Document:

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                                                                        EXH 10.3

(MULTICURRENCY--CROSS BORDER)

                                     ISDA(R)
                  International Swap Dealers Association, Inc.

                                MASTER AGREEMENT
                          dated as of April _____, 2001

MERRILL LYNCH CAPITAL SERVICES, INC.               MMCA AUTO OWNER TRUST 2001-1
                                       AND

have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.

Accordingly, the parties agree as follows:

1.       INTERPRETATION

(a)      DEFINITIONS. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.

(b)      INCONSISTENCY. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purposes of the relevant Transaction.

(c)      SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.

2.       OBLIGATIONS

(a)      General Conditions.

         (i)      Each party will make each payment or delivery specified in
         each Confirmation to be made by it, subject to the other provisions of
         this Agreement.

         (ii)     Payments under this Agreement will be made on the due date for
         value on that date in the place of the account specified in the
         relevant Confirmation or otherwise pursuant to this Agreement, in
         freely transferable funds and in the manner customary for payments in
         the required currency. Where settlement is by delivery (that is, other
         than by payment), such delivery will be made for receipt on the due
         date in the manner customary for the relevant obligation unless
         otherwise specified in the relevant Confirmation or elsewhere in this
         Agreement.

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         (iii)    Each obligation of each party under Section 2(a)(i) is subject
         to (1) the condition precedent that no Event of Default or Potential
         Event of Default with respect to the other party has occurred and is
         continuing, (2) the condition precedent that no Early Termination Date
         in respect of the relevant Transaction has occurred or been effectively
         designated and (3) each other applicable condition precedent specified
         in this Agreement.

(b)      Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.

(c)      Netting. If on any date amounts would otherwise be payable:--

         (i)      in the same currency; and

         (ii)     in respect of the same Transaction,

by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.

(d)      Deduction or Withholding for Tax.

         (i)      Gross-Up. All payments under this Agreement will be made
         without any deduction or withholding for or on account of any Tax
         unless such deduction or withholding is required by any applicable law,
         as modified by the practice of any relevant governmental revenue
         authority, then in effect. If a party is so required to deduct or
         withhold, then that party ("X") will:--

                  (1)      promptly notify the other party ("Y") of such
                  requirement;

                  (2)      pay to the relevant authorities the full amount
                  required to be deducted or withheld (including the full amount
                  required to be deducted or withheld from any additional amount
                  paid by X to Y under this Section 2(d)) promptly upon the
                  earlier of determining that such deduction or withholding is
                  required or receiving notice that such amount has been
                  assessed against Y;

                  (3)      promptly forward to Y an official receipt (or a
                  certified copy), or other documentation reasonably acceptable
                  to Y, evidencing such payment to such authorities; and

                  (4)      if such Tax is an Indemnifiable Tax, pay to Y, in
                  addition to the payment to which Y is otherwise entitled under
                  this Agreement, such additional amount as is necessary to
                  ensure that the net amount actually received by Y (free and
                  clear of Indemnifiable Taxes, whether assessed against X or Y)
                  will equal the full amount Y would have received had no such
                  deduction or

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                  withholding been required. However, X will not be required to
                  pay any additional amount to Y to the extent that it would not
                  be required to be paid but for:--

                           (A)    the failure by Y to comply with or perform any
                           agreement contained in Section 4(a)(i), 4(a)(iii) or
                           4(d); or

                           (B)    the failure of a representation made by Y
                           pursuant to Section 3(f) to be accurate and true
                           unless such failure would not have occurred but for
                           (I) any action taken by a taxing authority, or
                           brought in a court of competent jurisdiction, on or
                           after the date on which a Transaction is entered into
                           (regardless of whether such action is taken or
                           brought with respect to a party to this Agreement) or
                           (II) a Change in Tax Law.

         (ii)     Liability. If:--

                  (1)      X is required by any applicable law, as modified by
                  the practice of any relevant governmental revenue authority,
                  to make any deduction or withholding in respect of which X
                  would not be required to pay an additional amount to Y under
                  Section 2(d)(i)(4);

                  (2)      X does not so deduct or withhold; and

                  (3)      a liability resulting from such Tax is assessed
                  directly against X,

         then, except to the extent Y has satisfied or then satisfies the
         liability resulting from such Tax, Y will promptly pay to X the amount
         of such liability (including any related liability for interest, but
         including any related liability for penalties only if Y has failed to
         comply with or perform any agreement contained in Section 4(a)(i),
         4(a)(iii) or 4(d)).

(e)      Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.

3.       REPRESENTATIONS

Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:--

(a)      Basic Representations.

         (i)      Status. It is duly organized and validly existing under the
         laws of the jurisdiction of its organization or incorporation and, if
         relevant under such laws, in good standing;

         (ii)     Powers. It has the power to execute this Agreement and any
         other documentation relating to this Agreement to which it is a party,
         to deliver this Agreement and any other documentation relating to this
         Agreement that it is required by this Agreement to deliver and to
         perform its obligations under this Agreement and any

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         obligations it has under any Credit Support Document to which it is a
         party and has taken all necessary action to authorise such execution,
         delivery and performance;

         (iii)    No Violation or Conflict. Such execution, delivery and
         performance do not violate or conflict with any law applicable to it,
         any provision of*its constitutional documents, any order or judgment of
         any court or other agency of government applicable to it or any of its
         assets or any contractual restriction binding on or affecting it or any
         of its assets;

         (iv)     Consents. All governmental and other consents that are
         required to have been obtained by it with respect to this Agreement or
         any Credit Support Document to which it is a party have been obtained
         and are in full force and effect and all conditions of any such
         consents have been complied with; and

         (v)      Obligations Binding. Its obligations under this Agreement and
         any Credit Support Document to which it is a party constitute its
         legal, valid and binding obligations, enforceable in accordance with
         their respective terms (subject to applicable bankruptcy,
         reorganisation, insolvency, moratorium or similar laws affecting
         creditors* rights generally and subject, as to enforceability, to
         equitable principles of general application (regardless of whether
         enforcement is sought in a proceeding in equity or at law)).

(b)      Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.

(c)      Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or inequity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.

(d)      Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.

(e)      Payer Tax Representation. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(e) is accurate and true.

(f)      Payee Tax Representations. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is accurate
and true.

4.       AGREEMENTS

Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--

(a)      Furnish Specified Information. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--

         (i)      any forms, documents or certificates relating to taxation
         specified in the Schedule or any Confirmation;

         (ii)     any other documents specified in the Schedule or any
         Confirmation; and

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         (iii)    upon reasonable demand by such other party, any form or
         document that may be required or reasonably requested in writing in
         order to allow such other party or its Credit Support Provider to make
         a payment under this Agreement or any applicable Credit Support
         Document without any deduction or withholding for or on account of any
         Tax or with such deduction or withholding at a reduced rate (so long as
         the completion, execution or submission of such form or document would
         not materially prejudice the legal or commercial position of the party
         in receipt of such demand), with any such form or document to be
         accurate and completed in a manner reasonably satisfactory to such
         other party and to be executed and to be delivered with any reasonably
         required certification,

in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.

(b)      Maintain Authorisations. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.

(c)      Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.

(d)      Tax Agreement. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.

(e)      Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated, organised, managed and
controlled, or considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is located ("Stamp
Tax Jurisdiction") and will indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in respect of the other party's
execution or performance of this Agreement by any such Stamp Tax Jurisdiction
which is not also a Stamp Tax Jurisdiction with respect to the other party.

5.       EVENTS OF DEFAULT AND TERMINATION EVENTS

(a)      Events of Default. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:--

         (i)      Failure to Pay or Deliver. Failure by the party to make, when
         due, any payment under this Agreement or delivery under Section 2(a)(i)
         or 2(e) required to be made by it if such failure is not remedied on or
         before the third Local Business Day after notice of such failure is
         given to the party;

         (ii)     Breach of Agreement. Failure by the party to comply with or
         perform any agreement or obligation (other than an obligation to make
         any payment under this Agreement or delivery under Section 2(a)(i) or
         2(e) or to give notice of a Termination Event or any agreement or
         obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
         with or performed by the party in accordance with this Agreement if
         such failure is not remedied on or before the thirtieth day after
         notice of such failure is given to the party;

         (iii)    Credit Support Default.

                  (1)      Failure by the party or any Credit Support Provider
                  of such party to comply with or perform any agreement or
                  obligation to be complied with or performed by it in
                  accordance with any Credit Support Document if such failure is
                  continuing after any applicable grace period has elapsed;

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                  (2)      the expiration or termination of such Credit Support
                  Document or the failing or ceasing of such Credit Support
                  Document to be in full force and effect for the purpose of
                  this Agreement (in either case other than in accordance with
                  its terms) prior to the satisfaction of all obligations of
                  such party under each Transaction to which such Credit Support
                  Document relates without the written consent of the other
                  party; or

                  (3)      the party or such Credit Support Provider disaffirms,
                  disclaims, repudiates or rejects, in whole or in part, or
                  challenges the validity of, such Credit Support Document;

         (iv)     Misrepresentation. A representation (other than a
         representation under Section 3(e) or (f)) made or repeated or deemed to
         have been made or repeated by the party or any Credit Support Provider
         of such party in this Agreement or any Credit Support Document proves
         to have been incorrect or misleading in any material respect when made
         or repeated or deemed to have been made or repeated;

         (v)      Default under Specified Transaction. The party, any Credit
         Support Provider of such party or any applicable Specified Entity of
         such party (l) defaults under a Specified Transaction and, after giving
         effect to any applicable notice requirement or grace period, there
         occurs a liquidation of, an acceleration of obligations under, or an
         early termination of, that Specified Transaction, (2) defaults, after
         giving effect to any applicable notice requirement or grace period, in
         making any payment or delivery due on the last payment, delivery or
         exchange date of, or any payment on early termination of, a Specified
         Transaction (or such default continues for at least three Local
         Business Days if there is no applicable notice requirement or grace
         period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
         or in part, a Specified Transaction (or such action is taken by any
         person or entity appointed or empowered to operate it or act on its
         behalf);

         (vi)     Cross Default. If "Cross Default" is specified in the Schedule
         as applying to the party, the occurrence or existence of (l) a default,
         event of default or other similar condition or event (however
         described) in respect of such party, any Credit Support Provider of
         such party or any applicable Specified Entity of such party under one
         or more agreements or instruments relating to Specified Indebtedness of
         any of them (individually or collectively) in an aggregate amount of
         not less than the applicable Threshold Amount (as specified in the
         Schedule) which has resulted in such Specified Indebtedness becoming,
         or becoming capable at such time of being declared, due and payable
         under such agreements or instruments, before it would otherwise have
         been due and payable or (2) a default by such party, such Credit
         Support Provider or such Specified Entity (individually or
         collectively) in making one or more payments on the due date thereof in
         an aggregate amount of not less than the applicable Threshold Amount
         under such agreements or instruments (after giving effect to any
         applicable notice requirement or grace period);

         (vii)    Bankruptcy. The party, any Credit Support Provider of such
         party or any applicable Specified Entity of such party:--

                  (1)      is dissolved (other than pursuant to a consolidation,
                  amalgamation or merger);

                  (2)      becomes insolvent or is unable to pay its debts or
                  fails or admits in writing its inability generally to pay its
                  debts as they become due; (3) makes a general assignment,
                  arrangement or composition with or for the benefit of its
                  creditors; (4) institutes or has instituted against it a
                  proceeding seeking a judgment of insolvency or bankruptcy or
                  any other relief under any bankruptcy or insolvency law or
                  other similar law affecting creditors' rights, or a petition
                  is presented for its winding-up or liquidation, and, in the
                  case of any such proceeding or petition instituted or
                  presented against it, such proceeding or petition (A) results
                  in a judgment of insolvency or bankruptcy or the entry of an
                  order for relief or the making of an order for its winding-up
                  or liquidation or (B) is not dismissed, discharged, stayed or
                  restrained in each case within 30 days of the institution or
                  presentation thereof; (5) has a resolution passed for its
                  winding-up, official management or liquidation (other than
                  pursuant to a consolidation, amalgamation or merger); (6)
                  seeks or becomes subject to the appointment of an
                  administrator, provisional liquidator, conservator,

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                  receiver, trustee, custodian or other similar official for it
                  or for all or substantially all its assets; (7) has a secured
                  party take possession of all or substantially all its assets
                  or has a distress, execution, attachment, sequestration or
                  other legal process levied, enforced or sued on or against all
                  or substantially all its assets and such secured party
                  maintains possession, or any such process is not dismissed,
                  discharged, stayed or restrained, in each case within 30 days
                  thereafter; (8) causes or is subject to any event with respect
                  to it which, under the applicable laws of any jurisdiction,
                  has an analogous effect to any of the events specified in
                  clauses (1) to (7) (inclusive); or (9) takes any action in
                  furtherance of, or indicating its consent to, approval of, or
                  acquiescence in, any of the foregoing acts; or

         (viii)   Merger Without Assumption. The party or any Credit Support
         Provider of such party consolidates or amalgamates with, or merges with
         or into, or transfers all or substantially all its assets to, another
         entity and, at the time of such consolidation, amalgamation, merger or
         transfer:--

                  (1)      the resulting, surviving or transferee entity fails
                  to assu me all the obligations of such party or such Credit
                  Support Provider under this Agreement or any Credit Support
                  Document to which it or its predecessor was a party by
                  operation of law or pursuant to an agreement reasonably
                  satisfactory to the other party to this Agreement; or

                  (2)      the benefits of any Credit Support Document fail to
                  extend (without the consent of the other party) to the
                  performance by such resulting, surviving or transferee entity
                  of its obligations under this Agreement.

(b)      Termination Events. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below, or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to (iv) below, or an Additional Termination Event if the
event is specified pursuant to (v) below:--

         (i)      Illegality. Due to the adoption of, or any change in, any
         applicable law after the date on which a Transaction is entered into,
         or due to the promulgation of, or any change in, the interpretation by
         any court, tribunal or regulatory authority with competent jurisdiction
         of any applicable law after such date, it becomes unlawful (other than
         as a result of a breach by the party of Section 4(b)) for such party
         (which will be the Affected Party):--

                  (1)      to perform any absolute or contingent obligation to
                  make a payment or delivery or to receive a payment or delivery
                  in respect of such Transaction or to comply with any other
                  material provision of this Agreement relating to such
                  Transaction; or

                  (2)      to perform, or for any Credit Support Provider of
                  such party to perform, any contingent or other obligation
                  which the party (or such Credit Support Provider) has under
                  any Credit Support Document relating to such Transaction;

         (ii)     Tax Event. Due to (x) any action taken by a taxing authority,
         or brought in a court of competent jurisdiction, on or after the date
         on which a Transaction is entered into (regardless of whether such
         action is taken or brought with respect to a party to this Agreement)
         or (y) a Change in Tax Law, the party (which will be the Affected
         Party) will, or there is a substantial likelihood that it will, on the
         next succeeding Scheduled Payment Date (1) be required to pay to the
         other party an additional amount in respect of an Indemnifiable Tax
         under Section 2(d)(i)(4) (except in respect of interest under Section
         2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
         is required to be deducted or withheld for or on account of a Tax
         (except in respect of Interest under Section 2(e), 6(d)(ii) or 6(e))
         and no additional amount is required to be paid in respect of such Tax
         under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A)
         or (B));

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         (iii)    Tax Event Upon Merger. The party (the "Burdened Party") on the
         next succeeding Scheduled Payment Date will either (1) be required to
         pay an additional amount in respect of an Indemnifiable Tax under
         Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
         6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
         been deducted or withheld for or on account of an Indemnifiable Tax in
         respect of which the other party is not required to pay an additional
         amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in
         either case as a result of a party consolidating or amalgamating with,
         or merging with or into, or transferring all or substantially all its
         assets to, another entity (which will be the Affected Party) where such
         action does not constitute an event described in Section 5(a)(viii);

         (iv)     Credit Event Upon Merger. If "Credit Event Upon Merger" is
         specified in the Schedule as applying to the party, such party ("X"),
         any Credit Support Provider of X or any applicable Specified Entity of
         X consolidates or amalgamates with, or merges with or into, or
         transfers all or substantially all its assets to, another entity and
         such action does not constitute an event described in Section
         5(a)(viii) but the creditworthiness of the resulting, surviving or
         transferee entity is materially weaker than that of X, such Credit
         Support Provider or such Specified Entity, as the case may be,
         immediately prior to such action (and, in such event, X or its
         successor or transferee, as appropriate, will be the Affected Party);
         or

         (v)      Additional Termination Event. If any "Additional Termination
         Event" is specified in the Schedule or any Confirmation as applying,
         the occurrence of such event (and, in such event, the Affected Party or
         Affected Parties shall be as specified for such Additional Termination
         Event in the Schedule or such Confirmation).

(c)      Event of Default and Illegality. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.

6.       EARLY TERMINATION

(a)      Right to Terminate Following Event of Default. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).

(b)      Right to Terminate Following Termination Event.

         (i)      Notice. If a Termination Event occurs, an Affected Party will,
         promptly upon becoming aware of it, notify the other party, specifying
         the nature of that Termination Event and each Affected Transaction and
         will also give such other information about that Termination Event as
         the other party may reasonably require.

         (ii)     Transfer to Avoid Termination Event. If either an Illegality
         under Section 5(b)(i)(1) or a Tax Event occurs and there is only one
         Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
         Party is the Affected Party, the Affected Party will, as a condition to
         its right to designate an Early Termination Date under Section
         6(b)(iv), use all reasonable efforts (which will not require such party
         to incur a loss, excluding immaterial, incidental expenses) to transfer
         within 20 days after it gives notice under Section 6(b)(i) all its
         rights and obligations under this Agreement in respect of the Affected
         Transactions to another of its Offices or Affiliates so that such
         Termination Event ceases to exist.

