Document:

ex10_8.htm

    
      

    

    
      Exhibit
10.8

       

      

       

      Capped
Call Transaction

       

      
        	
                Date:

              	
                March
      4, 2008

              

      

       

      
        	
                To:

              	
                Central
      European Media Enterprises Ltd.

              

      

      c/o CME
Development Corporation

      Mark Wyllie
(VP Corporate Finance) / Robert Janta-Lipinski (Group
Treasurer)

      Facsimile:
+44 20 7430 5402

      Telephone:
+44 20 7430 5337 / 5353

      

      
        	
                From:

              	
                BNP
      Paribas

              

      

      787
Seventh Avenue, 8th Floor

      New York,
NY  10019

       

      

      
        
          

        
Dear Sir or
Madam:

       

      The
purpose of this communication (this “Confirmation”) is to confirm the terms and
conditions of the transaction (the “Transaction”) entered into between BNP
Paribas (“Party A”) and Central European Media Enterprises Ltd. (“Party B”) on
the Trade Date specified below. This Confirmation constitutes a “Confirmation”
as referred to in the Agreement specified below.

      

      This
Confirmation evidences a complete and binding agreement between Party A and
Party B as to the terms of the Transaction to which this Confirmation relates.
This Confirmation supplements, forms part of, and is subject to, an agreement in
the form of the 1992 ISDA Master Agreement (Multicurrency—Cross Border) (the
“Agreement”) as if we had executed an agreement in such form (but without any
Schedule except for the elections set forth herein) on the Trade Date of the
Transaction.

      

      The
definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “Equity Definitions”) and the 2000 ISDA Definitions (the “Swap
Definitions”, and together with the Equity Definitions, the “Definitions”), in
each case as published by the International Swaps and Derivatives Association,
Inc. (“ISDA”) are incorporated into this Confirmation. The Transaction
constitutes a Share Option Transaction for the purposes of the Equity
Definitions. References herein to “Transaction” shall be deemed references to
“Swap Transaction” for purposes of the Swap Definitions.  In the event
of any inconsistency between the Equity Definitions and the Swap Definitions,
the Equity Definitions will govern.  In the event of any inconsistency
between either set of Definitions and this Confirmation, this Confirmation will
govern.

       

      Certain
defined terms used herein have the meanings assigned to them in the Offering
Memorandum dated March 4, 2008 (the “Offering Memorandum”) relating to the
USD425 million aggregate principal amount of 3.50% Convertible Senior Notes due
2013 (the “Convertible Notes” and each USD1,000 principal amount of Convertible
Notes, a “Convertible Note”) issued by Party B pursuant to an Indenture to be
dated as of March 10, 2008 between Party B and The Bank of New York, as trustee
(as in effect on the date of its execution, the “Indenture”). In the event of
any inconsistency between the terms defined in the Offering Memorandum, the
Indenture and this Confirmation, this Confirmation shall govern. The parties
acknowledge that this Confirmation is entered into on the date hereof with the
understanding that (i) definitions set forth in the Indenture that are also
defined herein by reference to the Indenture and (ii) sections of the Indenture
that are referred to herein, in each case, will conform to the descriptions
thereof in the Offering Memorandum. If any such definitions in the Indenture or
any such sections of the Indenture differ from the descriptions thereof in the
Offering Memorandum, the descriptions thereof in the Offering Memorandum will
govern for purposes of this Confirmation. The parties further acknowledge that
the Indenture section numbers used herein are based on the draft of the
Indenture last reviewed by Party A and Party B as of the date of this
Confirmation, and if any such section numbers are changed in the Indenture as
executed, the parties will amend this Confirmation in good faith to preserve the
intent of the parties. For the avoidance of doubt, references to the Indenture
herein are references to the Indenture as in effect on the date of its execution
and if the Indenture is amended following its execution, any such amendment will
be disregarded for purposes of this Confirmation unless the parties agree
otherwise in writing.

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

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

       

      
        	
                General
      Terms:

                 

              	 	 
      
	
                Agent:

              	 	
                BNP
      Paribas Securities Corp. The parties agree and acknowledge
      that (i) BNP Paribas Securities Corp. (“BNPPSC”), an affiliate of BNP
      Paribas, has acted solely as agent and not as principal with
      respect to this Transaction and (ii) BNPPSC has no obligation or
      liability, by way of guarantee, endorsement or otherwise, in any manner
      in
      respect of this Transaction (including, if applicable, in respect of the
      settlement thereof).  Each party agrees it will look solely to the
      other
      party (or any guarantor in respect thereof) for performance of such other
      parties’ obligations under this Transaction.

              
	 	 	 
	
                Trade
      Date:

              	 	
                March
      4, 2008

              
	 	 	 
	
                Option
      Style:

              	 	
                “Modified
      American” as set forth under “Procedures for Exercise”
    below.

              
	 	 	 
	
                Option
      Type:

              	 	
                Call

              
	 	 	 
	
                Seller:

              	 	
                Party
      A

              
	 	 	 
	
                Buyer:

              	 	
                Party
      B

              
	 	 	 
	
                Shares:

              	 	
                The
      Class A common stock of Central European Media Enterprises Ltd. (the
      “Issuer”), par value USD0.08 per share, Ticker: CETV

              
	 	 	 
	
                Number
      of Options:

              	 	
                148,750,
      provided that if
      Lehman Brothers Inc. and J.P. Morgan Securities Inc. as representatives of
      the Initial Purchasers (as defined in the Purchase Agreement dated as of
      March 4, 2008 between Party B and Lehman Brothers Inc. and J.P. Morgan
      Securities Inc. as representatives of the initial purchasers party thereto
      (the “Purchase Agreement”)), exercise the option to purchase additional
      Convertible Notes pursuant to Section 2(d) of the Purchase Agreement, the
      Number of Options hereunder shall be automatically increased, effective
      upon payment by Party B of the Additional Premium on the Additional
      Premium Payment Date, by the Applicable Percentage times the number of
      Convertible Notes in denominations of USD1,000 principal amount issued
      pursuant to such exercise (such Convertible Notes, the “Additional
      Convertible Notes”). For the avoidance of doubt, the Number of Options
      shall be reduced by the number of any Options exercised or terminated by
      Party B. In no event will the Number of Options be less than
      zero.

              

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      

      
        	
                Option
      Entitlement:

              	 	
                As
      of any date, a number equal to the Conversion Rate as of such date (as
      defined in the Indenture, but without regard to any adjustments to the
      Conversion Rate pursuant to Section 10.04(b) or Section 10.05(i) of the
      Indenture).

              
	 	 	 
	
                Applicable
      Percentage:

              	 	
                35%

              
	 	 	 
	
                Number
      of Shares:

              	 	
                The
      product of the Number of Options and the Option
    Entitlement.

              
	 	 	 
	
                Strike
      Price:

              	 	
                USD105.00

              
	 	 	 
	
                Cap
      Price:

              	 	
                USD151.20

              
	 	 	 
	
                Premium:

              	 	
                USD19,828,375
      (Premium per Option: USD133.30), provided that if the
      Number of Options is increased pursuant to the proviso to the definition
      of “Number of Options” above, Party B shall pay on the Additional Premium
      Payment Date an additional Premium (the “Additional Premium”) equal to the
      product of the number of Options by which the Number of Options is so
      increased and USD133.30.

              
	 	 	 
	
                Premium
      Payment Date:

              	 	
                Four
      Currency Business Days after the Trade Date

              
	 	 	 
	
                Additional
      Premium Payment Date:

              	 	
                The
      closing date for the purchase and sale of the Additional Convertible
      Notes.

              
	 	 	 
	
                Exchange:

              	 	
                NASDAQ
      Global Select Market

              
	 	 	 
	
                Related
      Exchange(s):

              	 	
                All
      Exchanges

              
	 	 	 
	
                Market
      Disruption Event:

              	 	
                The
      definition of “Market Disruption Event” in Section 6.3(a) of the Equity
      Definitions is hereby amended by deleting the words “at any time during
      the one-hour period that ends at the relevant Valuation Time, Latest
      Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the
      case may be” and inserting the words “at any time on any Averaging Date”
      after the word “material,” in the third line thereof.

                 

                Section
      6.3(d) of the Equity Definitions is hereby amended by deleting the
      remainder of the provision following the term “Scheduled Closing Time” in
      the fourth line thereof.

              

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      

      
        	
                Disrupted
      Day:

              	 	
                The
      definition of “Disrupted Day” in Section 6.4 of the Equity Definitions
      shall be amended by adding the following sentence after the first
      sentence: “A Scheduled Trading Day on which a Related Exchange fails to
      open during its regular trading session will not be a Disrupted Day if the
      Calculation Agent determines that such failure will not have a material
      adverse impact on Party A’s ability to unwind any related hedging
      transactions related to the Transaction.”

              
	 	 	 
	
                Procedure for
      Exercise:

              	 	 
      
	 	 	 
	
                Exercise
      Period:

              	 	
                Notwithstanding
      anything to the contrary in the Equity Definitions, an Exercise Period
      shall occur with respect to an Option hereunder only if such Option is an
      Exercisable Option (as defined below) and the Exercise Period shall be, in
      respect of any Exercisable Option, the period commencing on, and
      including, the relevant Conversion Date and ending on, but excluding, the
      first Averaging Date in respect of such Conversion Date; provided that in
      respect of any Exercisable Options relating to Convertible Notes for which
      the relevant Conversion Date occurs during the period beginning on, and
      including, December 15, 2012, the final day of the Exercise Period shall
      be the Scheduled Trading Day immediately prior to the Expiration Date
      (such Exercise Period, the “Final Exercise Period”).

              
	 	 	 
	
                Conversion
      Date:

              	 	
                With
      respect to any conversion of Convertible Notes, the date on which the
      holder of such Convertible Notes satisfies all of the requirements for
      conversion thereof as set forth in Section 10.02 of the
      Indenture.

              
	 	 	 
	
                Exercisable
      Options:

              	 	
                Upon
      the occurrence of a Conversion Date, a number of Options equal to (x) the
      Applicable Percentage times (y) the number of
      Convertible Notes in denominations of USD1,000 principal amount converted
      on such Conversion Date.

              
	 	 	 
	
                Expiration
      Time:

              	 	
                The
      Valuation Time

              
	 	 	 
	
                Expiration
      Date:

              	 	
                March
      15, 2013

              
	 	 	 
	
                Multiple
      Exercise:

              	 	
                Applicable,
      as described under “Exercisable Options” above.

              
	 	 	 
	
                Automatic
      Exercise:

              	 	
                Applicable;
      and means that, in respect of any Exercise Period other than the Final
      Exercise Period, a number of Options not previously exercised hereunder
      equal to the number of Exercisable Options shall be deemed to be exercised
      on the relevant Averaging Dates to which such Options relate and, in
      respect of the Final Exercise Period, all Options not previously exercised
      shall be deemed exercised on the relevant Averaging Dates to which such
      Options relate; provided that in each
      case, if a Notice of Exercise is required, such Options shall be deemed
      exercised only to the extent that Party B has provided a Notice of
      Exercise to Party A (in each case, such number of Options deemed
      exercised, the “Exercised Options”); provided further that,
      with respect to Exercised Options relating to an Exercise Period occurring
      prior to the Final Exercise Period (an “Early Conversion”), Automatic
      Exercise means that an Additional Termination Event shall be deemed to
      occur with respect to a portion of the Transaction relating to a number of
      Options equal to the number of such Exercised Options, as provided in
      clause (i) under “Additional Termination Events” below; provided further that
      to the extent the number of Exercised Options relating to any Conversion
      Date is less than the number of Exercisable Options relating to such
      Conversion Date, Party B shall be deemed to make to Party A on the date it
      provided the related Notice of Exercise to Party A (or, if no such notice
      is provided, the final day of such Exercise Period) the representations
      and warranties contained in paragraph (g) under “Additional
      Representations and Warranties of Party B” below as if the reference
      therein to “at the time of placing any order with respect to the
      Transaction” were replaced with “as of the date of the related Notice of
      Exercise (or, if no such notice is provided, the final day of the related
      Exercise Period).”

              

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      

      
        	
                Notice
      of Exercise:

              	 	
                Notwithstanding
      anything to the contrary in the Equity Definitions, in order to exercise
      any Exercisable Options in respect of any Conversion Date occurring prior
      to the Final Exercise Period, Party B must notify Party A in writing
      before 5:00 p.m. (New York City time) on the Scheduled Trading Day prior
      to the scheduled first Averaging Date for the Exercisable Options being
      exercised of (i) the number of such Options, (ii) such first scheduled
      Averaging Date and the scheduled Settlement Date and (iii) if Party B elected
      to satisfy its obligations under the Convertible Notes solely with Shares
      (a “Gross Physical Settlement”) in connection with the related conversion
      of the Convertible Notes, the fact that Gross Physical Settlement applies
      to such conversion, and, in order to exercise any Exercisable Options
      during the Final Exercise Period, if Party B elected Gross Physical
      Settlement for any conversion of the Convertible Notes during the Final
      Exercise Period, Party B must notify Party A of such election in writing
      before 5:00 p.m. (New York City time) on December 15,
  2012.

              

      

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      

      
        	
                Valuation:

              	 	 
      
	 	 	 
	
                Valuation
      Time:

              	 	
                At
      the close of trading on the Exchange, without regard to extended or after
      hours trading.

              
	 	 	 
	
                Averaging
      Dates:

              	 	
                (x)
      For any Exercised Option relating to an Exercise Period occurring prior to
      the Final Exercise Period, the 25 (or 60 if Party B has notified Party A
      that Gross Physical Settlement applies to the related conversion)
      consecutive Scheduled Trading Days commencing on and including the third
      “Settlement Period Trading Day” (as defined in the Indenture) following
      the relevant Conversion Date, or (y) for any Exercisable Option relating
      to the Final Exercise Period, the 25 (or 60 if Party B has notified Party
      A that Gross Physical Settlement applies to conversions during the Final
      Exercise Period) consecutive Scheduled Trading Days commencing on, and
      including, the 27th (or 62nd if Party B has notified Party A that Gross
      Physical Settlement applies to conversions during the Final Exercise
      Period) Scheduled Trading Day immediately preceding the Expiration
      Date.

