketing and licensing of all Versions of the
SanFrancisco Product; and (ii) all outstanding claims between IBM and YOU
under this Agreement have been resolved to IBM's satisfaction as of the date
IBM ceases support, marketing and licensing of all Versions of the
SanFrancisco Product.

9.7     On expiration of the Futures Period and upon receipt of YOUR written
request, IBM hereby agrees, at it's sole discretion, either to amend this
Agreement or enter into a new license agreement with YOU regarding the
Version that is being licensed to third parties by IBM as of the date of
expiration of the Futures Period, which will incorporate IBM's then current
terms and conditions, PROVIDED THAT:
(a) IBM shall have no obligation to grant such extension if IBM is not then
    offering licenses to such Version to others under similar terms and
    conditions;
(b) all outstanding intellectual property claims between IBM and YOU have
    been resolved to IBM's satisfaction as of the date of expiration of the
    Futures Period; and
(c) all outstanding claims between IBM and YOU under this Agreement have been
    resolved to IBM's satisfaction as of the date of expiration of the Futures
    Period.

SECTION 10. INDEMNIFICATION
10.1    If a third party claims that the Base or CBP in Binary Code form that
IBM provides to YOU infringes that party's copyright, IBM will, subject to
the limitations of Section 13.4, defend YOU against that claim at IBM's
expense and pay all costs, damages, and attorney's fees that a court finally
awards, provided that YOU:
(a) notify IBM in writing of any such claim within ten (10) business days of
    YOUR receipt of such claim; and
(b) allow IBM to control, and cooperate with IBM in, the defense and any
    related settlement discussions.

10.2    If a third party claim that the Base or CBP in Binary Code form that
IBM provides to YOU infringe that party's copyright is made or appears likely
to be made, YOU agree to permit IBM to obtain the right for YOU to continue
to use the Base or CBP, or to modify it, or replace it with non-infringing
Base or CBP that is at least functionally equivalent. If IBM determines that
none of these alternatives is reasonably available, YOU agree to return the
Licensed Materials to IBM upon IBM's written request. Sections 10.1 and 10.2
state IBM's entire obligation to YOU regarding any claim of infringement.

10.3    IBM has no obligation regarding any claim based on any of the
following:
(a) anything YOU provide which is incorporated into the Licensed Materials or
    into which the Base or CBP is incorporated;
(b) YOUR modification of the Licensed Code, or the use thereof in other than
    its specified operating environment;
(c) the combination, operation, or use of Licensed Code with other products.

10.4    Subject to the limitations of Section 13.4, IBM shall settle or
defend all claims made by third parties against YOU and shall thereby
indemnify and hold YOU, YOUR officers, agents and employees, harmless from
any and all claims made against YOU for infringement or unfair competition
arising from YOUR use of the Trademarks in accordance with the terms of this
Agreement. Following notice of an infringement claim or at any time IBM deems
appropriate, IBM may provide to YOU a substitute trademark for use under the
terms and conditions of this Agreement.
(a) Notwithstanding the above, IBM shall not be liable for any lost revenue,
    profits, business opportunities or consequential, incidental or punitive
    damages, even if advised of the possibility of such damages.
(b) To qualify for such indemnification, YOU must notify IBM of any such
    claim in writing within ten (10) business days of YOUR receipt of such
    claim, and allow IBM to control

                                       9
<PAGE>

    and fully cooperate with IBM in the defense of and all settlement
    negotiations related to such claim.

10.5    Except for claims that are solely caused by IBM, YOU shall indemnify
IBM, its officers, agents and employees from and against any and all claims,
damages, liabilities (including settlements entered into in good faith),
suits, actions, judgments, penalties and taxes, civil and criminal, and all
costs and expenses (including without limitation reasonable attorneys' fees)
incurred in connection therewith, arising out of:
(a) any act, omission, neglect or default of YOU or YOUR agents on or in
    connection with the manufacture, sale, distribution, promotion, or marketing
    of Your Product;
(b) any defect (whether obvious or hidden) in Your Product manufactured, sold
    or licensed by YOU, except if such defect is contained wholly within
    Licensed Binary Code provided by IBM to YOU;
(c) personal injury or any infringement of any rights (including copyrights)
    of any person by the manufacture, sale, distribution, possession or use
    of Your Product; or
(d) YOUR failure to comply with applicable laws with respect to the
    manufacture, sale, distribution, possession or use of Your Product.

To qualify for such indemnification IBM must notify YOU in writing of any
such claim within ten (10) business days of IBM's receipt of such claim, and
allow YOU to control and fully cooperate with YOU in the defense of and all
settlement negotiations related to such claim.

SECTION 11. TRADEMARK LICENSE
11.1    To the extent it has the right to do so, IBM grants to YOU a
worldwide, non-exclusive, non-transferable, right and license to use the
Trademarks on Your Product in accordance with the terms of this Agreement.
YOU shall have no right and/or license to use the Trademarks on goods other
than Your Product, including, by way of example, and not limitation,
promotional goods, such as clothing, sports gear, computer accessories,
office supplies, and jewelry. Upon reasonable written notice, IBM shall have
the right to modify ATTACHMENT B so as to add or delete certain Trademarks
licensed under this Section 11.1. YOU agree to adopt any such modification
made to ATTACHMENT B within a reasonable time. YOU shall have the right to
deplete any existing inventories bearing any trademarks which may deleted
from ATTACHMENT B.

11.2    The license granted to YOU in Section 11.1 includes the right to
sublicense the Trademarks to YOUR Subsidiaries, provided that each
sublicensed Subsidiary shall be bound by the terms and conditions of this
Agreement as if it were named herein in YOUR place. YOU agree that any breach
of the terms and conditions of this Agreement by a sublicensee shall also be
considered a breach by YOU.

11.3    YOU agree to display and use the Trademarks solely in the form, manner
and style required in the Trademark Usage Guidelines which may be modified
from time to time, upon reasonable written notice, by IBM.

11.4    YOU agree to use the Trademarks only on Your Products, and sales
literature, advertising, presentation materials, press materials, and
exhibits for Your Products.

11.5    All ownership rights in the Trademarks belong exclusively to IBM. YOU
have no ownership rights in the Trademarks and shall acquire no ownership
rights in the Trademarks as a result of YOUR performance (or breach) of this
Agreement. All use of the Trademarks or variations thereon shall inure solely
to the benefit of IBM. Upon termination of this Agreement all of YOUR rights
to use the Trademarks shall terminate immediately except as otherwise
provided herein.

11.6    YOU agree:
(a) not to take any action which will interfere with any of IBM's rights in
    and to the Trademarks;
(b) not to challenge IBM's right, title or interest in and to the Trademarks
    or the benefits therefrom;
(c) not to make any claim or take any action adverse to IBM's ownership of
    the Trademarks;
(d) not to register or apply for registrations, anywhere, for the Trademarks
    or any other mark which is similar to the Trademark or which incorporates
    the Trademarks; and
(e) not to use any mark, anywhere, which is confusingly similar to the
    Trademarks.

11.7    YOU agree that it is of fundamental importance that Your Product
bearing the Trademarks be of the highest quality and integrity and that the
Trademarks be properly used and displayed. YOU agree that the level of
quality of Your Product manufactured, sold or licensed by YOU shall meet or
exceed industry standards. However the accuracy and appropriateness of all
claims made regarding Your Product in conjunction with one or more of the
Trademarks is solely YOUR responsibility, even though IBM may have reviewed
or had an opportunity to review such claims.

11.8    The parties agree that IBM may inspect Your Product distributed by
YOU upon reasonable notice, and may purchase Your Product without notice to
insure that the quality standards set forth in Section 11.7 and the Trademark
Usage Guidelines are maintained and that the Trademarks are properly used.