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         If the Affected Party is not able to make such a transfer it will give
         notice to the other party to that effect within such 20 day period,
         whereupon the other party may effect such a transfer within 30 days
         after the notice is given under Section 6(b)(i).

         Any such transfer by a party under this Section 6(b)(ii) will be
         subject to and conditional upon the prior written consent of the other
         party, which consent will not be withheld if such other party's
         policies in effect at such time would permit it to enter into
         transactions with the transferee on the terms proposed.

         (iii)    Two Affected Parties. If an Illegality under Section
         5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties,
         each party will use all reasonable efforts to reach agreement within 30
         days after notice thereof is given under Section 6(b)(i) on action to
         avoid that Termination Event.

         (iv)     Right to Terminate. If:--

                  (1)      a transfer under Section 6(b)(ii) or an agreement
                  under Section 6(b)(iii), as the case may be, has not been
                  effected with respect to all Affected Transactions within 30
                  days after an Affected Party gives notice under Section
                  6(b)(i); or

                  (2)      an Illegality under Section 5(b)(i)(2), a Credit
                  Event Upon Merger or an Additional Termination Event occurs,
                  or a Tax Event Upon Merger occurs and the Burdened Party is
                  not the Affected Party,

         either party in the case of an Illegality, the Burdened Party in the
         case of a Tax Event Upon Merger, any Affected Party in the case of a
         Tax Event or an Additional Termination Event if there is more than one
         Affected Party, or the party which is not the Affected Party in the
         case of a Credit Event Upon Merger or an Additional Termination Event
         if there is only one Affected Party may, by not more than 20 days
         notice to the other party and provided that the relevant Termination
         Event is then continuing, designate a day not earlier than the day such
         notice is effective as an Early Termination Date in respect of all
         Affected Transactions.

(c)      Effect of Designation.

         (i)      If notice designating an Early Termination Date is given under
         Section 6(a) or (b), the Early Termination Date will occur on the date
         so designated, whether or not the relevant Event of Default, or
         Termination Event is then continuing.

         (ii)     Upon the occurrence or effective designation of an Early
         Termination Date, no further payments or deliveries under Section
         2(a)(i) or 2(e) in respect of the Terminated Transactions will be
         required to be made, but without prejudice to the other provisions of
         this Agreement. The amount, if any, payable in respect of an Early
         Termination Date shall be determined pursuant to Section 6(e).

(d)      Calculations.

         (i)      Statement. On or as soon as reasonably practicable following
         the occurrence of an Early Termination Date, each party will make the
         calculations on its part, if any, contemplated by Section 6(e) and will
         provide to the other party a statement (1) showing, in reasonable
         detail, such calculations (including all relevant quotations and
         specifying any amount payable under Section 6(e)) and (2) giving
         details of the relevant account to which any amount payable to it is to
         be paid. In the absence of written confirmation from the source of a
         quotation obtained in determining a Market Quotation, the records of
         the party obtaining such quotation will be conclusive evidence of the
         existence and accuracy of such quotation.

         (ii)     Payment Date. An amount calculated as being due in respect of
         any Early Termination Date under Section 6(e) will be payable on the
         day that notice of the amount payable is effective (in the case of an
         Early

                                       9
<PAGE>

         Termination Date which is designated or occurs as a result of an Event
         of Default) and on the day which is two Local Business Days after the
         day on which notice of the amount payable is effective (in the case of
         an Early Termination Date which is designated as a result of a
         Termination Event). Such amount will be paid together with (to the
         extent permitted under applicable law) interest thereon (before as well
         as after judgment) in the Termination Currency, from (and including)
         the relevant Early Termination Date to (but excluding) the date such
         amount, is paid, at the Applicable Rate. Such interest will be
         calculated on the basis of daily compounding and the actual number of
         days elapsed.

(e)      Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.

         (i)      Events of Default. If the Early Termination Date results from
         an Event of Default:--

                  (1)      First Method and Market Quotation. If the First
                  Method and Martet Quotation apply, the Defaulting Party will
                  pay to the Non-defaulting Party the excess, if a positive
                  number, of (A) the sum of the Settlement Amount (determined by
                  the Non-defaulting Party) in respect of the Terminated
                  Transactions and the Termination Currency Equivalent of the
                  Unpaid Amounts owing to the Non-defaulting Party over (B) the
                  Termination Currency Equivalent of the Unpaid Amounts owing to
                  the Defaulting Party.

                  (2)      First Method and Loss. If the First Method and Loss
                  apply, the Defaulting Party will pay to the Non-defaulting
                  Party, if a positive number, the Non-defaulting Party's Loss
                  in respect of this Agreement.

                  (3)      Second Method and Market Quotation. If the Second
                  Method and Market Quotation apply, an amount will be payable
                  equal to (A) the sum of the Settlement Amount (determined by
                  the Non-defaulting Party) in respect of the Terminated
                  Transactions and the Termination Currency Equivalent of the
                  Unpaid Amounts owing to the Non-defaulting Party less (B) the
                  Termination Currency Equivalent of the Unpaid Amounts owing to
                  the Defaulting Party. If that amount is a positive number, the
                  Defaulting Party will pay it to the Non-defaulting Party; if
                  it is a negative number, the Non-defaulting Party will pay the
                  absointe value of that amount to the Defaulting Party.

                  (4)      Second Method and Loss. If the Second Method and Loss
                  apply, an amount will be payable equal to the Non-defaulting
                  Party*s Loss in respect of this Agreement. If that amount is a
                  positive number, the Defaulting Party will pay it to the
                  Non-defaulting Party; if it is a negative number, the
                  Non-defaulting Party will pay the absolute value of that
                  amount to the Defaulting Party.

         (ii)     Termination Events. If the Early Termination Date results from
         a Termination Event:--

                  (1)      One Affected Party. If there is one Affected Party,
                  the amount payable will be determined in accordance with
                  Section 6(e)(i)(3), if Market Quotation applies, or Section
                  6(e)(i)(4), if Loss applies, except that, in either case,
                  references to the Defaulting Party and to the Non-defaulting
                  Party will be deemed to be references to the Affected Party
                  and the party which is not the Affected Party, respectively,
                  and, if Loss applies and fewer than all the Transactions are
                  being terminated, Loss shall be calculated in respect of all
                  Terminated Transactions.

                  (2)      Two Affected Parties. If there are two Affected
                  Parties:--

                                       10
<PAGE>

                           (A)    if Market Quotation applies, each party will
                           determine a Settlement Amount in respect of the
                           Terminated Transactions, and an amount will be
                           payable equal to (I) the sum of (a) one-half of the
                           difference between the Settlement Amount of the party
                           with the higher Settlement Amount ("X") and the
                           Settlement Amount of the party with the lower
                           Settlement Amount ("Y") and (b) the Termination
                           Currency Equivalent of the Unpaid Amounts owing to X
                           less (II) the Termination Currency Equivalent of the
                           Unpaid Amounts owing to Y; and

                           (B)    if Loss applies, each party will determine its
                           Loss in respect of this Agreement (or, if fewer than
                           all the Transactions are being terminated, in respect
                           of all Terminated Transactions) and an amount will be
                           payable equal to one-half of the difference between
                           the Loss of the party with the higher Loss ("X") and
                           the Loss of the party with the lower Loss ("Y").

                  If the amount payable is a positive number, Y will pay it to
                  X; if it is a negative number, X will pay the absolute value
                  of that amount to Y.

         (iii)    Adjustment for Bankruptcy. In circumstances where an Early
         Termination Date occurs because "Automatic Early Termination" applies
         in respect of a party, the amount determined under this Section 6(e)
         will be subject to such adjustments as are appropriate and permitted by
         law to reflect any payments or deliveries made by one party to the
         other under this Agreement (and retained by such other party) during
         the period from the relevant Early Termination Date to the date for
         payment determined under Section 6(d)(ii).

         (iv)     Pre-Estimate. The parties agree that if Market Quotation
         applies an amount recoverable under this Section 6(e) is a reasonable
         pre-estimate of loss and not a penalty. Such amount is payable for the
         loss of bargain and the loss of protection against future risks and
         except as otherwise provided in this Agreement neither party will be
         entitled to recover any additional damages as a consequence of such
         losses.

7.       TRANSFER

Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--

(a)      a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and

(b)      a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be void.

8.       CONTRACTUAL CURRENCY

(a)      Payment in the Contractual Currency. Each payment under this Agreement
will he made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable law,
any obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by

                                       11
<PAGE>

applicable law, immediately pay such additional amount in the Contractual
Currency as may be necessary to compensate for the shortfall. If for any reason
the amount in the Contractual Currency so received exceeds the amount in the
Contractual Currency payable in respect of this Agreement, the party receiving
the payment will refund promptly the amount of such excess.

(b)      Judgments. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.

(c)      Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.

(d)      Evidence of Loss. For the purpose of this Section 8, it will he
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.

9.       MISCELLANEOUS

(a)      Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.

(b)      Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.

(c)      Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.

(d)      Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.

(e)      Counterparts and Confirmations.

         (i)      This Agreement (and each amendment, modification and waiver in
         respect of it) may be executed and delivered in counterparts (including
         by facsimile transmission), each of which will he deemed an original.

         (ii)     The parties intend that they are legally bound by the terms of
         each Transaction from the moment they agree to those terms (whether
         orally or otherwise). A Confirmation shall be entered into as soon as
         practicable and

                                       12
<PAGE>

         may be executed and delivered in counterparts (including by facsimile
         transmission) or be created by an exchange of telexes or by an exchange
         of electronic messages on an electronic messaging system, which in each
         case will be sufficient for all purposes to evidence a binding
         supplement to this Agreement. The parties will specify therein or
         through another effective means that any such counterpart, telex or
         electronic message constitutes a Confirmation.

(f)      No Waiver of Rights. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.

(g)      Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.

10.      OFFICES; MULTIBRANCH PARTIES

(a)      If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organization of such party, the
obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.

(b)      Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.

(c)      If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.

11.      EXPENSES

A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.

12.      NOTICES

(a)      Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--

         (i)      if in writing and delivered in person or by courier, on the
         date it is delivered;

         (ii)     if sent by telex, on the date the recipient's answer back is
         received;

         (iii)    if sent by facsimile transmission, on the date that
         transmission is received by a responsible employee of the recipient in
         legible form (it being agreed that the burden of proving receipt will
         be on the sender and will not be met by a transmission report generated
         by the sender's facsimile machine);

                                       13
<PAGE>

         (iv)     if sent by certified or registered mail (airmail, if overseas)
         or the equivalent (return receipt requested), on the date that mail is
         delivered or its delivery is attempted; or

         (v)      if sent by electronic messaging system, on the date that
         electronic message is received,

         unless the date of that delivery (or attempted delivery) or that
         receipt, as applicable, is not a Local Business Day or that
         communication is delivered (or attempted) or received, as applicable,
         after the close of business on a Local Business Day, in which case that
         communication shall be deemed given and effective on the first
         following day that is a Local Business Day.

(b)      Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.

13.      GOVERNING LAW AND JURISDICTION

(a)      Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.

(b)      Jurisdiction. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:--

         (i)      submits to the jurisdiction of the English courts, if this
         Agreement is expressed to be governed by English law, or to the
         non-exclusive jurisdiction of the courts of the State of New York and
         the United States District Court located in the Borough of Manhattan in
         New York City, if this Agreement is expressed to be governed by the
         laws of the State of New York; and

         (ii)     waives any objection which it may have at any time to the
         laying of venue of any Proceedings brought in any such court, waives
         any claim that such Proceedings have been brought in an inconvenient
         forum and further waives the right to object, with respect to such
         Proceedings, that such court does not have any jurisdiction over such
         party.

Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.

(c)      Service of Process. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any reason any party*s
Process Agent is unable to act as such, such party will promptly notify the
other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given in
the manner provided for notices in Section 12. Nothing in this Agreement will
affect the right of either party to serve process in any other manner permitted
by law.

(d)      Waiver of Immunities. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.

                                       14
<PAGE>

14.      DEFINITIONS

As used in this Agreement:--

"Additional Termination Event" has the meaning specified in Section 5(b).

"Affected Party" has the meaning specified the Section 5(b).

"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.

"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.

"Applicable Rate" means:--

(a)      in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

(b)      in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the Rate (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;

(c)      in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate; and

(d)      in all other cases, the Termination Rate.

"Burdened Party" has the meaning specified in Section 5(b).

"Change in Tax Law" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.

"consent" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.

"Credit Event Upon Merger" has the meaning specified in Section 5(b).

"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.

"Credit Support Provider" has the meaning specified in the Schedule.

"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.

"Defaulting Party" has the meaning specified in Section 6(a).

                                       15
<PAGE>

"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).

"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.

"Illegality" has the meaning specified in Section 5(b).

"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organized, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient, or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).

"law" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.

"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial center, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.

"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding, or at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and out-
of-pocket expenses referred to under Section 11. A party will determine its Loss
as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.

"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to

                                       16
<PAGE>

be excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if
each party is obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall he disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.

"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.

"Non-defaulting Party" has the meaning specified in Section 6(a).

"Office" means a branch or office of a party, which may be such party*s head or
home office.

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

"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.

"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organized, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.

"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.

"Set-off" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.

"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:--

(a)      the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and

                                       17
<PAGE>

(b)      such party*s Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.

"Specified Entity" has the meaning specified in the Schedule.

"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.

"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basic swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.

"Stamp Tax" means any stamp, registration, documentation or similar tax.

"Tax" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.

"Tax Event" has the meaning specified in Section 5(b).

"Tax Event Upon Merger" has the meaning specified in Section 5(b).

"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).

"Termination Currency" has the meaning specified in the Schedule.

"Termination Currency Equivalent" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 am. (in the city in which such foreign exchange agent is located)
on such date as would be customary for the determination of such a rate for the
purchase of such Other Currency for value on the relevant Early Termination Date
or that later date. The foreign exchange agent will, if only one party is
obliged to make a determination under Section 6(e), be selected in good faith by
that party and otherwise will be agreed by the parties.

"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.

                                       18
<PAGE>

"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.

"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market value of that which was (or would have been) required to be
delivered as of the originally scheduled date for delivery, in each case
together with (to the extent permitted under applicable law) interest, in the
currency of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or performed to
(but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to
make the determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the Termination Currency. Equivalents of the fair market
values reasonably determined by both parties.

                                       19
<PAGE>

IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.

MERRILL LYNCH CAPITAL SERVICES, INC.        MMCA AUTO OWNER TRUST 2001-1

By:                                         By:
   -----------------------------               ----------------------------
   Name:                                       Name:
   Title:                                      Title:
   Date:                                       Date:

                                       20
<PAGE>

                      SCHEDULE TO THE ISDA MASTER AGREEMENT

                           Dated as of April [ ], 2001

                                     between
                  MERRILL LYNCH CAPITAL SERVICES, INC. ("MLCS")
                                       and
                   MMCA AUTO OWNER TRUST 2001-1 (THE "TRUST")

PART 1   TERMINATION PROVISIONS.

(a)      "SPECIFIED ENTITY" means:

         (i)     in relation to MLCS: Not Applicable.

         (ii)    in relation to the Trust: Not Applicable.

(b)      "SPECIFIED TRANSACTION" shall have the meaning specified in Section 14
         of this Agreement.

(c)      The "Breach of Agreement" provisions of Section 5(a)(ii) will not apply
         to MLCS or to the Trust.

(d)      The "Credit Support Default" provisions of Section 5(a)(iii), if
         applicable, will apply to MLCS and will not apply to the Trust.

(e)      The "Misrepresentation" provisions of Section 5(a)(iv) will not apply
         to MLCS or to the Trust.

(f)      The "Default under Specified Transaction" provisions of Section 5(a)(v)
         will not apply to MLCS or to the Trust.

(g)      The "Cross Default" provisions of Section 5(a)(vi) will not apply to
         MLCS or to the Trust.

(h)      The "Merger Without Assumptions" provisions of Section 5(a)(vii) will
         not apply to MLCS or to the Trust.

(i)      The "Credit Event Upon Merger" provision in Section 5(b)(iv), will not
         apply to MLCS or to the Trust.

(j)      The "Tax Event" provision of Section 5(b)(ii) will apply to the Trust
         and will not apply to MLCS.

(k)      The "Tax Event Upon Merger" provision of Section 5(b)(iii) will apply
         to the Trust and to MLCS.

(l)      The "Automatic Early Termination" provision of Section 6(a) will not
         apply to MLCS or to the Trust.

(m)      Payments on Early Termination. For the purpose of Section 6(e) of this
         Agreement:

         (i)     Market Quotation will apply unless the Trust is the
                 Non-defaulting Party or the party which is not the Affected
                 Party, as the case may be, and the Trust enters into a
                 replacement Transaction on or prior to the Early Termination
                 Date, in which event Loss will apply.

         (ii)    The Second Method will apply.

                                       1
<PAGE>

(n)      "TERMINATION CURRENCY" means United States Dollars.

