Document:

ex10-3.htm

    
Exhibit
10.3

      

       

      THE
BOND MARKET ASSOCIATION

       

      Master
Repurchase Agreement

       

      September
1996 Version

       

       

      Dated
as of September 12, 2008

       

      Between:

       

      J.P.
Morgan Securities Inc.

       

      and

       

      JERIT
Finance CO JPM, LLC

       

       

      
        	
                1.

              	
                Applicability

              

      

       

       

      From
time to time the parties hereto may enter into transactions in which one party
("Seller") agrees to transfer to the other ("Buyer") securities or other assets
("Securities") against the transfer of funds by Buyer, with a simultaneous
agreement by Buyer to transfer to Seller such Securities at a date certain or on
demand, against the transfer of funds by Seller. Each such transaction shall be
referred to herein as a "Transaction" and, unless otherwise agreed in writing,
shall be governed by this Agreement, including any supplemental terms or
conditions contained in Annex I hereto and in any other annexes identified
herein or therein as applicable hereunder.

       

       

      
        	
                2.

              	
                Definitions

              

      

       

       

      (a)           “Act of Insolvency", with respect to any
party, (i) the commencement by such party as debtor of any case or proceeding
under any bankruptcy, insolvency, reorganization, liquidation,
moratorium, dissolution, delinquency or similar law, or such party seeking the
appointment or election of a receiver, conservator, trustee, custodian or
similar official for such party or any substantial part of its
property, or the convening of any meeting of
creditors for purposes of commencing any such case or proceeding or seeking such
an appointment or election, (ii) the commencement of any such case or proceeding
against such party, or another seeking such an appointment or election, or the filing against a
party of an application for a protective decree under the provisions of the
Securities Investor Protection Act of 1970, which (A) is consented to or not
timely contested by such party, (B) results in the entry of an order for relief, such an appointment or
election, the issuance of such a protective decree or the entry of an order
having a similar effect, or (C) is not dismissed within 15 days, (iii) the
making by such party of a general assignment for the benefit of creditors, or (iv) the admission in
writing by such party of such party's inability to pay such party's debts as
they become due;

       

       

      (b)           "Additional Purchased Securities",
Securities provided by Seller to Buyer pursuant to Paragraph 4(a)
hereof;

       

      
        
           

        

        
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      (c)           "Buyer's Margin Amount", with respect to any Transaction as
of any date, the amount obtained by application of the Buyer's Margin Percentage
to the Repurchase Price for such Transaction as of such
date;

       

       

      (d)           "Buyer's Margin Percentage", with
respect to any Transaction as of any date, a percentage (which may be equal to
the Seller's Margin Percentage) agreed to by Buyer and Seller or, in the absence
of any such agreement, the percentage obtained by dividing the Market Value of
the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for
such Transaction;

       

       

      (e)           "Confirmation", the meaning specified in
Paragraph 3(b) hereof;

       

       

      (f)           "Income", with respect to any Security
at any time, any principal thereof and all interest, dividends or other
distributions thereon;

       

       

      (g)           "Margin Deficit", the meaning specified in
Paragraph 4(a) hereof;

       

       

      (h)           "Margin Excess", the meaning specified
in Paragraph 4(b) hereof;

       

       

      (i)           "Margin Notice Deadline", the time
agreed to by the parties in the relevant Confirmation, Annex I hereto or
otherwise as the deadline
for giving notice requiring same-day satisfaction of margin maintenance
obligations as provided in Paragraph 4 hereof (or, in the absence of any such
agreement, the deadline for such purposes established in accordance with market
practice);

       

       

      (j)           "Market Value", with respect to any Securities
as of any date, the price for such Securities on such date obtained from a
generally recognized source agreed to by the parties or the most recent closing
bid quotation from such a source, plus accrued Income to the extent not included therein (other than
any Income credited or transferred to, or applied to the obligations of, Seller
pursuant to Paragraph 5 hereof) as of such date (unless contrary to market
practice for such Securities);

       

       

      (k)           "Price Differential", with
respect to any Transaction
as of any date, the aggregate amount obtained by daily application of the
Pricing Rate for such Transaction to the Purchase Price for such Transaction on
a 360 day per year basis for the actual number of days during the period
commencing on (and including) the Purchase
Date for such Transaction and ending on (but excluding) the date of
determination (reduced by any amount of such Price Differential previously paid
by Seller to Buyer with respect to such Transaction);

       

       

      (l)           "Pricing Rate", the per annum percentage rate for
determination of the Price Differential;

       

       

      (m)           "Prime Rate", the prime rate of U.S.
commercial banks as published in The Wall Street Journal (or, if more than one
such rate is published, the average of such rates);

       

       

      (n)           "Purchase Date", the date on which Purchased
Securities are to be transferred by Seller to Buyer;

       

       

      (o)           "Purchase Price", (i) on the Purchase
Date, the price at which Purchased Securities are transferred by Seller to
Buyer, and (ii) thereafter, except where Buyer and Seller agree otherwise, 

       

       

      
        
           

        

        
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      such price increased by the amount of
any cash transferred by Buyer to Seller pursuant to Paragraph 4(b) hereof and
decreased by the amount of any cash transferred by Seller to Buyer pursuant to
Paragraph 4(a) hereof or applied to reduce Seller's obligations under clause (ii) of
Paragraph 5 hereof;

       

       

      (p)           "Purchased Securities", the Securities
transferred by Seller to Buyer in a Transaction hereunder, and any Securities
substituted therefor in accordance with Paragraph 9 hereof. The term
"Purchased Securities" with
respect to any Transaction at any time also shall include Additional Purchased
Securities delivered pursuant to Paragraph 4(a) hereof and shall exclude
Securities returned pursuant to Paragraph 4(b) hereof;

       

       

      (q)           "Repurchase Date", the date on
which Seller is to
repurchase the Purchased Securities from Buyer, including any date determined by
application of the provisions of Paragraph 3(c) or 11
hereof;

       

       

      (r)           "Repurchase Price", the price at which
Purchased Securities are to be transferred from Buyer to Seller upon termination of a
Transaction, which will be determined in each case (including Transactions
terminable upon demand) as the sum of the Purchase Price and the Price
Differential as of the date of such determination;

       

       

      (s)           "Seller's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of the Seller's Margin Percentage to
the Repurchase Price for such Transaction as of such date;

       

       

      (t)           "Seller's Margin Percentage", with
respect to any Transaction as of any date, a percentage (which may be equal to the
Buyer's Margin Percentage) agreed to by Buyer and Seller or, in the absence of
any such agreement, the percentage obtained by dividing the Market Value of the
Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such
Transaction.

       

       

      
        	
                3.

              	
                Initiation;
      Confirmation; Termination

              

      

       

       

      (a)           An agreement to enter into a Transaction
may be made orally or in writing at the initiation of either Buyer or Seller. On
the Purchase Date for the Transaction, the Purchased Securities shall be transferred to
Buyer or its agent against the transfer of the Purchase Price to an account of
Seller.