11.9    Failure to meet the quality standards set forth in Section 11.7 and
the Trademark Usage Guidelines shall be deemed to be a breach thereof which
must be corrected to IBM's satisfaction within ninety (90) days of being put
on notice. Until such breach is corrected YOU may not sell or distribute Your
Products with the Trademarks.

11.10   YOU represent and warrant that Your Product meets the applicable
SanFrancisco criteria and quality standards in accordance with section 11.7
and the Trademark Usage Guidelines.

11.11   YOU agree to notify IBM within ten (10) business days if YOU become
aware of:
(a) any uses of, or any application or registration for, a trademark, service
    mark or trade name that conflicts with or is confusingly similar to the
    Trademarks;
(b) any acts of infringement or unfair competition involving the Trademarks;
    or
(c) any allegations or claims whether or not made in a lawsuit, that the use
    of the Trademarks by IBM or YOU infringe the

                                       10

<PAGE>

  trademark or service mark or other rights of any other entity.

11.12   IBM may, but shall not be required to, take whatever action it, in
its sole discretion, deems necessary or desirable to protect the validity
and strength of the Trademarks at IBM's sole expense. YOU agree to comply
with all reasonable requests from IBM for assistance in connection with any
action with respect to the Trademarks that IBM may choose to take.

11.13   YOU shall not institute or settle any claims or litigation affecting
any rights in and to the Trademarks without IBM's prior written approval.

11.14   Trademark symbols and notices outside the U.S. must comply with the
Trademark Usage Guidelines and with local laws and customs. For example, in
some countries an asterisk is sometimes used instead of the -TM- with the
same footnote, and in some countries a translated version of the US trademark
attribution may be required. YOU are advised to check with YOUR legal
department regarding such compliance with local laws and customs.

SECTION 12. REPRESENTATIONS AND WARRANTIES

12.1    IBM represents and warrants that it has the full right and power to
grant the licenses granted in Sections 2 and 11, and that there are no
outstanding agreements, assignments or encumbrances inconsistent with the
provisions of said licenses or with any other provisions of this Agreement.

12.2    IBM represents and warrants that it is not aware of any claims of
infringement of intellectual property that have been brought against it by
third parties for infringement of such third party's intellectual property by
the SanFrancisco Product.

12.3    YOU represent and warrant that other than in Your Product(s) no
computer program product of YOURS contains, incorporates, invokes, calls, or
otherwise causes execution of any version of the Licensed Code, or any
portion thereof.

12.4    IBM warrants that when the SanFrancisco Product is used in the
Specified Operating Environment, it will conform to the Specifications,
PROVIDED that YOU provide a substantially similar warranty to YOUR Customers
of Your Product.

The warranty period for a Release of the SanFrancisco Product licensed under
this Agreement commences on the day YOU receive such Release and continues
for a period of one hundred and eighty (180) days after public availability
of a subsequent Release or new Version. In no event, however, shall such
warranty continue after the termination or expiration of this Agreement.

THESE WARRANTIES ARE YOUR EXCLUSIVE WARRANTIES AND REPLACE ALL OTHER
WARRANTIES OR CONDITIONS, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
THE IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY FOR A PARTICULAR
PURPOSE. IBM'S INDEMNIFICATION OBLIGATIONS AND LIMITATION OF LIABILITY SHALL
BE AS SET FORTH IN SECTION 10 AND 13.4  AND IBM SHALL HAVE NO OTHER LIABILITY
IN RESPECT OF ANY INFRINGEMENT OF PATENTS OR OTHER RIGHTS OF THIRD PARTIES
DUE TO YOUR OPERATION UNDER THE LICENSES GRANTED HEREIN.

SECTION 13. MISCELLANEOUS

13.1    IBM shall not assign or grant any right under any of its intellectual
property that is licensed to YOU pursuant to Section 2, unless such
assignment or grant is made subject to the terms and conditions of this
Agreement. You shall not assign this Agreement or any of its rights, licenses
or privileges hereunder, or delegate or subcontract YOUR obligations, except
to a purchaser of all, or substantially all, of YOUR assets, provided that,
any such assignment, delegation or subcontracting shall be with IBM's written
consent, which consent shall not be unreasonably withheld and all outstanding
intellectual property claims between IBM and such purchaser, and all
outstanding issues between YOU and IBM under this Agreement, if any, shall
have been resolved to the satisfaction of IBM as of the date of such purchase
of YOUR assets. Any assignment in derogation of the foregoing shall be null
and void.

13.2    Except as specifically permitted in Section 11.1, nothing contained
in this Agreement shall be construed as conferring any right to use in
advertising, publicity or other promotional activities any name, trade name,
trademark or other designation of either party hereto (including any
contraction, abbreviation or simulation of any of the foregoing).

13.3    With the exception of any reduction in the value of the Licensed
Materials resulting from YOUR material breach of YOUR obligations, neither
party shall be entitled to indirect, incidental, consequential, special or
punitive damages, including lost profits based on any breach or default of
the other party and including those arising from infringement or alleged
infringement of any patent, trademark, copyright, mask work or any other
intellectual property right.

13.4    IBM's entire liability and YOUR exclusive remedy for actual damages
from any cause whatsoever relating to this Agreement shall be limited to the
greater of two hundred fifty thousand ($250,000.00) dollars or the royalty
payment made by YOU under this Agreement in the immediately preceding annual
year. The limitation will apply, except as otherwise stated in this section,
regardless of the form of action, whether in contract or in tort, including
negligence. The limitation will not apply to claims by YOU for bodily injury
or damage to real property or tangible personal property for which IBM is
legally liable.

13.5    IBM shall have no obligation hereunder to institute any action or
suit against third parties for any cause.

13.6    YOU recognize that URLs change from time to time. In the event that
YOU are unable to gain access to any URL recited in this Agreement, please
contact your IBM marketing representative to obtain any updates or other
changes to the URL.

                                       11
<PAGE>

13.7    This Agreement will not be binding upon the parties until it has been
signed hereinbelow by or on behalf of each party, in which event it shall be
effective as of the Effective Date. No amendment or modification hereof shall
be valid or binding upon the parties unless made in writing and signed on
behalf of each of the parties.

13.8    Each party shall, at its own expense, comply with any governmental
law, statute, ordinance, administrative order, rule or regulation relating to
its duties, obligations and performance under this Agreement and shall
procure all licenses and pay all fees and other charges required thereby.
Each party agrees to comply with all applicable federal, state and local
laws, regulations and ordinances, including the Regulations of the U.S.
Department of Commerce and/or the U.S. State Department. YOU hereby give
written assurance that, unless authorized by appropriate U.S. Government
license or regulations, neither software nor technical data provided by IBM
under this Agreement, nor the direct product thereof, shall be exported,
directly or indirectly, to prohibited countries or nationals thereof. YOU
agree that YOU are responsible for obtaining required government documents
and approvals prior to export of any commodity, machine, software or
technical data. As a part of the technical assistance provided under Section
5.2, IBM agrees to cooperate and provide reasonable information concerning
the Licensed Materials to YOU in order for YOU to obtain export approval for
Your Product.

13.9    Licensed Technology and Your Product are subject to specific U.S.
export restrictions and may not be marketed or distributed directly or
indirectly for military or nuclear users in the countries of Russia, Armenia,
Azerbeijan, Belarus, Georgia, Kazakhstan, Kyrgystan, Moldova, Tajikistan,
Turmenistan, Ukraine, and Uzbekhistan, without prior notification to IBM and
receipt of U.S. Government export approval.

13.10   If any section of this Agreement is found by competent authority to
be invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such section in every other
respect and the remainder of this Agreement shall continue in effect so long
as the Agreement still expresses the intent of the parties. If the intent of
the parties cannot be preserved, this Agreement shall be either renegotiated
or terminated.