(o)      "ADDITIONAL TERMINATION EVENT". The following shall constitute an
         Additional Termination Event:

         (i)     Acceleration or Liquidation of the Notes. It shall be an
                 Additional Termination Event with the Trust the sole Affected
                 Party if MLCS or the Trust elects to terminate the Transactions
                 (1) following an Event of Default as defined in Section 5.1(i)
                 or Section 5.1(ii) of the Indenture which has resulted in an
                 acceleration of the Notes, provided such acceleration has not
                 been rescinded and annulled pursuant to Section 5.2(b) of the
                 Indenture, or (2) upon a liquidation of the Trust Estate
                 pursuant to Section 5.4(a)(iv) of the Indenture. In such event,
                 either MLCS or the Trust may, by not more than 20 days notice
                 to the other party and provided such Additional Termination
                 Event is continuing, designate a day not earlier than the day
                 such notice is effective as an Early Termination Date in
                 respect of all Affected Transactions. If an event or
                 circumstance which would constitute an Event of Default by MLCS
                 under this Agreement gives rise to an Event of Default under
                 the Indenture, it will be treated as an Event of Default by
                 MLCS and not an Additional Termination Event.

         (ii)    Amendments Made Without Consent of MLCS. It shall be an
                 Additional Termination Event if any amendment or supplement to
                 the Indenture or to any of the Receivables Transfer and
                 Servicing Agreements which would adversely affect any of MLCS'
                 rights or obligations under this Agreement or modify the
                 obligations of, or impair the ability of the Trust to fully
                 perform any of the Trust's obligations under, this Agreement is
                 made without the consent of MLCS, which consent shall not be
                 unreasonably withheld (in which case the Trust will be the
                 Affected Party).

         (iii)   Downgrade of MLCS. It shall be an Additional Termination Event
                 with MLCS the Affected Party if (1) the long-term Credit Rating
                 of MLCS is downgraded below "A2" by Moody's or below "A" by
                 Fitch, or is suspended or withdrawn by either Rating Agency or
                 (2) the short-term Credit Rating of MLCS is downgraded below a
                 rating of "A" by S&P, or is suspended or withdrawn by such
                 Rating Agency, and within 30 days of such downgrade,
                 suspension, withdrawal or notification, MLCS shall fail to
                 either (x) deliver or post collateral acceptable to the Trust
                 and acceptable to the Rating Agencies, in amounts sufficient or
                 in accordance with the standards of the Rating Agencies (as
                 such standards may be modified while any Transaction is still
                 outstanding), to secure its obligations under this Agreement,
                 (y) assign its rights and obligations under this Agreement to a
                 replacement counterparty acceptable to the Trust or (z)
                 establish other arrangements necessary, if any, in each case so
                 that the Rating Agencies confirm the ratings of the Notes that
                 were in effect immediately prior to such downgrade, suspension,
                 withdrawal or notification.

         (iv)    Failure to Maintain Security Interest. It shall be an
                 Additional Termination Event if the Trust fails to maintain
                 MLCS' first priority perfected security interest in the
                 Collateral under the Indenture.

         (v)     Representations. Section 3(a)(iii) is hereby amended by
                 inserting the words "or investment policies, guidelines,
                 procedures or restrictions" immediately following the words
                 "documents".

PART 2   TAX REPRESENTATIONS.

(a)      Payer Tax Representations. For the purposes of Section 3(e) of this
         Agreement, MLCS and the Trust will

                                       2
<PAGE>

         each make the following representations to the other:

         It is not required by any applicable law, as modified by the practice
         of any relevant governmental revenue authority, of any Relevant
         Jurisdiction to make any deduction or withholding for or on account of
         any Tax from any payment (other than interest under Section 2(e),
         6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party
         under this Agreement. In making this representation, each party may
         rely on:

         (i)     the accuracy of any representations made by the other party
                 pursuant to Section 3(f) of this Agreement;

         (ii)    the satisfaction of the agreement of the other party contained
                 in Section 4(a)(i) or 4(a)(iii) of this Agreement and the
                 accuracy and effectiveness of any document provided by the
                 other party pursuant to Section 4(a)(i) or 4(a)(iii) of this
                 Agreement, and

         (iii)   the satisfaction of the agreement of the other party contained
                 in Section 4(d) of this Agreement,

         provided that it shall not be a breach of this representation where
         reliance is placed on clause (ii) and the other party does not deliver
         a form or document under Section 4(a)(iii) by reason of material
         prejudice to its legal or commercial position.

(b)      Payee Tax Representations.

         (i)     For the purpose of Section 3(f) of this Agreement, MLCS
                 represents to the Trust that it is a corporation organized
                 under the laws of the State of Delaware.

         (ii)    For the purpose of Section 3(f) of this Agreement, the Trust
                 represents to MLCS that it is a business trust organized and
                 existing under the laws of the State of Delaware.

         (iii)   MLCS represents that it is a "United States person" as defined
                 in Section 7701(a)(30) of the Internal Revenue Code of 1986, as
                 amended, and the Trust represents that it is wholly-owned by a
                 "United States person" and disregarded as an entity separate
                 from its owner for U.S. federal tax purposes.

                                       3
<PAGE>

PART 3 DOCUMENTS TO BE DELIVERED.

(a)      For the purpose of Section 4(a)(i), the documents to be delivered are:

<TABLE>
<CAPTION>
PARTY REQUIRED TO         FORM/DOCUMENT/                  DATE BY WHICH TO BE DELIVERED   SECTION 3(d)
DELIVER DOCUMENT          CERTIFICATE                                                     REPRESENTATION

<S>                       <C>                             <C>                             <C>
MLCS and the Trust        An executed United States       (i) Upon execution of this      Applicable
                          Internal Revenue Service Form   Agreement, (ii) promptly upon
                          W-9 (or any successor           reasonable demand by the
                          thereto).                       other party and (iii) promptly
                                                          upon learning that any such form
                                                          previously provided by such
                                                          party has become obsolete or
                                                          incorrect.
</TABLE>

(b)      For the purposes of Section 4(a)(ii), the other documents to be
         delivered are as follows:

<TABLE>
<CAPTION>
PARTY REQUIRED TO          FORM/DOCUMENT/              DATE BY WHICH TO BE DELIVERED    SECTION 3(d)
DELIVER DOCUMENT           CERTIFICATE                                                  REPRESENTATION:
<S>                        <C>                         <C>                              <C>
MLCS and  the Trust        Evidence of the             Upon or prior to the execution   Applicable
                           authority, incumbency and   and delivery of this Agreement
                           specimen signature of       and, with respect to any
                           each person executing       Confirmation upon request by
                           this Agreement or any       the other party.
                           Confirmation, Credit
                           Support Document or other
                           document entered into in
                           connection with this
                           Agreement on its behalf
                           or on behalf of a Credit
                           Support Provider or
                           otherwise, as the case
                           may be.
</TABLE>

                                       4
<PAGE>

<TABLE>
<S>                        <C>                         <C>                              <C>
MLCS and the Trust         Certified copies of         Upon request by the other        Applicable
                           documents evidencing each   party.
                           Party's capacity to
                           execute and deliver this
                           Agreement, each
                           Confirmation and any
                           Credit Support Document
                           (if applicable), and to
                           perform its obligations
                           hereunder or thereunder
                           as may be reasonably
                           requested by the other
                           party.

MLCS                       Annual audited financial    Promptly after request by the
                           statements of its Credit    Trust.                           Applicable
                           Support Provider prepared
                           in accordance with
                           generally accepted
                           accounting principles in
                           the country in which its
                           Credit Support Provider
                           is organized.

                           Monthly reports to          On or prior to each Monthly      Applicable
The Trust                  noteholders and to          Payment Date.
                           holders of the
                           certificate (and all
                           other such notices
                           required to be given to
                           noteholders and to
                           holders of the
                           certificate, as specified
                           in the Indenture).

MLCS and the Trust         A legal opinion in form                                      Not Applicable
                           and substance               On or prior to the
                           satisfactory to the other   Closing Date.
                           party.

The Trust                  A copy of the executed      As soon as practical after the
                           Indenture and of each of    Closing Date.                    The Trust
                           the Receivables Transfer
                           and Servicing Agreements.
</TABLE>

                                       5
<PAGE>

<TABLE>
<S>                        <C>                         <C>                              <C>
MLCS                       An officer's certificate    On or pior to the                Applicable
                           affirming the information   Closing Date
                           describing MLCS under
                           "Description of Swap
                           Counterparty" provided to
                           the Trust by MLCS for use
                           in the Trust's prospectus.

MLCS and the Trust         Such other documents as     Promptly upon request of the     Not Applicable
                           the other party may         other party.
                           reasonably request.
</TABLE>

PART 4   MISCELLANEOUS.

(a)      Address for Notices. For the purpose of Section 12(a) of this
         Agreement, the addresses for notices and communications to MLCS and the
         Trust shall be as follows:

         TO PARTY A:

              Merrill Lynch World Headquarters
              4 World Financial Center
              New York, New York 10080
              Attention:  Swap Group
              Telephone: (212) 449-0371
              Facsimile: (212) 449-1788

              Additionally, a copy of all notices pursuant to Sections 5, 6, and
7 as well as any changes to counterparty's address, telephone number or
facsimile number should be sent to:

              CICG Counsel
              Merrill Lynch World Headquarters
              4 World Financial Center
              New York, New York 10080
              Attention:  Swaps Legal
              Facsimile: (212) 449-6993

         TO PARTY B:

              MMCA Auto Owner Trust 2001-1
              c/o Wilmington Trust Company,
                as Owner Trustee
              Rodney Square North
              1100 North Market Street
              Wilmington, Delaware 19890-0001

                                       6
<PAGE>

(b)      Process Agent.  For the purposes of Section 13(c) of this Agreement:

         MLCS appoints as its Process Agent:  Not Applicable

         The Trust appoints as its Process Agent:    [                    ]

(c)      Offices.  The provisions of Section 10(a) will apply to this Agreement.

(d)      Multibranch Party.  For purposes of Section 10(c) of this Agreement:

         (i)     MLCS is not a Multibranch Party.

         (ii)    The Trust is not a Multibranch Party.

(e)      The CALCULATION AGENT shall be MLCS.

(f)      Credit Support Documents.

         MLCS:  Guarantee of Merrill Lynch & Co., Inc. ("ML&CO.") in the form
         attached hereto as Exhibit A.

         The Trust:  Not applicable

(g)      Credit Support Provider.

         Credit Support Provider means, in relation to MLCS, ML&Co. Credit
         Support Provider means, in relation to the Trust, Not Applicable.

(h)      Governing Law. This Agreement shall be governed by, and construed and
         enforced in accordance with, the laws of the State of New York (without
         reference to its choice of law doctrine).

(i)      "AFFILIATE" will have the meaning specified in Section 14 of this
         Agreement.

PART 5   OTHER PROVISIONS.

(a)      Representations.

         (i)     Non-Reliance, Etc. Each party will be deemed to represent to
                 the other party on the date that it enters into a Transaction
                 that (absent a written agreement between the parties that
                 expressly imposes affirmative obligations to the contrary for
                 that Transaction):

                 (1)   Non-Reliance. It is acting for its own account, and it
                       has made its own independent decisions to enter into that
                       Transaction and as to whether that Transaction is
                       appropriate or proper for it based upon its own judgment
                       and upon advice from such advisers as it has deemed
                       necessary. It is not relying on any communication
                       (written or oral) of the other party as investment advice
                       or as a recommendation to enter into that Transaction; it
                       being understood that information and explanations
                       related to the terms and conditions of a Transaction
                       shall not be considered to be investment advice or a
                       recommendation to enter into that Transaction. No
                       communication (written or oral) received from the other
                       party shall be deemed to be an assurance or guarantee as
                       to the expected results of that

                                       7
<PAGE>

                       Transaction.

                 (2)   Assessment and Understanding. It is capable of assessing
                       the merits of and understanding (on its own behalf or
                       through independent professional advice), and understands
                       and accepts the terms and conditions and risks of that
                       Transaction. It is also capable of assuming, and assumes,
                       the risks of that Transaction.

                 (3)   Status of Parties. The other party is not acting as a
                       fiduciary for or adviser to it in respect of that
                       Transaction.

         (ii)    Commodity Exchange Act. Each party represents to the other
                 party on and as of the date hereof and on each date on which a
                 Transaction is entered into between them that:

                 (1)   each Transaction is intended to be exempt from, or
                       otherwise not subject to regulation under, the Commodity
                       Exchange Act;

                 (2)   such party is an "eligible contract participant" within
                       the meaning of the United States Commodity Exchange Act;
                       and

                 (3)   such party is entering into each Transaction in
                       connection with its line of business and not for purposes
                       of speculation.

(b)      Consent to Recording.

         Each party consents to the recording of the telephone conversations of
         trading and marketing and/or other personnel of the parties and their
         Affiliates in connection with this Agreement.

(c)      Tax Provisions.

         (i)     The definition of Tax Event, Section 5 (b)(ii), is hereby
                 modified by adding the following provision at the end thereof:

                 "provided, however, that for purposes of clarification, the
                 parties acknowledge that the introduction or proposal of
                 legislation shall not, in and of itself, give rise to a
                 presumption that a Tax Event has occurred."

         (ii)    The Trust will not be required to pay additional amounts in
                 respect of an Indemnifiable Tax or be under any obligation to
                 pay to MLCS any amount in respect of any liability of MLCS for
                 or on account of any Tax.

(d)      No Set Off.

                  Notwithstanding any setoff right contained in any other
         agreement between the Trust or any Affiliate or Credit Support Provider
         of the Trust, on the one hand, and MLCS or any Affiliate or Credit
         Support Provider of the Trust, on the other, whether now in existence
         or hereafter entered into unless such agreement shall specifically
         refer to this paragraph (d), each party agrees that all payments
         required to be made by it under this Agreement shall be made without
         setoff or counterclaim for, and that it shall not withhold payment or
         delivery under this Agreement in respect of, any default by the other
         party or any Affiliate or Credit Support Provider of the other party
         under any such other agreement or any amount relating to any such other
         agreement. For purposes of this paragraph (d), "AFFILIATE" shall have
         the

                                       8
<PAGE>

         meaning specified in Section 14 of this Agreement.

(e)      Additional Acknowledgments and Agreements of the Parties.

         (i)     Financial Statements. Notwithstanding Section 5(a)(ii), the
                 failure of either party to deliver any financial statement or
                 monthly report referenced in Part 3 of this Schedule shall not
                 constitute an Event of Default under Section 5(a)(ii).

         (ii)    Bankruptcy Code. Without limiting the applicability, if any, of
                 any other provision of the U.S. Bankruptcy Code as amended (the
                 "BANKRUPTCY CODE") (including without limitation Sections 362,
                 546, 556, and 560 thereof and the applicable definitions in
                 Section 101 thereof), the parties acknowledge and agree that
                 all Transactions entered into hereunder will constitute
                 "forward contracts" or "swap agreements" as defined in Section
                 101 of the Bankruptcy Code or "commodity contracts" as defined
                 in Section 761 of the Bankruptcy Code, that the rights of the
                 parties under Section 6 of this Agreement will constitute
                 contractual rights to liquidate Transactions, that any margin
                 or collateral provided under any margin, collateral, security,
                 pledge, or similar agreement related hereto will constitute a
                 "margin payment" as defined in Section 101 of the Bankruptcy
                 Code, and that the parties are entities entitled to the rights
                 under, and protections afforded by, Sections 362, 546, 556, and
                 560 of the Bankruptcy Code.

         (iii)   Non-Petition. MLCS covenants and agrees that it will not, prior
                 to the date which is one year and one day following the payment
                 in full of all of the Notes and the Certificate and the
                 expiration of all applicable preference periods under the
                 United States Bankruptcy Code or other applicable law relating
                 to any such payment, acquiesce, petition or otherwise invoke
                 the process of any governmental authority for the purpose of
                 commencing a case (whether voluntary or involuntary) against
                 the Trust under any bankruptcy, insolvency or similar law or
                 appointing a receiver, liquidator, assignee, trustee,
                 custodian, sequestrator or other similar official of the Trust
                 or any substantial part of its property or ordering the winding
                 up or liquidation of the affairs of the Trust. MLCS agrees that
                 it has recourse against the Trust only to the extent of the
                 assets of the Trust and the proceeds thereof, and any claims
                 against the Trust shall be extinguished when the assets of the
                 Trust are exhausted.

         (iv)    Transfer. Notwithstanding the provisions of Section 7, MLCS may
                 assign its rights and delegate its obligations under any
                 Transaction, in whole or in part, to any Affiliate of ML&Co.
                 (an "ASSIGNEE"), effective (the "EFFECTIVE TRANSFER DATE") upon
                 delivery to Counterparty of both (a) an executed acceptance and
                 assumption by the Assignee of the transferred obligations of
                 MLCS under the Transaction(s) (the "TRANSFERRED OBLIGATIONS");
                 and (b) an executed guarantee of ML&Co., of the Transferred
                 Obligations, substantially identical to the Credit Support
                 Document with respect to MLCS; provided that no such transfer
                 to an Assignee shall occur if (i) Counterparty shall, as a
                 result of such transfer, be required to pay to MLCS or the
                 Assignee an amount in respect of an Indemnifiable Tax under
                 Section 2(d)(i)(4) (except in respect of interest under Section
                 2(e), 6(d)(ii) or 6(e)) greater than the amount in respect of
                 which Counterparty would have been required to pay to MLCS in
                 the absence of such transfer; (ii) MLCS or the Assignee shall,
                 as a result of such transfer, be required to withhold or deduct
                 on account of a Tax under Section 2(d)(i) (except in respect of
                 interest under Section 2(e), 6(d)(ii) or 6(e)) an amount in
                 excess of that which MLCS would have been required to withhold
                 or deduct in the absence of such transfer, unless the Assignee
                 would be required to make additional payments pursuant to
                 Section 2(d)(i)(4) corresponding to such excess; or (iii) an
                 Event of Default, Potential Event of Default or Termination
                 Event would occur hereunder as a result of such transfer; and,
                 provided, further, that MLCS shall pay any fees and expenses
                 incurred by or on the part of either party as a

                                       9
<PAGE>

                 result of such transfer.