              
	 	 	 
	
                Averaging
      Date Market Disruption:

              	 	
                Modified
      Postponement; provided that,
      notwithstanding anything to the contrary in the Equity Definitions and in
      addition to the provisions of Section 6.7(c)(iii) of the Equity
      Definitions, if any Averaging Date is a Disrupted Day, the Calculation
      Agent may assign additional dates to be Averaging Dates and/or make
      adjustments to the number of Options to which each Averaging Date relates
      (including increasing such number or reducing such number to zero with
      respect to one or more Averaging Dates).

              
	 	 	 
	
                Relevant
      Price:

              	 	
                For
      any Averaging Date, the VWAP Price for such Averaging
  Date.

              
	 	 	 
	
                VWAP
      Price:

              	 	
                For
      any Exchange Business Day, the dollar volume weighted average price per
      Share for that Exchange Business Day based on transactions executed during
      that Exchange Business Day on the Exchange, as reported on Bloomberg Page
      “CETV.UQ <Equity> AQR” (or any successor thereto), or in the event
      such price is not so reported on such Exchange Business Day for any
      reason, as reasonably determined by the Calculation
  Agent.

              
	 	 	 
	
                Settlement
      Terms:

              	 	 
      
	 	 	 
	
                Settlement
      Currency:

              	 	
                USD

              

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      

      
        	
                Settlement
      Date or Cash Settlement Payment Date:

              	 	
                For
      any Exercised Option, the date Shares will be delivered or cash will be
      paid with respect to the Convertible Notes related to such Exercised
      Options, under the terms of the Indenture; provided that if Gross
      Physical Settlement applies to the related conversion of the Convertible
      Notes and the Exercised Option relates to an Exercise Period other than
      the Final Exercise Period, one Settlement Cycle immediately following the
      final Averaging Date relating to such Exercised Option.

              
	 	 	 
	
                Settlement
      Method Election:

              	 	
                Applicable;
      provided that
      Party B shall not be permitted to elect Cash Settlement and hereby agrees
      not to make an election other than the Default Settlement Method with
      respect to the Transaction unless Party B makes to Party A in writing on
      the date of its election the representations and warranties contained in
      paragraph (g) under “Additional Representations and Warranties of Party B”
      below where the reference therein to “at the time of placing any order
      with respect to the Transaction” shall be replaced with “as of the date of
      such election of Cash Settlement.”

              
	 	 	 
	
                Electing
      Party:

              	 	
                Party
      B

              
	 	 	 
	
                Settlement
      Method Election Date:

              	 	
                The
      third Scheduled Trading Day immediately preceding the first Averaging Date
      for the relevant Exercisable Options.

              
	 	 	 
	
                Default
      Settlement Method:

              	 	
                Physical
      Settlement

              
	 	 	 
	
                Cash
      Settlement Terms:

              	 	 
      
	 	 	 
	
                Cash
      Settlement:

              	 	
                If
      Cash Settlement applies with respect to any Exercised Options, a relevant
      portion of the Transaction shall expire on each Averaging Date with
      respect to a number of Options equal to the relevant number of Exercised
      Options divided
      by the number of scheduled Averaging Dates relating to such
      Exercised Options, rounded down to the nearest whole number, except the
      portion relating to the last such Averaging Date shall equal such relevant
      number of Exercised Options minus the number of
      Options relating to all preceding Averaging Dates relating to such
      Exercised Options (in each case subject to adjustment by the Calculation
      Agent in respect of any Disrupted Day). On the Cash Settlement Payment
      Date relating to the relevant Exercised Options, Party A shall pay to
      Party B the aggregate Cash Settlement Amount for all related Averaging
      Dates.

              
	 	 	 
	
                Cash
      Settlement Amount:

              	 	
                For
      each Averaging Date, an amount, as calculated by the Calculation Agent,
      equal to (i) the Strike Price Differential for such Averaging Date, multiplied by (ii) the
      number of Options to which such Averaging Date relates, multiplied
      by (iii)
      the Option Entitlement as of such Averaging
  Date.

              

      

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      

      
        	
                Strike
      Price Differential:

              	 	
                For
      each Averaging Date, if the Relevant Price for such Averaging Date is (a)
      greater than the Strike Price and less than or equal to the Cap Price, an
      amount equal to the excess of the Relevant Price for such Averaging Date
      over the Strike Price, (b) greater than the Cap Price, an amount equal to
      the excess of the Cap Price over the Strike Price, or (c) less than or
      equal to the Strike Price, zero.

              
	 	 	 
	
                Physical
      Settlement Terms:

              	 	 
      
	 	 	 
	
                Physical
      Settlement:

              	 	
                If
      Physical Settlement applies with respect to any Exercised Options, a
      relevant portion of the Transaction shall expire on each Averaging Date
      with respect to a number of Options equal to the relevant number of
      Exercised Options divided by the number
      of scheduled Averaging Dates, rounded down to the nearest whole number,
      except the portion relating to the last such Averaging Date shall equal
      such relevant number of Exercised Options minus the number of
      Options relating to all preceding Averaging Dates relating to such
      Exercised Options (in each case subject to adjustment by the Calculation
      Agent in respect of any Disrupted Day). On the Settlement Date relating to
      the relevant Exercised Options, Party A shall deliver to Party B the
      aggregate Number of Shares to be Delivered for all related Averaging Dates
      and pay to Party B any Fractional Share Amount resulting from such
      aggregation (valued at the Relevant Price for the last Averaging
      Date).

              
	 	 	 
	
                Number
      of Shares to be Delivered:

              	 	
                An
      amount of Shares equal to the Cash Settlement Amount for such Averaging
      Date divided by
      the Relevant Price for such Averaging Date.

              
	 	 	 
	
                Other
      Applicable Provisions in
      Respect of Physical Settlement:

              	 	
                The
      representations and agreements contained in Section 9.11 of the Equity
      Definitions shall be modified by excluding any representations therein
      relating to restrictions, obligations, limitations or requirements under
      applicable securities laws that exist as a result of the fact that Party B
      is the issuer of the Shares.

              

      

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      

      
        	Share
      Adjustments:	 	 
	 	 	 
	
                Potential
      Adjustment Events:

              	 	
                Notwithstanding
      Section 11.2(e) of the Equity Definitions, a “Potential Adjustment Event”
      means an occurrence of any event or condition, as set forth in Section
      10.05 of the Indenture, that would result in an adjustment to the
      Conversion Rate of the Convertible Notes; provided that in no
      event shall there be any adjustment hereunder as a result of an adjustment
      to the Conversion Rate pursuant to Section 10.04(b) or Section 10.05(i) of
      the Indenture.

              
	 	 	 
	
                Method
      of Adjustment:

              	 	
                Calculation
      Agent Adjustment; which means, notwithstanding anything to the contrary in
      the Equity Definitions, upon any adjustment to the Conversion Rate of the
      Convertible Notes pursuant to the Indenture (other than pursuant to
      Section 10.04(b) or Section 10.05(i) of the Indenture) (i) the Calculation
      Agent shall make a corresponding adjustment to any of the Strike Price,
      Number of Options and the Option Entitlement and (ii) the Calculation
      Agent may, but is not required to, make any adjustment consistent with the
      Calculation Agent Adjustment set forth in Section 11.2(c) of the Equity
      Definitions to the Cap Price or any other variable relevant to the
      exercise, settlement or payment for the Transaction (other than the Strike
      Price) to preserve the fair value of the Options to Party A after taking
      into account the effect of such Potential Adjustment Event; provided that in no
      event shall the Cap Price be less than the Strike Price; provided further, that
      adjustments may be made to the Cap Price to account for changes in
      volatility, expected dividends, stock loan rate and liquidity relevant to
      the Shares or to the Transaction.

              
	 	 	 
	
                Extraordinary
      Events:

              	 	 
      
	 	 	 
	
                Merger
      Events:

              	 	
                Notwithstanding
      Section 12.1(b) of the Equity Definitions, a “Merger Event” means the
      occurrence of any event or condition set forth in Section 10.06(a) or
      Section 10.06(b)  of the Indenture.

              
	 	 	 
	
                Tender
      Offers:

              	 	
                Applicable;
      provided that
      notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender
      Offer” means the occurrence of any event or condition set forth in Section
      10.05(f) of the Indenture or Clause (1) of the definition of “Fundamental
      Change” in Section 1.01 of the Indenture.

              
	 	 	 
	
                Consequence
      of Merger Events/Tender Offers:

              	 	
                Notwithstanding
      Sections 12.2 and 12.3 of the Equity Definitions, upon the occurrence of a
      Merger Event or a Tender Offer:

              

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      

      
        	 
      	 	
                (i)   the
      Calculation Agent shall make a corresponding adjustment in respect of any
      adjustment under the Indenture to any one or more of the nature of the
      Shares, Strike Price, Number of Options and the Option Entitlement; provided, however, that such
      adjustment shall be made without regard to any adjustment to the
      Conversion Rate for the issuance of additional shares as set forth in
      Section 10.04(b) or Section 10.05(i) of the Indenture;
  and

              
	 	 	 
	 
      	 	
                (ii)   the
      Calculation Agent may, in its sole discretion, make any adjustment
      consistent with the Modified Calculation Agent Adjustment set forth in
      Section 12.2(e) or 12.3(d) of the Equity Definitions, as applicable, to
      the Cap Price or any other variable relevant to the exercise, settlement
      or payment for the Transaction; provided, however, that in no
      event shall the Cap Price be less than the Strike
Price;

              
	 	 	 
	 
      	 	
                provided that, for the
      avoidance of doubt, adjustments shall be made pursuant to the provisions
      of subparagraphs (i) and (ii) above regardless of whether any Merger Event
      or Tender Offer gives rise to an Early Conversion; and

                provided further that,
      notwithstanding the foregoing, with respect to any Majority Tender Offer,
      Party A may elect for Cancellation and Payment (Calculation Agent
      Determination) to apply.  “Majority Tender Offer” means A Tender
      Offer as defined in Section 12.1(d) of the Equity Definitions that results
      in the relevant entity or person purchasing, or otherwise obtaining or
      having the right to obtain, by conversion or other means, 50% or greater
      than 50% of the outstanding voting shares of the Issuer, as determined by
      the Calculation Agent, based upon the making of filings with governmental
      or self-regulatory agencies or such other information as the Calculation
      Agent deems relevant.

              

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      

      
        	
                Modified
      Calculation Agent Adjustment:

              	 	
                For
      greater certainty, the definition of “Modified Calculation Adjustment” in
      Sections 12.2 and 12.3 of the Equity Definitions shall be amended by (i)
      adding the following italicized language after the stipulated
      parenthetical provision: “(including adjustments to account for
      changes in
      expected dividends, stock loan rate, liquidity, or, in the case of the Cap
      Price, also changes in volatility, relevant to the Shares or to the
      Transaction) from the
      Announcement Date to the Merger Date (Section 12.2)  or Tender
      Offer Date (Section 12.3),” and (ii) deleting the phrase “,
      expected dividends, stock loan rate” from such stipulated parenthetical
      provision.

              
	 	 	 
	
                Announcement
      Event:

              	 	
                If
      an Announcement Event occurs, the Calculation Agent will determine the
      economic effect of the Announcement Event on the theoretical value of the
      Transaction (including without limitation any change in expected
      dividends, stock loan rate, liquidity, or, in the case of the Cap Price,
      also changes in volatility, relevant to the Shares or to the Transaction)
      from the Announcement Date to the Expiration Date. If such economic effect
      is material to either party, the Calculation Agent will adjust the Cap
      Price to account for such economic effect; provided that in no
      event shall the Cap Price be less than the Strike Price. “Announcement
      Event” shall mean the occurrence of (i) the first public announcement of a
      firm intention to engage in a transaction that may lead to a Merger Event,
      (ii) the first public announcement of a firm intention to purchase or
      otherwise obtain the requisite number of shares that may lead to a Tender
      Offer or (iii) in each case, any subsequent amendment to or withdrawal of
      such announcement.

              
	 	 	 
	
                Composition
      of Combined Consideration:

              	 	
                Not
      Applicable

              
	 	 	 
	
                Nationalization,
      Insolvency or Delisting:

              	 	
                Cancellation
      and Payment

                 

                (Calculation Agent
      Determination)

              
	 	 	 
	
                Delisting:

              	 	
                The
      definition of “Delisting” in Section 12.6 of the Equity Definitions shall
      be deleted in its entirety and replaced with the following: ‘“Delisting”
      means that the Exchange announces that pursuant to the rules of such
      Exchange, the Shares cease (or will cease) to be listed, traded or
      publicly quoted on the Exchange for any reason (other than a Merger Event
      or Tender Offer) and are not immediately re-listed, re-traded or re-quoted
      on the New York Stock Exchange, the American Stock Exchange, the NASDAQ
      Global Select Market or the NASDAQ Global Market (or their respective
      successors)”

              

      

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      

      
        	
                Additional
      Disruption Events:

              	 	 
      
	 	 	 
	
                Change
      in Law:

              	 	
                Applicable

              
	 	 	 
	
                Failure
      to Deliver:

              	 	
                Applicable

              
	 	 	 
	
                Insolvency
      Filing:

              	 	
                Applicable

                 

                The
      definition of “Insolvency Filing” in Section 12.9 of the Equity
      Definitions shall be amended by deleting the clause “provided that such
      proceedings instituted or petitions presented by creditors and not
      consented to by the Issuer shall not be deemed an Insolvency Filing” at
      the end of such definition and replacing it with the following: “; or it
      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 by a creditor and such proceeding is not
      dismissed, discharged, stayed or restrained in each case within fifteen
      (15) days of the institution or presentation thereof.”