13.11   This Agreement shall be construed, and the legal relations between
the parties hereto shall be determined, in accordance with the law of the
State of New York as such law applies to contracts signed and fully performed
in such State. Both parties agree that any action brought concerning this
Agreement shall be brought in a court of competent jurisdiction in the State
of New York. Both parties agree to waive their right to a trial by jury in
any dispute arising out of this Agreement. The prevailing party in any legal
action hereunder shall be entitled to reimbursement by the other party of its
expenses including, without limitation, reasonable attorneys' fees.

13.12   Each party is an independent contractor. Neither party is, nor will
claim to be, a legal representative, partner, franchisee, agent or employee
of the other. Neither party will assume or create obligations for the other.
Each party is responsible for the direction and compensation of its employees.

13.13   Neither party relies on any promises, inducements, or representations
made by the other or expectations of more business dealings. This Agreement
accurately states our business agreement.

13.14   The headings of the sections are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.

13.15   Any terms of this Agreement which by their nature extend beyond its
expiration or termination, including but not limited to the terms of Sections
3 and 6 shall remain in effect until fulfilled and shall bind the parties and
their legal representatives, successors, heirs and assigns.

13.16   You understand that the CD-ROM may include third party code in
separate library or libraries. Such third party code is provided solely for
your convenience, is not Licensed Material, is not covered by this agreement,
and is subject to a separate license provided in the separate library.

THIS AGREEMENT AND ANY ATTACHMENTS THERETO EMBODY THE ENTIRE UNDERSTANDING OF
THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MERGE ALL PRIOR
DISCUSSIONS BETWEEN THEM.

                 QAD Inc.
---------------------------------------------
(Please print full name of YOUR organization)

By /s/ David M. Myers
---------------------------------------------
(Authorized signature)

Name: David M. Myers
      ---------------------------------------
      (Please print)

Title: Senior Director e-Business Operations
       --------------------------------------
       (Please print)

Date: November 19, 1999
      ---------------------------------------
      (Please print)

INTERNATIONAL BUSINESS MACHINES CORPORATION

By /s/ Joseph A. Damassa
   ------------------------------------------
      Authorized signature
      Joseph A. Damassa
      Vice President

Date: November 30, 1999
      ---------------------------------------

                                12
<PAGE>

                                 ATTACHMENT A

                    PRODUCT NOS. COVERED BY THIS AGREEMENT

Product No. 5648-SF1 -  IBM SanFrancisco Base
Product No. 5648-GL1 -  IBM SanFrancisco General Ledger
Product No. 5648-WM1 -  IBM SanFrancisco Warehouse Management
Product No. 5648-OM1 -  IBM SanFrancisco Order Management
Product No. 5648-RP1 -  IBM SanFrancisco Accounts Receivable/Accounts Payable

The product numbers covered by this Agreement shall also be listed in the
file named LICENSE.TXT which is located in the root directory of the CD-ROM
and in the ...com/ibm/sl/doc/ relative directory that results from the
installation of the SanFrancisco Product on YOUR computer where " ..." is the
prefix directory determined at install time by user specification of
directory preference and/or specific platform requirements under Section B,
entitled "SanFrancisco Product Numbers and Names." The contents of these
lists and subdirectories may be updated by IBM from time to time.

                                      A-1
<PAGE>

                                 ATTACHMENT B

                                  TRADEMARKS

      IBM SanFrancisco
                                          "Suspension
                                          bridge design":

                                          Multicolor logo

                                                                  [LOGO]

                                      A-2
<PAGE>

                                 ATTACHMENT C

                          TRADEMARK USAGE GUIDELINES

1.0     THE GUIDELINES AND TRADEMARKS

1.1     The Trademark Usage Guidelines of this Attachment C ("Guidelines")
set forth the proper treatment and use of the Trademarks licensed under the
SanFrancisco Technology License Agreement ("Agreement") to which these
Guidelines are appended and incorporated by reference. This Attachment
includes and incorporates by reference the "IBM SanFrancisco Technology
Licensee Guidelines", the current copy, dated 7-98, of which was provided to
you with this Agreement and which IBM may modify from time to time upon
reasonable notice. The word "should" as used in the "IBM SanFrancisco
Technology Licensee Guidelines" indicates required usage, and is to be
interpreted as if it were replaced with the word "must".

1.2     Compliance with these Guidelines is the sole responsibility of YOU,
YOUR Subsidiaries and/or YOUR Distributors. In the event of a conflict
between the provisions of the Agreement and these Guidelines, the Agreement
shall control.

1.3     "IBM SanFrancisco" - The Trademark "IBM SanFrancisco" consists of two
portions: "IBM" which is a registered trademark; and "SanFrancisco" which, as
of the date of this Agreement, is not registered. IBM will notify you should
it be granted a registration of the trademark "SanFrancisco" in the U.S. or a
foreign trademark office.

1.4     "IBM SanFrancisco Graphic Identifier" - The "IBM SanFrancisco Graphic
Identifier" consists of the Suspension Bridge Design and the words "IBM
SanFrancisco Technology Licensee" as shown in the Guidelines.

1.5     YOU may secure additional copies of the "IBM SanFrancisco Technology
Licensee Guidelines" by E-mail request for "the IBM SanFrancisco Identity
Guidelines" to apaquet@harte-hanks.com or to jcullender@harte-hanks.com or by
telephone call to (512) 434-1294 or (512) 434-1683.

YOU recognize that contact information and fulfillment processes to secure
additional copies of the "IBM SanFrancisco Technology Licensee Guidelines"
may change from time to time. In the event that YOU are unable to secure
additional copies via the numbers and addresses recited in this section,
please contact your IBM marketing representative to obtain any updates or
other changes.

2.0     USE OF THE TRADEMARKS

2.1     YOU will always use the Trademarks only as set forth in these
Guidelines. Under no circumstances are YOU permitted by the Agreement or
these Guidelines to use the trademark "IBM" in a design or logotype form or as
a trademark separate and apart from the words "SanFrancisco," or to use the
Suspension Bridge Design in a design or logotype form or as a trademark
separate and apart from the IBM SanFrancisco Graphic Identifier.

2.2     The Trademarks must not be used in a manner which may cause confusion
as to the source or origin of products or services being offered. As such, the
Trademarks must not be:

    -   displayed in a striking and solitary manner;

    -   made more prominent than the remainder of the text in which it is
        used by another;

    -   as prominent or more prominent than the YOUR trademark or company
        name; or

    -   used as part of the name or other identifier of a business, product,
        or service not originating not based upon or developed using the
        SanFrancisco product.

                                       A-3

<PAGE>

                                   ATTACHMENT D

                                   ROYALTY RATES

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
YOUR PRODUCT REVENUE STEPS (IN       ROYALTY RATE FOR YOUR PRODUCT          ROYALTY RATE FOR YOUR PRODUCT
U.S. DOLLARS)                        THAT USES BASE AND/OR PROVIDES         THAT USES BOTH CBP AND BASE OR
                                     MAINTENANCE SERVICES                   CBP ALONE

                                             (RATE CODE A)                         (RATE CODE B)

--------------------------------------------------------------------------------------------------------------
<S>                                  <C>                                    <C>
Step 1: [*]                          [*]                                    [*]
--------------------------------------------------------------------------------------------------------------
Step 2: [*]                          [*]                                    [*]
--------------------------------------------------------------------------------------------------------------
Step 3: [*]                          [*]                                    [*]
--------------------------------------------------------------------------------------------------------------
Step 4: [*]                          [*]                                    [*]
--------------------------------------------------------------------------------------------------------------
Step 5: [*]                          [*]                                    [*]
--------------------------------------------------------------------------------------------------------------
</TABLE>

IBM CONFIDENTIAL

[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.