                 On the Effective Transfer Date, (a) MLCS shall be released from
                 all obligations and liabilities arising under the Transferred
                 Obligations; and (b) the Transferred Obligations shall cease to
                 be Transaction(s) under this Agreement and shall be deemed to
                 be Transaction(s) under the ISDA Master Agreement between
                 Assignee and Counterparty, provided that, if, on the Effective
                 Transfer Date, Assignee and Counterparty have not entered into
                 an ISDA Master Agreement, Assignee and Counterparty shall be
                 deemed to have entered into an ISDA Master Agreement that is
                 substantially identical to this Agreement, including this
                 Schedule. At least 15 days prior to any such transfer MLCS
                 shall notify Counterparty in writing of its intent to transfer
                 its rights and delegate its obligations hereunder in accordance
                 with the terms hereof, and shall state in writing that such
                 transfer shall conform to the requirements of this Part
                 5(e)(iv), whereupon Counterparty shall promptly notify each
                 Rating Agency of such transfer.

         (v)     The Trust Pledge. Notwithstanding Section 7 of this Agreement
                 to the contrary, MLCS acknowledges that the Trust will pledge
                 its rights under this Agreement to the Indenture Trustee (as
                 defined in the Indenture) for the benefit of the Noteholders
                 (as defined in the Indenture) pursuant to the Indenture and
                 agrees to such pledge. The Indenture Trustee shall not be
                 deemed to be a party to this Agreement, provided, however, that
                 the Indenture Trustee, acting on behalf of the holders of the
                 Notes, shall have the right to enforce this Agreement against
                 MLCS. MLCS shall be entitled to rely on any notice or
                 communication from the Indenture Trustee to that effect. MLCS
                 acknowledges that the Trust will pledge substantially all its
                 assets to the Indenture Trustee for the benefit of the
                 Noteholders and MLCS and that all payments hereunder, including
                 payments on early termination, will be made in accordance with
                 the priority of payment provisions of the Indenture and the
                 Sale and Servicing Agreement and on the Payment Dates specified
                 therein.

         (vi)    Limited Recourse. The liability of the Trust in relation to
                 this Agreement and any Transaction hereunder is limited in
                 recourse to the assets of the Trust and proceeds thereof
                 applied in accordance with the Indenture and the Sale and
                 Servicing Agreement. Upon exhaustion of the assets of the Trust
                 and proceeds thereof in accordance with the Indenture and the
                 Sale and Servicing Agreement, MLCS shall not be entitled to
                 take any further steps against the Trust to recover any sums
                 due but still unpaid hereunder or thereunder, all claims in
                 respect of which shall be extinguished. No recourse may be
                 taken for the payment of any amount owing in respect of any
                 obligation of, or claim against, the Trust arising out of or
                 based upon this Agreement or any Transaction hereunder against
                 any holder of a beneficial interest, employee, officer or
                 Affiliate thereof and no recourse shall be taken for the
                 payment of any amount owing in respect of any obligation of, or
                 claim against, the Trust based upon or arising out of this
                 Agreement against the Administrator, the Seller, the Servicer,
                 the Indenture Trustee, the Owner Trustee, the Delaware Trustee
                 or any stockholder, holder of a beneficial interest, employee,
                 officer, director, incorporator or Affiliate thereof; provided,
                 however, that the foregoing shall not relieve any such person
                 or entity from any liability they might otherwise have as a
                 result of willful misconduct, bad faith or negligence.

                 In furtherance of and not in derogation of the foregoing, MLCS
                 acknowledges and agrees that it shall have no right, title or
                 interest in or to the Other Assets of the Seller. To the extent
                 that, notwithstanding the agreements and provisions contained
                 in the preceding paragraph, MLCS either (i) asserts an interest
                 or claim to, or benefit from, Other Assets, or (ii) is deemed
                 to have any such interest, claim to, or benefit in or from
                 Other Assets, whether by operation of law, legal process,
                 pursuant to applicable provisions of insolvency laws or
                 otherwise (including by virtue of Section 1111(b) of the
                 Bankruptcy Code or any successor provision having similar
                 effect under

                                       10
<PAGE>

                 the Bankruptcy Code), then MLCS further acknowledges and agrees
                 that any such interest, claim or benefit in or from Other
                 Assets is and shall be expressly subordinated to the
                 indefeasible payment in full, which, under the terms of the
                 relevant documents relating to the securitization or conveyance
                 of such Other Assets, are entitled to be paid from, entitled to
                 the benefits of, or otherwise secured by such Other Assets
                 (whether or not any such entitlement or security interest is
                 legally perfected or otherwise entitled to a priority of
                 distributions or application under applicable law, including
                 insolvency laws, and whether or not asserted against the
                 Seller), including the payment of post-petition interest on
                 such other obligations and liabilities. This subordination
                 agreement shall be deemed a subordination agreement within the
                 meaning of Section 510(a) of the Bankruptcy Code. The Trust
                 further acknowledges and agrees that no adequate remedy at law
                 exists for a breach of this Part 5(e)(vi) and the terms of this
                 Part 5(e)(vi) may be enforced by an action for specific
                 performance. The provisions of this Part 5(e)(vi) shall be for
                 the third party benefit of those entitled to rely thereon and
                 shall survive the termination of this Agreement.

         (vii)   No Amendment without Prior Confirmation by Rating Agencies.
                 Section 9(b) of this Agreement is hereby amended by adding the
                 following at the end of such Section: ", and unless the Rating
                 Agencies confirm that such amendment will not cause the
                 reduction, suspension or withdrawal of their then current
                 rating on any of the Notes or the Certificate, unless such
                 amendment clarifies any term or provision, corrects any
                 inconsistency, cures any ambiguity, or corrects any
                 typographical error in the Agreement."

         (viii)  Consent by MLCS to Amendments to Certain Documents. Before any
                 amendment or supplement is made to the Receivables Transfer and
                 Servicing Agreements or to the Indenture which would adversely
                 affect any of MLCS' rights or obligations under this Agreement
                 or modify the obligations of, or impair the ability of the
                 Trust to fully perform any of the Trust's obligations under,
                 this Agreement, the Trust shall provide MLCS with a copy of the
                 proposed amendment or supplement and shall obtain the consent
                 of MLCS to such amendment or supplement prior to its adoption,
                 which consent shall not be unreasonably withheld; provided that
                 MLCS' consent will be deemed to have been given if MLCS does
                 not object in writing within ten Business Days of receipt of a
                 written request for such consent.

         (ix)    Severability. If any term, provision, covenant, or condition of
                 this Agreement, or the application thereof to any party or
                 circumstance, shall be held to be invalid or unenforceable (in
                 whole or in part) for any reason, the remaining terms,
                 provisions, covenants, and conditions hereof shall continue in
                 full force and effect as if this Agreement had been executed
                 with the invalid or unenforceable portion eliminated, so long
                 as this Agreement as so modified continues to express, without
                 material change, the original intentions of the parties as to
                 the subject matter of this Agreement and the deletion of such
                 portion of this Agreement will not substantially impair the
                 respective benefits or expectations of the parties to this
                 Agreement; provided, however, that this severability provision
                 shall not be applicable if any provision of Section 1, 2, 5, 6
                 or 13 (or any definition or provision in Section 14 to the
                 extent it relates to, or is used in connection with, any such
                 Section) shall be so held to be invalid or unenforceable.

(f)      Waiver of Right to Trial by Jury. Each of the parties hereby
         irrevocably waives any and all right to a trial by jury with respect to
         any legal proceeding arising out of or relating to this Agreement or
         any Transaction.

(g)      Limited Transactions. MLCS and the Trust each agrees and acknowledges
         that the only Transactions that are or will be governed by this
         Agreement are the Transactions evidenced by the two Confirmations dated
         the date hereof.

                                       11
<PAGE>

(h)      Notices to Noteholders. The Trust shall provide MLCS with copies of all
         notices required to be given to the holders of the Notes, and upon
         request, shall provide MLCS with any other notices which could be
         requested by the holders of the Notes.

(i)      Further Representations of the Trust:

         (i)     The Notes are rated _____ by Moody's Investor Services, Inc.,
                 _____ by Standard and Poor's, and _____ by Fitch as to the
                 timely payment of interest and principal and without regard to
                 third party credit enhancement.

         (ii)    All conditions precedent to the issuance of the Notes under the
                 Indenture have been satisfied.

         (iii)   Each of the Basic Documents to which it is a party has been
                 duly authorized, executed and delivered by it.

         (iv)    Assuming the due authorization, execution and delivery thereof
                 by the other parties thereto, the Indenture and the other Basic
                 Documents to which the Trust is a party constitutes the legal,
                 valid and binding obligations of the Trust, enforceable against
                 the Trust in accordance with the terms thereof, subject to
                 applicable bankruptcy, insolvency and similar laws or legal
                 principles affecting creditors' rights generally, and subject,
                 as to enforceability, to general principles of equity
                 regardless of whether enforcement is sought in a proceeding in
                 equity or at law.

         (v)     The Indenture and the other Basic Documents to which the Trust
                 is a party are in full force and effect on the date hereof and
                 there have been no amendments or waivers or modifications of
                 any of the terms thereof since the original execution and
                 delivery of the Indenture and the other Basic Documents to
                 which the Trust is a party, except such as may have been
                 delivered to the Trust.

         (vi)    To the best of its knowledge no event of default or event which
                 would with the passage of time or the giving of notice
                 constitute an event of default has occurred and is continuing
                 under any of the Basic Documents to which the Trust is a party.

(j)      Additional Definitions.

              "ADMINISTRATION AGREEMENT" shall mean the administration agreement
         dated as of April [ ], 2001, as amended, supplemented or otherwise
         modified and in effect, by and among the Trust, Mitsubishi Motors
         Credit of America, Inc., and Bank of Tokyo-Mitsubishi Trust Company.

              "ADMINISTRATOR" shall have the meaning assigned thereto in the
         Administration Agreement.

              "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday
         or a day on which banking institutions or trust companies in New York
         or London are authorized or obligated by law, regulation or executive
         order to remain closed.

              "CERTIFICATE" means the Certificate issued by the Trust pursuant
         to the Trust Agreement.

              "CLASS A-2 NOTES" means the Class A-2 Notes issued by the Trust
         pursuant to the Indenture.

              "CLASS A-3 NOTES" means the Class A-3 Notes issued by the Trust
         pursuant to the Indenture.

              "CLOSING DATE" shall mean April [ ], 2001.

                                       12
<PAGE>

              "CREDIT RATING" means, with respect to MLCS, the issuer rating of
         the head office of Merrill Lynch & Co. Inc. without regard to whether
         or not such rating is under review with positive or negative
         implications.

              "FITCH" shall mean Fitch IBCA.

              "INDENTURE" shall mean the indenture dated as of April [ ], 2001,
         as amended, supplemented or otherwise modified and in effect, between
         the Trust and Bank of Tokyo-Mitsubishi Trust Company, as Indenture
         Trustee.

              "INDENTURE TRUSTEE" shall mean Bank of Tokyo-Mitsubishi Trust
         Company, or any successor or replacement thereto pursuant to the
         Indenture.

              "MOODY'S" shall mean Moody's Investors Service, Inc.

              "NOTES" shall mean the Class A-1 Notes, the Class A-2 Notes, the
         Class A-3 Notes, the Class A-4 Notes and the Class B Notes issued by
         the Trust pursuant to the Indenture.

              "OTHER ASSETS" shall mean any assets (or interests therein) (other
         than the receivables and related property conveyed to the Trust
         pursuant to the Sale and Servicing Agreement) conveyed or purported to
         be conveyed by the Seller to another Person or Persons other than MLCS,
         whether by way of a sale, capital contribution or by virtue of the
         granting of a lien.

              "PERSON" shall mean any individual, corporation, estate,
         partnership, joint venture, association, joint stock company, trust,
         unincorporated organization, or government or any agency or political
         subdivision thereof.

              "PAYMENT DATE" shall mean the fifteenth (15th) day of each month
         or, if such day is not a Business Day, the immediately following
         Business Day, commencing [             ] 15, 2001.

              "PURCHASE AGREEMENT" shall mean the purchase agreement dated as of
         April [ ], 2001, as from time to time amended, supplemented or
         otherwise modified and in effect, between Mitsubishi Motors Credit of
         America, Inc. and MMCA Auto Receivables Trust.

              "RATING AGENCIES" shall mean Fitch, Moody's or S&P, or any
         substitute rating agency that the Seller (as defined in the Indenture)
         requests to rate the Notes.

              "RECEIVABLES TRANSFER AND SERVICING AGREEMENTS" shall mean
         collectively the Purchase Agreement, the Sale and Servicing Agreement,
         the Trust Agreement and the Administration Agreement.

              "SALE AND SERVICING AGREEMENT" shall mean the sale and servicing
         agreement dated as of April [ ], 2001, as amended, supplemented or
         otherwise modified and in effect, by and among the Trust, MMCA Auto
         Receivables Trust, as seller, and Mitsubishi Motors Credit of America,
         Inc., as servicer.

              "S&P" shall mean Standard & Poor's Rating Services, a division of
         the McGraw-Hill Companies, Inc.

              "TRUST AGREEMENT" shall mean the Amended and Restated Trust
         Agreement dated as of April [ ], 2001, as amended, supplemented or
         otherwise modified and in effect, by and among MMCA Auto

                                       13
<PAGE>

         Receivables Trust, as depositor, and Wilmington Trust Company, as
         owner trustee.

              "TRUST ESTATE" shall mean all money, instruments, rights and other
         property that are subject or intended to be subject to the lien and
         security interest of the Indenture for the benefit of the Noteholders
         and the Swap Counterparties (including, without limitation, all
         property and interests granted to the Indenture Trustee), including all
         proceeds thereof.

                                       14
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Schedule to the
Master Agreement on the respective dates specified below with effect from the
date specified on the first page of this document.

MERRILL LYNCH CAPITAL SERVICES, INC.   MMCA AUTO OWNER TRUST 2001-1

                                       By:  WILMINGTON TRUST COMPANY,
                                            not in its individual capacity but
                                            solely as Owner Trustee

By:                                    By:
   ---------------------------------      ---------------------------------
   Name:                                  Name:
   Title:                                 Title:
   Date:                                  Date:

                                       15
<PAGE>

                                                                       EXHIBIT A

                [FORM OF GUARANTEE OF MERRILL LYNCH & CO., INC.]

         FOR VALUE RECEIVED, receipt of which is hereby acknowledged, MERRILL
LYNCH & CO., INC., a corporation duly organized and existing under the laws of
the State of Delaware ("ML & Co."), hereby unconditionally guarantees to MMCA
AUTO OWNER TRUST 2001-1 ("Company"), the due and punctual payment of any and all
amounts payable by Merrill Lynch Capital Services, Inc., a corporation organized
under the laws of the State of Delaware ("MLCS"), under the terms of the Master
Agreement between the Company and MLCS, dated as of _______________ ___, 2001
("Agreement"), including, in case of default, interest on any amount due, when
and as the same shall become due and payable, whether on the scheduled payment
dates, at maturity, upon declaration of termination or otherwise, according to
the terms thereof. In case of the failure of MLCS punctually to make any such
payment, ML & Co. hereby agrees to make such payment, or cause such payment to
be made, promptly upon demand made by the Company to ML & Co.; provided, however
that delay by the Company in giving such demand shall in no event affect ML &
Co.'s obligations under this Guarantee. This Guarantee shall remain in full
force and effect or shall be reinstated (as the case may be) if at any time any
payment guaranteed hereunder, in whole or in part, is rescinded or must
otherwise be returned by the Company upon the insolvency, bankruptcy or
reorganization of MLCS or otherwise, all as though such payment had not been
made.

         ML & Co. hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Agreement; the absence of any action to enforce the same; any waiver or consent
by the Company concerning any provisions thereof; the rendering of any judgment
against MLCS or any action to enforce the same; or any other circumstances that
might otherwise constitute a legal or equitable discharge of a guarantor or a
defense of a guarantor. ML & Co. covenants that this guarantee will not be
discharged except by complete payment of the amounts payable under the
Agreement. This Guarantee shall continue to be effective if MLCS merges or
consolidates with or into another entity, loses its separate legal identity or
ceases to exist.

         ML & Co. hereby waives diligence; presentment; protest; notice of
protest, acceleration, and dishonor; filing of claims with a court in the event
of insolvency or bankruptcy of MLCS; all demands whatsoever, except as noted in
the first paragraph hereof; and any right to require a proceeding first against
MLCS.

         ML & Co. hereby certifies and warrants that this Guarantee constitutes
the valid obligation of ML & Co. and complies with all applicable laws.

         This Guarantee shall be governed by, and construed in accordance with,
the laws of the State of New York.

         This Guarantee may be terminated at any time by notice by ML & Co. to
the Company given in accordance with the notice provisions of the Agreement,
effective upon receipt of such notice by the Company or such later date as may
be specified in such notice; provided, however, that this Guarantee shall
continue in full force and effect with respect to any obligation of MLCS under
the Agreement entered into prior to the effectiveness of such notice of
termination.

                                      A-1
<PAGE>

        This Guarantee becomes effective concurrent with the effectiveness of
the Agreement, according to its terms.

         IN WITNESS WHEREOF, ML & Co. has caused this Guarantee to be executed
in its corporate name by its duly authorized representative.

                                       MERRILL LYNCH & CO., INC.