              
	 	 	 
	
                Hedging
      Disruption:

              	 	
                Applicable

              
	 	 	 
	
                Increased
      Cost of Hedging:

              	 	
                Applicable

              
	 	 	 
	
                Loss
      of Stock Borrow:

              	 	
                Not
      Applicable

              
	 	 	 
	
                Increased
      Cost of Stock Borrow:

              	 	
                Not
      Applicable

              
	 	 	 
	
                Hedging
      Party:

              	 	
                Party
      A shall be the Hedging Party for all Extraordinary
  Events

              
	 	 	 
	
                Determining
      Party:

              	 	
                Party
      A shall be the Determining Party for all Extraordinary
    Events

              
	 	 	 
	
                Additional
      Provisions:

              	 	 
      
	 	 	 
	
                Non-Reliance:

              	 	
                Applicable

              
	 	 	 
	
                Agreements
      and Acknowledgments Regarding Hedging Activities:

              	 	
                Applicable

              
	 	 	 
	
                Additional
      Acknowledgments:

              	 	
                Applicable

              
	 	 	 
	
                Additional
      Representations and Warranties of Party B:

                 

              	 	
                In
      addition to the representations set forth in the Agreement, Party B
      further represents that;

                 

                (a)
      (i) It is not entering into the Transaction on behalf of or for the
      accounts of any other person or entity, and will not transfer or assign
      its obligations under the Transaction or any portion of such obligations
      to any other person or entity except in compliance with applicable laws
      and the terms of the Transaction; (ii) it understands that the Transaction
      is subject to complex risks which may arise without warning, may at times
      be volatile, and that losses may occur quickly and in unanticipated
      magnitude; (iii) it is authorized to enter into the Transaction and such
      action does not violate any laws of its jurisdiction of organization or
      residence (including, but not limited to, any applicable position or
      exercise limits set by any self-regulatory organization, either acting
      alone or in concert with others) or the terms of
      any agreement to which it is a party; (iv) it has consulted with its legal
      advisor(s) and has reached its own conclusions about the Transaction, and
      any legal, regulatory, tax, accounting or economic consequences arising
      from the Transaction; and (v) it has concluded that the Transaction is
      suitable in light of its own investment objectives, financial capabilities
      and expertise.

                 

                (b)
      If Party B purchases any Shares pursuant to the Transaction, such
      purchase(s) will comply with (i) all laws and regulations applicable to it
      and (ii) all contractual obligations of Party B.

                 

                (c)
      At all times until termination of the Transaction, Party B is an “eligible
      contract participant” as the term is defined in the Commodity Futures
      Modernization Act of 2000.

              

      

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      

      
        	 
      	 	
                 (d)
      Neither Party A nor any of its affiliates has advised it with respect to
      any legal, regulatory, tax, accounting or economic consequences arising
      from the Transaction, and neither Party A nor any of its affiliates is
      acting as agent (other than BNPPSC as dual agent as specified above), or
      advisor for Party B in connection with the Transaction.

                 

                (e)
      Each of its required filings under all applicable securities laws have
      been filed and that, as of the respective dates thereof there is no
      material misstatement of material fact contained therein or omission of a
      material fact required to be stated therein or necessary to make the
      statements therein not misleading.

                 

                (f)
      It has not entered into any obligation that would contractually limit it
      from effecting Physical Settlement or Cash Settlement under the
      Transaction.

              
	 	 	 
	 
      	 	
                (g)
      As of the Trade Date, Party B is in compliance with its reporting
      obligations under the Exchange Act and its most recent Annual Report on
      Form 10-K, together with all reports subsequently filed by it pursuant to
      the Exchange Act, taken together and as amended and supplemented to the
      Trade Date, do not, as of their respective filing dates, contain any
      untrue statement of a material fact or omit to state any material fact
      required to be stated therein or necessary to make the statements therein,
      in the light of the circumstances under which they were made, not
      misleading such that Party B’s officers and directors are not in
      possession of any material non-public information concerning Party B or
      its securities.

              

      

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      

      
        	 
      	 	
                (h)
      The Transaction and any repurchase of Shares by Party B in connection with
      the Transaction has been approved by its board of directors and that any
      such repurchase has been publicly disclosed.

              
	 	 	 
	 
      	 	
                (i)
      It is not entering into the Transaction to create actual or apparent
      trading activity in the Shares (or any security convertible into or
      exchangeable for Shares), to manipulate the price of the Shares (or any
      security convertible into or exchangeable for Shares) or to facilitate a
      distribution of Shares (or any security convertible into or exchangeable
      for Shares).

              
	 	 	 
	 
      	 	
                (j)
      It is not, and, after giving effect to the transactions contemplated
      hereby will not be, an “investment company” as such term is defined in the
      Investment Company Act of 1940, as amended.

              
	 	 	 
	 
      	 	
                (k)
      It is not on the Trade Date engaged in a distribution, as such term is
      used in Regulation M under the Securities Exchange Act of 1934, as amended
      (“Regulation M”), of any securities of Party B, other than a distribution
      meeting the requirements of the exception set forth in section 101(b)(10)
      or 102(b)(7) of Regulation M.  Party B shall not, until the
      second Exchange Business Day immediately following the Trade Date, engage
      in any such distribution.

              
	 	 	 
	 
      	 	
                (l)
      On the Trade Date and on any Additional Premium Payment Date (A) the
      assets of Party B at their fair valuation exceed the liabilities of Party
      B, including contingent liabilities, (B) the capital of Party B is
      adequate to conduct the business of Party B and (C) Party B has the
      ability to pay its debts and obligations as such debts mature and does not
      intend to, or does not believe that it will, incur debt beyond its ability
      to pay as such debts mature.

              

      

       

      
        	
                Other
      Provisions:

                 

              	 	 
      
	
                Alternative
      Calculations and Payment on Early Termination and on
      Certain  Extraordinary Events:

              	 	
                If,
      in respect of the Transaction, an amount is payable by Party A to Party B
      (i) pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity
      Definitions (except in the event of a Nationalization, Insolvency, Tender
      Offer or a Merger Event, in each case, in which the consideration to be
      paid to holders of Shares consists solely of cash) or (ii) pursuant to
      Section 6(d)(ii) of the Agreement (except in the event of an Event of
      Default in which Party B is the Defaulting Party or a Termination Event in
      which Party B is the Affected Party that resulted from an event or events
      outside Party B’s control) (a “Payment Obligation”), Party B shall have
      the right, in its sole discretion, to require Party A to satisfy any such
      Payment Obligation by the Share Termination Alternative (as defined below)
      by giving irrevocable telephonic notice to Party A, confirmed in writing
      within one Currency Business Day, no later than 4:00 p.m. New York local
      time on the Merger Date, Tender Offer Date, Announcement Date or Early
      Termination Date, as applicable (“Notice of Share
      Termination”).

              

      

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      

      
        	 	 	
                Notwithstanding
      anything to the contrary in the foregoing, with respect to any Payment
      Obligation resulting from an Additional Termination Event in connection
      with an Early Conversion, Party B shall be deemed to have elected as of
      the Trade Date to require Party A to satisfy any such Payment Obligation
      by the Share Termination Alternative; provided that Party B
      may elect for the Share Termination Alternative not to apply to such
      Payment Obligation by (x) giving written notice of such election to Party
      A no later than 4:00 p.m., New York local time, on the Scheduled Trading
      Day immediately preceding the relevant Early
      Termination Date and (y) making to Party A in such written notice the
      representations and warranties contained in paragraph (g) under
      “Additional Representations and Warranties of Party B” above where the
      reference therein to “at the time of placing any order with respect to the
      Transaction” shall be replaced with “as of the date of this written
      notice.”

                 

                Upon
      Notice of Share Termination no later than 8:00 a.m. on the Exchange
      Business Day immediately following the Merger Date, Tender Offer Date,
      Announcement or Early Termination Date, as applicable, the following
      provisions shall apply:

              
	 	 	 
	
                Share
      Termination Alternative:

              	 	
                Applicable
      and means that Party A shall deliver to Party B the Share Termination
      Delivery Property on the date, or within a commercially reasonable period
      of time after, when the Payment Obligation would otherwise be due pursuant
      to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) and
      6(e) of the Agreement, as applicable (the “Share Termination Payment
      Date”), in satisfaction of the Payment Obligation in the manner reasonably
      requested by Party B free of
payment.

              

      

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      

      
        	
                Share
      Termination Delivery Property:

              	 	
                A
      number of Share Termination Delivery Units, as calculated by the
      Calculation Agent, equal to the Payment Obligation divided by the Share
      Termination Unit Price.  The Calculation Agent shall adjust the
      Share Termination Delivery Property by replacing any fractional portion of
      a security therein with an amount of cash equal to the value of such
      fractional security based on the values used to calculate the Share
      Termination Unit Price.

              
	 	 	 
	
                Share
      Termination Unit Price:

              	 	
                The
      value to Party A of property contained in one Share Termination Delivery
      Unit on the date such Share Termination Delivery Units are to be delivered
      as Share Termination Delivery Property, as determined by the Calculation
      Agent in its discretion by commercially reasonable means and notified by
      the Calculation Agent to Party A at the time of notification of the
      Payment Obligation.

              
	 	 	 
	
                Share
      Termination Delivery Unit:

              	 	
                In
      the case of a Termination Event or Event of Default, one Share or, in the
      case of Nationalization, Insolvency or Merger Event or Tender Offer, a
      unit consisting of the number or amount of each type of property received
      by a holder of one Share (without consideration of any requirement to pay
      cash or other consideration in lieu of fractional amounts of any
      securities) in such Nationalization, Insolvency, Merger Event or Tender
      Offer, as determined by the Calculation Agent. If a Share Termination
      Delivery Unit consists of property other than cash or New Shares and if
      Party B provides irrevocable written notice to the Calculation Agent on or
      prior to the Merger Date that it elects to have Party A deliver cash, New
      Shares or a combination thereof (in such proportion as Party B designates)
      in lieu of such other property, the Calculation Agent will replace such
      property with cash, New Shares or a combination thereof as components of a
      Share Termination Delivery Unit in such amounts, as determined by the
      Calculation Agent in its discretion by commercially reasonable means, as
      shall have a value equal to the value of the property so
      replaced.  If such Nationalization, Insolvency, Merger Event or
      Tender Offer involves a choice of consideration to be received by holders,
      such holder shall be deemed to have elected to receive the maximum
      possible amount of cash.

              
	 	 	 
	
                Failure
      to Deliver:

              	 	
                Applicable

              

      

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      

      
        	
                Other
      applicable provisions:

              	 	
                If
      the Transaction is to be Share Termination Settled, the provisions of
      Sections 9.8, 9.9, 9.10, 9.11 and 9.12 (as modified above) of the Equity
      Definitions will be applicable, as if “Physical Settlement” applied to the
      Transaction; provided that all
      references to “Shares” shall be read as references to “Share Termination
      Delivery Units” and the representations and agreements contained in
      Section 9.11 of the Equity Definitions shall be modified by excluding any
      representations therein relating to restrictions, obligations, limitations
      or requirements under applicable securities laws that exist as a result of
      the fact that Party B is the issuer of the Shares.  “Share
      Termination Settled” in relation to a Transaction means that Share
      Termination Settlement is applicable to the
Transaction.

              
	 	 	 
	
                Special
      Provisions for Party B Payments:

              	 	
                Party
      A and Party B agree that, notwithstanding anything to the contrary herein
      or in the Agreement, in the event that (i) an Early Termination Date
      (whether as a result of an Event of Default or Termination Event) occurs
      or is designated with respect to any Transaction and, as a result, Party B
      owes to Party A an amount calculated under Section 6(e) of the Agreement
      or (ii) an Extraordinary Event occurs that results in the termination or
      cancellation of any Transaction pursuant to Article 12 of the Equity
      Definitions and, as a result, Party B owes to Party A a Cancellation
      Amount or any other amount in respect to this Transaction, such amount
      shall be deemed to be zero.

              
	 	 	 
	
                Right
      to Designate:

              	 	
                Notwithstanding
      any other provision in this Confirmation to the contrary requiring or
      allowing Party A to purchase, sell, receive or deliver any shares or other
      securities to or from Party B, Party A may designate any of its Affiliates
      to purchase, sell, receive or deliver such shares or other securities and
      otherwise to perform Party A’s obligations in respect of this Transaction
      and any such designee may assume such obligations. Party A shall be
      discharged of its obligations to Party B to the extent of any such
      performance; provided, however, that
      notwithstanding the foregoing no such designation shall be permitted
      unless:

                 

                (i)
      Party B will not, as a result of such designation, be required to pay to
      such Affiliate any amount in respect of an Indemnifiable Tax under Section
      2(d)(i)(4) of the Agreement greater than the amount in respect of which
      Party B would have been required to pay to Party A absent such transfer or
      otherwise suffer any other additional tax burden (whether an Indemnifiable
      Tax or otherwise) or Party A or such Affiliate waives any such additional
      payment obligation under Section 2(d)(i)(4) of the Agreement or agrees to
      make Party B whole for such additional tax burden;
  and

              

      

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      

      
        	 	 	
                (ii)
      such Affiliate will not, as a result of such designation, be required to
      withhold or deduct on account of a Tax under Section 2(d)(i) of the
      Agreement in an amount in excess of that which Party A would have been
      required to so withhold or deduct absent such designation unless such
      Affiliate elects (or is required pursuant to Section 2(d)(i)(4) of the
      Agreement) to gross up Party B with respect to such excess withholding
      (either by payment directly to the taxing authority or a payment to Party
      B).

              
	 	 	 
	
                Transfer:

              	 	
                Neither
      party may transfer, pledge, assign or encumber this Transaction, in whole
      or in part, without the prior written consent of the other party; provided that Party A
      may transfer this Transaction to any branch of Party A or to any direct or
      indirect subsidiary of Party A whose obligations hereunder will be
      guaranteed by BNP Paribas where such guarantee shall be in form and
      substance reasonably acceptable to Party B; provided, however, that
      notwithstanding the foregoing no such assignment by Party A as assignor
      (the “Assignor”) shall be permitted unless:

                 

                (i)
      Party B will not, as a result of such assignment, be required to pay to
      such Affiliate any amount in respect of an Indemnifiable Tax under Section
      2(d)(i)(4) of the Agreement greater than the amount in respect of which
      Party B would have been required to pay to the Assignor absent such
      transfer or otherwise suffer any other additional tax burden (whether an
      Indemnifiable Tax or otherwise) or Party A or such Affiliate waives any
      such additional payment obligation under Section 2(d)(i)(4) of the
      Agreement or agrees to make Party B whole for such additional tax
      burden;

                 

                (ii)
      such Affiliate will not, as a result of such assignment, be required to
      withhold or deduct on account of a Tax under Section 2(d)(i) of the
      Agreement in an amount in excess of that which the Assignor would have
      been required to so withhold or deduct absent such transfer unless such
      Affiliate elects (or is required pursuant to Section 2(d)(i)(4) of the
      Agreement) to gross up Party B with respect to such excess withholding
      (either by payment directly to the taxing authority or a payment to Party
      B); and

              

      

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

      

      
        	 
      	 	
                (iii)
      immediately upon giving effect to such assignment, no Event of Default and
      no Termination Event will occur as a direct result of such
      assignment.