       

       

      (b)           Upon agreeing to enter into a
Transaction hereunder, Buyer or Seller (or both), as shall be agreed, shall
promptly deliver to the
other party a written confirmation of each Transaction (a "Confirmation"). The
Confirmation shall describe the Purchased Securities (including CUSIP number, if
any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the
Purchase Price, (iii) the Repurchase Date, unless the
Transaction is to be terminable on demand, (iv) the Pricing Rate or Repurchase
Price applicable to the Transaction, and (v) any additional terms or conditions
of the Transaction not inconsistent with this Agreement. The Confirmation, together with this
Agreement, shall constitute conclusive evidence of the terms agreed between
Buyer and Seller with respect to the Transaction to which the Confirmation
relates, unless with respect to the Confirmation specific objection
is made promptly after receipt thereof. In
the event of any 

       

       

      
        
           

        

        
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      conflict between the terms of such
Confirmation and this Agreement, this Agreement shall
prevail.

       

       

      (c)           In the case of Transactions terminable
upon demand, such demand shall be made by Buyer or Seller, no later than such time as is customary in
accordance with market practice, by telephone or otherwise on or prior to the
business day on which such termination will be effective. On the date specified
in such demand, or on the date fixed for termination in the case of Transactions having a fixed
term, termination of the Transaction will be effected by transfer to Seller or
its agent of the Purchased Securities and any Income in respect thereof received
by Buyer (and not previously credited or transferred to, or applied to the obligations of, Seller
pursuant to Paragraph 5 hereof) against the transfer of the Repurchase Price to
an account of Buyer.

       

       

      
        	
                4.

              	
                Margin
      Maintenance

              

      

       

       

      (a)           If at any time the aggregate Market
Value of all Purchased Securities subject to all Transactions in which a particular party hereto is
acting as Buyer is less than the aggregate Buyer's Margin Amount for all such
Transactions (a "Margin Deficit"), then Buyer may by notice to Seller require
Seller in such Transactions, at Seller's option, to transfer to Buyer cash or additional Securities
reasonably acceptable to Buyer ("Additional Purchased Securities"), so that the
cash and aggregate Market Value of the Purchased Securities, including any such
Additional Purchased Securities, will thereupon equal or exceed such aggregate Buyer's Margin
Amount (decreased by the amount of any Margin Deficit as of such date arising
from any Transactions in which such Buyer is acting as
Seller).

       

       

      (b)           If at any time the aggregate Market
Value of all Purchased Securities subject to all Transactions in which a
particular party hereto is acting as Seller exceeds the aggregate Seller's
Margin Amount for all such Transactions at such time (a "Margin Excess"), then
Seller may by notice to Buyer require Buyer in such Transactions, at Buyer's option, to transfer cash or
Purchased Securities to Seller, so that the aggregate Market Value of the
Purchased Securities, after deduction of any such cash or any Purchased
Securities so transferred, will thereupon not exceed such aggregate
Seller's Margin Amount (increased by the
amount of any Margin Excess as of such date arising from any Transactions in
which such Seller is acting as Buyer).

       

       

      (c)           If any notice is given by Buyer or
Seller under subparagraph (a) or (b) of this Paragraph at or before
the Margin Notice Deadline
on any business day, the party receiving such notice shall transfer cash or
Additional Purchased Securities as provided in such subparagraph no later than
the close of business in the relevant market on such day. If any such
notice is given after the Margin Notice
Deadline, the party receiving such notice shall transfer such cash or Securities
no later than the close of business in the relevant market on the next business
day following such notice.

       

       

      (d)           Any cash transferred pursuant to
this Paragraph shall be
attributed to such Transactions as shall be agreed upon by Buyer and
Seller.

       

       

      (e)           Seller and Buyer may agree, with respect
to any or all Transactions hereunder, that the respective rights of Buyer or
Seller (or both) under subparagraphs (a) and (b) of this Paragraph

       

       

      
        
           

        

        
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      may be exercised only where a Margin
Deficit or Margin Excess, as the case may be, exceeds a specified dollar amount
or a specified percentage of the Repurchase Prices for such Transactions (which
amount or percentage shall be agreed to by Buyer and Seller prior to
entering into any such Transactions).

       

       

      (f)           Seller and Buyer may agree, with respect
to any or all Transactions hereunder, that the respective rights of Buyer and
Seller under subparagraphs (a) and (b) of this Paragraph to require the elimination of a Margin
Deficit or a Margin Excess, as the case may be, may be exercised whenever such a
Margin Deficit or Margin Excess exists with respect to any single Transaction
hereunder (calculated without regard to any other Transaction outstanding under this
Agreement).

       

       

      
        	
                5.

              	
                Income
      Payments

              

      

       

       

      Seller
shall be entitled to receive an amount equal to all Income paid or distributed
on or in respect of the Securities that is not otherwise received by Seller, to
the full extent it would be so entitled if the Securities had not been sold to
Buyer. Buyer shall, as the parties may agree with respect to any Transaction
(or, in the absence of any such agreement, as Buyer shall reasonably determine
in its discretion), on the date such Income is paid or distributed either (i)
transfer to or credit to the account of Seller such Income with respect to any
Purchased Securities subject to such Transaction or (ii) with respect to Income
paid in cash, apply the Income payment or payments to reduce the amount, if any,
to be transferred to Buyer by Seller upon termination of such Transaction. Buyer
shall not be obligated to take any action pursuant to the preceding sentence (A)
to the extent that such action would result in the creation of a Margin Deficit,
unless prior thereto or simultaneously therewith Seller transfers to Buyer cash
or Additional Purchased Securities sufficient to eliminate such Margin Deficit,
or (B) if an Event of Default with respect to Seller has occurred and is then
continuing at the time such Income is paid or distributed.

       

       

      
        	
                6.

              	
                Security
      Interest

              

      

       

       

      Although
the parties intend that all Transactions hereunder be sales and purchases and
not loans, in the event any such Transactions are deemed to be loans, Seller
shall be deemed to have pledged to Buyer as security for the performance by
Seller of its obligations under each such Transaction, and shall be deemed to
have granted to Buyer a security interest in, all of the Purchased Securities
with respect to all Transactions hereunder and all Income thereon and other
proceeds thereof.

       

       

      
        	
                7.

              	
                Payment
      and Transfer

              

      

       

       

      Unless
otherwise mutually agreed, all transfers of funds hereunder shall be in
immediately available funds. All Securities transferred by one party hereto to
the other party (i) shall be in suitable form for transfer or shall be
accompanied by duly executed instruments of transfer or assignment in blank and
such other documentation as the party receiving possession may reasonably
request, (ii) shall be transferred on the book-entry system of a Federal Reserve
Bank, or (iii) shall be transferred by any other method mutually acceptable to
Seller and Buyer.

       

       

       

      
        
           

        

        
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                8.

              	
                Segregation
      of Purchased Securities

              

      

       

       

      To
the extent required by applicable law, all Purchased Securities in the
possession of Seller shall be segregated from other securities in its possession
and shall be identified as subject to this Agreement. Segregation may be
accomplished by appropriate identification on the books and records of the
holder, including a financial or securities intermediary or a clearing
corporation. All of Seller's interest in the Purchased Securities shall pass to
Buyer on the Purchase Date and, unless otherwise agreed by Buyer and Seller,
nothing in this Agreement shall preclude Buyer from engaging in repurchase
transactions with the Purchased Securities or otherwise selling, transferring,
pledging or hypothecating the Purchased Securities, but no such transaction
shall relieve Buyer of its obligations to transfer Purchased Securities to
Seller pursuant to Paragraph 3, 4 or 11 hereof, or of Buyer's obligation to
credit or pay Income to, or apply Income to the obligations of, Seller pursuant
to Paragraph 5 hereof.