                                       By:
                                          ---------------------------------
                                          Name:
                                          Title:
                                          Date:

                                      A-2
<PAGE>

                                                                       EXHIBIT B

                           [Form of SWAP Confirmation]

                                                        [Date]

To:   MERRILL LYNCH CAPITAL SERVICES, INC.
      Merrill Lynch World Headquarters
      4 World Financial Center
      New York, New York 10080
      Swap Group
      Tel:  (212) 449-0371
      Facsimile:  (212) 449-1788

From: MMCA Auto Owner Trust 2001-1
      c/o Wilmington Trust Company,
        as Owner Trustee
      Rodney Square North
      1100 North Market Street
      Wilmington, Delaware 19890-0001
      Corporate Trust Administration
      Tel:  (302) 651-1834

Re:   Interest Rate Swap Reference No. [                    ]

Ladies and Gentlemen:

         The purpose of this letter agreement is to confirm the terms and
conditions of the Swap Transaction entered into between Merrill Lynch Capital
Services, Inc. ("MLCS") and MMCA Auto Owner Trust 2001-1 (the "TRUST") on the
Trade Date listed below (the "TRANSACTION"). This letter constitutes a
"CONFIRMATION" as referred to in the ISDA Agreement specified below.

         The definitions and provisions contained in the 2000 ISDA Definitions,
together with the Annex to the 2000 ISDA Definitions, as published by the
International Swaps and Derivatives Association, Inc. (the "DEFINITIONS") are
incorporated into this Confirmation. For these purposes, all references in those
Definitions to a "TRANSACTION" shall be deemed to apply to the Transaction
referred to herein. In the event of any inconsistency between the Definitions
and this Confirmation, the terms of this Confirmation shall govern.

         This Confirmation supplements, forms part of and is subject to the
Master Agreement dated as of [ ], as amended and supplemented from time to time
(the "AGREEMENT") between you and us. All provisions contained in or
incorporated by reference in the Agreement upon its execution will govern this
Confirmation except as expressly modified below. Other capitalized terms used
herein and not otherwise defined shall have the meanings given them in the
Indenture referred to in the Agreement. In the event of any inconsistency
between the provisions of that agreement and this Confirmation, this
Confirmation will prevail for the purpose of this Transaction.

                                      B-1
<PAGE>

         The terms of the particular Transaction to which this Confirmation
relates are as follows:

Trade Date:                            [                    ].

Effective Date:                        [                    ].

Notional Amount:                       The Notional Amount initially shall equal
                                       $[      ] and shall decrease by an amount
                                       equal to the amount of the reduction in
                                       the aggregate principal balance of the
                                       Class [A- ] Notes on the fifteenth (15th)
                                       day of each calendar month commencing on
                                       [     ]. Decreases in the Notional Amount
                                       with respect to the calculation of Fixed
                                       Amounts shall take effect as of the
                                       Period End Date occurring in the month of
                                       the Distribution Date. The Trust shall
                                       determine the Notional Amount and shall
                                       inform MLCS of such determination by the
                                       twelfth day of each calendar month.]

Termination Date:                      The date on which the aggregate
                                       outstanding principal balance of the
                                       Class [A- ] Notes has been reduced to
                                       zero, or [        ] 15, [    ], whichever
                                       is the earlier.

Fixed Amounts:

     Fixed Rate Payer:                 The Trust.

     Fixed Rate Payer
     Payment Dates:                    The 15th day of each calendar month
                                       commencing on [          ], subject to
                                       adjustment in accordance with the
                                       Following Business Day Convention.

     Period End Date:                  The 15th day of each calendar month, with
                                       No Adjustments.

     Fixed Rate:                       [     ]%.

     Fixed Rate
     Day Count Fraction:               30/360.

Floating Amounts:

     Floating Rate Payer:              MLCS.

     Floating Rate Payer
     Payment Dates:                    The 15th day of each calendar month
                                       commencing on [           ], subject to
                                       adjustment in accordance with the
                                       Following Business Day Convention.

     Floating Rate for initial
     Calculation Period:               [One month.]

                                      B-2
<PAGE>

     Floating Rate Option:             [USD-LIBOR-BBA.]

     Designated Maturity:              [One month.]

     Spread:                           [     ]%.

     Floating Rate
     Day Count Fraction:               Actual/360.

     Reset Dates:                      The first day of each Floating Rate Payer
                                       Calculation Period.

Business Days:                         New York and London.

Account Details

     Payments to MLCS:                 Bankers Trust Company
                                       New York, NY
                                       ABA: [                         ]
                                       Account #: [                   ]
                                       Ref: Merrill Lynch Capital Services, Inc.
                                       Dollar Swaps, New York, NY

     Payments to the Trust:            [                     ]

Misc.

     Calculation Agent:                Mitsubishi Motors Credit of America, Inc.

     Non-Reliance:                     Each party represents to the other party
                                       that it is acting for its own account,
                                       and has made its own independent
                                       decisions to enter into this Transaction
                                       and as to whether this Transaction is
                                       appropriate or proper for it based on its
                                       own judgment and upon advice from such
                                       advisors as it has deemed necessary. It
                                       is not relying on any communication
                                       (written or oral) of the other party as
                                       investment advice or as a recommendation
                                       to enter into this Transaction, it being
                                       understood that information and
                                       explanations related to the terms and
                                       conditions of this Transaction shall not
                                       be considered investment advice or a
                                       recommendation to enter into this
                                       Transaction. No communication (written or
                                       oral) received from the other party shall
                                       be deemed to be an assurance or guarantee
                                       as to the expected results of this
                                       Transaction.

                                       B-3
<PAGE>

         Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to us.

Best Regards,

                        MMCA AUTO OWNER TRUST 2001-1

                        By: WILMINGTON TRUST COMPANY,
                            not in its individual capacity but
                            solely as Owner Trustee

                        By:
                            -------------------------------------
                            Name:
                            Title:

                        MERRILL LYNCH CAPITAL SERVICES, INC.

                        By:
                            -------------------------------------
                            Name:
                            Title:

                                       B-4<PAGE>

                            STOCK PURCHASE AGREEMENT

         THIS STOCK PURCHASE AGREEMENT (the "Agreement") dated as of January 4,
2001, is made by and among Nexsan Corporation, a Delaware corporation (the
"Company"), the Company's wholly-owned subsidiary Nexsan Technologies Limited, a
United Kingdom corporation ("Nexsan"), and Martin Boddy (the "Control
Shareholder"), and the purchasers set forth on Schedule A hereto (each an
"Investor" and, collectively, the "Investors").

                              W I T N E S S E T H:

         WHEREAS, the Investors have reviewed a copy of Nexsan's business plan
dated December 14, 2000, a copy of which is attached hereto as Exhibit A (the
"Business Plan"); and

         WHEREAS, on the basis of the information contained in the Business
Plan, the Investors desire to acquire an equity interest in the Company; and

         WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Investors and the
Investors desire to purchase from the Company an aggregate of 4,600,000 shares
(each a "Share" and, collectively, the "Shares") of the Company's common stock,
par value $.001 per share ("Common Stock"), representing 25.6% of the total
number of Common Stock outstanding shares on the Closing Date (as hereafter
defined) after giving effect to the sale of the Shares contemplated hereby, upon
the terms and subject to the conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

                                    ARTICLE I
                               PURCHASE OF SHARES

                  1.01 Purchase. At the Closing provided for and defined in
Section 1.02 hereof, the Company shall issue and sell to the Investors, and the
Investors shall purchase from the Company the Shares at a purchase price of $.66
per Share, and the Company shall issue to the Investors certificates evidencing
the Shares. The number of Shares purchased by the Investors shall be equal to
approximately 25.6% of the total number of shares of Common Stock outstanding
after giving effect to the sale of the Shares.

<PAGE>

                  1.02 Closing. Subject to the provisions of Articles VII and
VIII hereof, the Closing of the transactions contemplated hereby shall take
place at the offices of Rubin Baum LLP, 30 Rockefeller Plaza, New York, New
York, on January 4, 2000 or at such other place or on such other day as the
parties may mutually agree. At the Closing, the Company shall deliver to the
Investors certificates representing the Shares to be purchased by said Investors
pursuant to Section 1.01 hereof, free of all claims, liens and encumbrances
whatsoever, and all other documents required to be delivered by the Company to
the Investors as described herein, and all other documents required to be
delivered hereby and each Investor shall deliver to the Company the aggregate
amount required to be paid pursuant to Section 1.01 hereof for the Shares to be
purchased in checks made payable to the Company, or in immediately available
federal funds by wire transfer.

                                   ARTICLE II

                                   DEFINITIONS

                  2.01. Definitions. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:

                  "Adverse Consequences" means all claims, losses, damages,
liabilities, fees and expenses, including, without limitation, settlement costs
and any legal, accounting or other fees and expenses, suffered or incurred by
the Investors in connection with any breach of this Agreement as provided in
ARTICLE X hereof.

                  The terms "Affiliate" means, with respect to any Person, any
other Person that directly or indirectly controls or is controlled by or under
common control with such Person. For the purposes of this definition, "control,"
when used with respect to any Person, means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.

                  "Balance Sheet" means the unaudited consolidated balance sheet
of the Company referred to in Section 3.06(ii) of this Agreement.

                  "Beechtree" means Beechtree Capital, Ltd.

                  "Beechtree Consulting Agreement" means the consulting
agreement between the Company and Beechtree referred to in section 5.07 hereof.

                  "Business Plan" means the business plan prepared by the
Company dated December 14, 2000, describing the business and financial condition
of the Company and setting forth certain revenue and earnings projections of the
Company, a copy of which is attached hereto as Exhibit A.

<PAGE>

                  "Closing" means the closing referred to in Section 1.02 of
this Agreement.

                  "Closing Date" means the date on which the Closing occurs.

                  "Company" means Nexsan Technologies Incorporated, a
corporation formed under the laws of the State of Delaware.

                  "Company Affiliate" means each Affiliate of the Company.

                  "Company Subsidiary" means any corporation of which the
Company (a) directly or indirectly owns or controls at the time outstanding
shares of stock which have in ordinary circumstances (not dependent upon the
happening of a contingency) voting power to elect a majority of the board of
directors of said corporation, or (b) of which shares of stock of the character
described in the foregoing clause (a) shall at the time be owned or controlled
directly or indirectly by the Company and one or more Company Subsidiaries as
defined in the foregoing clause (a) or by one or more such Company Subsidiaries.

                  "Control Shareholder" means Martin Boddy, the principal
shareholder of Nexsan Technologies, Inc."

                  "Direct" means Direct Brokerage Inc.

                  "Direct Services Agreement" means the services agreement
between the Company and Direct referred to in Section 5.12 hereof.

                  "Disclosure Schedule" means the document delivered by the
Company to the Investors simultaneously with the execution hereof containing the
information required to be included therein pursuant to this Agreement.

                  "Material" The word "material," when used herein in
reference to the Company or any Company Subsidiaries, means material in respect
of the Company and Company Subsidiaries taken as a whole and in each and every
case is used as such word is used in the Federal securities laws. Inclusion of
information on a schedule delivered pursuant to this Agreement does not
constitute an admission or acknowledgment of the materiality of such
information.

                  "Material Adverse Effect" means any action or failure to act
that either: (i) adversely affect the legality, validity or enforceability of
this Agreement, (ii) have a material adverse effect on the results of
operations, assets, prospects, or financial condition of the Company and the
Company Subsidiaries, taken as a whole, or (iii) adversely impairs the Company's
ability to perform fully on a timely basis its obligations under this Agreement.

                  "Person" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint

<PAGE>

stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

                  "Prospectus" means the prospectus included in the Registration
Statement.

                  "Registration Rights Agreement" means the Registration Rights
Agreement entered into by the Company and the Investors dated the date hereof
whereby the Company agrees to register the Shares for public resale under the
Securities Act, a copy of which is attached hereto as Exhibit D.

                  "Registration Statement" means the registration statement
referred to in Section 5.13 of this Agreement.

                  "SEC" means the United States Securities and Exchange
Commission.

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

                  "Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.

                  "Transactions Documents" means this Stock Purchase Agreement,
the Registration Rights Agreement executed by the Company and the Investors
simultaneous herewith, the Beechtree Consulting Agreement and the Direct
Services Agreement.

                  The plural of any defined term shall have a meaning
correlative to such defined term.

                                   ARTICLE III
                        REPRESENTATIONS AND WARRANTIES OF
                 THE COMPANY, NEXSAN AND THE CONTROL SHAREHOLDER

         The Company, Nexsan and the Control Shareholder hereby jointly and
severally represent and warrant to the Investors as follows:

                  3.01 Corporate Organization; Etc. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to carry on its
business as it is now being conducted and to own the properties and assets it
now owns; is duly qualified or licensed to do business as a foreign corporation
in good standing in the jurisdictions listed in Section 3.01 of the Disclosure
Schedule, which are all the jurisdictions in which such qualification is
required except jurisdictions in which the Company's failure to qualify to do
business will have no "Material Adverse Effect" on the business, prospects,
operations, properties, assets or condition (financial or otherwise) of the
Company and the Company Subsidiaries. True and complete copies of the
Certificate of Incorporation and By-Laws of the Company are attached hereto as
Exhibits B and C, respectively.

<PAGE>

                  3.02 Capitalization of the Company. As of the date of this
Agreement, the authorized capital stock of the Company consists of 90,000,000
shares of Common Stock, $.001 par value per share, of which 9,050,000 shares are
issued and outstanding, and 10,000,000 shares of blank check preferred stock,
$.001 par value per share, of which no shares are outstanding, and no options to
purchase shares of Common Stock issued pursuant to the Company's 2000 Share
Option Plan. All issued and outstanding shares of capital stock of the Company
are validly issued, fully paid and nonassessable. No shares of Common Stock are
entitled to preemptive or similar rights, nor is any holder of the Common Stock
entitled to preemptive or similar rights arising out of any agreement or
understanding with the Company by virtue of any of the Transaction Documents.
Except as disclosed in Schedule 3.02(a), there are no outstanding options,
warrants, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or, securities, rights or obligations convertible into
or exchangeable for, or giving any person any right to subscribe for or acquire
any shares of Common Stock, or contracts, commitments, understandings, or
arrangements by which the Company or any Company Subsidiary is or may become
bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. To the knowledge of the
Company, except as specifically disclosed in Section 3.02(a) of the Disclosure
Schedule, no Person beneficially owns (as determined pursuant to Rule 13d-3
promulgated under the Securities Exchange Act) or has the right to acquire by
agreement with or by obligation binding upon the Company, beneficial ownership
of in excess of 5% of the Common Stock. Except for the registration rights
granted to the Investors and to the certain members of the Company's management
named in the Registration Rights Agreement, there are no agreements or
arrangements under which the Company or any Company Subsidiary is obligated to
register the sale of any of their securities under the Securities Act.

                  3.03 Subsidiaries and Affiliates. Section 3.03(a) of the
Disclosure Schedule sets forth the name, jurisdiction of incorporation and
capitalization of each Company Subsidiary and the jurisdictions in which each
Company Subsidiary is qualified to do business. Except as disclosed in Section
3.03(b) of the Disclosure Schedule, the Company does not own, directly or
indirectly, any capital stock or other equity securities of any corporation or
have any direct or indirect equity or ownership interest in any business not
listed in Section 3.03(a) of the Disclosure Schedule. Except as and to the
extent set forth in Section 3.03(a) of the Disclosure Schedule, all the
outstanding capital stock of each Company Subsidiary is owned directly or
indirectly by the Company free and clear of all liens, options or encumbrances
of any kind and all material claims or charges of any kind, and is validly
issued, fully paid and nonassessable, and there are no outstanding options,
rights or agreements of any kind relating to the issuance, sale or transfer of
any capital stock or other equity securities of any such Company Subsidiary to
any person except the Company. Each Company Subsidiary (i) is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation; and (ii) has full corporate power and authority
to carry on its business as it is now being conducted and to own the properties
and assets it now owns. Each Company Subsidiary is duly qualified to do business
and is in good standing as a foreign

<PAGE>

corporation in each jurisdiction listed opposite the name of such Company
Subsidiary in Section 3.03(a) of the Disclosure Schedule, which are the only
jurisdictions in which the properties owned or leased or the nature of the
business conducted by it makes such qualification necessary. The Company has
heretofore delivered to Beechtree complete and correct copies of the certificate
of incorporation and by-laws of each Company Subsidiary, as presently in effect.

                  3.04 Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company. This Agreement
has been duly executed by the Company and when delivered in accordance with the
terms hereof shall constitute the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application. Neither the Company nor any
Subsidiary is in violation of any of the provisions of its respective
certificate of incorporation, by-laws or other charter documents.

                  3.05 No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any provision of the Certificate of Incorporation or By-Laws of the
Company or any Company Subsidiary, or, except as specified in Section 3.05 of
the Disclosure Schedule, violate, or be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or cause the acceleration of the maturity of any debt
or obligation pursuant to, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of the
Company or any Company Subsidiary under, any agreement or commitment to which
the Company or any Company Subsidiary is a party or by which the Company or any
Company Subsidiary is bound, or to which the property of the Company or any
Company Subsidiary is subject, or violate any statute or law or any judgment,
decree, order, regulation or rule of any court or governmental authority.