                                       A-4
<PAGE>

                                   ATTACHMENT E

                    SANFRANCISCO PRODUCT STATEMENT OF ROYALTY

Licensee Name:_________________________       Date of Report:__________________
License Reference Number:______________            Period Covered:_____________

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
YOUR PRODUCT              NET YOUR        NUMBER OF      NUMBER OF       UNIT         RATE CODE       ROYALTY        AMOUNT OF
DESCRIPTION/TYPE          PRODUCT         COPIES         NO CHARGE       SELLING      (A OR B)        RATE (%)       ROYALTY DUE
NUMBER                    REVENUE                        COPIES          PRICE

(Column 1)                (Column 2)      (Column 3)     (Column 4)      (Column 5)   (Column 6)      (Column 7)     (Column 2 x 7)
----------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>             <C>            <C>             <C>          <C>             <C>            <C>

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
Fee due under Section 5.6    NA              NA               NA              NA          NA              NA
----------------------------------------------------------------------------------------------------------------------------------
                          Total:                                                                                     TOTAL DUE:

                          --------------
                          YTD Total:

                          --------------                                                                             ------------
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* FROM ATTACHMENT F

                                                           A-5
<PAGE>

                             ATTACHMENT F

SANFRANCISCO PRODUCT WORKSHEET FOR NET LICENSED PRODUCT REVENUE UNDER
                            SECTION 6.2(a)

Licensee Name:_________________________       Date of Report:__________________
License Reference Number:______________            Period Covered:_____________

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
YOUR PRODUCT              GROSS YOUR           OTHER COMPANY         LICENSED OTHER        PAYMENT MADE TO     NET YOUR PRODUCT
                          PRODUCT REVENUE                            COMPANY PRODUCT       OTHER COMPANY       REVENUE
                                                                     INCORPORATED IN       DEDUCTIBLE UNDER
                                                                     YOUR PRODUCT          SECTION 6.2(a)

(Column A)                (Column B)           (Column C)            (Column D)            (Column E)          (Column B-E)
----------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                  <C>                   <C>                   <C>                 <C>

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                      A-6<PAGE>   1
                                                               Exhibit 10(a)

                              EMPLOYMENT AGREEMENT

      AGREEMENT dated as of March 13, 2001 (the "Effective Date"), by and
between OXFORD HEALTH PLANS, INC. (the "Corporation"), having a principal office
in Trumbull, Connecticut, and Charles G. Berg (the "Employee").

      WHEREAS, the Board of Directors of the Corporation (the "Board") first
authorized the Corporation's entry into an Employment Agreement with the
Employee dated April 15, 1998; and

      WHEREAS, such Employment Agreement was amended as of December 17, 1998,
(as amended, the "Original Employment Agreement");

      WHEREAS, the Corporation and the Employee now wish to terminate the
Original Employment Agreement, and to enter into this new Employment Agreement
to reflect changes in the Employee's duties;

      NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Corporation and the Employee agree as follows:

      1. Employment. The Employee is employed as President and Chief Operating
Officer. As President and Chief Operating Officer of the Corporation the
Employee shall render executive, policy and other management services to the
Corporation of the type customarily performed by persons serving in a similar
executive officer capacity, subject to the powers by law vested in the Board and
in the Corporation's stockholders. The Employee shall report to the Chief
Executive Officer of the Corporation, and shall perform such other related
duties as the Chief Executive Officer of the Corporation may from time to time
reasonably direct or request. The Employee shall be a full time employee of the
Corporation, and shall devote substantially all his working time to the
performance of his duties hereunder.

      The Employee shall perform his duties and responsibilities under this
Agreement faithfully, diligently and to the best of the Employee's ability, and
in compliance with all
<PAGE>   2
applicable laws and the Corporation's Certificate of Incorporation and Bylaws,
as they may be amended from time to time.

      2. Term. The initial term of employment under this Agreement shall be for
a period of two (2) years commencing on the Effective Date (the "Term"). This
Agreement shall be extended automatically for two (2) additional years on the
second anniversary date of the Effective Date and on each second anniversary of
the Effective Date thereafter, unless either the Corporation or the Employee
gives contrary written notice to the other not less than three (3) months in
advance of such anniversary of the Effective Date. References herein to the Term
shall refer both to such initial term and such successive terms. Upon a "Change
in Control" (as defined in Section 7(a)) of the Corporation, the Term shall be
extended to two (2) years from the date of such Change in Control, unless notice
to terminate the Term has been properly provided prior to the date of such
Change in Control, and such Change in Control date shall be treated as the
Effective Date for purposes of renewals of this Agreement. The Term shall end
upon the termination of the Employee's employment under this Agreement.

      3. Compensation. (a) Base Salary. The Corporation agrees to pay the
Employee during the Term an annual base salary ("Base Salary") of $600,000. The
Base Salary shall be reviewed at least annually during the Term by the Board,
and the Employee shall receive such increases in Base Salary, if any, as the
Compensation Committee of the Board (the "Committee") in its absolute discretion
may determine, together with such performance or merit increases, if any, as the
Committee in its absolute discretion may determine. Base Salary shall refer to
Base Salary as increased from time to time pursuant to the previous sentence.
Base Salary shall not be decreased. Participation with respect to discretionary
bonuses, retirement and other employee benefit plans and fringe benefits shall
not reduce the Base Salary payable to the Employee under this Section 3. The
Base Salary shall be payable to the Employee in equal installments in conformity
with the Corporation's normal payroll periods.

            (b) Bonus. During the Term, the Employee shall be eligible to
receive an annual performance bonus up to $600,000 based on annual performance
targets to be

                                       2
<PAGE>   3
determined by the Chief Executive Officer of the Corporation as approved by the
Committee of the Corporation.

            (c) Options. Subject to the approval of the Committee, upon the
execution and delivery of this Agreement, the Corporation shall grant the
Employee an option to acquire 300,000 shares of the Corporation's common stock
pursuant to the terms and conditions of the Corporation's 1991 Stock Option Plan
(the "Plan").

      4. Withholding Obligation. The Corporation shall have the ability to
withhold from the compensation otherwise due to the Employee under this
Agreement any federal income tax, Federal Insurance Contribution Act tax,
Federal Unemployment Act tax, or other amounts required to be withheld from
compensation from time to time under the Internal Revenue Code of 1986, as
amended (the "Code"), or under any state or municipal laws or regulations.

      5. Fringe Benefits.

            (a) Time Off and Leave. During the Term, the Employee shall be
entitled to twenty-three (23) select days per year or up to the maximum allowed
under the Corporation's select time program. Select days are used for vacation,
personal time and sick time. In addition, the Employee will receive paid company
holidays each year (seven holidays as of the date of this Agreement). The
employee shall also be eligible for such other leave, with or without
compensation, as shall be mutually agreed upon by the Employee and the Chief
Executive Officer.

            (b) Participation in Retirement and Employee Benefit Plans. During
the Term, the Employee shall be eligible to participate in the Corporation's
1991 Stock Option Plan, annual incentive compensation plan, and any other plan
of the Corporation or its subsidiaries relating to stock options, stock
appreciation, stock purchases, pension, thrift, profit sharing, group life
insurance, medical coverage, education or other retirement or employee benefits
that the Corporation may adopt for the benefit of its executive employees.

                                       3
<PAGE>   4
            (c) Disability. If the Employee shall become disabled or
incapacitated during the Term to the extent that he is unable to perform his
duties and responsibilities hereunder, he shall be eligible to receive
disability benefits of the type currently provided to him, or, if more favorable
to the Employee, benefits of the type provided for other executive employees in
similar positions with the Corporation.

            (d) Death. If the Employee shall die during the Term,the Corporation
shall pay to such person as the Employee has designated in a notice filed with
the Corporation, or, if no such notice is filed, to his estate, Employee's Base
Salary at the date of his death plus an amount equal to the Bonus as defined in
Section 3(b) which shall not be less than $600,000, amortized in 26 equal
bi-weekly payments.