                 
If
      Party A, in its sole discretion, determines that its “beneficial
      ownership” at any time (within the meaning of Section 16 of the Exchange
      Act and rules promulgated thereunder) exceeds 8.0% or more of Party B’s
      outstanding Shares; and, in its sole discretion, Party A is unable after
      its commercially reasonable efforts to effect a transfer or assignment on
      pricing terms and in a time period reasonably acceptable to Party A that
      would reduce its “beneficial ownership” to 7.5%; Party A may designate any
      Exchange Business Day as an Early Termination Date with respect to a
      portion (the “Terminated Portion”) of the Transaction, such that its
      “beneficial ownership” following such partial termination will be equal to
      or less than (but not materially less than) 7.5%.  In the event
      that Party A so designates an Early Termination Date with respect to a
      portion of the Transaction, a payment shall be made pursuant to Section 6
      of the Agreement as if (i) an Early Termination Date had been designated
      in respect of Transaction having terms identical to the Transaction and
      Numbers of Options equal to the Terminated Portion, (ii) Party B shall be
      the sole Affected Party with respect to such partial termination and (iii)
      such Transaction shall be the only Terminated Transaction.
	 	 	 
	
                Staggered
      Settlement:

              	 	
                Party
      A may, by notice to Party B on or prior to any Settlement Date (a “Nominal
      Settlement Date”), elect to deliver any Shares required to be delivered by
      it on two or more dates (each, a “Staggered Settlement Date”) as
      follows:

                 

                (i)   
      in such notice, Party A will specify to Party B the related Staggered
      Settlement Dates (the first of which will be such Nominal Settlement Date
      and the last of which will be no later than the twentieth (20th)
      Exchange Business Day following such Nominal Settlement Date) and the
      number of Shares that it will deliver on each Staggered Settlement
      Date;

                 

                (ii) 
      the aggregate number of Shares that Party A will deliver to Party B
      hereunder on all such Staggered Settlement Dates will equal the number of
      Shares that Party A would otherwise be required to deliver on such Nominal
      Settlement Date; and

                 

                (iii)
       if the Physical Settlement terms set forth above were to apply on
      such Nominal Settlement Date, then the Physical Settlement terms will
      apply on each Staggered Settlement Date, except that the related Shares to
      be delivered by Party A will be allocated among such Staggered Settlement
      Dates as specified by Party A in the notice referred to in clause (i)
      above and Party B shall pay the Settlement Amount for those Shares on the
      Nominal Settlement Date.

              

      

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

      

      
        	
                Set-Off
      and Netting:

              	 	
                Party
      A agrees not to set-off or net amounts due from Party B with respect to
      the Transaction hereunder against amounts due from Party A to Party B
      under obligations other than Equity Contracts. Section 2(c) of the
      Agreement as it applies to payments due with respect to the Transaction
      hereunder shall remain in effect and is not subject to the first sentence
      of this provision.

                 

                Upon
      the occurrence of an Event of Default or Termination Event with respect to
      a party who is the Defaulting Party or the Affected Party (“X”), the other
      party (“Y”) will have the right (but not be obliged) without prior notice
      to X or any other person to set-off or apply any obligation of X under an
      Equity Contract owed to Y (or any Affiliate of Y) (whether or not matured
      or contingent and whether or not arising under the Agreement, and
      regardless of the currency, place of payment or booking office of the
      obligation) against any obligation of Y (or any Affiliate of Y) under an
      Equity Contract owed to X (whether or not matured or contingent and
      whether or not arising under the Agreement, and regardless of the
      currency, place of payment or booking office of the
      obligation).  Y will give notice to the other party of any
      set-off effected under this paragraph.

                 

                “Equity
      Contract” shall mean for purposes of this paragraph any transaction
      relating to Shares between X and Y (or any Affiliate of Y) that qualifies
      as ‘equity’ under applicable accounting rules.

                 

                Amounts
      (or the relevant portion of such amounts) subject to set-off may be
      converted by Y into the Termination Currency at the rate of exchange at
      which such party would be able, acting in a reasonable manner and in good
      faith, to purchase the relevant amount of such currency.

                 

                If
      any obligation is unascertained, Y may in good faith and a commercially
      reasonable manner estimate that obligation and set-off in respect of the
      estimate, subject to the relevant party accounting to the other when the
      obligation is ascertained.

                 

                Nothing
      in this section shall be effective to create a charge or other security
      interest.  This section shall be without prejudice and in
      addition to any right of set-off, combination of accounts, lien or other
      right to which any party is at any time otherwise entitled (whether by
      operation of law, contract or
otherwise).

              

      

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

      

      
        	
                Equity
      Rights:

              	 	
                Party
      A acknowledges and agrees that this Confirmation is not intended to convey
      to it rights with respect to the Transaction that are senior to the claims
      of common stockholders in the event of Party B’s
      bankruptcy.  For the avoidance of doubt, the parties agree that
      the preceding sentence shall not apply at any time other than during Party
      B’s bankruptcy to any claim arising as a result of a breach by Party B of
      any of its obligations under this Confirmation or the
      Agreement.  For the avoidance of doubt, the parties acknowledge
      that this Confirmation is not secured by any collateral that would
      otherwise secure the obligations of Party B herein under or pursuant to
      any other agreement.

              
	 	 	 
	
                No
      Collateral:

              	 	
                No
      collateral is required to be posted by Party B in respect of the
      Transaction.

              
	 	 	 
	
                Bankruptcy
      Code Provisions:

              	 	
                Each
      of Party A and Party B agrees and acknowledges that Party A is a
      “financial institution,” “swap participant” and/or “financial participant”
      within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11
      of the United States Code (the “Bankruptcy Code”).  The parties
      hereto further agree and acknowledge (A) that this Confirmation is (i) a
      “securities contract,” as such term is defined in Section 741(7) of the
      Bankruptcy Code, with respect to which each payment and delivery hereunder
      is a “settlement payment,” as such term is defined in Section 741(8) of
      the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined
      in Section 101(53B) of the Bankruptcy Code, with respect to which each
      payment and delivery hereunder is a “transfer,” as such term is defined in
      Section 101(54) of the Bankruptcy Code, and (B) that Party A is entitled
      to the protections afforded by, among other sections, Sections 362(b)(6),
      362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy
      Code.

              
	 	 	 
	
                Early
      Unwind:

              	 	
                In
      the event the sale of the Convertible Notes by the Issuer is not
      consummated with the initial purchasers for any reason, other than as a
      result of a breach by Party A, by the close of business in New York on
      March 10, 2008 (or such later date as agreed upon by the parties) (March
      10, 2008 or such later date as agreed upon being the “Early Unwind Date”),
      the Transaction shall automatically terminate (the “Early Unwind”), on the
      Early Unwind Date and (i) the Transaction and all of the respective rights
      and obligations of Party A and Party B under the Transaction shall be
      cancelled and terminated and (ii) each party shall be released and
      discharged by the other party from and agrees not to make any claim
      against the other party with respect to any obligations or liabilities of
      the other party arising out of and to be performed in connection with the
      Transaction either prior to or after the Early Unwind Date; provided that Party B
      shall reimburse the costs and expenses (including market losses) relating
      to reselling those Shares to unwind its hedge positions, and will assume,
      or reimburse the cost of unwinding, any and all derivatives entered into
      by Party A or one or more of its affiliates in connection with hedging the
      Transaction (to the extent such costs and expenses in the aggregate do not
      exceed the product of USD3,000,000 times the Applicable
      Percentage). Party A and Party B represent and acknowledge to the other
      that, subject to the proviso included in the preceding sentence, upon an
      Early Unwind, all obligations with respect to the Transaction shall be
      deemed fully and finally
discharged.

              

      

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

      

      
        	
                Additional
      Termination Events:

              	 	
                Notwithstanding
      anything to the contrary in this Confirmation, (i) upon the occurrence of
      an Early Conversion:

                 

                (A)
      such Early Conversion shall constitute an Additional Termination Event
      hereunder with respect to a number of Options equal to the number of the
      relevant Exercised Options (the “Affected Number of Options”), in which
      case (x) the sole Affected Transaction shall consist of a transaction
      identical to the Transaction except that Number of Options for such
      Affected Transaction shall equal the Affected Number of Options and Party
      B shall be deemed the sole Affected Party and (y) the Transaction shall
      remain in full force and effect, except that the Number of Options subject
      to the Transaction immediately prior to the Conversion Date for such Early
      Conversion shall as of such Conversion Date be reduced by the Affected
      Number of Options;

                 

                (B)
      notwithstanding anything to the contrary in the Agreement, Party A shall
      designate an Early Termination Date in respect of such Affected
      Transaction, which shall be no earlier than one Scheduled Trading Day
      following the Conversion Date for the related Early Conversion;
      and

              

      

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

      

      
        	 	 	
                (C)
      for the avoidance of doubt, in determining the amount payable in respect
      of such Affected Transaction pursuant to Section 6 of the Agreement, the
      Calculation Agent shall assume that (x) the relevant Early Conversion and
      any adjustments, agreements, payments, deliveries or acquisitions by or on
      behalf of Party B leading thereto had not occurred, (y) no adjustments to
      the Conversion Rate have occurred pursuant to Section 10.04(b) or Section
      10.05(i) of the Indenture and (z) the corresponding Convertible Notes
      remain outstanding, and

                 

                (ii)
      if there has occurred an acceleration of the Convertible Notes after an
      event of default with respect to Party B under the terms of the
      Convertible Notes as set forth in Section 6.02 of the Indenture, then such
      acceleration shall constitute an Additional Termination Event applicable
      to the Transaction and, with respect to such event of default (A) Party B
      shall be deemed to be the sole Affected Party and the Transaction shall be
      the sole Affected Transaction and (B) Party A shall be the party entitled
      to designate an Early Termination Date pursuant to Section 6(b) of the
      Agreement.

              
	 	 	 
	
                Right
      to Extend:

              	 	
                Party
      A may extend, for as long as it is reasonably necessary, any Averaging
      Date, the Expiration Date, the Settlement Date or any other date of
      delivery by Party A, with respect to some or all of the Options hereunder,
      if Party A determines, in its commercially reasonable
      discretion based on the advice of nationally recognized outside
      counsel, that such extension is reasonably necessary or appropriate to
      preserve Party A’s hedging or hedge unwind activity hereunder in light of
      existing liquidity conditions or to enable Party A to effect purchases or
      sales of Shares in connection with its hedging or settlement activity
      hereunder in a manner that would, if Party A were Party B or an affiliated
      purchaser of Party B, be in compliance with applicable legal and
      regulatory or self-regulatory requirements or with related policies or
      procedures applicable to Party A.

              

      

      

        
          
             

          

          
            23

            
              

            

          

          
             

          

        

      

       

      
        	
                Registration
      of Hedge Shares:

              	 	
                Party
      B hereby agrees that if Party A determines, in its reasonable judgment
      based on the advice of nationally recognized outside counsel, that the
      Shares (the “Hedge Shares”) acquired by Party A for the purpose of hedging
      its obligations pursuant to the Transaction cannot be sold in the U.S.
      public market by Party A without registration under the Securities Act,
      Party B shall, at Party B’s election: (i) in order to allow Party A to
      sell the Hedge Shares in a registered offering, make available to Party A
      an effective registration statement under the Securities Act to cover the
      resale of such Hedge Shares and (A) enter into an agreement, in form and
      substance satisfactory to Party A, substantially in the form of an
      underwriting agreement for a registered offering, (B) provide accountant’s
      “comfort” letters in customary form for registered offerings of equity
      securities, (C) provide disclosure opinions of nationally recognized
      outside counsel to Party B reasonably acceptable to Party A, (D) provide
      other customary opinions, certificates and closing documents customary in
      form for registered offerings of equity securities and (E) afford Party A
      a reasonable opportunity to conduct a “due diligence” investigation with
      respect to Party B customary in scope for underwritten offerings of equity
      securities (provided,
      however, that if Party A, in its sole reasonable discretion, is not
      satisfied with access to due diligence materials, the results of its due
      diligence investigation, or the procedures and documentation for the
      registered offering referred to above, then clause (ii) or clause (iii) of
      this paragraph shall apply at the election of Party B); (ii) in order to
      allow Party A to sell the Hedge Shares in a private placement, enter into
      a private placement agreement substantially similar to private placement
      purchase agreements customary for private placements of equity securities,
      in form and substance satisfactory to Party A, including customary
      representations, covenants, blue sky and other governmental filings and/or
      registrations, indemnities to Party A, due diligence rights (for Party A
      or any designated buyer of the Hedge Shares from Party A), opinions and
      certificates and such other documentation as is customary for private
      placements agreements, all reasonably acceptable to Party A (in which
      case, the Calculation Agent shall make any adjustments to the terms of the
      Transaction that are necessary, in its reasonable judgment, to compensate
      Party A for any discount from the public market price of the Shares
      incurred on the sale of Hedge Shares in a private placement); or (iii)
      purchase the Hedge Shares from Party A at the VWAP Price on such Exchange
      Business Days, and in the amounts, as requested by Party
      A.  