                  3.06 Financial Statements. Attached hereto as Schedule B is:
(i) an unaudited balance sheet of the Company's wholly-owned subsidiary, Nexsan
Technologies Limited, a United Kingdom corporation as at March 31, 2000; and
statements of income, changes in stockholders' equity and changes in financial
position of Nexsan Technologies Limited for the fiscal year then ended; and (ii)
an unaudited balance sheet of Nexsan Technologies Limited as at September 30,
2000 (the "Balance Sheet"), and unaudited consolidated statements of income,
changes in stockholders' equity and changes in financial position of Nexsan
Technologies Limited for the six (6) month period then ended. The financial
statements set forth in Schedule B do not include

<PAGE>

financial information relating to the Company nor the Company's wholly-owned
United States subsidiary, Nexsan Technologies Corp. The financial statements are
prepared in British Pounds Sterling in accordance with United States generally
accepted accounting principles. Such consolidated balance sheets and the notes
thereto are true, complete and accurate and fairly present the consolidated
assets, liabilities and financial condition of Nexsan Technologies Limited as at
the respective dates thereof, and such statements of income, changes in
stockholders' equity and changes in financial position and the notes thereto are
true, complete and accurate and fairly present the results of operations for the
periods therein referred to; all in accordance with United States generally
accepted accounting principles consistently applied throughout the periods
involved except, in the case of unaudited statements, for normally recurring
year-end adjustments, which adjustments will not be material either individually
or in the aggregate.

                  3.07. No Undisclosed Liabilities; Etc. Neither the Company nor
any Company Subsidiary has any material liabilities or obligations of any nature
(absolute, accrued, contingent or otherwise) which were not fully reflected or
reserved against in the Balance Sheet, except for liabilities and obligations
incurred in the ordinary course of business and consistent with past practice
since the date thereof; and the reserves reflected in the Balance Sheet are
adequate, appropriate and reasonable.

                  3.08 Accounts Receivable. All accounts receivable of the
Company and each Company Subsidiary, whether reflected in the Balance Sheet or
otherwise, represent sales actually made in the ordinary course of business, and
are current and collectible net of any reserves shown on the Balance Sheet
(which reserves are adequate and were calculated consistent with past practice).

                  3.09 Absence of Certain Changes. Except as set forth in
Section 3.09 of the Disclosure Schedule, since the date of the Balance Sheet,
neither the Company nor any Company Subsidiary has effected, suffered or granted
(as the case may be):

                            (a) any change in the assets, liabilities, financial
condition or operating results from that reflected in the Financial Statements,
except changes in the ordinary course of business that have not been, in the
aggregate, materially adverse;

                            (b) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting its assets, properties,
financial condition, operations, results, prospects or business (as such
business is presently conducted and as it is proposed to be conducted);

                            (c) any waiver of a valuable right or of a material
debt owed to it;

                            (d) any satisfaction or discharge of any lien, claim
or encumbrance or payment of any obligation, except in the ordinary course of
business and that is not material to its assets, properties, financial
condition, operating results or business (as such business is presently
conducted and as it is proposed to be conducted);

<PAGE>

                            (e) any material change or amendment to a material
contract or arrangement by which the Company or any Company Subsidiary or any of
their respective assets or properties are bound or subject;

                            (f) any material change in any compensation
arrangement or agreement with any employee;

                            (g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;

                            (h) any resignation or termination of employment of
any key officer; and the Company, to the best of its knowledge, does not know of
the impending resignation or termination of employment of any such officer;

                            (i) receipt of notice that there has been a loss of,
or material order cancellation by, any major customer;

                            (j) any mortgage, pledge, transfer of a security
interest in, or lien, created, with respect to any material properties or
assets, except liens for taxes not yet due or payable;

                            (k) any loans or guarantees made to or for the
benefit of the employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;

                            (1) any declaration, setting aside or payment or
other distribution in respect of any capital stock, or any direct or indirect
redemption, purchase or other acquisition of any of such stock;

                            (m) to the best of the Company's knowledge, any
other event or condition of any character that might materially and adversely
affect the assets, properties, financial condition, operating results or
business of the Company or any Company Subsidiary (as such business is presently
conducted and as it is proposed to be conducted); or

                            (n) any agreement or commitment by the Company or
any Company Subsidiary to do any of the things described in this Section 3.09.

                  3.10 Title to Properties; Encumbrances. Each of the Company
and the Company Subsidiaries has good, valid and marketable title to all the
properties and assets which it purports to own (real, personal and mixed,
tangible and intangible), including, without limitation, all the properties and
assets reflected in the Balance Sheet (except for personal property having an
aggregate book value not in excess of $10,000 sold since the date of the Balance
Sheet in the ordinary course of business and consistent with past practice), and
all the properties and assets purchased by the Company and Company Subsidiaries
since the date of the Balance Sheet, which subsequently acquired properties

<PAGE>

and assets (other than inventory and short term investments) are listed in
Section 3.10 of the Disclosure Schedule. All properties and assets reflected in
the Balance Sheet have a fair market or realizable value at least equal to the
value thereof as reflected therein, and all such properties and assets are free
and clear of all title defects or objections, liens, claims, charges, security
interests or other encumbrances of any nature whatsoever including, without
limitation leases, chattel mortgages, conditional sales contracts, collateral
security arrangements and other title or interest retention arrangements, and
are not, in the case of real property, subject to any rights of way, building
use restrictions, exceptions, variances, reservations or limitations of any
nature whatsoever except, with respect to all such properties and assets, (a)
liens shown on the Balance Sheet as securing specified liabilities or
obligations and liens incurred in connection with the purchase of property
and/or assets, if such purchase was effected after the date of the Balance
Sheet, with respect to which no default exists; (b) minor imperfections of
title, if any, none of which are substantial in amount, materially detract from
the value or impair the use of the property subject thereto, or impair the
operations of the Company or any Company Subsidiary and which have arisen only
in the ordinary course of business and consistent with past practice since the
date of the Balance Sheet; and (c) liens for current taxes not yet due. The
rights, properties and other assets presently owned, leased or licensed by the
Company and/or the Company Subsidiaries and described elsewhere in this
Agreement include all rights, properties and other assets necessary to permit
the Company and the Company Subsidiaries to conduct their businesses in all
material respects in the same manner as their businesses have been conducted
prior to the date hereof.

                  3.11 Plant and Equipment. The plants, structures and equipment
of the Company and each Company Subsidiary are structurally sound with no known
defects and are in good operating condition and repair and are adequate for the
uses to which they are being put; and none of such plants, structures or
equipment are in need of maintenance or repairs except for ordinary, routine
maintenance and repairs which are not material in nature or cost. Except as set
forth in Section 3.11 of the Disclosure Schedule, neither the Company nor any
Company Subsidiary has received notification that it is in violation of any
applicable building, zoning, anti-pollution, health or other law, ordinance or
regulation in respect of its plants or structures or their operations and no
such violation exists.

                  3.12 Patents, Trademarks, Trade Names, Etc. The Company and
each Company Subsidiary has sufficient title and ownership of all patents,
trademarks, service marks, trade names, copyrights, trade secrets, information,
proprietary rights and processes necessary for its business as now conducted
without any conflict with or infringement of the rights of others. Section 3.12
of the Disclosure Schedule contains an accurate and complete description of (a)
all patents, trademarks, trade names and copyrights used or proposed to be used
by the Company or any Company Subsidiary, all applications therefor, and a
summary of the terms of all licenses and other agreements relating thereto and
(b) a summary of the terms of all agreements relating to technology, know-how or
processes which the Company or any Company Subsidiary is licensed or authorized
to use by others. Except as set forth in Section 3.12 of the Disclosure
Schedule, the Company and each Company Subsidiary has the sole and exclusive
right to

<PAGE>

use the patents, trademarks, trade names, copyrights, technology, know-how and
processes referred to in the Disclosure Schedule, and the consummation of the
transactions contemplated hereby will not alter or impair any such rights; no
claims have been asserted by any person to the use of any such patents,
trademarks, trade names, copyrights, technology, know-how or processes or
challenging or questioning the validity or effectiveness of any such license or
agreement, and the Company does not know of any valid basis for any such claim;
and the use of such patents, trademarks, trade names, copyrights, technology,
know-how or processes by the Company or any Company Subsidiary does not infringe
on the rights of any person.

                  3.13     Agreements in Full Force and Effect; Action.

                            (a) Section 3.13 of the Disclosure Schedule sets
forth a list of all contracts material to the business and operations of the
Company and each Company Subsidiary. All contracts, agreements, plans, leases,
policies and licenses referred to in the Disclosure Schedule are valid and in
full force and effect, and true copies thereof have been initialed and
heretofore delivered to Beechtree.

                            (b) Except for agreements explicitly contemplated
hereby and disclosed herein, there are no agreements, understandings or proposed
transactions between the Company or any Company Subsidiary and any of their
respective officers, directors, affiliates, or any affiliate thereof.

                            (c) There are no agreements, understandings,
instruments, contracts, proposed transactions, judgments, orders, writs or
decrees to which the Company or any Company Subsidiary is a party or by which
any of them is bound that may involve (i) obligations (contingent or otherwise)
of, or payments to the Company in excess of, in the aggregate, $5,000, or (ii)
the license of any patent, copyright, trade secret or other proprietary right to
or from the Company or any Company Subsidiary, or (iii) provisions restricting
or affecting the development, manufacture or distribution of the Company's or
any Company Subsidiary's products or services, or (iv) indemnification by the
Company or any Company Subsidiary with respect to infringements of proprietary
rights.

                            (d) Neither the Company nor any Company Subsidiary
has (i) declared or paid any dividends or authorized or made any distribution
upon or with respect to any class or series of its capital stock, (ii) incurred
any indebtedness for money borrowed or any other liabilities individually in
excess of $25,000 or, in the case of indebtedness and/or liabilities
individually less than $5,000, in excess of $50,000 in the aggregate, (iii) made
any loans or advances to any person, other than ordinary advances for travel
expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or
rights, other than the sale of its inventory in the ordinary course of business.

                            (e) For the purposes of subsections (c) and (d)
above, all indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities the

<PAGE>

Company has reason to believe are affiliated therewith) shall be aggregated for
the purpose of meeting the individual minimum dollar amounts of such
subsections.

                            (f) Neither the Company nor any Company Subsidiary
is a party to nor are any of them bound by any contract, agreement or
instrument, or subject to any restriction under their respective Certificates of
Incorporation or By-Laws (or other organizational documents) that adversely
affects their business as now conducted or as proposed to be conducted in the
Business Plan, its properties or its financial condition.

                            (g) Neither the Company nor any Company Subsidiary
has engaged in the past three (3) months in any discussion (i) with any
representative of any corporation or corporations regarding the consolidation or
merger of the Company or any Company Subsidiary with or into any such
corporation or corporations, (ii) with any corporation, partnership, association
or other business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of the Company or any
Company Subsidiary or a transaction or series of related transactions in which
more than fifty percent (50%) of the voting power of the Company or any Company
Subsidiary is disposed of, or (iii) regarding any other form of acquisition,
liquidation, dissolution or winding up of the Company or any Company Subsidiary.

                  3.14 Related-Party Transactions. No employee, officer, or
director of the Company or any Company Subsidiary or member of his or her
immediate family is indebted to the Company or any Company Subsidiary, nor is
the Company or any Company Subsidiary indebted (or committed to make loans or
extend or guarantee credit) to any of them. To the best of the Company's
knowledge, none of such persons has any direct or indirect ownership interest in
any firm or corporation with which the Company or any Company Subsidiary is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company, except that employees, officers, or
directors of the Company and members of their immediate families may own,
directly or indirectly, up to two percent (2%) of the issued and outstanding
securities in companies, the securities of which are regularly traded on a
national securities exchange or in the over-the-counter market, that may compete
with the Company. No member of the immediate family of any officer or director
of the Company is directly or indirectly interested in any material contract
with the Company.

                  3.15 Permits. The Company and each Company Subsidiary has all
franchises, permits, licenses and similar authority necessary for the conduct of
its business as now being conducted by it, the lack of which could materially
and adversely affect the business, properties, prospects, or financial condition
of the Company or any Company Subsidiary, and the Company believes it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted. Neither the Company nor any Company
Subsidiary is in default in any material respect under any of such franchises,
permits, licenses, or other similar authority.

                  3.16 Environmental and Safety Laws. To the best of its
knowledge, neither the Company nor any Company Subsidiary is in violation of any
applicable

<PAGE>

statute, law or regulation relating to the environment or occupational health
and safety, and to the best of its knowledge, no material expenditures are or
will be required in order to comply with any such existing statute, law or
regulation.

                  3.17 Manufacturing and Marketing Rights. Except as Described
in Section 3.17 of the Disclosure Schedule, neither the Company nor any Company
Subsidiary has granted rights to manufacture, produce, assemble, license,
market, or sell its products to any other person and is not bound by any
agreement that affects the Company's or any Company Subsidiary's exclusive right
to develop, manufacture, assemble, distribute, market or sell its products.

                  3.18 Use of Proceeds: The proceeds from the sale of the Shares
shall be applied substantially as set forth in Section 3.18 of the Disclosure
Schedule.

                  3.19 Business Plan. The Business Plan previously delivered to
each Investor has been prepared in good faith by the Company and does not
contain any untrue statement of a material fact nor does it omit to state a
material fact necessary to make the statements made therein not misleading,
except that with respect to projections contained in the Business Plan, the
Company represents only that such projections were prepared in good faith and
that the Company reasonably believes there is a reasonable basis for such
projections.

                  3.20 Employee Benefit Plans. The Company does not have any
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974.

                  3.21 Tax Returns. Payments and Elections. The Company and each
Company Subsidiary has filed all tax returns and reports as required by law.
These returns and reports are true and correct in all material respects. The
Company and each Company Subsidiary has paid all taxes and other assessments
due, except those contested by it in good faith that are listed in Section 3.21
of the Schedule of Exceptions. The provision for taxes of the Company (and each
Company Subsidiary) as shown in the Financial Statements is adequate for taxes
due or accrued as of the date thereof. The Company has not elected pursuant to
the Internal Revenue Code of 1986, as amended (the "Code"), to be treated as a
Subchapter S corporation or a collapsible corporation pursuant to Section
1362(a) or Section 341(f) of the Code, nor has it made any other elections
pursuant to the Code (other than elections that relate solely to methods of
accounting, depreciation or amortization) that would have a material effect on
the Company, its financial condition, its business as presently conducted or
proposed to be conducted or any of its properties or material assets.

                  3.22 Insurance. The Company and each Company Subsidiary has in
full force and effect fire and casualty insurance policies, with extended
coverage, sufficient in amount (subject to reasonable deductibles) to allow it
to replace any of its properties that might be damaged or destroyed. On the
Closing Date, the Company will have in full force and effect term life
insurance, payable to the Company, on the lives of

<PAGE>

each of Martin Boddy, Gary Watson and Diamond Lauffin in an amount of no less
than $1,000,000 and no more than $3,000,000 for each such person. The Company
has in full force and effect products liability and errors and omissions
insurance in amounts customary for companies similarly situated.

                  3.23 Minute Books. The minute books of the Company and each
Company Subsidiary have been delivered to Beechtree and contain a complete
summary of all meetings of directors and stockholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately in all material respects.

                  3.24 Labor Agreements and Actions. Neither the Company nor any
Company Subsidiary is bound by or subject to (and none of their respective
assets or properties is bound by or subject to) any written or oral, express or
implied, contract, commitment or arrangement with any labor union, and no labor
union has requested or, to the best of the Company's knowledge, has sought to
represent any of the employees, representatives or agents of the Company or any
Company Subsidiary. There is no strike or other labor dispute involving the
Company or any Company Subsidiary pending, or to the best of the Company's
knowledge, threatened, that could have a material adverse effect on the assets,
properties, financial condition, operating results, or business of the Company
or any Company Subsidiary (as such business is presently conducted and as it is
proposed to be conducted), nor is the Company aware of any labor organization
activity involving its employees. The Company is not aware that any officer or
key employee, or that any group of key employees, intends to terminate their
employment with the Company or any Company Subsidiary, nor does the Company or
any Company Subsidiary have a present intention to terminate the employment of
any of the foregoing. The employment of each officer and employee of the Company
and any Company Subsidiary is terminable at the will of the Company. To the best
of its knowledge, the Company and each Company Subsidiary has complied in all
material respects with all applicable state and federal equal employment
opportunity and other laws related to employment.

                  3.25 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company or any Company
Subsidiary that questions the validity of this Agreement or the Registration
Rights Agreement, or the right of the Company to enter into such agreements, or
to consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition, affairs or prospects of the Company or any Company
Subsidiary, financially or otherwise, or any change in the current equity
ownership of the Company or any Company Subsidiary, nor is the Company aware
that there is any basis for the foregoing. The foregoing includes, without
limitation, actions, suits, proceedings or investigations pending or threatened
(or any basis therefor known to the Company) involving the prior employment of
any of the Company's or any Company Subsidiary's employees, their use in
connection with the Company's or any Company Subsidiary's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers.
Neither the Company nor any Company Subsidiary is

<PAGE>

a party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company or any Company Subsidiary
currently pending or that the Company or any Company Subsidiary intends to
initiate.

                  3.26 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement.

                  3.27 Offering. Subject in part to the truth and accuracy of
each Investor's representations set forth in Article IV of this Agreement, the
offer, sale and issuance of the Shares as contemplated by this Agreement are
exempt from the registration requirements of the Act, and neither the Company
nor any authorized agent acting on its behalf will take any action hereafter
that would cause the loss of such exemption.

                  3.28 Valid Issuance of Shares. The Shares that are being
purchased by the Investors hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable, and will
be free of restrictions on transfer other than restrictions on transfer under
this Agreement and under applicable state and federal securities laws.