            (e) Other Benefits. During the Term, the Employee shall be entitled
to participate in any other fringe benefits which are or may become applicable
to the Corporation's executive employees, including a reasonable expense account
and any other benefits which are commensurate with the duties and
responsibilities to be performed by the Employee under this Agreement. In
addition, the Corporation agrees, during the Term, to reimburse the Employee for
the cost of the Employees personal disability and life insurance policies as in
effect on April 15, 1998.

      6. Termination of Employment.  The Employee's employment hereunder
may be terminated under the circumstances set forth in paragraphs (a)
through (e) below:

            (a)   Death.  The Employee's employment hereunder shall
terminate upon his death.

            (b) Disability. If, as a result of the Employee's incapacity due to
physical or mental illness, the Employee shall have been absent from his duties
hereunder on a full-time basis for the entire period of six (6) consecutive
months, and within thirty (30) days after written Notice of Termination is given
(which may occur before or after the end of such six (6) month period) shall not
have returned to the performance of his duties hereunder on a full-time basis,
the Corporation may terminate the Employee's employment hereunder for
"Disability."

                                       4
<PAGE>   5
            (c) Cause. The Corporation may terminate the Employee's employment
hereunder for Cause or without Cause. Except as provided in Section 7(b) hereof
following a Change in Control, termination for Cause shall mean termination
because the Employee (i) engages in the following conduct in connection with his
employment with the Corporation: personal dishonesty, willful misconduct, breach
of fiduciary duty involving personal profit, breach of a restrictive covenant
against competition, disclosure of confidential information of the Corporation,
consistent intentional failure to perform stated duties after notice, or (ii)
willfully violates any law, rule, or regulation (other than traffic violations
or similar offenses), which willful violation materially impacts the Employee's
performance of his duties to the Corporation.

            (d) Good Reason. The Employee may terminate his employment hereunder
with or without Good Reason; provided, however, that the Employee agrees not to
terminate his employment hereunder (other than for Good Reason or for
Retirement) during the ninety-day period following a Change in Control. Except
as provided in Section 7(c) hereof during the two-year period following a Change
in Control, for purposes of this Agreement "Good Reason" shall mean any (i)
removal of the Employee from, or failure to re-appoint the Employee to, his
position as President and Chief Operating Officer, except in connection with
termination of the Employee for Cause, (ii) failure by the Corporation to comply
with Section 3 or Section 5 hereof in any material respect, (iii) material
diminution in Employee's duties and responsibilities or (iv) requirement of the
Corporation that the Employee be based in an office that increases the
Employee's commute thirty (30) or more miles from the Employee's commute at the
time of this Agreement (Westport, CT home to Trumbull, CT office), except that
relocation to the Corporation's New York City, NY office shall not give rise to
Good Reason under this clause. This paragraph is applicable only to a
termination which occurs prior to a Change in Control or following the two-year
period immediately subsequent to a Change in Control as provided in Section 6(h)
hereof. For purposes of this Agreement, "Good Reason" shall not exist until
after Employee has given the Company notice of the applicable event within 90
days of such event and which is not remedied within 30 days after receipt of
written notice from Employee specifically delineating such claimed event and
setting forth Employee's intention to terminate

                                       5
<PAGE>   6
employment if not remedied; provided, that if the specified event cannot
reasonably be remedied within such 30-day period and the Company commences
reasonable steps within such 30-day period to remedy such event and diligently
continues such steps thereafter until a remedy is effected, such event shall not
constitute "Good Reason" provided that such event is remedied within 60 days
after receipt of such written notice.

            (e) Retirement. For purposes of this Agreement, "Retirement" shall
mean termination of the Employee's employment by either the Employee (other than
for Good Reason) or the Corporation (other than for Cause) on or after the
Employee's normal retirement age under the terms of the Corporation's pension
plan (or, any other tax-qualified plan, if no pension plan exists); provided,
that, following a Change in Control such normal retirement age may not be
reduced for purposes of this Agreement without the consent of the Employee.

            (f) Date of Termination. For purposes of this Agreement, "Date of
Termination" means (1) the effective date on which the Employee's employment by
the Corporation terminates as specified in a Notice of Termination by the
Corporation or the Employee, as the case may be, or (2) if the Employee's
employment terminates by reason of death, the date of death of the Employee.
Notwithstanding the previous sentence, (i) if the Employee's employment is
terminated for Disability (as defined in Section 6(b)), then such Date of
Termination shall be no earlier than thirty (30) days following the date on
which a Notice of Termination is received.

            (g) Payment Upon Termination. Upon any termination of employment
hereunder, the Corporation shall pay the Employee, within ten (10) days
following his Date of Termination, a lump sum cash amount equal to the sum of
(i) the Employee's unpaid Base Salary through the Date of Termination, (ii) any
bonus payments which have become payable (other than deferred amounts), to the
extent not theretofore paid, and (iii) any accrued, unused select time up to
eighty (80) hours.

            (h) Termination Without Cause, For Good Reason or Upon Failure to
Renew. In addition to the payments set forth in Section 6(g) hereof, in the
event that the Employee's employment with the Corporation terminates either
prior to a Change in

                                       6
<PAGE>   7
Control or following the two-year period immediately subsequent to a Change in
Control (including as a result of a notice of non-renewal of the Term by the
Corporation provided during such two-year period), in each case as a result of
(i) a termination by the Employee for Good Reason (as defined in Section 6(d)
hereof), (ii) a termination by the Corporation without Cause (other than for
Retirement or Disability) or (iii) notice by the Corporation of non-renewal of
the Term (other than for Retirement), then the Corporation shall pay to the
Employee, in twenty-four (24) equal monthly installments in conformity with the
Corporation's normal payroll periods, an amount equal to the sum of (i) two (2)
times the sum of the Employee's annual Base Salary at the Employee's Date of
termination, and (ii) two (2) times the annual performance bonus earned by the
Employee from the Corporation and its subsidiaries in respect of the fiscal year
immediately preceding the Employee's Date of Termination which shall not be less
than $600,000 ("Bonus Amount"). The Employee will also be eligible for the same
level of medical and dental benefits (as well as reimbursement for the personal
life and disability insurance policies referred to in Section 5(e) hereunder)
for twelve months following the Date of Termination.

      7. Termination of Employment Following a Change in Control.

            (a)   Change in Control Defined.  For purposes of this
Agreement, a "Change in Control" shall be deemed to have taken place if:

                        (i) any "person" (as defined below) is or becomes the
      "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
      Act of 1934 (the "Exchange Act")), directly or indirectly, of securities
      of the Corporation representing 30% or more of the total voting power
      represented by the Corporation's then outstanding voting securities;

                        (ii) a change in the composition of the Board of
      Directors of the Corporation occurs, as a result of which fewer than
      two-thirds (2/3) of the incumbent directors are directors who either (A)
      had been directors of the Corporation on the "look-back date" (as defined
      below) or (B) were elected, or nominated for election, to the Board of
      Directors of the Corporation with the

                                       7
<PAGE>   8
      affirmative votes of at least a majority of the directors who had been
      directors of the Corporation on the "look-back date" and who were still in
      office at the time of the election or nomination;

                        (iii) the stockholders of the Corporation approve a
      merger or consolidation of the Corporation with any other corporation,
      other than a merger or consolidation which would result in the voting
      securities of the Corporation outstanding immediately prior thereto
      continuing to represent (either by remaining outstanding or by being
      converted into voting securities of the surviving entity) at least 80% of
      the total voting power represented by the voting securities of the
      Corporation or such surviving entity outstanding immediately after such
      merger or consolidation; or

                        (iv) the stockholders of the Corporation approve (A) a
      plan of complete liquidation of the Corporation or (B) an agreement for
      the sale or disposition by the Corporation of all or substantially all of
      the Corporation's assets.