              

      

      

        
          
             

          

          
            24

            
              

            

          

          
             

          

        

      
        	
                Repurchase
      notices:

              	 	
                Party
      B shall, no later than ten Scheduled Trading Days prior to the day on
      which Party B effects any repurchase of Shares, give Party A a written
      notice of such repurchase (a “Repurchase Notice”) on such day if following
      such repurchase, the Options Equity Percentage as determined on such day
      is (i) greater than 8.0% and (ii) greater by 0.5% than the Options Equity
      Percentage included in the immediately preceding Repurchase Notice (or, in
      the case of the first such Repurchase Notice, greater than the Options
      Equity Percentage as of the date hereof).  The “Options Equity
      Percentage” as of any day is the fraction (A) the numerator of which is
      the Number of Shares and (B) the denominator of which is the number of
      Shares outstanding on such day.  Party B agrees to indemnify and
      hold harmless Party A and its affiliates and their respective officers,
      directors, employees, affiliates, advisors, agents and controlling persons
      (each, an “Indemnified Person”) from and against any and all losses
      (including losses relating to Party A's hedging activities as a
      consequence of becoming, or of the risk of becoming, a Section 16
      “insider”, including without limitation, any forbearance from hedging
      activities or cessation of hedging activities and any losses in connection
      therewith with respect to the Transaction), claims, damages, judgments,
      liabilities and expenses (including reasonable attorney’s fees), joint or
      several, which an Indemnified Person may become subject to, as a result of
      Party B's failure to provide Party A with a Repurchase Notice on the day
      and in the manner specified in this paragraph, and to reimburse, within 30
      days, upon written request, each of such Indemnified Persons for any
      reasonable legal or other expenses incurred in connection with
      investigating, preparing for, providing testimony or other evidence in
      connection with or defending any of the foregoing.  If any suit,
      action, proceeding (including any governmental or regulatory
      investigation), claim or demand shall be brought or asserted against the
      Indemnified Person, such Indemnified Person shall promptly notify Party B
      in writing, and Party B, upon request of the Indemnified Person, shall
      retain counsel reasonably satisfactory to the Indemnified Person to
      represent the Indemnified Person and any others Party B may designate in
      such proceeding and shall pay the fees and expenses of such counsel
      related to such proceeding.  Party B shall not be liable for any
      settlement of any proceeding effected without its written consent, but if
      settled with such consent or if there be a final judgment for the
      plaintiff, Party B agrees to indemnify any Indemnified Person from and
      against any loss or liability by reason of such settlement or
      judgment.  Party B shall not, without the prior written consent
      of the Indemnified Person, effect any settlement of any pending or
      threatened proceeding in respect of which any Indemnified Person is or
      could have been a party and indemnity could have been sought hereunder by
      such Indemnified Person, unless such settlement includes an unconditional
      release of such Indemnified Person from all liability on claims that are
      the subject matter of such proceeding on terms reasonably satisfactory to
      such Indemnified Person.  If the indemnification provided for in
      this paragraph is unavailable to an Indemnified Person or insufficient in
      respect of any losses, claims, damages or liabilities referred to therein,
      then Party B, in lieu of indemnifying such Indemnified Person thereunder,
      shall contribute to the amount paid or payable by such Indemnified Person
      as a result of such losses, claims, damages or liabilities.  The
      remedies provided for in this paragraph are not exclusive and shall not
      limit any rights or remedies that may otherwise be available to any
      Indemnified Person at law or in equity.  The indemnity and
      contribution agreements contained in this paragraph shall remain operative
      and in full force and effect regardless of the termination of the
      Transaction.

              

      

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

      

      
        	
                Restrictions
      on Repurchases:

              	 	
                On
      any Averaging Date, neither Party B nor any “affiliate” or “affiliated
      purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“Rule
      10b-18”)) shall directly or indirectly (including, without limitation, by
      means of any cash-settled or other derivative instrument) purchase, offer
      to purchase, place any bid or limit order that would effect a purchase of,
      or commence any tender offer relating to, any Shares (or an equivalent
      interest, including a unit of beneficial interest in a trust or limited
      partnership or a depository share) or any security convertible into or
      exchangeable or exercisable for Shares.

              
	 	 	 
	
                Restrictions
      on Certain Distributions:

              	 	
                During
      any Averaging Period, the Shares or securities that are convertible into,
      or exchangeable or exercisable for Shares shall not be subject to a
      "restricted period" (as such term is defined in Regulation M) and Party A
      shall not engage in any "distribution" (as such term is defined in
      Regulation M) until the sixth Exchange Business Day immediately following
      the Averaging Period.

              

      

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

      

      
        	
                Payments
      on Early Termination:

              	 	
                Party
      A and Party B agree that for the Transaction, for the purposes of Section
      6(e) of the Agreement, Loss and the Second Method will
    apply.

              
	 	 	 
	
                Governing
      Law:

              	 	
                The
      laws of the State of New York (without reference to choice of law doctrine
      other than Section 5-1401 of the New York General Obligations
      Law).

              
	 	 	 
	
                Termination
      Currency:

              	 	
                USD

              
	 	 	 
	
                Office:

              	 	
                For
      the purposes of the Transaction, Party A is not a Multibranch Party, and
      Party B is not a Multibranch Party.

              
	 	 	 
	
                Calculation
      Agent:

              	 	
                BNPPSC;
      provided that,
      upon written request by Party B, the Calculation Agent shall provide in
      writing in reasonable detail evidence and explanation of any calculation
      or determination it made in respect of the Transaction, including a
      description of the methodology and data applied in making any adjustment
      to any terms of the Transaction, in each case within five Exchange Trading
      Days of receipt by Party A of such written request by Party B; provided further that
      (i) if the Calculation Agent fails to provide such evidence or calculation
      within such required time period and such failure resulted from
      administrative or clerical error, such failure shall not constitute an
      Event of Default with respect to the Calculation Agent if the Calculation
      Agent provides such evidence or calculation within three Exchange Business
      Days of being made aware of such failure and (ii) in providing such
      evidence and explanation, in no event shall the Calculation Agent be
      obligated to disclose any trading information proprietary to Party A or
      its affiliates or any information which Party A or its affiliate is
      required by contract or law to hold confidential.

              
	 	 	 
	
                WAIVER
      OF JURY TRIAL:

              	 	
                EACH
      PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
      IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR
      PROCEEDING RELATING TO THE TRANSACTION.  EACH PARTY (I)
      CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS
      REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
      THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE
      FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE
      BEEN INDUCED TO ENTER INTO THE TRANSACTION, AS APPLICABLE, BY, AMONG OTHER
      THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS PROVIDED
    HEREIN.

              

      

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

      

      
        	
                Tax
      Disclosure:

              	 	
                Effective
      from the date of commencement of discussions concerning the Transaction,
      Party B and each of its employees, representatives, or other agents may
      disclose to any and all persons, without limitation of any kind, the tax
      treatment and tax structure of the transaction and all materials of any
      kind (including opinions or other tax analyses) that are provided to Party
      B relating to such tax treatment and tax
  structure.

              

      

      

       

      THE
SECURITIES REPRESENTED BY THE CONFIRMATION HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR ANY
OTHER UNITED STATES FEDERAL OR STATE SECURITIES LAWS; SUCH SECURITIES MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF APPROPRIATE REGISTRATION UNDER
SUCH SECURITIES LAWS OR EXCEPT IN A TRANSACTION EXEMPT FROM OR NOT SUBJECT TO
THE REGISTRATION REQUIREMENTS OF SUCH SECURITIES LAWS.

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

      Please
confirm your agreement with the foregoing by executing this Confirmation and
returning such Confirmation, in its entirety, to us at facsimile number
212-741-7990, Attention: Terrance
Ganser.

      

       

      
        	
                Yours
      sincerely,

              	 
      	
                Accepted
      and agreed to:

              
	 
      	 
      	 
      
	
                BNP
      Paribas

              	 
      	
                Central
      European Media Enterprises Ltd

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                By:    /s/ Lamine
      Merad

              	 
      	
                By:    /s/ Michael
      Garin

              
	
                Name:
      Lamine Merad

              	 
      	
                Name:
      Michael Garin

              
	
                Title:
      Vice President

              	 
      	
                Title:
      Chief Executive Officer

              

      

      

       

      Execution
time will be furnished upon Party B's written request.ex10_1.htm

    
      

    

    EXHIBIT
10.1

    

    EMPLOYMENT
AGREEMENT

    

    This
Employment Agreement (the “Agreement”) made this 24th day of
April, 2008 and effective as of the 24th day of April, 2008 (the “Effective
Date”) between POMEROY IT
SOLUTIONS, INC., a Delaware Corporation (the “Company”) and KEITH BLACHOWIAK (the
“Executive”).

     

     

    W
I T N E S S E T H:

     

     

    WHEREAS,
Executive has been employed by Company pursuant to the terms and conditions of
an Employment Agreement made effective on February 20, 2006; and

    

    WHEREAS,
Company and Executive now desire to enter into this Employment Agreement to
provide Executive with continued employment as the Company’s Senior Vice
President and Chief Information Officer and additional responsibilities, duties,
benefits and compensation incident thereto.

    

    NOW,
THEREFORE, in consideration of the foregoing premises and the mutual covenants
herein and of other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby covenant and agree as
follows:

    

    
      	
               
      

            	
              1.

            	
              Position/Duties.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Executive
      shall serve as the Senior Vice President and Chief Information Officer of
      the Company and shall report to the President and Chief Executive Officer
      of the Company. In this capacity, Executive shall have such duties,
      authorities and responsibilities commensurate with the duties, authorities
      and responsibilities of persons in similar capacities in similar size
      companies and such other duties and responsibilities as the
      President/Chief Executive Officer of the Company or the Board of Directors
      of the Company (“Board”) shall from time to time assign to him consistent
      with the Executive’s position as Senior Vice President and Chief
      Information Officer of the Company.

            

    

     

    
      	
               
      

            	
              (b)

            	
              During
      the Employment Term (as defined in Section 2), the Executive shall devote
      substantially all his business time and efforts to the business and
      affairs of the Company and the performance of his duties
      hereunder.  In addition, Executive shall not render services of
      a business, professional or commercial nature to any other person, firm or
      corporation, whether for compensation or otherwise, during the Employment
      Term.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Executive’s
      primary workplace shall be the Company’s offices in Hebron, Kentucky,
      except for usual and customary travel on the Company’s
      business.

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              2.

            	
              Term of
      Employment.

            

    

     

    This
Agreement shall be in effect beginning on the Effective Date and terminating
upon the earlier of (a)  three (3) years (April 24, 2008 – April 24,
2011) (the “Initial Term”) or (b) the Date of Termination as defined in Section
8(g).  The period of time from the Effective Date through the Initial
Term and any Renewal Term, as defined in Section 3, or the Date of Termination,
as applicable, is referred to as the “Employment Term”.

     

    
      	
               
      

            	
              3.

            	
              Renewal
      Term.

            

    

     

    The term
of Executive’s employment and this Agreement shall automatically renew for
additional consecutive renewal terms of one (1) year unless either party gives
written notice of his/its intent not to renew the terms of the Agreement ninety
(90) days prior to the expiration of the then expiring
term.  Executive’s Base Salary for each Renewal Term shall be
negotiated and mutually agreed upon by and between the Company and Executive;
however, in no event shall Executive’s Base Salary for any Renewal Term be less
than the Base Salary in effect for the prior year.

     

    
      	
               
      

            	
              4.

            	
              Base
      Salary.

            

    

     

    During
each fiscal year of the Company during the Initial Term of this Agreement, the
Company agrees to pay Executive a base salary (“Base Salary”) at an annual rate
of Two Hundred Forty Six Thousand Seven Hundred Fifty  Dollars
($246,750.00). Said Base Salary shall be payable in accordance with the regular
payroll practices of the Company, but not less frequently than
monthly.  Executive’s Base Salary shall be subject to an annual review
by the President/Chief Executive Officer of the Company in conjunction with the
Compensation Committee of the Board (and may be increased, but not decreased,
from time to time incident thereto ).

     

    
      	
               
      

            	
              5.

            	
              Bonuses.

            

    

     

    Each year
during the Initial Term, Executive shall have the opportunity to earn both a
quarterly and annual targeted bonus measured against financial criteria
consisting primarily of NPBT (as defined below) (as determined by the Chief
Executive Officer of the Company in conjunction with the Compensation Committee
of the Board)), of at least Two Hundred Seventy Five Thousand Dollars
($275,000.00), with a potential bonus in excess of such amount for achievement
above target and a reduced bonus for achievement below target, all in accordance
with the applicable bonus plan.  Generally, two-thirds (2/3) of the
potential targeted bonus shall be based on achievement of quarterly criteria and
one-third (1/3) shall be allocated to annual attainment. The bonus plan shall
provide that under-performance in one quarter can be made up in subsequent
quarters on a year-to-date basis.  The quarterly and annual bonuses
payable to Executive during the Employment Term shall be fully paid in
cash.

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

    For
purposes of this Agreement, the Net Profit Before Taxes (“NPBT”) shall be
determined on a consolidated basis computed without regard to the bonus payable
to Executive pursuant to this Section 5, shall exclude any gains or losses
realized by Company on the sale or other disposition of its assets other than in
the ordinary course of business and shall exclude any extraordinary one-time
charges taken by the Company.  NPBT shall be determined by the
independent accountant regularly retained by the Company, subject to the
foregoing provisions of this subparagraph and in accordance with generally
accepted accounting principles.  Said determinations and payment
of  any bonus shall be made no later than the fifteenth (15th) day of
the third (3rd) month
following the end of the Company’s taxable year, and the determinations by the
accountant shall be final, binding and conclusive on all parties
hereto.  In the event the audited financial statements are not issued
before the fifteenth (15th) day of
the third (3rd) month
following the end of the Company’s taxable year, Company shall make any payment
due hereunder, if any, based on its best reasonable estimate of any liability
hereunder, which amount shall be recorded and shall be reconciled by both
parties once the audited financial statements are issued but in no event later
than the end of the calendar year in which the Company’s taxable year
ends.  Any quarterly bonus determinations shall be determined on a
consolidated basis by the independent accountant regularly retained by the
Company subject to the foregoing provisions of this paragraph and in accordance
with generally accepted accounting principles.  Any amount due
hereunder shall be paid within fifteen (15) days of the filing of Form 10-Q by
the Company for the respective quarter, but in no event later than the fifteenth
(15th) day of
the third (3rd) month
following the end of the Company’s taxable year.

     

    In the
event that Company acquires during any applicable fiscal year a company that had
gross revenues in excess of Twenty-Five Million Dollars ($25,000,000.00) for its
most recently concluded fiscal year, Company and Executive shall in good faith
determine whether any adjustments to the NPBT criteria, whether upward or
downward, shall be made in order to reflect the effect of such acquisition on
the operations of the Company.

     

    
      	
               
      

            	
              6.

            	
              Equity
      Awards.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Stock
      Options.

            

    

     

    On each
annual anniversary of the Effective Date, Executive shall be eligible for a
stock option grant at the sole discretion of the President/Chief Executive
Officer of the Company in conjunction with the Compensation Committee of the
Board.

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (b)

            	
              Restricted
      Stock.