                  3.29 Compliance with Other Instruments.

                            (a) Neither the Company nor any Company Subsidiary
is in violation or default in any material respect of any provision of its
Certificate of Incorporation or By-Laws or other organizational documents, as
the case may be,, or in any material respect of any instrument, judgment, order,
writ, decree or contract to which it is a party or by which it is bound, or, to
the best of its knowledge, of any provision of any federal or state statute,
rule or regulation applicable to the Company. The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby will not result in any such violation or be in conflict with
or constitute, with or without the passage of time and giving of notice, either
a default under any such provision, instrument, judgment, order, writ, decree or
contract or an event that results in the creation of any lien, charge or
encumbrance upon any assets of the Company or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization, or approval applicable to the Company, its business or operations
or any of its assets or properties.

                            (b) The Company and each Company Subsidiary has
avoided every condition, and has not performed any act, the occurrence of which
would result in the Company's loss of any right granted under any license,
distribution or other agreement.

<PAGE>

                  3.30 Compliance with Law. The operations of the Company and
the Company Subsidiaries have been conducted in accordance with all applicable
laws, regulations and other requirements of all national governmental
authorities, and of all states, municipalities and other political subdivisions
and agencies thereof, having jurisdiction over the Company and the Company
Subsidiaries, including, without limitation, all such laws, regulations and
requirements relating to antitrust, consumer protection, currency exchange,
equal opportunity, health, occupational safety, pension, securities and
trading-with-the-enemy matters. Neither the Company nor any Company Subsidiary
has received any notification of any asserted present or past failure by the
Company or any Company Subsidiary to comply with such laws, rules or
regulations.

                  3.31 Backlog. At November 30, 2000, the Company's backlog of
firm orders for products and services was $146,311.

                  3.32 Brokers and Finders. Except for certain fees payable to
Direct pursuant to the terms of a Placement Agency Agreement dated the date
hereof between Direct and the Company, neither the Company nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement. The Company agrees to
indemnify and hold the Investors and their officers, directors, employees and
agents harmless against any liability for commissions, fees or other
compensation to any broker or financial advisor or other person or firm (and the
costs and expenses of defending against such liability) for which the Company or
any Company Subsidiary, or any of their respective employees or representatives,
are responsible.

                  3.32 Disclosure. The Company has fully provided each Investor
with all the information that such Investor has requested for deciding whether
to purchase the Shares and all information that the Company believes is
reasonably necessary to enable such Investor to make such decision. Neither this
Agreement nor any other statements or certificates made or delivered in
connection herewith or therewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading.

                                   ARTICLE IV
                 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

         Each Investor hereby represents and warrants to the Company, severally
as to itself, as follows:

                  4.01 Organization; Authority. The Investor, if a corporation
or other legal entity, was organized, and is validly existing and in good
standing under the laws of the jurisdiction of its organization with the
requisite power and authority to enter into and to consummate the transactions
contemplated by this Agreement and to carry out its obligations hereunder. The
acquisition of the Shares to be acquired hereunder by the

<PAGE>

Investor has been duly authorized by all necessary action on the part of the
Investor. This Agreement has been duly executed and delivered by each Investor
and constitutes the valid and legally binding obligation of the Investor,
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights generally and
to general principles of equity.

                  4.02 Purchase Entirely for Own Account. This Agreement is made
with each Investor in reliance upon the Investor's representation to the
Company, which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Shares to be received by the Investor will be acquired for
investment for such Investor's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and that such
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same, without in any way limiting the Investors'
right to resell the Shares pursuant to the Registration Statement. By executing
this Agreement, the Investor further represents that such Investor does not have
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Shares.

                  4.03 Disclosure of Information. The Investor believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Shares. Each Investor further represents that it has had
an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Shares and the business,
properties, prospects and financial condition of the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 3 of this Agreement or the right of the Investors to rely
thereon.

                  4.04 Brokers. No Investor has entered into an agreement for
the payment of any broker's or finder's fee or commission in connection with the
purchase or sale of the Shares. Each Investor agrees to indemnify and hold the
Company and its officers, directors, employees and agents harmless against any
liability for commissions, fees or other compensation in the nature of a
broker's or finder's fee to any broker or other nature of a broker's or finder's
fee to any broker or other person or firm (and the costs and expenses of
defending against such liability) for which the Investor, or any of its
employees or representatives, are responsible.

                  4.05 Private Placement. Each Investor understands that the
Shares have not been registered under the Securities Act or registered or
qualified under any state securities laws on the grounds that such Shares are
being issued in a transaction exempt from the registration requirements of the
Securities Act and the registration or qualification requirement of applicable
state securities laws, and that the Shares must be held indefinitely unless
Shares are subsequently registered under the Securities Act and qualified or
registered under applicable state securities laws or an exemption from
registration and qualification is available, and that, except as otherwise
provided in this Agreement, the Company is under no obligation to register or
qualify the Shares. The

<PAGE>

Company may require an opinion of the Investor's counsel prior to authorizing
the registration of any transfer of the Shares in reliance on an exemption from
registration or qualification to the effect that the transfer is exempt from
such registration or qualification. Each Investor shall hold harmless the
Company and its directors, officers, employees and agents against any loss or
liability from any disposition of Shares by it in violation of this Section
4.05.

                  4.06 Accredited Investor. Each Investor is an accredited
investor within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the investment
to be made hereunder by it and it is able to bear the economic risk of its
investment. The Investor, as a corporation or partnership, has total assets in
excess of $5,000,000 or each of its partners or shareholders has an individual
net worth in excess of $1,000,000, (b) was not formed for the purpose of
investing in the Shares, and (c) has business or investments other than the
investment in the Shares.

                  4.07 Preexisting Relationship. Each Investor either (a) has a
preexisting personal or business relationship with the Company or any of its
officers, directors or controlling persons or an affiliate of the Company, or
(b) by reason of its business or financial experience or the business or
financial experience of its professional advisor(s) who is (are) unaffiliated
with and who is (are) not compensated, directly or indirectly, by the Company,
or any affiliate or selling agent of the Company, the Investor can reasonably by
assumed to have the capacity to protect its own interests in connection with
this transaction.

                  4.08 Confidentiality. Each Investor shall keep confidential
and shall not use the trade secrets and other non-public information provided to
it by the Company or its agents in connection with the transactions contemplated
hereby.

                  4.09 Representations and Warranties at Closing. Except as
expressly herein otherwise provided, the representations and warranties of the
Investors set forth in this Agreement shall be true on and as of the Closing as
though such representations and warranties were made on and as of such time.

                  4.10 Reliance. Each Investor understands and acknowledges that
(i) the Shares to be acquired by it hereunder are being offered and sold to it
without registration under the Securities Act in a private placement that is
exempt from the registration provisions of the Securities Act and (ii) the
availability of such exemption, depends in part on, and the Company will rely
upon the accuracy and truthfulness of, the foregoing representations and the
Investor hereby consents to such reliance.

                  The Company acknowledges and agrees that the Investors make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Article IV.

<PAGE>

                                    ARTICLE V
                         OTHER AGREEMENTS OF THE PARTIES

                  5.01 Transfer Restrictions. (a) The Shares may only be
disposed of pursuant to an effective registration statement under the Securities
Act, to the Company or pursuant to an available exemption from or in a
transaction not subject to the registration requirements thereof. In connection
with any transfer of any Shares other than pursuant to an effective registration
statement or to the Company, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor, the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration under
the Securities Act. Notwithstanding the foregoing, the Company hereby consents
to and agrees to register any transfer of Shares by an Investor to an Affiliate
of the Investor, or any transfers among any such Affiliates the transferee
certifies to the Company that it is an "accredited investor" as defined in Rule
501(a) under the Securities Act and that it is acquiring any such Shares in
accordance with the representation provided by the original Investor in Article
IV. Any Affiliate transferee shall have the rights of an Investor under this
Agreement.

                            (b) Each Investor agrees to the imprinting, so long
as is required by this Section 5.01(b), of the following legend on the
Securities:

         "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
         SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
         REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
         "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
         PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
         ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
         SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
         ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS."

         The Company agrees that it will provide each Investor, upon request,
with a certificate or certificates representing the Shares free from such legend
at such time as such legend is no longer required hereunder. The Company may not
make any notation on its records or give instructions to any transfer agent of
the Company which enlarge the restrictions of transfer set forth in this Section
5.01(b).

                  5.02 Furnishing of Information. As long as any Investor owns
Shares, the Company covenants that, after such time as it becomes subject to the
reporting requirements of the Exchange Act, it shall timely file (or obtain
extensions in respect

<PAGE>

thereof and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to Section 13(a) or 15(d) of
the Exchange Act. If at any time prior to the date on which an Investor may
resell all of its Shares without volume restrictions pursuant to Rule 144(k)
promulgated under the Securities Act (as determined by counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable to
the Company's transfer agent for the benefit of and enforceable by the Investor)
the Company is not required to file reports pursuant to Section 13(a) or 15(d)
of the Exchange Act, it will prepare and furnish to the Investor and make
publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company further covenants that it will take such further
action as an Investor may reasonably request, all to the extent required from
time to time to enable such person to sell Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including the legal opinion referenced
above in this Section. Upon the request of any such person, the Company shall
deliver to such person a written certification of a duly authorized officer as
to whether it has complied with such requirements. In connection with any future
access or diligence of the Company by an Investor, the Company agrees that its
will not furnish to the Investor any non-public information unless it first
discloses in writing that such information is of such character and the Investor
thereafter agrees to receive such information.

                  5.03 Blue Sky Laws. In accordance with the Registration Rights
Agreement, the Company shall qualify the Shares under the securities or Blue Sky
laws of such jurisdictions as any Investor may request and shall continue such
qualification at all times until the Investor notifies the Company in writing
that it no longer owns Shares; provided, however, that neither the Company nor
the Company Subsidiaries shall be required in connection therewith to qualify as
a foreign corporation where they are not now so qualified or to take any action
that would subject the Company to general service of process in any such
jurisdiction where it is not then so subject.

                  5.04 Integration. The Company shall not and shall use its best
efforts to ensure that no Affiliate shall sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the
Shares in a manner that would require the registration under the Securities Act
of the issue or sale of the Shares to the Investor.

                  5.05 No Sales of Company Securities. The Company shall not,
without the prior written consent of Beechtree, offer for sale or sell any
securities until a date which is six months after the date upon which the SEC
declares the Registration Statement effective.

<PAGE>

                  5.06 Use of Proceeds. Unless otherwise agrees to in writing by
Beechtree, the Company shall use all of the proceeds from the sale of the Shares
as described in Section 3.18 of the Disclosure Schedule. Pending application of
the proceeds derived from the sale of the Shares, the Company will invest such
proceeds in interest bearing accounts and/or short-term, investment grade
interest bearing securities.

                  5.07 Consulting Agreement with Beechtree Capital, Ltd. At the
Closing, the Company will execute and deliver to Beechtree the form of
Consulting Agreement, a copy of which is attached hereto as Exhibit E (the
"Consulting Agreement"), pursuant to which the Company engages Beechtree to
provide certain financial and business advisory services for a period of five
years after the Closing Date for the compensation and on the other terms and
conditions therein set forth.

                  5.08 Lock-Up of Outstanding Common Stock. On or before the
Closing Date, the Company will have entered into a lock-up agreement with each
person holding shares of Common Stock immediately prior to the Closing, a copy
of the form of which is attached hereto as Exhibit F (the "Lock-Up Agreement"),
pursuant to which such holder agrees, except as provided therein, to refrain
from selling or otherwise disposing of his shares of Common Stock for a one-year
period commencing on the Closing Date. The Company will deliver to Beechtree a
copy of each such Lock-Up Agreement at the Closing.

                  5.09 Management Employment Agreements. On or before the
Closing Date, the Company will have entered into an employment agreement, in
form and substance reasonably satisfactory to the Company and Beechtree, with
each of the persons named on Exhibit G hereto providing for the employment by
the Company of such persons commencing upon the Closing.

                  5.10 Notice of Breaches. Each of the Company and the Investors
shall give prompt written notice to the other of any breach by it of any
representation, warranty or other agreement contained in the Transaction
Documents, as well as any events or occurrences arising after the date hereof,
which would reasonably be likely to cause any representation or warranty or
other agreement of such party, as the case may be, contained in the Transaction
Documents to be incorrect or breached as of such Closing Date. However, no
disclosure by either party pursuant to this Section shall be deemed to cure any
breach of any representation, warranty or other agreement contained in the
Transaction Documents.

         Notwithstanding the generality of the foregoing, the Company shall
promptly notify Beechtree of any notice or claim (written or oral) that it
receives from any lender of the Company to the effect that the consummation of
the transactions contemplated by the Transaction Documents violates or would
violate any written agreement or understanding between the Investors and the
Company, and the Company shall promptly furnish by facsimile to Beechtree a copy
of any written statement in support of or relating to such claim or notice.

<PAGE>

                  5.11 Board of Director and Committee Representation. (a) The
Company shall use its best efforts to cause and maintain the election to the
Board of Directors of one representative selected by Beechtree and one
representative of Direct, should Direct so desire, for a period of five years
after the Closing Date. To the extent permitted by law and the applicable
exchange on which the Company's stock is trading, the Control Shareholder agrees
to vote any and all shares of Common Stock and other voting securities of the
Company registered in his name in favor of Beechtree's and Direct's respective
nominees to the Board.

                            (b) The Company shall use its best efforts to
appoint each of Beechtree's and Direct's respective nominees to the Board to
serve on its Executive Committee of the Board of Directors, which such committee
shall consist of up to five (5) persons, for a period of five (5) years. To the
extent permitted by law and the applicable exchange on which the Company's stock
is trading, the Control Shareholder agrees to vote any and all shares of Common
Stock and other voting securities of the Company registered in his name in favor
of Beechtree's and Direct's respective nominees to the Executive Committee.

                            (c) The Company shall use its best efforts to
appoint each of Beechtree's and Direct's respective nominees to the Board to
serve on its Audit Committee of the Board of Directors, which such committee
shall consist of up to five (5) persons, for a period of five (5) years. To the
extent permitted by law and the applicable exchange on which the Company's stock
is trading, the Control Shareholder agrees to vote any and all shares of Common
Stock and other voting securities of the Company registered in his name in favor
of Beechtree's and Direct's respective nominees to the Audit Committee.

                  5.12 Consulting Agreement with Direct. As soon as reasonably
practicable after the Closing, the Company shall enter into a services agreement
with Direct in the form attached hereto as Exhibit H.

                  5.13 No Registration of Other Securities. Except for the
Shares and other "Registrable Securities" (as such term is defined in the
Registration Rights Agreement) to be registered by the Company in the
"Registration Statement" (as such term is defined in the Registration Rights
Agreement) in accordance with the Registration Rights Agreement, the Company
shall not, without the prior written consent of Beechtree, (i) issue or sell any
of its or any of its Affiliates' equity or equity-equivalent securities pursuant
to Regulation S promulgated under the Securities Act, or (ii) register for
resale any securities of the Company for a period of not less than one year
after the date that the Registration Statement covering the Registrable
Securities is declared effective by the SEC.

                  5.14 Certain Securities Laws Disclosures; Publicity. (a) The
Company shall timely file with the SEC a Form D promulgated under the Securities
Act as required under Regulation D promulgated under the Securities Act and
provide a copy thereof to each Investor promptly after the filing thereof.

<PAGE>

                            (b) In furtherance of and in addition to the
obligation of the Company set forth in Section 5.14(a) above, the Company and
Beechtree shall consult with each other in issuing any press releases or
otherwise making public statements with respect to the transactions contemplated
hereby and neither party shall issue any such press release or otherwise make
any such public statement without the prior written consent of the other, which
consent shall not be unreasonably withheld or delayed, except that no prior
consent shall be required if such disclosure is required by law, in which such
case the disclosing party shall provide the other party with prior notice of
such public statement.

                  5.14 Review and Approval of Company Budget. One month prior to
the conclusion of the 2000 calendar year, the Company shall furnish to Beechtree
a copy of the Company's proposed budget for the 2001 calendar year. Beechtree,
as representative of the Investors, shall have the right to review and approve
said budget. Beechtree shall communicate its comments on said budget, if any, to
the Company in writing two weeks prior to the conclusion of calendar year 2000.
The Company shall deliver to Beechtree a revised budget for calendar year 2001
that reflects the changes requested by Beechtree one week prior to the
conclusion of the 2000 calendar year.

                                   ARTICLE VI
                            COVENANTS OF THE COMPANY

         The Company hereby covenants and agrees with each Investor as follows:

                  6.01 Full Access. The Company shall, and shall cause each
Company Subsidiary to, afford to Beechtree, its counsel, accountants and other
representatives full access to the plants, offices, warehouses, properties,
books and records of the Company and each Company Subsidiary in order that
Beechtree may have full opportunity to make such investigations as it shall
desire to make of the affairs of the Company and the Company Subsidiaries; and
the Company will cause its officers and accountants to furnish such additional
financial and operating data and other information as the Investors'
Representative shall from time to time request, provided, however, that any such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the businesses of the Company and the Company
Subsidiaries.

                  6.02 Consents of Company Lenders, Etc. The Company shall, and
shall cause each Company Subsidiary to, use its best efforts to obtain at the
earliest practicable date and prior to the Closing all consents necessary to the
consummation of the transactions contemplated hereby and will provide to
Beechtree copies of each such consent promptly after it is obtained.

                  6.03 Other Transactions. Neither the Company nor its Board of
Directors shall enter into any discussions concerning, or approve or recommend
to the holders of any shares of its capital stock, any merger, consolidation,
disposition of all or substantially all of its business, properties or assets
(other than pursuant to this

<PAGE>

Agreement), any tender offer, acquisition or other business combination, or
proposal therefor, or furnish or cause to be furnished any information
concerning the business, properties or assets of the Company to any party in
connection with any tender offer or other transaction involving the acquisition
of the Company or all or any substantial part of its assets by any person other
than the Investors or their duly authorized representatives.