      For purposes of paragraph (a)(i), the term "person" shall have the same
      meaning as when used in sections 13(d) and 14(d) of the Exchange Act, but
      shall exclude (1) a trustee or other fiduciary holding securities under an
      employee benefit plan of the Corporation or of a parent or subsidiary of
      the Corporation or (2) a corporation owned directly or indirectly by the
      stockholders of the Corporation in substantially the same proportions as
      their ownership of the common stock of the Corporation. For purposes of
      paragraph (a)(ii), the term "look-back date" shall mean the later of (A)
      the date twenty-four (24) months prior to the change in the composition of
      the Board and (B) the Effective Date. Any other provision of this Section
      7(a) notwithstanding, the term "Change in Control" shall not include
      either of the following events, if undertaken at the election of the
      Corporation:

                        (x)   a transaction, the sole purpose of which is
                              to change the state of the Corporation's
                              incorporation; or

                                       8
<PAGE>   9
                        (y)   a transaction, the result of which is to
                              sell all or substantially all of the assets
                              of the Corporation to another corporation or
                              entity (the "surviving entity"); provided
                              that the voting power represented by the
                              surviving entity's securities (or other
                              equity interests) is owned directly or
                              indirectly by the stockholders of the
                              Corporation immediately following such
                              transaction in substantially the same
                              proportions as their ownership of the voting
                              power represented by the Corporation's
                              common stock immediately preceding such
                              transaction; and provided, further, that the
                              surviving entity expressly assumes this
                              Agreement.

            Notwithstanding anything in this Agreement to the contrary, if the
Employee's employment terminates prior to a Change in Control, and the Employee
reasonably demonstrates that such termination was at the request or suggestion
of a third party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control (a "Third Party"), then for all
purposes of this Agreement, the date of a Change in Control shall mean the date
immediately prior to the date of such termination of employment.

            (b) Cause. During the two-year period following a Change in Control,
"Cause" shall mean (i) the willful and continued failure of the Employee to
substantially perform his duties with the Corporation (other than any such
failure resulting from the Employee's incapacity due to physical or mental
illness or any such failure subsequent to the Employee being delivered a notice
of termination without Cause by the Corporation or delivering a notice of
termination for Good Reason to the Corporation) after a written demand for
substantial performance is delivered to the Employee by the Board which
specifically identifies the manner in which the Board believes that the Employee
has not substantially performed the Employee's duties, or (ii) the willful
engaging by the Employee in illegal conduct or gross misconduct which is
demonstrably and materially

                                       9
<PAGE>   10
injurious to the Corporation or its subsidiaries. For purpose of this paragraph
(b), no act or failure to act by the Employee shall be considered "willful"
unless done or omitted to be done by the Employee in bad faith and without
reasonable belief that the Employee's action or omission was in the best
interests of the Corporation or its affiliates. Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the Board,
based upon the advice of counsel for the Corporation, shall be conclusively
presumed to be done, or omitted to be done, by the Employee in good faith and in
the best interests of the Corporation. Cause shall not exist unless and until
the Corporation has delivered to the Employee a copy of a resolution duly
adopted by two-thirds (2/3) of the entire Board at a meeting of the Board called
and held for such purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board an event set forth
in clause (i) or (ii) has occurred and specifying the particulars thereof in
detail. For purposes of Board approval with respect hereto, if the Employee is
also a director of the Corporation, he shall abstain from acting on matters
pertaining to this Section 7(b) and shall not be counted as a Board member for
purposes of the two-thirds (2/3) requirement. Following a Change in Control, the
Corporation must notify the Employee of any event constituting Cause within
ninety (90) days following the Corporation's knowledge of its existence or such
event shall not constitute Cause under this Agreement.

            (c)   Good Reason.  During the two-year period following a
Change in Control, "Good Reason" shall mean, without the Employee's
express written consent, the occurrence of any of the following events:

            (1) a change in the Employee's duties or responsibilities such that
      he (i) no longer has chief operating responsibility (subject to reporting
      to the Chief Executive Officer, Chief Operating Officer or President of
      the ultimate parent entity or successor of the Corporation) for regional
      operations in the region in which the Corporation operated immediately
      prior to such Change in Control (including primary responsibility for the
      financial results of the region), or (ii) is required to report to any
      person other than the Chief Executive Officer, Chief

                                       10
<PAGE>   11
      Operating Officer or President of the ultimate parent entity or successor
      of the Corporation;

            (2) a reduction by the Corporation in the Employee's rate of annual
      Base Salary or annual target bonus opportunity (including any adverse
      change in the formula for such annual bonus target) as in effect
      immediately prior to such Change in Control or as the same may be
      increased from time to time thereafter;

            (3) any requirement of the Corporation that the Employee be based in
      an office that increases the Employee's commute thirty (30) or more miles
      from the Employee's commute at the time of this Agreement (Westport, CT
      home to Trumbull, CT office) or (ii) travel on the Corporation's business
      to an extent substantially greater than the travel obligations of the
      Employee immediately prior to such Change in Control;

            (4) the failure of the Corporation to (i) continue in effect any
      employee benefit plan, compensation plan, welfare benefit plan or material
      fringe benefit plan in which the Employee is participating immediately
      prior to such Change in Control, or the taking of any action by the
      Corporation which would adversely affect the Employee's participation in
      or reduce the Employee's benefits under any such plan, unless the Employee
      is permitted to participate in other plans providing the Employee with
      substantially equivalent aggregate benefits (at substantially comparable
      cost with respect to welfare benefit plans), or (ii) provide the Employee
      with paid vacation in accordance with the most favorable plans, policies,
      programs and practices of the Corporation and its affiliated companies as
      in effect for the Employee immediately prior to such Change in Control; or

            (5) the failure of the Corporation to obtain the assumption
      agreement from any successor as contemplated in Section 11(a) hereof.

            Any event or condition described in Section 7(c)(1) through (4)
which occurs prior to a Change in Control, but with respect to which the
Employee is able to

                                       11
<PAGE>   12
reasonably demonstrate was at the request or suggestion of a Third Party, shall
constitute Good Reason following a Change in Control for purposes of this
Agreement (as if a Change in Control had occurred immediately prior to the
occurrence of such event or condition) notwithstanding that it occurred prior to
the Change in Control. An isolated, insubstantial and inadvertent action taken
in good faith and which is remedied by the Corporation promptly after receipt of
notice thereof given by the Employee shall not constitute Good Reason. The
Employee's right to terminate employment for Good Reason shall not be affected
by the Employee's incapacity due to mental or physical illness and the
Employee's continued employment shall not constitute consent to, or a waiver of
rights with respect to, any event or condition constituting Good Reason.
Following a Change in Control, the Employee must provide notice of termination
of employment within ninety (90) days of the Employee's knowledge of an event
constituting Good Reason or such event shall not constitute Good Reason under
this Agreement, and the provisions of the last sentence of Section 6(d) will
apply.