            

    

     

    
      	
               
      

            	
              (i)

            	
              Upon
      the Effective Date the Company granted Executive an equity award of Eleven
      Thousand Two Hundred Fifty (11,250) shares of restricted stock under the
      Plan.  Thereafter, so long as Executive is gainfully employed as
      the Company’s Senior Vice President and Chief Information Office on the
      first anniversary of the Effective Date hereof, Company shall also grant
      Executive an equity award of Five Thousand (5,000) shares of restricted
      stock under the Plan.  Said restricted stock shall vest and the
      restrictions thereon shall lapse in full on the fourth (4th)
      annual anniversary grant date. In the event a Change In Control occurs
      during the Initial Term of this Agreement, One Hundred Percent (100%) of
      such restricted stock shall fully vest and the restrictions thereon shall
      lapse immediately prior to the Change In Control.  In the event
      that Company does not renew this Agreement at the expiration of the
      Initial Term of this Agreement pursuant to the provisions of Section
      3,  100% of such restricted stock shall fully vest and the
      restrictions thereon shall lapse immediately upon the expiration of the
      Initial Term of this Agreement.   For purposes of the
      foregoing shares of restricted stock only, it is agreed by
      the parties hereto that in the event the Company terminates this Agreement
      without cause in accordance with Section 8(d) below, 100% of such
      restricted stock awarded to Executive under this Section 6(b)(i) shall
      fully vest and the restrictions thereon shall lapse immediately on the
      date upon which this Agreement is effectively terminated.  A
      copy of the Restricted Stock Award Agreement is attached hereto as Exhibit
      B.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              In
      addition, on each annual anniversary of the Effective Date, Executive
      shall be eligible for an additional award of restricted stock under the
      Plan at the sole discretion of the President/Chief Executive Officer of
      the Company in conjunction with the Compensation Committee of the
      Board.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Adjustments to Number
      of Shares.  The provisions of this Section 6 shall be
      appropriately adjusted for any stock splits, reverse splits, stock
      dividends, combinations or reclassifications of the Company’s common
      stock, or any other similar increases or decreases in the number of issued
      shares of such common stock affected without receipt of consideration by
      the Company.

            

    

    

    
      	
               
      

            	
              (d)

            	
              Representations and
      Warranties of the Company.  The Company represents and
      warrants to Executive that (i) the shares he acquires pursuant to options
      and restricted stock awards as provided for in this Agreement will be
      issued under the Plan; (ii) the Plan and the options and restricted stock
      awards to be made hereunder are covered under a Form S-8 registration
      statement (the effectiveness of which shall continue to be maintained so
      that Executive can resell the shares he receives pursuant to options and
      restricted stock awards pursuant to this Agreement on a current basis once
      exercised or vested, as applicable), (iii) there are currently, and will
      continue to be, adequate shares available under the Plan for the issuance
      of stock pursuant to all options and the restricted stock awards provided
      for in this Agreement; and (iv) the Plan permits the contemplated
      provisions of such grants.

            

    

     

    
      	
               
      

            	
              7.

            	
              Fringe
      Benefits.

            

    

     

    During
the Employment Term (, Executive shall be entitled to the following
benefits:

     

    
      	
               
      

            	
              (a)

            	
              Insurance.  Executive
      shall be provided with standard medical, health, and other insurance
      coverage in accordance with the plans from time to time maintained by the
      Company for its senior management
employees.

            

    

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (b)

            	
              Vacation.  Executive
      shall be entitled each year to three (3) weeks of vacation, during which
      his compensation will be paid in full; provided, however, Executive shall
      not take more than two weeks of vacation consecutively without the prior
      written consent of the President/Chief Executive
  Officer.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Automobile
      Allowance.  Company shall provide Executive with an
      automobile allowance of Five Hundred and 00/100 Dollars ($500.00) per
      month to be paid on the first of every
month.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Travel
      Allowance. The Company shall provide Executive with a travel
      allowance of Three Thousand Four Hundred Dollars ($3,400.00) per month to
      be paid on the first of every month; provided that such Travel Allowance
      shall be subject to review and modification on a quarterly basis depending
      on actual travel expenses incurred by
Executive.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Housing
      Allowance.  The Company shall provide Executive with a
      housing allowance of up to Two Thousand Five Hundred Dollars ($2,500.00)
      per month to be paid on the first of every month.  The Executive
      shall enter into a lease agreement that shall provide housing for
      Executive near the Company’s headquarters during the Employment Term,
      provided that the term of such lease shall not exceed six months at any
      time.

            

    

     

    
      	
               
      

            	
              (f)

            	
              Insurance During the
      Term of Employment Agreement.  Company shall maintain on
      the life of the Executive, provided he is insurable at standard rates, a
      term life insurance policy in the amount of Five Hundred Thousand Dollars
      ($500,000.00).  Executive shall have the right to designate the
      beneficiary of such policy.  Executive agrees to take any and
      all physicals that are necessary incident to the issuance and/or renewal
      of said policy.  In addition, Executive agrees to take any and
      all physicals necessary incident to the procurement of Key Man insurance
      upon his life by Company.  In the event that Executive is not
      insurable at standard rates during the term of this Agreement, but
      Executive is able to procure rated coverage, Executive has the right to
      procure coverage at a lower amount of insurance, the cost of which is
      equivalent to the standard term rate cost of Five Hundred Thousand Dollars
      ($500,000.00) in coverage.  In the event Executive is not
      insurable, then Company shall, within thirty (30) days following the date
      that Executive is determined to be uninsurable, pay Executive an amount
      equal to the projected cost of the contemplated term insurance of Five
      Hundred Thousand Dollars ($500,000.00) at standard rates.  In
      the event that Executive should die prior to the insurance being obtained
      hereunder or in the event insurance cannot be obtained for medical
      reasons, Company shall have no obligation to Executive or his beneficiary
      for payment of any of the death benefit amount upon Executive’s
      death.  Company and Executive agree to use diligent efforts
      after the Effective Date to obtain the coverage upon Executive’s life
      hereunder.

            

    

    
      
         

      

      
        - 5
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (g)

            	
              Expenses.   During
      the Employment Term, Executive shall be entitled to receive prompt
      reimbursement for all reasonable and customary travel and entertainment
      expenses or other out-of-pocket business expenses incurred by Executive in
      preparing for and fulfilling the Executive’s duties and responsibilities
      hereunder, including all expenses for travel while away from home on
      business (other than expenses related Executive’s travel to and from his
      home and the Company’s corporate headquarters as such are intended to be
      paid for by Executive incident to the Travel Allowance he is entitled to
      receive on a monthly basis under subsection (d) above) or at the request
      or in the service of the Company, provided that such expenses are incurred
      and accounted for in accordance with the policies and procedures
      established by the Company.  Executive shall use reasonable best
      efforts to take advantage of advance purchase pricing for airplane
      tickets.  Amounts reimbursable pursuant to this subparagraph (g)
      shall be paid upon the earlier of (i) thirty (30) days after Executive’s
      submission of a request for reimbursement and (ii) the fifteenth (15th)
      day of the third (3rd)
      month of the Company’s fiscal year following the year in which the expense
      was incurred.

            

    

     

    
      	
               
      

            	
              (h)

            	
              Communications
      Allowance. Company shall provide Executive with a
      Communications Allowance in the amount of Two Hundred Fifty Dollars
      ($250.00) per month to be paid in accordance with normal payroll practices
      for allowances.

            

    

    

    
      	
               
      

            	
              (h)

            	
              Benefit
      Plans.  Executive shall participate, after meeting
      eligibility requirements, in any qualified retirement plans and/or welfare
      plans maintained by the Company during the Employment
  Term.

            

    

     

    
      	
               
      

            	
              (i)

            	
              Executive
      shall be responsible for all taxes owed, if any, on the fringe benefits
      provided to him pursuant to this Section 7.  Furthermore,
      certain of the fringe benefits provided under this Section 7, including
      those allowances set forth under subsections (c), (d), and (e) above,
      shall be subject to ordinary income tax withholding incident to the
      payment thereof by Company.

            

    

    

    
      	
               
      

            	
              8.

            	
              Termination.

            

    

     

    Executive’s
employment hereunder and the Employment Term shall be terminated under the first
of the following to occur:

     

    
      	
               
      

            	
              (a)

            	
              Death.  The
      Executive’s employment hereunder shall automatically terminate upon the
      death of the Executive.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Disability.  The
      Executive’s employment hereunder shall terminate upon written notice by
      the Company to the Executive, of termination due to
      Disability.  For purposes of this Agreement, “Disability” or
      “Disabled” shall mean the Executive’s incapacity due to physical or mental
      illness to substantially perform his duties and the essential functions of
      his position, with or without reasonable accommodation on a full-time
      basis for One Hundred Eighty (180) days (including weekends and holidays)
      in any Three Hundred Sixty-Five (365) day period.  The existence
      or non-existence of a physical or mental injury, infirmity or incapacity
      shall be determined by an independent physician mutually agreed to by the
      Company and the Executive (provided that neither party shall unreasonably
      withhold their consent).

            

    

    
      
         

      

      
        - 6
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (c)

            	
              Cause. The
      Company may terminate the Executive’s employment hereunder for
      Cause.  For purposes of this Agreement, the Company shall have
      “Cause” to terminate the Executive’s employment hereunder
      upon:

            

    

     

    
      	
               
      

            	
              (i)

            	
              The
      conviction of Executive of a felony or other crime involving theft,
      misappropriation of funds, fraud or moral
  turpitude;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              The
      engaging by Executive in conduct which is demonstrably and materially
      injurious to the Company, monetarily or otherwise, including but not
      limited to any material misrepresentation related to the performance of
      his duties, misappropriation, fraud, including with respect to the
      Company’s accounting and financial statements, embezzlement or conversion
      by Executive of the Company’s or any of its subsidiaries’ property in
      connection with Executive’s duties or in the course of the Executive’s
      employment with the Company;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Executive’s
      gross negligence or gross misconduct in carrying out his duties hereunder
      resulting, in either case, in material harm to the Company;
    or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              Any
      act or omission constituting a material breach by the Executive of any
      material provision of this
Agreement.

            

    

     

    Notwithstanding
the foregoing, in the event the basis for a termination for Cause is under
subsections 8(c)(iii) or (iv) above, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
written notice from the Chief Executive Officer asserting that he has engaged in
the conduct set forth above in Sections 8(c)(iii) or (iv) (as interpreted and
enforced consistently with the Company’s treatment of all other executives and
senior management) and specifying the particulars thereof in detail, and
Executive shall not have cured such conduct to the reasonable satisfaction of
the Board within thirty (30) days after receipt of such resolution.

     

    
      	
               
      

            	
              (d)

            	
              Without
      Cause.  Upon written notice by the Company to the
      Executive of an involuntary termination without Cause, other than for
      death or Disability.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Good
      Reason.  Upon written notice by the Executive to the
      Company of the termination of his employment hereunder for Good
      Reason.  “Good Reason” shall mean Executive’s resignation from
      employment within thirty (30) days after the occurrence of one of the
      events hereinafter enumerated; provided, however, that Executive must
      provide written notice to the Company within thirty (30) days after the
      occurrence of the event allegedly constituting Good Reason and the Company
      shall have thirty (30) days after such notice is given to
      cure:  (i) a material diminution in Executive’s authority,
      duties or responsibilities without Executive’s written consent; (ii) a
      material diminution in Executive’s  Base Salary or targeted
      annual bonus at any time during the Employment Term without Executive’s
      written consent; (iii) the relocation of Executive to an area that is
      greater than thirty (30) miles from the Greater Cincinnati/Northern
      Kentucky metropolitan area without the consent of Executive; and (iv) any
      other action or inaction that constitutes a material breach by Company of
      this Agreement

            

    

    
      
         

      

      
        - 7
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (f)

            	
              Voluntary
      Termination.  If Executive terminates employment with
      Company without Good Reason, Executive agrees to provide the Company with
      thirty (30) days prior written notice.  The Company, in its sole
      discretion, following its receipt of such written notice from Executive
      may accelerate the termination of Executive’s employment and the right to
      any further compensation to a date prior to the Thirtieth (30th)
      day after such written notice is
given.

            

    

     

    
      	
               
      

            	
              (g)

            	
              Date of
      Termination.  For purposes of this Agreement, “Date of
      Termination” shall mean (i) if Executive is terminated as Senior Vice
      President and Chief Information Officer by the Company for Disability,
      thirty (30) days after written notice of such determination is given to
      Executive (provided that Executive shall not have returned to perform his
      duties on a full time basis during such thirty (30) day period); (ii) if
      Executive’s employment is terminated by the Company for any other reason,
      the date on which a written notice of termination is given, provided that,
      in the case of the termination for Cause under Sections 8(c)(iii) or (iv),
      Executive shall not have cured the matter or matters stated in the Notice
      of Termination within the thirty (30) day period provided in Section
      8(c)(iii) or (iv); (iii) if Executive terminates his employment for Good
      Reason, the date of Executive’s resignation, provided that the notice and
      cure provisions in Section 8(e) have been complied with; (iv) if Executive
      terminates employment for other than Good Reason, the date specified in
      Executive’s notice in compliance with Section 8(f) or, (v) in the event of
      Executive’s death, the date of
death.

            

    

     

    
      	
               
      

            	
              (h)

            	
              Notice of
      Termination.  Any termination of Executive’s employment
      by the Company or by Executive under this Section 8 (other than in the
      case of death) shall be communicated by a written notice (“Notice of
      Termination”) to the other party hereto, indicating the specific
      termination provision in this Agreement relied upon. If the termination
      provision relied upon requires notice and an opportunity to cure, then the
      Notice of Termination shall set forth in reasonable detail any facts and
      circumstances claimed to provide a basis for termination of Executive’s
      employment under the provisions so indicated.   The Notice
      of Termination shall specify a date of termination and shall be delivered
      within the time period set forth in the various paragraphs of this Section
      8, as applicable (the “Notice
Period”).

            

    

     

    
      	
               
      

            	
              (i)

            	
              Compliance with
      409A.  To the extent any payment under Section 9 is
      subject to Section 409A of the Internal Revenue Code of 1986, as amended
      (the “Code”) or exempt therefrom solely by virtue of the separation pay
      plan exceptions under Treasury Regulations Section 1.409A-1(b)(9), a
      termination of Executive’s employment will not be deemed to occur unless
      such termination constitutes a separation from service under Section 409A
      of the Code and the regulations promulgated
  thereunder.

            

    

    
      
         

      

      
        - 8
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              9.