                  6.04 Covenant to Satisfy Conditions. Each of the Company and
the Company Subsidiaries will use its best efforts to insure that the conditions
set forth in Article VI hereof are satisfied, insofar as such matters are within
the control of any of them.

                  6.05 Certificates. At the Closing, the Company will furnish
Beechtree with such certificates of its officers and others to evidence
compliance with the covenants set forth in this Article VI as may be reasonably
requested by Beechtree.

                                   ARTICLE VII
                     CONDITIONS TO THE COMPANY'S OBLIGATIONS

                  Each and every obligation of the Company under this Agreement
to be performed on or before the Closing shall be subject to the satisfaction,
on or before the Closing, of each of the following conditions, unless waived in
writing by the Company:

                  7.01 Representations and Warranties True. The representations
and warranties of each Investor contained herein shall be in all material
respects true and accurate as of the date when made and at and as of the Closing
as though such representations and warranties were made at and as of such date,
except for changes expressly permitted or contemplated by the terms of this
Agreement.

                  7.02 Performance. Each Investor shall have performed and
complied with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by them on or prior to the Closing.

                  7.03 No Governmental Proceeding or Litigation. No suit,
action, investigation, inquiry or other proceeding by any governmental body or
other person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.

                                  ARTICLE VIII
                   CONDITIONS TO OBLIGATIONS OF THE INVESTORS

                  Each and every obligation of the Investors under this
Agreement to be performed on or before the Closing shall be subject to the
satisfaction, on or before the Closing, of each of the following conditions,
unless waived in writing by Beechtree:

<PAGE>

                  8.01 Representations and Warranties True. The representations
and warranties contained in Article III hereof, the Disclosure Schedule and in
all certificates and other documents delivered and to be delivered by the
Company, the Control Shareholder and each Company Subsidiary to the Investors or
their representatives pursuant hereto or in connection with the transactions
contemplated hereby shall be true, complete and accurate as of the date when
made and at and as of the Closing Date as though such representations and
warranties were made at and as of such date, except for changes expressly
permitted or contemplated by the terms of this Agreement.

                  8.02 Performance. The Company and each Company Subsidiary
shall have performed and complied with all agreements, obligations and
conditions required by this Agreement to be performed or complied with by them
on or prior to the Closing.

                  8.03 Investigations; Etc. Neither any investigation of the
Company and the Company Subsidiaries by the Investors or Beechtree, nor the
Disclosure Schedule or any supplement thereto nor any other document delivered
to the Investors or Beechtree as contemplated by this Agreement, shall have
revealed any facts or circumstances which, in the sole and exclusive judgment of
any of the Investors or Beechtree, reflect in a material adverse way on the
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business, operations or prospects of the Company or any
Company Subsidiary.

                  8.04 No Proceeding or Litigation. There shall not be
threatened, instituted or pending any suit, action, investigation, inquiry or
other proceeding by or before any United States or foreign court or governmental
or other regulatory or administrative agency or commission requesting or looking
toward an order, judgment or decree which (a) in the judgment of Beechtree might
have a material adverse effect on the Investors or any of their affiliates or
(b) in the sole and exclusive judgment of Beechtree might have a material
adverse effect on the business or financial condition of the Company or any
Company Subsidiary.

                  8.05 Material Change. From the date of the Balance Sheet to
the Closing Date, neither the Company nor any Company Subsidiary shall have
suffered any material adverse change (whether or not such change is referred to
or described in any supplement to the Disclosure Schedule) in its business,
prospects, financial condition, working capital, assets, liabilities (absolute,
accrued, contingent or otherwise), reserves or operations.

                  8.06 Opinion of the Company's Counsel. The Company shall have
delivered an opinion in favor of the Investors from each of Rubin Baum LLC, as
to matters of United States law, and Flint Bishop & Barnett, as to matters of
United Kingdom law, dated as of the Closing Date, comprising the matters set
forth in Exhibit I hereto.

<PAGE>

                  8.07 Consents Obtained. All consents referred to in Sections
3.05, 3.26 and 3.29 shall have been obtained.

                                   ARTICLE IX
             CONDUCT OF THE COMPANY'S BUSINESS PENDING THE CLOSING

         Pending the Closing, and except as otherwise expressly consented to or
approved by Beechtree in writing:

                  9.01. Regular Course of Business. Each of the Company and the
Company Subsidiaries will carry on its respective business diligently and
substantially in the same manner as heretofore conducted, and neither the
Company nor any Company Subsidiary shall institute any new methods of
manufacture, purchase, sale, lease, management, accounting or operation or
engage in any transaction or activity, enter into any agreement or make any
commitment, except in the ordinary course of business and consistent with past
practice.

                  9.02. Amendments. No change or amendment shall be made in the
Certificate of Incorporation or By-Laws of the Company or any Company
Subsidiary.

                  9.03. Capital Changes; Dividends; Redemptions. Neither the
Company nor any Company Subsidiary shall, for a period of one year after the
Closing Date without the prior written consent of Beechtree, issue or sell any
shares of its capital stock or other securities except pursuant to the valid
conversion of securities or exercise of options described in Section 3.02,
acquire directly or indirectly, by redemption or otherwise, any such capital
stock, reclassify or split-up any such capital stock, declare or pay any
dividends thereon in cash, securities or other property or make any other
distribution with respect thereto, or grant or enter into any options, warrants,
calls or commitments of any kind with respect thereto.

                  9.04. Subsidiaries. Neither the Company nor any Company
Subsidiary will organize any new subsidiary, acquire any capital stock or other
equity securities of any corporation or acquire any equity or ownership interest
in any business.

                  9.05. Organization. Each of the Company and the Company
Subsidiaries shall use its best efforts to preserve its corporate existence and
business organization intact.

                  9.06. Certain Changes. Neither the Company nor any Company
Subsidiary shall, without the prior written consent of Beechtree:

                            (a) Borrow or agree to borrow any funds or incur, or
assume or become subject to, whether directly or by way of guarantee or
otherwise, any obligation or liability (absolute or contingent), except
obligations and liabilities incurred in the ordinary course of business and
consistent with past practice;

<PAGE>

                            (b) Pay, discharge or satisfy any claim, liability
or obligation (absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities or obligations reflected or
reserved against in the Balance Sheet or incurred in the ordinary course of
business and consistent with past practice since the date of the Balance Sheet;

                            (c) Permit or allow any of its property or assets
(real, personal or mixed, tangible or intangible) to be subjected to any
mortgage, pledge, lien or encumbrance, except for those of a kind permitted
under Section 3.10 hereof;

                            (e) Grant any general increase in the compensation
of officers or employees (including any such increase pursuant to any bonus,
pension, profit sharing or other plan or commitment) or any increase in the
compensation payable or to become payable to any officer or employee;

                            (i) Pay, loan or advance any amount to, or sell
transfer or lease any properties or assets to, or enter into any agreement or
arrangement with, any of its officers, directors agents or any affiliate or
Associate of any of its officers, directors or agents, except for directors'
fees and compensation to officers at rates not exceeding the rates of
compensation paid during the fiscal year ended March 31, 2000.

                            (k) Agree, whether in writing or otherwise, to do
any of the foregoing.

                  9.07 Compliance With Laws. The Company and each Company
Subsidiary shall duly comply with all laws applicable to it and its properties,
operations, business and employees.

                                    ARTICLE X
                   SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
                BREACHES; INDEMNIFICATION BY NEXSAN; ARBITRATION

                  10.01. Investigations; Survival of Warranties. All of the
representations and warranties of the Company, Nexsan and the Control
Shareholder on the one hand, and the Investors, on the other hand, contained
herein or in any certificates or other documents delivered prior to or at the
Closing shall not be deemed waived or otherwise affected by any investigation
made by any party hereto. Each and every such representation and warranty shall
survive the Closing hereunder and continue in full force and effect for three
years thereafter, even if the damaged party knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing.

                  10.02. Indemnification by Nexsan. (a) Subject to the
provisions of Sections 10.01, relating to the survival of the representations
and warranties made by the

<PAGE>

Company, Nexsan and the Control Shareholder in this Agreement, and Sections
10.02(b) and 10.03, below, Nexsan shall indemnify and hold harmless the
Investors in respect of any and all Adverse Consequences reasonably suffered or
incurred by the Investors through and after the date of the claim for
indemnification (including any Adverse Consequences the Investors may suffer
after the end of the survival period set forth in Section 10.01, above,) in
connection with each and all of the following:

                                 (i) the breach of any representation or
warranty made by the Company, Nexsan and the Control Shareholder in this
Agreement that results in a Material Adverse Effect;

                                 (ii) the breach of any covenant, agreement or
obligation of the Company, Nexsan and the Control Shareholder in this Agreement
that results in a Material Adverse Effect; and

                                 (iii) any misrepresentation contained in any
statement or certificate furnished by the Company, Nexsan and the Control
Shareholder in this Agreement that results in a Material Adverse Effect.

                            (b) Claims for Indemnification. Whenever any claim
shall arise for indemnification hereunder, the Investors shall promptly notify
Nexsan in writing in accordance with Section 12.03 hereof, of the claim and,
when known, the facts constituting the basis for such claim. In the event of any
claim by a third party, the notice to the Company shall specify, if known, a
reasonable estimate of the amount of the liability arising therefrom.

                  10.03. Arbitration. The determination as to whether any breach
or alleged breach of this Agreement shall result in a Material Adverse Effect on
the Company and the amount and nature of any remedy or dollar amount of
indemnification shall be settled by arbitration before a single arbitrator in
the City and State of New York, Borough of Manhattan, in accordance with the
rules of the American Arbitration Association. The arbitrator's determination
shall be final and binding on the parties. If the parties are unable to agree on
an arbitrator within 30 days following notice of the dispute, then each of the
parties shall select an arbitrator, and those two persons shall in turn, select
the third arbitrator who shall act as the sole arbitrator of the dispute. Any
judgment on the award rendered by the arbitrator in such arbitration proceeding
may be entered in any court having jurisdiction thereof. The fees and expenses
of the arbitration shall be borne as determined by the arbitrator. The
arbitrator will not be authorized to award punitive damages.

                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

<PAGE>

                                   ARTICLE XI
                           TERMINATION AND ABANDONMENT

                  11.01. Methods of Termination. The transactions contemplated
herein may be terminated and/or abandoned at any time but not later than the
Closing:

                            (a) By mutual consent of the respective Boards of
Directors of the Company and Beechtree; or

                            (b) By any of the Investors prior to January 4,
2000, or such later date as may be established pursuant to Section 1.02 hereof,
if any of the conditions provided for in Article VIII of this Agreement shall
not have been met or waived in writing by the Investors prior to such date; or

                            (c) By the Board of Directors of the Company prior
to January 4, 2000, or such later date as may be established pursuant to Section
1.02 hereof, if any of the conditions provided for in Article VII of this
Agreement shall not have been met or waived in writing by the Company prior to
such date.

                  11.02. Procedure Upon Termination. In the event of termination
and abandonment by Beechtree or by the Board of Directors of the Company, or
both, pursuant to Section 11.01 hereof, written notice thereof shall forthwith
be given to the other party and the transactions contemplated by this Agreement
shall be terminated and/or abandoned, without further action by any Investor or
the Company. If the transactions contemplated by this Agreement are terminated
and/or abandoned as provided herein:

                            (a) Each party will redeliver all documents, work
papers and other material of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
to the party furnishing the same;

                            (b) No party hereto shall have any liability or
further obligation to any other party to this Agreement except as stated in
subparagraphs (a) and (b) of this Section 11.02, provided, however, that (i) if
such termination and/or abandonment is a result of the failure of any condition
set forth in Article VIII hereof, other than the condition set forth in Section
8.10, then Beechtree shall be entitled to recover from the Company all
out-of-pocket costs which Beechtree has incurred (including reasonable
attorney's fees and expenses).

                                   ARTICLE XII
                                  MISCELLANEOUS

                  12.01. Fees and Expenses. Upon the Closing, the Company shall
pay to Beechtree and Direct, forthwith and without further notice (i) $15,000
for its legal fees and disbursements in connection with the preparation and
negotiation of the Transaction

<PAGE>

Documents, (ii) $7,000 for their due diligence expenses and disbursements in
connection with the transactions contemplated hereby and (iii) up to $50,000 for
other expenses actually incurred by Beechtree and Direct in the Company's
behalf. The Company agrees to pay to Beechtree and Direct any other expenses
which they may incur in the Company's behalf upon the earlier of the sale by the
Company of a minimum of $3.5 million of its securities or six (6) months from
the date hereof. The Company's covenant and promise to repay Beechtree and
Direct the fees and expenses incurred by them in its behalf shall be
unconditional, irrevocable, without set-off or counterclaim and shall require no
further notice on the part of Beechtree or Direct. The Company shall pay all
stamp and other taxes and duties levied in connection with the issuance of the
Shares pursuant hereto. The Investors shall be responsible for their own tax
liability that may arise as a result of the investment hereunder or the
transactions contemplated by this Agreement.

                  12.02. Entire Agreement; Amendments. This Agreement, together
with the Exhibits and Schedules hereto, contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters.

                  12.03. Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 4:30 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in the Purchase Agreement later than 4:30
p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as follows:

         If to the Company:                 Nexsan Corporation
                                            One Rockefeller Plaza
                                            Suite 1600
                                            New York, NY 10020
                                            Attn.: Cary Aminoff
                                            Facsimile No.: (212) 541-8463

         With copies to:                    Rubin Baum LLP
                                            30 Rockefeller Plaza
                                            New York, New York 10112
                                            Attn.: Michael Emont, Esq.
                                            Facsimile No.: (212) 698-7825

<PAGE>

                                            Flint Bishop & Barnett
                                            5 St. Michael's Court
                                            St. Michael's Lane
                                            Derby DE1 3JH
                                            England
                                            Attn.: Mr. Thomas Travers
                                            Facsimile no. 011 44 (0)1332 207601

         If to an Investor:                 Beechtree Capital, Ltd.
                                            One Rockefeller Plaza
                                            Suite 1600
                                            New York, NY 10020
                                            Attn.: Chairman
                                            Facsimile No.: (212) 541-8463

         With copies to (for
           communications to
           the Investor):                   Ruffa & Ruffa, P.C.
                                            150 East 58th Street
                                            New York, New York 10155
                                            Facsimile No.:
                                            Attn: William P. Ruffa, Esq.

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

                  12.04. Amendments; Waivers. No provision of this Agreement may
be waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and Beechtree; or, in the case of a waiver, by
the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.

                  12.05. Headings. The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.

                  12.06. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Investor. No Investor may
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Company. The assignment by a party of this Agreement or
any rights hereunder shall not affect the obligations of such party under this
Agreement.

<PAGE>

                  12.07. No Third-Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.

                  12.08. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflicts of law thereof. Each party
hereby irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.

                  12.09. Execution. This Agreement may be executed in two or
more counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.

                  12.10. Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties and no presumption shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state or local
statute or law shall be deemed to also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The parties intend that
each representation, warranty or covenant contained herein shall have
independent significance. If any party has breached any representation, warranty
or covenant herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty or covenant.

                  12.11. Severability. In case any one or more of the provisions
of this Agreement shall be invalid or unenforceable in any respect, the validity
and

<PAGE>

enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affected or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGE FOLLOWS]

<PAGE>

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

                                    THE COMPANY:

                                    NEXSAN CORPORATION

                                    By: /s/ Martin Boddy
                                        ______________________________
                                        Martin Boddy, Chief Executive Officer

                                    CONTROL SHAREHOLDER:
                                    MARTIN BODDY

                                    /s/ Martin Boddy
                                    __________________________________

                                    NEXSAN:
                                    NEXSAN TECHNOLOGIES, LTD.

                                    By: /s/ Martin Boddy
                                        ______________________________

                                    AS TO SECTION 12.01:

                                    BEECHTREE CAPITAL, LTD.

                                    By: /s/ George Weiss
                                        ______________________________

<PAGE>

                             INVESTOR SIGNATURE PAGE

         The undersigned hereby subscribes to purchase              Shares at a
price of $.66 per Share for an aggregate purchase price of $       . Payment of
the aggregate purchase for the Shares (please check one of the following):

         ______  Is included herewith in the form of a bank, cashier's or
                 certified check;

                                       or

         ______   Has been wire transferred to the escrow account referenced in
                  Schedule A to the Offering Memorandum.

                                                 FOR INDIVIDUALS:

                                                --------------------------------
                                                 Print Name

                                                --------------------------------
Dated: ___________, 2000                        Signature

                                                --------------------------------
                                                Print Name

                                                --------------------------------
Dated: ___________, 2000                        Signature

                                                FOR CORPORATIONS:

                                                --------------------------------
                                                Name of Company

                                                --------------------------------
                                                Name of Executive Officer of
                                                Company

Dated: ___________, 2000                        --------------------------------
                                                Signature of Executive Officer

                                                FOR PARTNERSHIPS:

                                                --------------------------------
                                                Name of Partnership

                                                --------------------------------
                                                Name of Authorized Partner

Dated: ___________, 2000                        --------------------------------
                                                Signature of Authorized Partner

                                                FOR TRUSTS:

                                                --------------------------------
                                                Name of Trust

                                                --------------------------------
                                                Name of Authorized Trustee

<PAGE>

Dated: ___________, 2000                        --------------------------------
                                                Signature of Authorized Trustee

<PAGE>

                                   SCHEDULE A
                                    INVESTORS

Name, Address and Tax Identification No.                      Signature
----------------------------------------                      ---------

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