       

      
        	 
      

      

       

      Required
Disclosure for Transactions in Which the Seller Retains Custody of
the

      Purchased
Securities

       

      Seller
is not permitted to substitute other securities for those subject to this
Agreement and therefore must keep Buyer's securities segregated at all times,
unless in this Agreement Buyer grants Seller the right to substitute other
securities. If Buyer grants the right to substitute, this means that Buyer's
securities will likely be commingled with Seller's own securities during the
trading day. Buyer is advised that, during any trading day that Buyer's
securities are commingled with Seller's securities, they [will]* [may]** be
subject to liens granted by Seller to [its clearing bank]* [third parties]** and
may be used by Seller for deliveries on other securities transactions. Whenever
the securities are commingled, Seller's ability to resegregate substitute
securities for Buyer will be subject to Seller's ability to satisfy [the
clearing]* [any] * * lien or to obtain substitute securities.

       

      
        	 
      

      

       

      *Language
to be used under 17 C.F.R. ß403.4(e) if Seller is a government securities broker
or dealer other than a financial institution.

       

       

      **Language
to be used under 17 C.F.R. ß403.5(d) if Seller is a financial institution. 9.
Substitution

       

       

      
        	
                9.

              	
                Substitution

              

      

       

       

      (a)           Seller may, subject to agreement with
and acceptance by Buyer, substitute other Securities for any Purchased
Securities. Such substitution shall be made by transfer to Buyer of such other
Securities and transfer to Seller of such Purchased Securities. After
substitution, the substituted Securities shall be deemed to be Purchased
Securities.

       

       

      (b)           In Transactions in which Seller retains
custody of Purchased Securities, the parties expressly agree
that Buyer shall be deemed, for purposes of subparagraph (a) of this Paragraph,
to have agreed to and accepted in this Agreement substitution by Seller of other
Securities for 

       

       

      
        
           

        

        
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      Purchased Securities; provided,
however, that such other Securities shall have a
Market Value at least equal to the Market Value of the Purchased Securities for
which they are substituted.

       

       

      
        	
                10.

              	
                Representations

              

      

       

       

      Each
of Buyer and Seller represents and warrants to the other that (i) it is duly
authorized to execute and deliver this Agreement, to enter into Transactions
contemplated hereunder and to perform its obligations hereunder and has taken
all necessary action to authorize such execution, delivery and performance, (ii)
it will engage in such Transactions as principal (or, if agreed in writing, in
the form of an annex hereto or otherwise, in advance of any Transaction by the
other party hereto, as agent for a disclosed principal), (iii) the person
signing this Agreement on its behalf is duly authorized to do so on its behalf
(or on behalf of any such disclosed principal), (iv) it has obtained all
authorizations of any governmental body required in connection with this
Agreement and the Transactions hereunder and such authorizations are in full
force and effect and (v) the execution, delivery and performance of this
Agreement and the Transactions hereunder will not violate any law, ordinance,
charter, by-law or rule applicable to it or any agreement by which it is bound
or by which any of its assets are affected. On the Purchase Date for any
Transaction Buyer and Seller shall each be deemed to repeat all the foregoing
representations made by it.

       

       

      
        	
                11.

              	
                Events
      of Default

              

      

       

       

      In
the event that (i) Seller fails to transfer or Buyer fails to purchase Purchased
Securities upon the applicable Purchase Date, (ii) Seller fails to repurchase or
Buyer fails to transfer Purchased Securities upon the applicable Repurchase
Date, (iii) Seller or Buyer fails to comply with Paragraph 4 hereof, (iv) Buyer
fails, after one business day's notice, to comply with Paragraph 5 hereof, (v)
an Act of Insolvency occurs with respect to Seller or Buyer, (vi) any
representation made by Seller or Buyer shall have been incorrect or untrue in
any material respect when made or repeated or deemed to have been made or
repeated, or (vii) Seller or Buyer shall admit to the other its inability to, or
its intention not to, perform any of its obligations hereunder (each an "Event
of Default"):

       

       

      (a)           The nondefaulting party may, at its
option (which option shall be deemed to have been exercised
immediately upon the occurrence of an Act of Insolvency), declare an Event of
Default to have occurred hereunder and, upon the exercise or deemed exercise of
such option, the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be
deemed immediately to occur (except that, in the event that the Purchase Date
for any Transaction has not yet occurred as of the date of such exercise or
deemed exercise, such Transaction shall be deemed immediately canceled). The nondefaulting party shall
(except upon the occurrence of an Act of Insolvency) give notice to the
defaulting party of the exercise of such option as promptly as
practicable.

       

       

      (b)           In all Transactions in which the
defaulting party is acting as Seller, if the nondefaulting party exercises
or is deemed to have exercised the option referred to in subparagraph (a) of
this Paragraph, (i) the defaulting party's obligations in such Transactions to
repurchase all Purchased Securities, at the Repurchase Price therefor on the Repurchase Date
determined in accordance with subparagraph (a) of this Paragraph, shall
thereupon become immediately due and payable, 

       

       

       

      
        
           

        

        
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      (ii) all Income paid after such exercise
or deemed exercise shall be retained by the nondefaulting party and applied to the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting party hereunder,
and (iii) the defaulting party shall immediately deliver to the nondefaulting
party any Purchased Securities subject to such Transactions then in the defaulting party's
possession or control.

       

       

      (c)           In all Transactions in which the
defaulting party is acting as Buyer, upon tender by the nondefaulting party of
payment of the aggregate Repurchase Prices for all such Transactions, all right,
title and interest in and
entitlement to all Purchased Securities subject to such Transactions shall be
deemed transferred to the nondefaulting party, and the defaulting party shall
deliver all such Purchased Securities to the nondefaulting
party.

       

       

      (d)           If the nondefaulting party exercises or is deemed to have
exercised the option referred to in subparagraph (a) of this Paragraph, the
nondefaulting party, without prior notice to the defaulting party,
may:

       

       

      
        	
                i.

              	
                as to Transactions in which the
      defaulting party is acting as Seller, (A) immediately sell, in a
      recognized market (or otherwise in a commercially reasonable manner) at
      such price or prices as the nondefaulting party may reasonably deem
      satisfactory, any or all Purchased Securities subject to such Transactions
      and apply the proceeds thereof to the
      aggregate unpaid Repurchase Prices and any other amounts owing by the
      defaulting party hereunder or (B) in its sole discretion elect, in lieu of
      selling all or a portion of such Purchased Securities, to give the
      defaulting party credit for such Purchased
      Securities in an amount equal to the price therefor on such date, obtained
      from a generally recognized source or the most recent closing bid
      quotation from such a source, against the aggregate unpaid Repurchase
      Prices and any other amounts owing by the defaulting
      party hereunder; and

              

      

       

       

      
        	
                ii.