            	
              Compensation Upon
      Termination.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Disability.  In
      the event the Employment Term ends on account of Executive’s Disability,
      the Company shall pay or provide Executive (i) any unpaid Base Salary
      through the date of termination and any accrued vacation in accordance
      with Company policy; (ii) any unpaid bonus earned with respect to any
      fiscal year or any fiscal quarter ending on or preceding the date of
      termination; and (iii) reimbursements for any unreimbursed expenses
      incurred through the date of termination (collectively “Accrued
      Amounts”).  In addition, Executive shall receive any Prorata
      Bonus as hereinafter defined.  For purposes hereof, a “Prorata
      Bonus” shall be determined by calculating a prorata portion of the
      Executive’s targeted bonus for the performance year in which the
      Executive’s termination occurs, payable at the time the annual bonuses are
      paid to the other senior executives, (determined by multiplying the amount
      the Executive would have received based upon actual performance had his
      employment continued through the end of the performance year, by a
      fraction, the numerator of which is the number of days during the
      performance year of termination that the Executive is employed by the
      Company and the denominator of which is Three Hundred Sixty-Five
      (365)).  The Accrued Amounts shall be paid within ten (10) days
      after the Date of Termination.  Any Pro Rata Bonus shall be paid
      at the same time other bonuses are paid with respect to the applicable
      performance year.   In addition,
      Executive shall be entitled to the
following:

            

    

     

    
      	
               
      

            	
              (i)

            	
              an
      amount equal to his then-applicable full Base Salary minus Eighty-Four
      Thousand Dollars ($84,000) (or such other amount as may be available to
      Executive pursuant to any salary continuation benefits under an accident
      and health benefit plan sponsored by the Company) to be paid within ten
      (10) days after the Date of Termination;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Executive
      shall be entitled to any rights he may have under the Consolidated Omnibus
      Budget Reconciliation Act of 1985, as amended
      (“COBRA”).  Company shall reimburse Executive for any premium
      for COBRA health, dental, and vision coverage paid by Executive (including
      coverage for Executive’s family) for a period of one (1) year after the
      Date of Termination.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Death.  In
      the event of Executive’s death, the Executive’s estate (or to the extent a
      beneficiary has been designated in accordance with a program, the
      beneficiary under such program) shall be entitled to any Accrued Amounts
      and a Prorata Bonus (as defined in Section 9(a).  Such Accrued
      Amounts shall be paid within ten (10) days after the date of Executive’s
      death.   In addition, Executive’s beneficiary shall receive
      any Prorata Bonus as defined in Section 9(a) payable in the manner set
      forth in Section 9(a).

            

    

     

    
      	
               
      

            	
              (c)

            	
              Termination for Cause
      or Without Good Reason.  If the Executive’s employment
      should be terminated (i) by the Company for Cause, or (ii) by the
      Executive without Good Reason, Company shall pay to the Executive any
      Accrued Amounts within ten (10) days after the Date of
      Termination.

            

    

    
      
         

      

      
        - 9
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (d)

            	
              Termination Without
      Cause or For Good Reason.  If Executive’s employment is
      terminated by the Company without Cause or the Executive terminates his
      employment for Good Reason, Executive shall be entitled to receive from
      the Company all Accrued Amounts through the Date of Termination and a
      Prorata Bonus (as defined in Section 9(a).  Such Accrued Amounts
      shall be paid within ten (10) days after the Date of
      Termination.  Any Prorata Bonus shall be payable in the manner
      set forth in Section 9(a). Contingent upon Executive delivering to the
      Company a release in the form attached hereto as Exhibit C, and the
      expiration of all revocation periods related thereto, Executive shall be
      entitled to the following:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Company shall pay Executive his Base Salary, then in effect, for a period
      of twelve (12) months commencing on the date that Company gives written
      notice to Executive of its intent to terminate his employment Without
      Cause, pursuant to Section 8(d), provided Executive is not, during such
      time, employed by a competitor or otherwise in breach of this
      Agreement.  Payment of such Base Salary shall be made in the
      ordinary course of the Company’s business in accordance with its usual and
      customary payroll practices.

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Executive
      shall be entitled to his COBRA rights under the Company’s group health
      plans.  Company shall reimburse Executive for any premium for
      COBRA health, dental, and vision coverage paid by Executive (including
      coverage for Executive’s family) for a period of one (1) year after the
      Date of Termination.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Expense
      Reimbursement.  Notwithstanding anything to the contrary
      in this Agreement, in the event Executive’s employment is terminated for
      any of the reasons contemplated under Section 8 above, Company shall
      reimburse Executive for (i) actual expenses (up to a maximum of $3,400)
      incurred by Executive for incident to his advance purchase of
      non-cancelable, non-refundable airline ticket(s), which Executive procured
      under the Travel Allowance provision set forth in Section 7(d) above, but
      were not otherwise utilized by him prior to his termination date; and (ii)
      actual expenses for any rents that remaining due and owing under any lease
      agreement for temporary housing that Executive entered into under the
      Travel Allowance provision set forth in Section 7(e) above prior to his
      termination date; provided that no such reimbursement for rents shall
      exceed the aggregate of sum of
$15,000.00.

            

    

     

    No
amounts paid under this Section 9 will be reduced by any earnings that Executive
may receive from any other source.

    

    
      	
               
      

            	
              10.

            	
              Change In Control
      Benefits.

            

    

     

    
      	
               
      

            	
              (a)

            	
              For
      purposes of this Agreement, “Change In Control” shall mean
      the first to occur of any of the following
  events:

            

    

    
      
         

      

      
        - 10
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (i)

            	
              any
      “person” (as defined in Section 13(d) and 14(d) of the Securities Exchange
      Act of 1934, as amended (the “Exchange Act”), excluding for this
      purpose, (A) the Company or any subsidiary of the Company, or (B) any
      employee benefit plan of the Company or any subsidiary of the Company, or
      any person or entity organized, appointed or established by the Company
      for or pursuant to the terms of any such plan, which acquires beneficial
      ownership of voting securities of the Company, is or becomes the
      “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
      directly or indirectly of securities of the Company representing more than
      fifty percent (50%) of the combined voting power of the Company’s then
      outstanding securities; provided, however, that no Change In Control will
      be deemed to have occurred as a result of a change in ownership percentage
      resulting solely from an acquisition of securities by the Company;
      or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              persons
      who, as of the Effective Date constitute the Board (the “Incumbent
      Directors”) cease for any
      reason, including without limitation, as a result of a tender offer, proxy
      contest, merger or similar transaction, to constitute at least a majority
      thereof, provided that any person becoming a director of the Company
      subsequent to the Effective Date shall be considered an Incumbent Director
      if such person’s election or nomination for election was approved by a
      vote of at least fifty percent (50%) of the Incumbent Directors; but
      provided further, that any such person whose initial assumption of office
      is in connection with an actual or threatened election contest relating to
      the election of members of the Board or other actual or threatened
      solicitation of proxies or consents by or on behalf of a “person” (as
      defined in Section 13(d) and 14(d) of the Exchange Act) other than the
      Board, including by reason of agreement intended to avoid or settle any
      such actual or threatened contest or solicitation, shall not be considered
      an Incumbent Director; or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              consummation
      of a reorganization, merger or consolidation or sale or other disposition
      of at least eighty percent (80%) of the assets of the Company (a “Business Combination”),
      unless, in each case, following such Business Combination, all or
      substantially all of the individuals and entities who were the beneficial
      owners of outstanding voting securities of the Company immediately prior
      to such Business Combination beneficially own, directly or indirectly,
      more than fifty percent (50%) of the combined voting power of the then
      outstanding voting securities entitled to vote generally in the election
      of directors of the Company resulting from such Business Combination
      (including, without limitation, a company which, as a result of such
      transaction, owns the Company or all or substantially all of the Company’s
      assets either directly or through one or more subsidiaries) in
      substantially the same proportions as their ownership, immediately prior
      to such Business Combination, of the outstanding voting securities of the
      Company; or

            

    

    
      
         

      

      
        - 11
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (iv)

            	
              approval
      by the stockholders of the Company of a complete liquidation or
      dissolution of the Company.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Upon
      a Change In Control of the Company, the Executive shall be entitled to
      receive the following:

            

    

     

    
      	
               
      

            	
              (i)

            	
              All
      of Executive’ stock options and restricted shares shall vest according to
      terms contained in the respective award agreements (executed incident to
      the grant of such options or restricted
shares).

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Executive
      shall be entitled to the benefits set forth in Section 9(d) if his
      employment is terminated Without Cause or For Good Reason after such
      Change in Control, or in the event the acquiring Company does not assume
      this Agreement pursuant to the provisions of Section
  16(a).

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Anything
      in this Agreement to the contrary notwithstanding, in the event that it is
      determined that any payment (other than the Gross-Up payments provided for
      in this subsection) or distribution by the Company or any of its
      affiliates to or for the benefit of the Executive, whether paid or payable
      or distributed or distributable pursuant to the terms of this Agreement or
      otherwise pursuant to or by reason of any other agreement, policy, plan,
      program or arrangement, including without limitation any stock option or
      similar right, or the lapse or termination of any restriction on or the
      vesting or exercisability of any of the foregoing (a “Payment”), would be
      subject to the excise tax imposed by Section 4999 of the Internal Revenue
      Code of 1986, as amended (the “Code”) (or any successor provision thereto)
      by reason of being considered “contingent on a change in ownership or
      control” of Company or any of its affiliates, within the meaning of
      Section 280G of the Code (or any successor provision thereto) or to any
      similar tax imposed by state or local law, or any interest or penalties
      with respect to such tax (such tax or  taxes, together with any
      such interest and penalties, being hereafter collectively referred to as
      the “Excise Tax”), then the Executive will be entitled to receive an
      additional payment or payments (collectively, a “Gross-Up
      Payment”).  The Gross-Up Payment will be in an amount such that,
      after payment by the Executive of all taxes (including any interest or
      penalties imposed with respect to such taxes), including any Excise Tax
      imposed upon the Gross-Up Payment, the Executive retains an amount of the
      Gross-Up Payment equal to the Excise Tax imposed upon the
      Payment.  For purposes of determining the amount of the Gross-Up
      Payment, the Executive will be considered to pay (1) federal income taxes
      at the highest rate in effect in the year in which the Gross-Up Payment
      will be made and (2) state and local income taxes at the highest rate in
      effect in the state or locality in which the Gross-Up Payment would be
      subject to state or local tax, net of the maximum reduction in federal
      income tax that could be obtained from deduction of such state and local
      taxes.  The Gross-Up Payment shall be made to Executive on or as
      soon as practicable following the date of the closing of the transaction
      resulting in such change in control, and in no event later than the end of
      the calendar year next following the calendar year in which Executive pays
      the Excise Taxes.

            

    

    
      
         

      

      
        - 12
-

        
          

        

      

      
         

      

    

    The
determination of whether an Excise Tax would be imposed, the amount of such
Excise Tax, and the calculation of the amounts referred to above will be made by
the Company’s regular independent accounting firm (as in effect immediately
prior to the transaction that gives rise to the Excise Tax) at the expense of
the Company or, at the election of Executive, another nationally recognized
independent accounting firm, which shall provide detailed supporting
calculations.

     

    
      	
               
      

            	
              11.

            	
              Confidentiality,
      Competition, etc.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Confidentiality.  The
      Executive agrees that he shall not, directly or indirectly, make
      available, sell, disclose or otherwise communicate to any person, other
      than in the course of the Executive’s employment and for the benefit of
      the Company (as determined by the Executive in good faith), either during
      the period of the Executive’s employment or at any time thereafter, any
      nonpublic, proprietary or confidential information, knowledge or data
      relating to the Company, any of its subsidiaries, affiliated companies or
      businesses, which shall have been obtained by the Executive during the
      Executive’s employment by the Company. The foregoing shall not apply to
      information that (i) was known to the public prior to its disclosure to
      the Executive; (ii) becomes known to the public subsequent to disclosure
      to the Executive through no wrongful act of the Executive or any
      representative of the Executive; or (iii) the Executive is required to
      disclose by applicable law, regulation or legal process (provided that the
      Executive provides the Company with prior notice of the contemplated
      disclosure and reasonably cooperates with the Company at its expense in
      seeking a protective order or other appropriate protection of such
      information). Notwithstanding clauses (i) and (ii) of the preceding
      sentence, the Executive’s obligation to maintain such disclosed
      information in confidence shall not terminate where only portions of the
      information are in the public
domain.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Nonsolicitation.
      During the Executive’s employment with the Company and for the one (1)
      year period thereafter, the Executive agrees that he will not, directly or
      indirectly, individually or on behalf of any other person, firm,
      corporation or other entity, knowingly solicit, aid or induce (i) any
      managerial level employee of the Company or any of its subsidiaries or
      affiliates to leave such employment in order to accept employment with or
      render services to or with any other person, firm, corporation or other
      entity unaffiliated with the Company or knowingly take any action to
      materially assist or aid any other person, firm, corporation or other
      entity in hiring any such employee (provided, that the foregoing shall not
      be violated by general advertising not targeted at Company employees nor
      by serving as a reference for an employee with regard to an entity with
      which the Executive is not affiliated), or (ii) any customer of the
      Company or any of its subsidiaries or affiliates to purchase goods or
      services then sold by the Company or any of its subsidiaries or affiliates
      from another person, firm, corporation or other entity or assist or aid
      any other persons or entity in identifying or soliciting any such customer
      (provided, that the foregoing shall not apply to any product or service
      which is not covered by the noncompetition provision set forth In Section
      11(c), below).

            

    

    
      
         

      

      
        - 13
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (c)

            	
              Noncompetition. The Executive
      acknowledges that he performs services of a unique nature for the Company
      that are irreplaceable, and that his performance of such services to a
      Competing Entity will result in irreparable harm to the Company. A
      Competing Entity is defined as an organization that (i) offers the same or
      similar products or services as the Company within the preceding twelve
      (12) months and (ii) sells these products or services to the same or
      similar companies of industry, geography and size as the Company in the
      preceding twelve (12) months and (iii) is not a charitable organization,
      as such term is defined in Section 501(c) of the
      Code.  Notwithstanding the above, the Executive may work for a
      division of a Competing Entity if the division does not meet the criteria
      of a Competing Entity.   Accordingly, during the
      Executive’s employment hereunder, and, except as provided in Section 11(h)
      or if the Company elects to execute its rights under section 11(i), for
      the one (1) year period thereafter, the Executive agrees that the
      Executive will not, directly or indirectly, own, manage, operate, control,
      be employed by (whether as an employee, consultant, independent contractor
      or otherwise, and whether or not for compensation), or render services to,
      any person, firm, corporation or other entity, in whatever form, that is a
      Competing Entity. This Section 11(c) shall not prevent the Executive from
      (i) owning not more than one percent (1%) of the total shares of all
      classes of stock outstanding of any publicly traded entity that is a
      Competing Entity.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Nondisparagement. Each of the
      Executive and the Company (for purposes hereof, “the Company” shall mean
      only (i) the Company by press release or other formally released
      announcement and (ii) the executive officers and directors thereof and not
      any other employees) agrees that during the Employment Term and for five
      (5) years thereafter not to make any public statements that disparage the
      other party, or in the case of the Company, its respective affiliates,
      employees, officers, directors, products or
      services.  Notwithstanding the foregoing, statements made in the
      course of sworn testimony in administrative, judicial or arbitral
      proceedings (including, without limitation, depositions in connection with
      such proceedings) shall not be subject to this Section 11(d). This
      provision shall also not cover normal competitive statements which do not
      cite the Executive’s employment by the
Company.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Equitable Relief and
      Other Remedies. The parties acknowledge and agree that the other
      party’s remedies at law for a breach or threatened breach of any of the
      provisions of this Section would be inadequate and, in recognition of this
      fact, the parties agree that, in the event of such a breach or threatened
      breach, in addition to any remedies at law, the other party, without
      posting any bond, shall be entitled to obtain equitable relief in the form
      of specific performance, temporary restraining order, a temporary or
      permanent injunction or any other equitable remedy which may then be
      available.