            (d) In addition to the payments set forth in Section 6(g) above, in
the event the Employee's employment with the Corporation terminates within two
(2) years following a Change in Control either (i) by the Corporation without
Cause (other than for Retirement or Disability) or (ii) by the Employee for Good
Reason, then the Corporation shall (1) pay to the Employee, within ten (10) days
following the Employee's Date of Termination, a lump sum cash amount equal to
two (2) times the sum of (i) the highest annual rate of Base Salary of the
Employee during the 3-year period immediately preceding the Employee's Date of
Termination and (ii) the highest annual performance bonus (which for the
purposes of this provision shall be deemed to be no less than $600,000) earned
by Employee during the three (3) year period immediately preceding the
Employee's Date of Termination, and (2) cause the options granted under Section
3(c) of this Agreement and any other options granted to Employee during the Term
to become fully vested and immediately exercisable, and (3)continue to provide
for a period of two (2) years following the Date of Termination, the Employee
(and the Employee's dependents if applicable) with the same level of medical and
dental benefits (as well as reimbursement for personal life and disability
insurance policies referred to in Section 5(e) hereunder) upon the substantially
same terms and conditions (including cost of

                                       12
<PAGE>   13
coverage to the Employee) as existed immediately prior to the Employee's Date of
Termination (or, if more favorable to the Employee, as such benefits and terms
and conditions existed immediately prior to the Change in Control); provided,
that if the Employee cannot continue to participate in the Corporation's plans
providing such benefits; the Corporation shall otherwise provide such benefits
on the same after-tax basis as if continued participation had been permitted.
Notwithstanding the foregoing, in the event the Employee becomes reemployed with
another employer and becomes eligible to receive medical and dental benefits
from such employer, the benefits described herein shall be secondary to such
benefits during the period of the Employee's eligibility, but only to the extent
that the Corporation reimburses the Employee for any increased cost and provides
any additional benefits necessary to give the Employee the benefit hereunder.

            (e) (i) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment or distribution, or any
acceleration of vesting of any benefit or award, by the Corporation or its
affiliated companies to or for the benefit of the Employee (whether paid or
payable, distributed or distributable or accelerated or subject to acceleration
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 7(e)) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of the
Code, or any interest or penalties are incurred by the Employee with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the Employee
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Employee of all taxes imposed upon the
Gross-Up Payment and any interest or penalties imposed with respect to such
taxes, the Employee retains an amount of the Gross-Up Payment equal to the sum
of (x) the Excise Tax imposed upon the Payments and (y) the product of any
deductions disallowed because of the inclusion of the Gross-Up Payment in the
Employee's adjusted gross income and the highest applicable marginal rate of
federal income taxation for the calendar year in which the Gross-Up Payment is
to be made. For purposes of determining the amount of the Gross-Up Payment, the
Employee shall be deemed to (A) pay federal income taxes at the

                                       13
<PAGE>   14
highest marginal rates of federal income taxation for the calendar year in which
the Gross-Up Payment is to be made, (B) pay applicable state and local income
taxes at the highest marginal rate of taxation for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes and (C) have otherwise allowable deductions for federal income tax
purposes at least equal to those which could be disallowed because of the
inclusion of the Gross-Up Payment in the Employee's adjusted gross income. The
payment of a Gross-Up Payment under this Section 7(e) shall in no event be
conditioned upon the Employee's termination of employment or the receipt of
severance benefits under this Agreement.

                        (ii) Subject to the provisions of Section 7(e)(i), all
      determinations required to be made under this Section 7(e), including
      whether and when a Gross-Up Payment is required and the amount of such
      Gross-Up Payment and the assumptions to be utilized in arriving at such
      determination, shall be made by the public accounting firm that is
      retained by the Corporation as of the date immediately prior to the Change
      in Control (the "Accounting Firm") which shall provide detailed supporting
      calculations both to the Corporation and the Employee within fifteen (15)
      business days of the receipt of notice from the Corporation or the
      Employee that there has been a Payment, or such earlier time as is
      requested by the Corporation (collectively, the "Determination"). In the
      event that the Accounting Firm is serving as accountant or auditor for the
      individual, entity or group effecting the Change in Control, the Employee
      may appoint another nationally recognized public accounting firm to make
      the determinations required hereunder (which accounting firm shall then be
      referred to as the Accounting Firm hereunder). All fees and expenses of
      the Accounting Firm shall be borne solely by the Corporation and the
      Corporation shall enter into any agreement requested by the Accounting
      Firm in connection with the performance of its services hereunder. The
      Gross-Up Payment under this Section 7(e) with respect to any Payment shall
      be made no later than thirty (30) days following such Payment. If the
      Accounting Firm determines that no Excise Tax is payable by the Employee,
      it shall furnish the Employee with a written opinion to

                                       14
<PAGE>   15
      such effect, and to the effect that failure to report the Excise Tax, if
      any, on the Employee's applicable federal income tax return will not
      result in the imposition of a negligence or similar penalty. The
      Determination by the Accounting Firm shall be binding upon the Corporation
      and the Employee. As a result of the uncertainty in the application of
      Section 4999 of the Code at the time of the Determination, it is possible
      that Gross-Up Payments which will not have been made by the Corporation
      should have been made ("Underpayment") or Gross-Up Payments are made by
      the Corporation which should not have been made ("Overpayment"),
      consistent with the calculations required to be made hereunder. In the
      event that the Employee thereafter is required to make payment of any
      additional Excise Tax, the Accounting Firm shall determine the amount of
      the Underpayment that has occurred and any such Underpayment (together
      with interest at the rate provided in Section 1274(b)(2)(B) of the Code)
      shall be promptly paid by the Corporation to or for the benefit of the
      Employee. In the event the amount of the Gross-Up Payment exceeds the
      amount necessary to reimburse the Employee for his Excise Tax, the
      Accounting Firm shall determine the amount of the Overpayment that has
      been made and any such Overpayment (together with interest at the rate
      provided in Section 1274(b)(2) of the Code) shall be promptly paid by the
      Employee to or for the benefit of the Corporation. The Employee shall
      cooperate, to the extent his expenses are reimbursed by the Corporation,
      with any reasonable requests by the Corporation in connection with any
      contests or disputes with the Internal Revenue Service in connection with
      the Excise Tax.

      8. Covenants Not to Compete; Confidentiality.

            (a) The Employee covenants that following his Date of Termination,
unless such termination is within the two-year period following a Change in
Control, he shall not, for a period of one (1) year following such Date of
Termination:

            (1) engage or be interested, whether alone or together with or on
      behalf or through any other person, firm, association, trust, venture, or
      corporation, whether

                                       15
<PAGE>   16
      as sole proprietor, partner, shareholder, agent, officer, director,
      employee, adviser, consultant, trustee, beneficiary or otherwise, in any
      business principally and directly engaged in the operation of health
      maintenance organizations or the health insurance business or in the
      management of specialty medical care through case rate contracting; which
      business operates in a geographic area in which, at the time of such
      termination of employment, the Corporation is conducting business or plans
      to conduct business (a "competing business");

            (2)  assist others in conducting any competing business;

            (3) directly or indirectly recruit or induce or hire any person who
      is an employee of the Corporation or any of its subsidiaries, or solicit
      any of the Corporation's customers, clients or providers; or

            (4) own any capital stock or any other securities of, or have any
      other direct or indirect interest in, any entity which owns or operates a
      competing business, other than the ownership of (i) less than five percent
      (5%) of any such entity whose stock is listed on a national securities
      exchange or traded in the over-the-counter market and which is not
      controlled by the Employee or any affiliate of the Employee or (ii) any
      limited partnership interest in such an entity.

            (b) The Employee hereby agrees and covenants, as a condition of the
Corporation's performance of its obligations arising from this Agreement, that,
both during and after the Term, except as may be necessary to perform the
Employee's duties for the benefit of the Corporation, he will not, directly or
indirectly, use or disclose any material proprietary or confidential
information, whether written or oral, received or gained by him in the course of
his employment by the Corporation or of his duties with the Corporation
("Confidential Information"). Confidential Information does not include
information that is or becomes widely known outside the Corporation through no
act or failure to act by the Employee. The rights set forth in this Agreement
are in addition to

                                       16
<PAGE>   17
any rights the Corporation may have under the common law or applicable statutes
relating to the protection of trade secrets and confidential information.

            (c) In the event that the Employee breaches or threatens to breach
any of the terms of this Section 8, the Employee acknowledges that the
Corporation's remedy at law would be inadequate and that the Corporation shall
be entitled to an injunction restraining the Employee from committing or
continuing such breach. The Employee therefore consents to the entry of a
restraining order, preliminary injunction or other court order to enforce those
paragraphs and expressly waives any security that might otherwise be required in
connection with such relief. The Employee also agrees that any request for such
relief by the Corporation shall be in addition and without prejudice to any
claim for monetary damages which the Corporation might seek.