              	
                as to Transactions in which the
      defaulting party is acting as Buyer, (A) immediately purchase, in a
      recognized market (or otherwise in a commercially reasonable manner) at
      such price or prices as the nondefaulting party may reasonably
      deem satisfactory, securities ("Replacement Securities") of the same class
      and amount as any Purchased Securities that are not delivered by the
      defaulting party to the nondefaulting party as required hereunder or (B)
      in its sole discretion elect, in lieu
      of purchasing Replacement Securities, to be deemed to have purchased
      Replacement Securities at the price therefor on such date, obtained from a
      generally recognized source or the most recent closing offer quotation
      from such a
  source.

              

      

       

       

      Unless
otherwise provided in Annex I, the parties acknowledge and agree that (1) the
Securities subject to any Transaction hereunder are instruments traded in a
recognized market, (2) in the absence of a generally recognized source for
prices or bid or offer quotations for any Security, the nondefaulting party may
establish the source therefor in its sole discretion and (3) all prices, bids
and offers shall be determined together with accrued Income (except to the
extent contrary to market practice with respect to the relevant
Securities).

       

       

      (e)           As to Transactions in which the
defaulting party is acting as Buyer, the defaulting party shall be liable to the
nondefaulting party for any excess of the price paid (or deemed paid) by the

       

       

      
        
           

        

        
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      nondefaulting party for Replacement Securities over the
Repurchase Price for the Purchased Securities replaced thereby and for any
amounts payable by the defaulting party under Paragraph 5 hereof or otherwise
hereunder.

       

       

      (f)           For purposes of this Paragraph 11, the
Repurchase Price for each
Transaction hereunder in respect of which the defaulting party is acting as
Buyer shall not increase above the amount of such Repurchase Price for such
Transaction determined as of the date of the exercise or deemed exercise by the
nondefaulting party of the option referred to in
subparagraph (a) of this Paragraph.

       

       

      (g)           The defaulting party shall be liable to
the nondefaulting party for (i) the amount of all reasonable legal or other
expenses incurred by the nondefaulting party in connection with or as
a result of an Event of
Default, (ii) damages in an amount equal to the cost (including all fees,
expenses and commissions) of entering into replacement transactions and entering
into or terminating hedge transactions in connection with or as a result of
an Event of Default, and (iii) any other
loss, damage, cost or expense directly arising or resulting from the occurrence
of an Event of Default in respect of a Transaction.

       

       

      (h)           To the extent permitted by applicable
law, the defaulting party shall be liable to the nondefaulting party for interest on
any amounts owing by the defaulting party hereunder, from the date the
defaulting party becomes liable for such amounts hereunder until such amounts
are (i) paid in full by the defaulting party or (ii) satisfied in full by the exercise of the nondefaulting
party's rights hereunder. Interest on any sum payable by the defaulting party to
the nondefaulting party under this Paragraph 11(h) shall be at a rate equal to
the greater of the Pricing Rate for the relevant Transaction or the Prime
Rate.

       

       

      (i)           The nondefaulting party shall have, in
addition to its rights hereunder, any rights otherwise available to it under any
other agreement or applicable law.

       

       

      
        	
                12.

              	
                Single
      Agreement

              

      

       

       

      Buyer
and Seller acknowledge that, and have entered hereinto and will enter into each
Transaction hereunder in consideration of and in reliance upon the fact that,
all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other. Accordingly,
each of Buyer and Seller agrees (i) to perform all of its obligations in respect
of each Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all Transactions
hereunder, (ii) that each of them shall be entitled to set off claims and apply
property held by them in respect of any Transaction against obligations owing to
them in respect of any other Transactions hereunder and (iii) that payments,
deliveries and other transfers made by either of them in respect of any
Transaction shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of any other Transactions hereunder,
and the obligations to make any such payments, deliveries and other transfers
may be applied against each other and netted.

       

       

      
        	
                13.

              	
                Notices
      and Other Communications

              

      

       

       

      Any
and all notices, statements, demands or other communications hereunder may be
given by a party to the other by mail, facsimile, telegraph, messenger or
otherwise to the address specified 

       

       

      
        
           

        

        
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      in
Annex II hereto, or so sent to such party at any other place specified in a
notice of change of address hereafter received by the other. All notices,
demands and requests hereunder may be made orally, to be confirmed promptly in
writing, or by other communication as specified in the preceding
sentence.

       

       

      
        	
                14.

              	
                Entire
      Agreement; Severability

              

      

       

       

      This
Agreement shall supersede any existing agreements between the parties containing
general terms and conditions for repurchase transactions. Each provision and
agreement herein shall be treated as separate and independent from any other
provision or agreement herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement.

       

       

      
        	
                15.

              	
                Non-assignability;
      Termination

              

      

       

       

      (a)           The rights and obligations of the parties
under this Agreement and under any Transaction shall not be assigned by either
party without the prior written consent of the other party, and any such
assignment without the prior written consent of the other party shall be null and void. Subject to the
foregoing, this Agreement and any Transactions shall be binding upon and shall
inure to the benefit of the parties and their respective successors and assigns.
This Agreement may be terminated by either party upon giving written notice to the other, except
that this Agreement shall, notwithstanding such notice, remain applicable to any
Transactions then outstanding.

       

       

      (b)           Subparagraph (a) of this Paragraph 15
shall not preclude a party from assigning, charging or otherwise dealing with all or any part of its
interest in any sum payable to it under Paragraph 11 hereof.

       

       

      
        	
                16.

              	
                Governing
      Law

              

      

       

       

      This
Agreement shall be governed by the laws of the State of New York without giving
effect to the conflict of law principles thereof.

       

       

      
        	
                17.

              	
                No
      Waivers, Etc.

              

      

       

       

      No
express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any
other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto. Without limitation on any of the foregoing, the failure to give
a notice pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver
of any right to do so at a later date.

       

       

      
        	
                18.

              	
                Use
      of Employee Plan Assets

              

      

       

       

      (a)           If assets of an employee benefit plan
subject to any provision of the Employee Retirement Income Security Act
of 1974 ("ERISA") are intended to be used by either party hereto (the "Plan
Party") in a Transaction, the Plan Party shall so notify the other party prior
to the Transaction. The Plan Party shall represent in writing to the other party that the Transaction

       

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

      does not constitute a prohibited
transaction under ERISA or is otherwise exempt therefrom, and the other party
may proceed in reliance thereon but shall not be required so to
proceed.

       

       

      (b)           Subject to the last sentence
of subparagraph (a) of this
Paragraph, any such Transaction shall proceed only if Seller furnishes or has
furnished to Buyer its most recent available audited statement of its financial
condition and its most recent subsequent unaudited statement of its
financial condition.

       

       

      (c)           By entering into a Transaction pursuant
to this Paragraph, Seller shall be deemed (i) to represent to Buyer that since
the date of Seller's latest such financial statements, there has been no
material adverse change in Seller's financial condition which Seller has not disclosed
to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited
statements of its financial condition as they are issued, so long as it is a
Seller in any outstanding Transaction involving a Plan Party.

       

       

      
        	
                19.

              	
                Intent

              

      

       

       

      (a)           The parties recognize that each
Transaction is a "repurchase agreement" as that term is defined in Section 101
of Title 11 of the United States Code, as amended (except insofar as the type of
Securities subject to such Transaction or the term of such Transaction would render such
definition inapplicable), and a "securities contract" as that term is defined in
Section 741 of Title 11 of the United States Code, as amended (except insofar as
the type of assets subject to such Transaction would render such definition
inapplicable).