            

    

    
      
         

      

      
        - 14
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (d)

            	
              Reformation. If
      it is determined by a court of competent jurisdiction in any state that
      any restriction in this Section 11 is excessive in duration or scope or is
      unreasonable or unenforceable under the laws of that state, it is the
      intention of the parties that such restriction may be modified or amended
      by the court to render it enforceable to the maximum extent permitted by
      the law of that state.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Survival of
      Provisions. The obligations contained in this Section 11 shall
      survive the termination or expiration of the Executive’s employment with
      the Company and shall be fully enforceable
  thereafter.

            

    

     

    
      	
               
      

            	
              (h)

            	
              Non-Competition Not
      Applicable.  The one (1) year non-competition provision
      set forth in Section 11(c) commencing on the date of Executive’s
      termination of employment shall not be applicable if Company does not
      renew this Agreement upon the expiration of the Initial Term of this
      Agreement or any Renewal Term; provided, however, such one (1) year
      non-competition provision shall be applicable in any such instance if the
      Company elects in writing to compensate Executive pursuant to Section
      11(i) of this Agreement.

            

    

    

    
      	
               
      

            	
              (i)

            	
              Optional Payment for
      Non-Competition.  In the event that  the
      Company does not renew this Agreement upon the expiration of the Initial
      Term of this Agreement or any Renewal Term with notice to Executive of
      such nonrenewal at least  ninety (90) days prior to the
      expiration of the Initial Term or any Renewal Term,  Company
      shall have the option to pay Executive an amount equal to his Base Salary
      that was in effect prior to such non-renewal in consideration for
      Executive not competing with Company for a period of twelve (12) months
      from the date of the expiration of this
  Agreement.

            

    

    

    
      	
               
      

            	
              12.

            	
              Continued Availability
      and Cooperation.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Following
      termination of the Executive’s employment with the Company, the Executive
      shall cooperate fully with the Company and with the Company’s counsel in
      connection with any present and future actual or threatened litigation,
      administrative proceeding or investigation involving the Company that
      relates to events, occurrences or conduct occurring (or claimed to have
      occurred) during the period of the Executive’s employment by the Company.
      Cooperation will include, but is not limited
to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              making
      himself reasonably available for interviews and discussions with the
      Company’s counsel as well as for depositions and trial
      testimony;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if
      depositions or trial testimony are to occur, making himself reasonably
      available and cooperating in the preparation therefore, as and to the
      extent that the Company or the Company’s counsel reasonably
      requests;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              refraining
      from impeding in any way the Company’s prosecution or defense of such
      litigation or administrative proceeding;
and

            

    

    
      
         

      

      
        - 15
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (iv)

            	
              cooperating
      fully in the development and presentation of the Company’s prosecution or
      defense of such litigation or administrative
  proceeding.

            

    

     

    The
Company will reimburse the Executive for reasonable travel, lodging, telephone
and similar expenses, as well as reasonable attorneys’ fees (if independent
legal counsel is necessary), incurred in connection with any cooperation,
consultation and advice rendered under this Agreement after the Executive’s
termination of employment; provided that (i) Executive shall not be required to
make himself available for such purposes for more than three days in any
calendar month, (ii) the Company and the Executive must mutually agree on which
days the Executive will make himself available, and (iii) the Company shall pay
in advance to the Executive (a) all reasonably anticipated travel and other
expenses, subject to subsequent submission of supporting documentation and, if
applicable, the refund by the Executive of any remaining balance of the advance
after he has been reimbursed fully for the actual expenses incurred, and (b) a
per diem, not accountable, of One Thousand Five Hundred Dollars ($1,500.00) per
day.

     

    
      	
               
      

            	
              13.

            	
              Dispute
      Resolution.

            

    

     

    
      	
               
      

            	
              (a)

            	
              In
      the event that the parties are unable to resolve any controversy or claim
      arising out of or in connection with this Agreement or breach thereof,
      either Party shall refer the dispute to binding arbitration, which shall
      be the exclusive forum for resolving such claims. Such arbitration will be
      administered by Judicial Arbitration and Mediation Services, Inc. (“JAMS”)
      pursuant to its Employment Arbitration Rules and Procedures and governed
      by Kentucky law. The arbitration shall be conducted by a single arbitrator
      selected by the parties according to the rules of JAMS. In the event that
      the parties fail to agree on the selection of the arbitrator within thirty
      (30) days after either party’s request for arbitration, the arbitrator
      will be chosen by JAMS. The arbitration proceeding shall commence on a
      mutually agreeable date within ninety (90) days after the request for
      arbitration, unless otherwise agreed by the parties, and shall be
      conducted in the Commonwealth of
Kentucky.

            

    

     

    
      	
               
      

            	
              (b)

            	
              The
      parties agree that each will bear their own costs and attorneys’ fees. The
      arbitrator shall not have authority to award attorneys’ fees or costs to
      any party.

            

    

     

    
      	
               
      

            	
              (c)

            	
              The
      arbitrator shall have no power or authority to make awards or orders
      granting relief that would not be available to a party in a court of law.
      The arbitrator’s award is limited by and must comply with this Agreement
      and applicable federal, state, and local laws. The decision of the
      arbitrator shall be final and binding on the
  parties.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Notwithstanding
      the foregoing, no claim or controversy for injunctive or equitable relief
      contemplated by or allowed under applicable law pursuant to Section 11 of
      this Agreement will be subject to arbitration under this Section 13, but
      will instead be subject to determination in a court of competent
      jurisdiction in the state of the place of performance, which court shall
      apply Kentucky law consistent with Section 13 of this Agreement, where
      either party may seek injunctive or equitable
  relief.

            

    

    
      
         

      

      
        - 16
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              14.

            	
              Other
      Agreements.

            

    

     

    No
agreements (other than the exhibits hereto and agreements evidencing any grants
of equity awards or the Special Change In Control Bonus Agreement entered into
by and between the Company and Executive on December 11, 2007) or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. Each party to this Agreement acknowledges that no
representations, inducements, promises, or other agreements, orally or
otherwise, have been made by any party, or anyone acting on behalf of any party,
pertaining to the subject matter hereof, which are not embodied herein, and that
no prior and/or contemporaneous agreement, statement or promise pertaining to
the subject matter hereof that is not contained in this Agreement shall be valid
or binding on either party.This Agreement shall supersede and replace, in all
respects, the Employment Agreement made effective on February 20, 2006,
including any and all written amendments or addendums thereto.

     

    
      	
               
      

            	
              15.

            	
              Withholding of
      Taxes.

            

    

     

    The
Company will withhold from any amounts payable under this Agreement all federal,
state, city or other taxes as the Company is required to withhold pursuant to
any law or government regulation or ruling.

     

    
      	
               
      

            	
              16.

            	
              Successors and Binding
      Agreement.

            

    

     

    
      	
               
      

            	
              (a)

            	
              The
      Company will require any successor (whether direct or indirect, by
      purchase of assets or stock, merger, consolidation, reorganization or
      otherwise) to all or substantially all of the business or assets of the
      Company expressly to assume and agree to perform this Agreement in the
      same manner and to the same extent the Company would be required to
      perform if no such succession had taken place. This Agreement will be
      binding upon and inure to the benefit of the Company and any successor to
      the Company, including without limitation any persons acquiring directly
      or indirectly all or substantially all of the business or assets of the
      Company whether by purchase, merger, consolidation, reorganization or
      otherwise (and such successor shall thereafter be deemed the “Company” for
      the purposes of this Agreement), but will not otherwise be assignable,
      transferable or delegable by the Company, except that the Company may
      assign and transfer this Agreement and delegate its duties thereunder to a
      wholly owned Subsidiary; provided that following any such assignment the
      Company shall remain fully liable with respect to all of its obligations
      under this Agreement.

            

    

     

    
      	
               
      

            	
              (b)

            	
              This
      Agreement will inure to the benefit of and be enforceable by the
      Executive’s personal or legal representatives, executors, administrators,
      successors, heirs, distributees and
legatees.

            

    

    
      
         

      

      
        - 17
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (c)

            	
              This
      Agreement is personal in nature and neither of the parties hereto shall,
      without the consent of the other, assign, transfer or delegate this
      Agreement or any rights or obligations hereunder except as expressly
      provided in Sections 16(a) and 16(b). Without limiting the generality or
      effect of the foregoing, the Executive’s right to receive payments
      hereunder will not be assignable, transferable or delegable, whether by
      pledge, creation of a security interest, or otherwise, other than by a
      transfer by the Executive’s will or by the laws of descent and
      distribution and, in the event of any attempted assignment or transfer
      contrary to this Section 16(c), the Company shall have no liability to pay
      any amount so attempted to be assigned, transferred or
      delegated.

            

    

     

    
      	
               
      

            	
              17.

            	
              Notices.

            

    

     

    All
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof confirmed), or five (5) business days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or three (3) business days after having been sent by
a nationally recognized overnight courier service such as Federal Express or
UPS, addressed to the Company (to the attention of the General Counsel of the
Company) at its principal executive offices and to the Executive at his
principal residence, or to such other address as any party may have furnished to
the other in writing and in accordance herewith, except that notices of changes
of address shall be effective only upon receipt.

     

    
      	
               
      

            	
              18.

            	
              Governing Law and
      Choice of Forum.

            

    

     

    
      	
               
      

            	
              (a)

            	
              This
      Agreement will be construed and enforced according to the laws of the
      Commonwealth of Kentucky, without giving effect to the conflict of laws
      principles thereof.

            

    

     

    
      	
               
      

            	
              (b)

            	
              To
      the extent not otherwise provided for by Section 13 of this Agreement, the
      Executive and the Company consent to the jurisdiction of all state and
      federal courts located in Boone County, Kentucky, as well as to the
      jurisdiction of all courts of which an appeal may be taken from such
      courts, for the purpose of any suit, action, or other proceeding arising
      out of, or in connection with, this Agreement or that otherwise arises out
      of the employment relationship. Each party hereby expressly waives any and
      all rights to bring any suit, action, or other proceeding in or before any
      court or tribunal other than the courts described above and covenants that
      it shall not seek in any manner to resolve any dispute other than as set
      forth in this paragraph and Section 13 of this Agreement. Further, the
      Executive and the Company hereby expressly waive any and all objections
      either may have to venue, including, without limitation, the inconvenience
      of such forum, in any of such courts. In addition, each of the parties
      consents to the service of process by personal service or any manner in
      which notices may be delivered hereunder in accordance with this
      Agreement.

            

    

    
      
         

      

      
        - 18
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              19.

            	
              Validity/Severability.

            

    

     

    If any
provision of this Agreement or the application of any provision is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision will not be affected, and the provision so held to
be invalid, unenforceable or otherwise illegal will be reformed to the extent
(and only to the extent) necessary to make it enforceable, valid or legal. To
the extent any provisions held to be invalid, unenforceable or otherwise illegal
cannot be reformed, such provisions are to be stricken herefrom and the
remainder of this Agreement will be binding on the parties and their successors
and assigns as if such invalid or illegal provisions were never included in this
Agreement from the first instance.

     

    
      	
               
      

            	
              20.

            	
              Survival of
      Provisions.

            

    

     

    Notwithstanding
any other provision of this Agreement, the parties’ respective rights and
obligations under Sections 8, 9, 10, 11, 12, 13, 17, 18, 20, and 21, will
survive any termination or expiration of this Agreement or the termination of
the Executive’s employment with the Company.

     

    
      	
               
      

            	
              21.

            	
              Liability
      Insurance.

            

    

     

    The
Company shall cover the Executive under directors and officers liability
insurance both during and, while potential liability exists, after the term of
this Agreement in the same amount and to the same extent as the Company covers
its other officers and directors.  The Company shall provide a
certificate of insurance confirming this coverage promptly upon receipt of a
request for same from Executive.

     

    
      	
               
      

            	
              22.

            	
              Public
      Announcements.

            

    

     

    The
Company shall give the Executive a reasonable opportunity to review and comment
in advance on any public announcement (including any filing with a governmental
agency or stock exchange) relating to this Agreement or the Executive’s
employment by the Company.

     

    
      	
               
      

            	
              23.

            	
              Compliance with Code
      Section 409A.

            

    

     

    This
Agreement is intended to comply with the requirements of Code Section 409A and
the regulations and guidance issued thereunder and shall be interpreted and
administered in a manner consistent with that intent.  Any provision
of this Agreement to the contrary notwithstanding, if Executive is a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code as of the
date of his separation from service with the Company, no distribution that is
subject to and not otherwise exempt from Code Section 409A shall be made or
commence under this Agreement sooner than six months from the date of
Executive’s separation from service (or, if earlier, the date of the Executive’s
death).  In such case, any payments that were otherwise required to be
made within such six-month period shall be accumulated and paid in a single lump
sum on the first day of the month immediately following the end of such
six-month period.

    
      
         

      

      
        - 19
-

        
          

        

      

      
         

      

    

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

    

    

    
      	 	
              POMEROY
      IT SOLUTIONS, INC.

            
	 	 
      
	 	 
      
	 	
              By:
      ___________________________________

            
	 	
              Keith
      R. Coogan

            
	 	
              Its: 
      President/Chief Executive Officer

            
	 	 
      
	 	
              _____________________________________

            
	 	
              Keith
      Blachowiak

            

    

    
 

    - 20 -

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