      9. Payment Obligation Absolute; No Mitigation. Except with respect to
continued welfare benefits under Section 7(d), the Corporation's obligation to
pay the Employee the compensation and other benefits provided herein shall be
absolute and unconditional and shall not be affected by an circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Corporation may have against the Employee. All amounts
payable by the Corporation hereunder shall be paid without notice or demand. The
Employee shall not be required to mitigate amounts payable pursuant to this
Agreement hereof by seeking other employment or otherwise, (other than as
provided in Section 7(d)) with respect to certain welfare benefits.

      10.  Notice.

            (a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or five (5) days after deposit in
the United States mail, certified and return receipt requested, postage prepaid,
addressed as follows:

            If to the Employee:

            Charles G. Berg

                                       17
<PAGE>   18
            10 Blind Brook Road
            Westport, CT  06880

            If to the Corporation:

            Oxford Health Plans, Inc.
            48 Monroe Turnpike
            Trumbull, CT 06611
            Attention:  Secretary

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

            (b) A written notice (a "Notice of Termination") of the Employee's
Date of Termination by the Corporation or the Employee, as the case may be, to
the other, shall (i) indicate the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Employee's employment under the provision so indicated and (iii) specify the
Date of Termination. The failure by the Employee or the Corporation to set forth
in such notice any particular fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Employee or the
Corporation hereunder or preclude the Employee or the Corporation from asserting
such fact or circumstance in enforcing the Employee's or the Corporation's
rights hereunder.

      11.  General Provisions.

            (a) No Assignments. This Agreement is personal to each of the
parties hereto. Neither party may assign or delegate any of his or its rights or
obligations hereunder without first obtaining the written consent of the other
party; provided, however, that the Corporation agrees that concurrently with any
merger or sale of assets which would constitute a Change in Control hereunder,
it will cause any successor or transferee unconditionally to assume, by written
instrument delivered to the Employee (or his beneficiary or estate), all of the
obligations of the Corporation hereunder. Failure of the Corporation to obtain
such assumption prior to the effectiveness of any such merger

                                       18
<PAGE>   19
or sale of assets, shall be a breach of this Agreement and shall constitute Good
Reason hereunder and shall entitle the Employee to compensation and other
benefits from the Corporation in the same amount and on the same terms as the
Employee would be entitled hereunder if the Employee's employment were
terminated following a Change in Control under Section 7(d) hereof. For purposes
of implementing the foregoing, the date on which any such merger or sale of
assets becomes effective shall be deemed the date Good Reason occurs, and shall
be the Date of Termination if requested by the Employee. Notwithstanding the
foregoing, this Agreement shall inure to the benefit of and be enforceable by
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Employee shall
die while any amounts would be payable to the Employee hereunder had the
Employee continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to such person or
persons appointed in writing by the Employee to receive such amounts or, if no
person is so appointed, to the Employee's estate.

            (b) Indemnification of Employee. The By-Laws of the Corporation
provide for indemnification of its officers and directors under the
circumstances and conditions specified therein. The Corporation currently
carries a policy of Directors and Officers Insurance, under which the Employee
is a covered person. Moreover, in the event the employment of the Employee is
terminated by the Corporation without Cause or by the Employee for Good Reason
hereof and the Corporation fails to make timely payment of the amounts then owed
to the Employee under this Agreement, the Employee shall be entitled to
indemnification for all reasonable costs (as such costs are incurred), including
attorneys' fees and disbursements, incurred by the Employee in taking action to
collect such amounts or otherwise to enforce this Agreement, plus interest on
all such amounts at the annual rate of one percent above the prime rate (defined
as the base rate on corporate loans at large U.S. money center commercial banks
as published by the Wall Street Journal), compounded monthly, for the period
from the time payment is due until payment is made to the Employee. The Employee
shall also be entitled to interest (at the rate described in the immediately
preceding sentence) on such reasonable costs incurred from the date the Employee
delivers a receipt to the Corporation for such costs until the

                                       19
<PAGE>   20
date they are reimbursed to the Employee. Such indemnification and interest
shall be in addition to all rights to which the Employee is otherwise entitled
under this Agreement.

            (c) Entire Agreement; Amendments or Additions; Action by Board. This
Agreement contains the entire agreement between the parties hereto with respect
to the transactions contemplated hereby and supersedes all prior oral and
written agreements, memoranda, understandings and undertakings between the
parties hereto relating to the subject matter hereof. No amendments or additions
to this Agreement shall be binding unless in writing and signed by both parties.

            (d)   Governing Law.  This Agreement shall be governed by the
laws of the State of Connecticut as to all matters, including, but not
limited to, matters of validity, construction, effect and practice.

            (e) Arbitration. Except with respect to injunctive relief under
Section 8(b) hereof, any dispute or controversy under this Agreement shall be
settled exclusively by arbitration in Norwalk, Connecticut by three (3)
arbitrators in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitration award in any court
having jurisdiction. The Corporation shall bear all costs and expenses arising
in connection with any arbitration proceeding pursuant to this Section 11(e).

            (f) Employment with Subsidiaries. Employment with the Corporation
for purposes of this Agreement shall include employment with any subsidiary of
the Corporation.

            (g) Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

            (h)   Section Headings.  The section headings used in this
Agreement are included solely for convenience and shall not affect, or be
used in connection with, the interpretation of this Agreement.

                                       20
<PAGE>   21
            (i) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.

      12. Consultant. In the event that the Employee is terminated without
Cause, or Employee terminates his employment hereunder following the
Corporation's requiring him to report to a Chief Executive Officer other than
the Corporation's current Chief Executive Officer, Norman Payson, the Employee
shall be employed as a consultant of the Corporation until September 1, 2002
(the "Consulting Period"). During the Consulting Period, the following terms
shall apply.

            (a) During the Consulting Period, the Employee agrees to be
reasonably available to the Corporation, primarily by telephone, or occasionally
in person at the Company's principal executive offices in Connecticut. The
performance of services hereunder shall be scheduled on reasonable notice and in
such a manner so as not to interfere significantly with the Employee's other
activities. During the Consulting Period, the Corporation shall pay Employee at
a rate of $1,000 per day for each full day of work performed by Employee. In
addition, the Corporation shall reimburse the Employee for expenses reasonably
incurred in the performance of services hereunder promptly following his
submission of appropriate expense documentation and shall provided
transportation to the Connecticut office when required;

            (b) The Employee's outstanding options to acquire Corporation common
stock that are not otherwise vested shall continue to vest and become
exercisable in accordance with the terms of such options during the Consulting
Period. Notwithstanding anything to the contrary in this paragraph 13(b), (i) no
option which vested prior to the Employee's Date of Termination may be exercised
after, or extended beyond, the earlier of the expiration of the term of the
option or ninety days following the Employee's Date of Termination; and (ii) all
options which vest following the Employee's Date of Termination will be
exercisable for 90 days following the date upon which the option vested, and
will then immediately terminate.

                                       21
<PAGE>   22
      13. Termination of Original Employment Agreement. The parties to this
Agreement hereby acknowledge and agree that, as of the date hereof, the Original
Employment Agreement is null and void, and that all liabilities of either party
thereunder are deemed to have been fully satisfied.

                                       22
<PAGE>   23
      14. IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

                                    OXFORD HEALTH PLANS, INC.

                                    By:   /s/ NORMAN C. PAYSON
                                          -----------------------------------

Dated:  March 13, 2001                    /s/ CHARLES G. BERG
        --------------                    -----------------------------------
                                          Charles G. Berg

                                       23

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