       

       

      (b)           It is understood that either party's
right to liquidate Securities delivered to it in connection with Transactions
hereunder or to exercise any other remedies pursuant to Paragraph 11 hereof is a
contractual right to liquidate such Transaction as described in
Sections 555 and 559 of Title 11 of the United States Code, as
amended.

       

       

      (c)           The parties agree and acknowledge that
if a party hereto is an "insured depository institution," as such term is
defined in the Federal Deposit Insurance Act, as amended ("FDIA"), then each
Transaction hereunder is a "qualified financial contract," as that term is
defined in FDIA and any rules, orders or policy statements thereunder (except
insofar as the type of assets subject to such Transaction would render such definition
inapplicable).

       

       

      (d)           It is understood that this Agreement
constitutes a "netting contract" as defined in and subject to Title IV of the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") and
each payment entitlement
and payment obligation under any Transaction hereunder shall constitute a
"covered contractual payment entitlement" or "covered contractual payment
obligation", respectively, as defined in and subject to FDICIA (except insofar
as one or both of the parties is not a "financial institution" as
that term is defined in FDICIA).

       

       

      
        	
                20.

              	
                Disclosure
      Relating to Certain Federal
Protections

              

      

       

       

      The
parties acknowledge that they have been advised that:

       

       

      (a)           in the case of Transactions in which one
of the parties is a broker or dealer registered with the Securities and
Exchange Commission ("SEC") under Section 15 of the Securities

       

       

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      Exchange Act of 1934 ("1934 Act"), the
Securities Investor Protection Corporation has taken the position that the
provisions of the Securities Investor Protection Act of 1970 ("SIPA") do not
protect the other party with respect to any Transaction
hereunder;

       

       

      (b)           in the case of Transactions in which one
of the parties is a government securities broker or a government securities
dealer registered with the SEC under Section 1 5C of the 1934 Act, SIPA will
not provide protection to the other party with respect to any Transaction
hereunder; and

       

       

      (c)           in the case of Transactions in which one
of the parties is a financial institution, funds held by the financial
institution pursuant to a
Transaction hereunder are not a deposit and therefore are not insured by the
Federal Deposit Insurance Corporation or the National Credit Union Share
Insurance Fund, as applicable.

       

      
        	
                J.P.
      MORGAN SECURITIES INC.

              	
                JERIT
      FINANCE CO JPM, LLC

              
	
                By
      /s/ Mark D. Pasierb

              	
                By          /s/ Jeffrey D.
      Goldberg

              
	
                Name
      Mark D.
      Pasierb

              	
                Name     Jeffrey D.
      Goldberg

              
	
                Title    Executive
      Director

              	
                Title      
       Authorized
      Signatory

              

      

      

      

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      

       

      ANNEX
I

      Supplemental
Terms and Conditions

       

       

      This
Annex I forms a part of the Master Repurchase Agreement dated as of September
12, 2008 (the "Agreement") between J.P. Morgan Securities Inc. ("Buyer") and
JERIT Finance CO JPM, LLC ("Seller"). Capitalized terms used but not defined in
this Annex I shall have the meanings ascribed to them in the
Agreement.

       

       

      1.           Other
Applicable Annexes. In addition to this Annex I and Annex II, the following
Annexes and any Schedules thereto shall form a part of the Agreement and shall
be applicable thereunder:

       

       

      Annex
I-a (Master Close Out and Set Off Terms)

      Annex
V (Margin for Forward Transactions)

      Annex
VI (Buy/Sell Back Transactions)

       

       

      2.           Confirmations
in accordance with Paragraph 3(b) are in all cases to be furnished by J.P.
Morgan Securities Inc. (“JPMSI”).

       

       

      3.           The
"Buyer's Margin Percentage" and "Seller's Margin Percentage", as defined in
Section 2, shall be agreed to at time of trade.

       

       

      4.           The
generally recognized source for the determination of Market Value under
Paragraph 2(j) shall be (i) TradeWeb for U.S. Treasury bills, bonds and notes or
(ii) determined in good faith by JPMSI in a manner selected by it for all other
securities.

       

       

      5.           With
respect to all Transactions, JERIT Finance CO JPM, LLC hereby represents and
warrants to JPMSI that it is not a “Plan Party” (as defined in Paragraph 18 of
the Agreement).

       

       

      6.           “Margin
Notice Deadline” means 10:00 a.m. New York Time.

       

       

      7.           Notices
pursuant to Section 4 of the Agreement may be delivered orally by telephone (but
in no event by voicemail) directly to one of the individuals set forth on Annex
II, or their named successors, and need not be confirmed in writing, or by
electronic mail to an address supplied by the other party.

       

       

      8.           In
addition to the representations and warranties contained in the Agreement, each
of Buyer and Seller represents and warrants to the other, and shall on the
Purchase Date of any Transaction be deemed to represent and warrant, as
follows:

       

       

      (a)           It
is not relying (for purposes of making any investment decision or otherwise)
upon any advice, counsel or representations (whether written or oral) of the
other party to the Agreement, other than the representations expressly set forth
in the Agreement;

       

       

      (b)           It
has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent that it has deemed necessary,
and it has made its own investment, hedging and trading decisions (including
decisions regarding the suitability of any 

       

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

       

      Transaction)
based upon its own judgment and upon any advice from such advisors as it has
deemed necessary and not upon any view expressed by the other party to the
Agreement;

       

       

      (c)           It
is a sophisticated and informed institution that has a full understanding of all
the terms, conditions and risks (economic and otherwise) of the Agreement and
each Transaction and is capable of assuming and willing to assume (financially
and otherwise) those risks;

       

       

      (d)           It
is not acting as a fiduciary or financial, investment or commodity trading
advisor for any other party to the Agreement, and has not given any other party
to the Agreement (directly or indirectly through any other person) any
assurance, guaranty or representation whatsoever as to the merits (either legal,
regulatory, tax, business, investment, financial accounting or otherwise) of the
Agreement or any Transaction.

       

       

      9.           In
addition to the representations and warranties above and the representations and
warranties set forth in Paragraph 10 of the Agreement, each of Seller and JER
Investors Trust Inc. (“Guarantor”) represents and warrants to Buyer as of the
date of this Agreement and will be deemed to represent and warrant to Buyer as
of the Purchase Date for the purchase of any Purchased Securities by Buyer from
Seller and any Transaction thereunder and covenants that at all times while this
Agreement and any Transaction thereunder is in effect, unless otherwise stated
herein:

       

       

      (a)           Adequate Capitalization; No
Fraudulent Transfer. Seller has, as of such Purchase Date, adequate
capital for the normal obligations foreseeable in a business of its size and
character and in light of its contemplated business operations. Seller is
generally able to pay, and as of the date hereof is paying, its debts as they
come due. Seller has not become, or is presently, financially insolvent nor will
Seller be made insolvent by virtue of Seller’s execution of or performance under
this Agreement within the meaning of the bankruptcy laws or the insolvency laws
of any jurisdiction. Seller has not entered into this Agreement or any
Transaction pursuant thereto in contemplation of insolvency or with intent to
hinder, delay or defraud any creditor.

       

       

      (b)           Judgments/Bankruptcy.
Except as disclosed in writing to Buyer, there are no judgments against Seller
unsatisfied of record or docketed in any court located in the United States of
America and no Act of Insolvency has ever occurred with respect to
Seller.

       

       

      (c)           Use of Proceeds; Margin
Regulations. All proceeds of each Transaction shall be used by Seller for
purposes permitted under Seller’s respective governing documents, provided that no part
of the proceeds of any Transaction will be used by Seller to purchase or carry
any margin security or to extend credit to others for the purpose of purchasing
or carrying any margin security. Neither the entering into of any Transaction
nor the use of any proceeds thereof will violate, or be inconsistent with, any
provision of Regulation T, U or X of the Board of Governors of the Federal
Reserve System.

       

       

      (d)           Financial
Information. All financial data concerning Seller, Guarantor and the
Purchased Securities that has been delivered by Seller, or Guarantor on behalf
of Seller, to Buyer is true, complete and correct in all material respects. All
financial data concerning Seller and Guarantor has been prepared fairly in
accordance with GAAP. Since the delivery of such data, except as otherwise
disclosed in writing to Buyer, there has been no change in the financial

       

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

       

      position
of Seller, Guarantor or the Purchased Securities, or in the results of
operations of Seller or Guarantor, which change is reasonably likely to have a
material adverse effect on Seller or Guarantor.

       

       

      (e)           Ownership. Seller is
and shall remain at all times a wholly owned subsidiary of
Guarantor.

       

       

      (f)           Seller
shall promptly notify Buyer of any material adverse change in its business
operations and/or financial condition; provided, however, that nothing
in this paragraph shall relieve Seller of its obligations under this
Agreement.

       

       

      (g)           Seller
shall provide Buyer with copies of such documents as Buyer may reasonably
request evidencing the truthfulness of the representations set forth in this
paragraph.

       

       

      (h)           Seller
shall notify Buyer of the occurrence of any default or Event of Default (as
defined in the relevant agreement) with respect to any indebtedness, including
any credit facilities or repo facilities to which Seller and/or Guarantor is a
borrower or repo facility Seller, as soon as possible but in no event later than
the immediately succeeding business day following the date upon which Seller
becomes aware of the event.

       

       

      (i)           At
any time from time to time upon the reasonable request of Buyer, at the sole
expense of Seller (provided, however, that in no event shall such out-of-pocket
expenses exceed $5,000 in the aggregate), Seller will promptly and duly execute
and deliver such further instruments and documents and take such further actions
as Buyer may reasonably request for the purposes of obtaining or preserving the
full benefits of this Agreement.

       

       

      (j)           Seller
or Guarantor, as applicable, shall provide, or to cause to be provided, to Buyer
the following financial and reporting information:

       

       

      (i)           Within
forty-five (45) calendar days after the last day of each of the first three
fiscal quarters in any fiscal year, consolidated unaudited financial statements
of Guarantor presented fairly in accordance with GAAP or, if such financial
statements being delivered have been filed with the Securities and Exchange
Commission (“SEC”) pursuant to the requirements of the Securities Exchange Act
of 1934 (“1934 Act”), or similar state securities laws, presented in accordance
with applicable statutory and/or regulatory requirements and delivered to Buyer
within the same time frame as are required to be filed in accordance with such
applicable statutory or regulatory requirements, in either case accompanied by a
Covenant Compliance Certificate (attached as Exhibit I hereto), including a
statement of operations and a statement of changes in cash flows for such
quarter and statement of net assets as of the end of such quarter, and certified
as being true and correct by a Covenant Compliance Certificate; and

       

       

      (ii)           Within
ninety (90) calendar days after the last day of its fiscal year, Guarantor’s
consolidated audited financial statements, prepared by a nationally recognized
independent certified public accounting firm and presented fairly in accordance
with GAAP or, if such financial statements being delivered have been filed with
the SEC pursuant to the requirements of the 1934 Act, or similar state
securities laws, presented in accordance with applicable statutory and/or
regulatory requirements and delivered to Buyer within the same time frame as are
required to be filed in accordance with such applicable statutory and/or
regulatory 

       

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

       

      requirements,
in either case accompanied by a Covenant Compliance Certificate, including a
statement of operations and a statement of changes in cash flows for such
quarter and statement of net assets as of the end of such quarter accompanied by
an unqualified report of the nationally recognized independent certified public
accounting firm that prepared them.

       

       

      (k)           Seller
or Guarantor shall provide Buyer with any such additional reports or information
as Buyer may reasonably request.

       

       

      (l)           Seller
and Guarantor shall at all times keep proper books of records and accounts in
which full, true and correct entries shall be made of its transactions fairly in
accordance with GAAP, and set aside on its books from its earnings for each
fiscal year all such proper reserves in accordance with GAAP.

       

       

      (m)           Seller
shall:

       

       

      (i)           continue
to engage in business of the same general type as now conducted by it or
otherwise provide Buyer with at least (10) Business Days prior written notice
thereof and maintain and preserve its legal existence and all of its material
rights, privileges, licenses and franchises necessary for the operation of its
business;

       

       

      (ii)           comply
with all contractual obligations and with the requirements of all applicable
laws, rules, regulations and orders of governmental authorities (including,
without limitation, all environmental laws) if failure to comply with such
requirements would be reasonably likely (either individually or in the
aggregate) to have a material adverse effect; and

       

       

      (iii)           not
cause or permit any change of control without providing Buyer with at least ten
(10) Business Days prior written notice thereof.

       

       

      (n)           Guarantor
shall:

       

       

      (i)           continue
to engage in business of the same general type as now conducted by it or
otherwise provide Buyer with at least (10) Business Days prior written notice
thereof and maintain and preserve its legal existence and all of its material
rights, privileges, licenses and franchises necessary for the operation of its
business;

       

       

      (ii)           comply
with all contractual obligations and with the requirements of all applicable
laws, rules, regulations and orders of governmental authorities (including,
without limitation, all environmental laws) if failure to comply with such
requirements would be reasonably likely (either individually or in the
aggregate) to have a material adverse effect; and

       

       

      (iii)           not
cause or permit any change of control without providing Buyer with at least ten
(10) Business Days prior written notice thereof.

       

       

      10.           The
first paragraph of Paragraph 11 of the Agreement is hereby amended to add the
following language before the phrase “(each an “Event of
Default”)”:

       

       

      (viii)                      Buyer
shall fail to receive on any date such payment is due, the accreted value of the
Price Differential (less any amount of such Price Differential previously paid
by 

       

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      Seller
to Buyer) (including, without limitation, in the event amounts equal to Income
paid or distributed on or in respect of the Purchased Securities is insufficient
to make such payment and Seller does not make such payment or cause such payment
to be made);

       

       

      (ix)           Seller
or Guarantor shall be in default under (i) any indebtedness of Seller or
Guarantor, as applicable, which default (1) involves the failure to pay a
matured obligation in excess of $250,000, with respect to Seller or $1,000,000,
with respect to Guarantor or (2) permits the acceleration of the maturity of
obligations by any other party to or beneficiary with respect to such
indebtedness, if the aggregate amount of the indebtedness in respect of which
such default or defaults shall have occurred is at least $250,000, with respect
to Seller or $1,000,000, with respect to Guarantor; or (ii) any other material
contract to which Seller or Guarantor is a party which default (1) involves the
failure to pay a matured obligation or (2) permits the acceleration of the
maturity of obligations by any other party to or beneficiary of such contract if
the aggregate amount of such obligations is $250,000, with respect to Seller or
$1,000,000, with respect to Guarantor;

       

       

      (x)          
 any governmental, regulatory, or self-regulatory authority shall have
taken any action to remove, limit, restrict, suspend or terminate the rights,
privileges, or operations of Seller or Guarantor, which suspension has a
material adverse effect in the determination of Buyer;

       

       

      (xi)           any
condition shall exist that constitutes a material adverse effect in Buyer’s sole
discretion exercised in good faith;

       

       

      (xii)           a
final non-appealable judgment by any competent court in the United States of
America for the payment of money (a) rendered against Seller in an amount
greater than $250,000 or (b) rendered against Guarantor in an amount greater
than $1,000,000, and remained undischarged or unpaid for a period of sixty (60)
days, during which period execution of such judgment is not effectively stayed
by bonding over or other means acceptable to Buyer;

       

       

      (xiii)          the
Guaranty or a replacement therefor acceptable to Buyer shall for whatever reason
be terminated or cease to be in full force and effect, or the enforceability
thereof in accordance with its terms shall be contested by Guarantor or
Seller;

       

       

        
(xiv)          the breach by
Guarantor of any term or condition set forth in the Guaranty or of any
representation, warranty, certification or covenant made or deemed made in the
Guaranty by Guarantor or if any certificate furnished by Seller or Guarantor (as
the case may be) to Buyer pursuant to the provisions hereof or thereof or any
material information with respect to the Purchased Securities furnished in
writing on behalf of Seller or Guarantor (as the case may be) shall prove to
have been false or misleading in any material respect as of the time made or
furnished;

       

       

         
(xv)         an Act of Insolvency
occurs with respect to Guarantor; and

       

       

        
(xvi)         Seller shall default in
the observance or performance of any other agreement contained in this Agreement
and such default shall not be cured within five (5) Business Days after notice
thereof by Buyer to Seller.

       

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

       

      
        	
                J.P.
      MORGAN SECURITIES INC.

              	
                JERIT
      FINANCE CO JPM, LLC

              
	 
      	 
      
	 
      	 
      
	
                By           /s/ Mark D.
      Pasierb

              	
                By           /s/ Jeffrey D.
      Goldberg

              
	
                Name      Mark D.
      Pasierb

              	
                Name      Jeffrey D.
      Goldberg

              
	
                Title         Executive
      Director

              	
                Title         Authorized
      Signatory

              
	 
      	 
      
	 
      	
                JER
      INVESTORS TRUST INC.

                With
      respect to #9 above only

              
	 
      	 
      
	 
      	
                By           /s/ Jeffrey D.
      Goldberg

              
	 
      	
                Name      Jeffrey D.
      Goldberg

              
	 
      	
                Title         Authorized
      Signatory

              

      

      

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

      

       

      EXHIBIT
I

       

       

      FORM OF COVENANT COMPLIANCE
CERTIFICATE

       

       

      [
] [ ], 200[ ]

       

      J.P.
Morgan Securities Inc.

      277
Park Avenue, 2nd Floor

      New
York, New York 10172

      Attention:
Kimberly L. Turner

       

       

      This
Covenant Compliance Certificate is furnished pursuant to that certain Master
Repurchase Agreement, dated as of September 12, 2008, by and between J.P. Morgan
Securities Inc. (“Buyer”) and JERIT Finance Co JPM, LLC (“Seller”) (as amended,
restated, supplemented, or otherwise modified and in effect from time to time,
the “Master Repurchase Agreement”). Unless otherwise defined herein, capitalized
terms used in this Covenant Compliance Certificate have the respective meanings
ascribed thereto in the Master Repurchase Agreement.

       

       

      THE
UNDERSIGNED HEREBY CERTIFIES THAT:

       

       

      1.           I
am a duly elected responsible officer of Seller or Guarantor (as
applicable).

       

       

      2.           All
of the financial statements, calculations and other information set forth in
this Covenant Compliance Certificate, including, without limitation, in any
exhibit or other attachment hereto, are true, complete and correct as of the
date hereof.

       

       

      3.           I
have reviewed the terms of the Master Repurchase Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and financial condition of Seller during the accounting period
covered by the financial statements attached (or most recently delivered to
Buyer if none are attached).

       

       

      4.           As
of the date hereof, and since the date of the certificate most recently
delivered pursuant to Paragraph 10 of the Master Repurchase Agreement, Seller
has observed or performed all of its covenants and other agreements in all
material respects, and satisfied in all material respects, every condition,
contained in the Master Repurchase Agreement and the related documents to be
observed, performed or satisfied by it.

       

       

      5.           The
examinations described in Paragraph 3 above did not disclose, and I have no
knowledge of, the existence of any condition or event which constitutes an Event
of Default or default during or at the end of the accounting period covered by
the attached financial statements or as of the date of this Covenant Compliance
Certificate (including after giving effect to any pending Transactions requested
to be entered into), except as set forth below.

       

       

      6.           As
of the date hereof, the representations and warranties made by Seller in
Paragraph 10 of the Master Repurchase Agreement are true, correct and complete
in all material respects with the same force and effect as if made on and as of
the date hereof.

       

       

       

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

       

      7.           Attached
hereto are the financial statements required to be delivered pursuant to
Paragraph 10 of the Master Repurchase Agreement (or, if none are required to be
delivered as of the date of this Covenant Compliance Certificate, the financial
statements most recently delivered pursuant to Paragraph 10 of the Master
Repurchase Agreement), which financial statements, to the best of my knowledge
after due inquiry, fairly and accurately present in all material respects, the
financial condition and operations of Seller as of the date or with respect to
the period therein specified, determined in accordance with the requirements set
forth in the Master Repurchase Agreement.

       

       

      8.           Attached
hereto are the calculations demonstrating compliance with the financial
covenants set forth in paragraph 10 of the Guaranty.

       

       

      To
the extent that Financial Statements are being delivered in connection with this
Covenant Compliance Certificate, JERIT FINANCE CO JPM, LLC hereby makes the
following representations and warranties: (i) it is in compliance with all of
the terms and conditions of the Master Repurchase Agreement, (ii) it has no
claim or offset against Buyer under the Transaction Documents and (iii) it
hereby affirms that each of the representations and warranties in the Master
Repurchase Agreement are true and correct as of the date hereof.

       

       

      To
the best of my knowledge, Seller has, during the period since the delivery of
the immediately preceding Covenant Compliance Certificate, observed or performed
all of its covenants and other agreements in all material respects, and
satisfied in all material respects every condition, contained in the Master
Repurchase Agreement and the related documents to be observed, performed or
satisfied by it, and I have no knowledge of the occurrence during such period,
or present existence, of any condition or event which constitutes an Event of
Default or default (including after giving effect to any pending Transactions
requested to be entered into), except as set forth below.

       

       

      Described
below are the exceptions, if any, to Paragraph 10, listing, in detail, the
nature of the condition or event, the period during which it has existed and the
action which the Guarantor or Seller has taken, is taking, or proposes to take
with respect to each such condition or event:

       

      
        	 
      
	 
      
	 
      
	 
      

      

      

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

       

      The
foregoing certifications, together with the financial statements, updates,
reports, materials, calculations and other information set forth in any exhibit
or other attachment hereto, or otherwise covered by this Covenant Compliance
Certificate, are made and delivered this [ ] day of [ ], 200[ ].

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    JERIT
      FINANCE CO JPM, LLC,

                                  	 
      
	
                                    a
      Delaware limited liability company

                                  	 
      
	 	 
	      
                                    By:

                                  	 	
                                     

                                  	 
      
	
                                    Name:

                                  	 
      
	
                                    Title:

                                  	 
      
	 	 
	 	 
	
                                    JER
      Investors Trust Inc.,

                                  	 
      
	
                                    a
      Maryland corporation

                                  	 
      
	 	 
	      
                                    By:

                                  	 	
                                     

                                  	 
      
	
                                    Name:

                                  	 
      
	
                                    Title:

                                  	 
      

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

      

       

      ANNEX
I-a

       

      MASTER
CLOSE OUT

      AND
SET OFF TERMS

       

       

      This
Annex I-a forms a part of the Master Repurchase Agreement dated as of September
12, 2008 (the "Agreement") between J.P. Morgan Securities Inc. and JERIT Finance
CO JPM, LLC (“Client”). Capitalized terms used but not defined in this Annex I-a
shall have the meanings ascribed to them in the Agreement.

       

       

      (1)  Master Close-out
and Set-off Definitions.  For the purposes of this Annex I-a,
the following terms have the following definitions:

       

       

      “JPM
Affiliate” means J.P. Morgan Securities Inc., J.P. Morgan Futures Inc., JPMorgan
Chase Bank, N.A., J.P. Morgan Securities Ltd., J.P. Morgan Securities Asia
Private Limited or J.P. Morgan Markets Australia Pty Limited; provided no such
affiliate shall be included to the extent that their inclusion would prejudice
the enforceability of this Annex I-a.

       

       

      “JPM
Affiliate Agreement” means any Specified Agreement to which Client and any JPM
Affiliate are parties.

       

       

      “Market
Transaction” means (a) any transaction (including an agreement with respect to
any such transaction) which is (i) a rate swap transaction, swap option, basis
swap, forward rate transaction, commodity swap, commodity option, equity or
equity index swap, equity or equity index option, bond option, interest rate
option, foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction,
currency option, credit protection transaction, credit swap, credit default
swap, credit default option, total return swap, credit spread transaction,
repurchase transaction, reverse repurchase transaction, buy/sell¬back
transaction, securities lending transaction, weather index transaction, futures
contract (whether exchange traded or otherwise) or purchase or sale of a
security, commodity or other financial instrument or interest (including any
option with respect to any of these transactions) or (ii) which is a type of
transaction that is similar to any transaction referred to in clause (i) above
that is currently, or in the future becomes, recurrently entered into in the
financial markets (including terms and conditions incorporated by reference in
such agreement) and which is a forward, swap, future (whether exchange traded or
otherwise), option or other derivative on one or more rates, currencies,
commodities, equity securities or other equity instruments, debt securities or
other debt instruments, economic indices or measures of economic risk or value,
or other benchmarks against which payments or deliveries are to be made and (b)
any combination of these transactions.

       

       

      “Specified
Agreement” means (i) an agreement or confirmation governing any Market
Transaction, (ii) any agreement in respect of credit support for obligations
under any Market Transaction or under an agreement governing any Market
Transaction, and (iii) any futures or options brokerage agreement.

       

       

      (2)  Master
Close-out.  Without limiting any provision in any JPM Affiliate
Agreement, each JPM Affiliate and the Client agree that the occurrence of any
event of default, default, 

       

       

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

       

      termination
event, event giving rise to the right to liquidate, or similar condition or
event (however described; hereinafter an "Event") in respect of the Client or a
JPM Affiliate (the entity in respect of which such occurrence takes place being
the "Master Close-out Defaulting Party") under a JPM Affiliate Agreement on the
basis of which the other party to such JPM Affiliate Agreement either (i) has
the contractual right to terminate or liquidate transactions governed by such
JPM Affiliate Agreement (ii) has the contractual right to terminate the JPM
Affiliate Agreement, or (iii) which causes the automatic termination or
liquidation of all transactions governed by the JPM Affiliate Agreement, shall
entitle but not obligate the Master Close-out Non-Defaulting Party (as defined
below) to terminate or liquidate all transactions governed by any other JPM
Affiliate Agreement (each, an "Other JPM Affiliate Agreement"). "Master
Close-out Non-Defaulting Party" means (i) the Client if the Master Close-out
Defaulting Party is J.P. Morgan Securities Inc. or (ii) the JPM Affiliate that
is the party to JPM Affiliate Agreement if the Master Close-out Defaulting Party
is the Client. The amount payable in respect of the termination of transactions
governed by any such Other JPM Affiliate Agreement shall be determined in
accordance with any applicable provisions thereof.

       

       

      (3)  Authorization to
Transfer Funds.  Notwithstanding anything to the contrary in
this Agreement, any Specified Agreement, or any other agreement between the
parties, and without limiting any rights given in any such agreement, upon the
occurrence and during the continuation of any Event in respect of the Client
under any JPM Affiliate Agreement, the Client authorizes each JPM Affiliate, in
its sole discretion and without prior notice to the Client, to transfer or cause
to be transferred any funds, securities and/or other property to, between, or
among any accounts maintained by the Client with or among any JPM
Affiliates.

       

       

      (4)  Assignment.  Notwithstanding
any provision to the contrary in any JPM Affiliate Agreement, upon the
occurrence and during the continuation of any Event (however described) in
respect of the Client under any JPM Affiliate Agreement, the Client hereby
consents and agrees that the rights and obligations of any JPM Affiliate in
respect of any JPM Affiliate Agreement may be assigned to any other JPM
Affiliate without the prior written consent of the Client.

       

       

      (5)  Additional JPM
Set Off Rights.  Any amount payable by a JPM Affiliate to the
Client in respect of the termination or liquidation of all transactions governed
by a JPM Affiliate Agreement as the result of the occurrence of any Event in
respect of the Client may, at the option of such JPM Affiliate (and without
prior notice to the Client), and after all regulatory obligations to futures or
options or other exchanges or other regulatory requirements are satisfied, be
reduced by its set-off against any Other Agreement Amount (as hereinafter
defined). As used herein, “Other Agreement Amount” shall mean any payment
obligation of any description whatsoever (whether arising at such time or in the
future or upon the occurrence of a contingency) by the Client to any JPM
Affiliate (irrespective of the currency, place of payment or booking office of
the obligation or whether the relevant party is legally or beneficially the
holder of the obligation) arising under any agreement between the Client and any
JPM Affiliate or any instrument or undertaking issued or executed or guaranteed
by the Client to, or in favor of, any JPM Affiliate or any bond, note, or other
debt instrument issued or guaranteed by the Client and owned or held
beneficially by any JPM Affiliate as a result of the purchase thereof by or on
behalf of any JPM Affiliate, whether directly from the issuer or in the
secondary market; and the Other Agreement Amount will be discharged promptly and
in all respects to the extent it is so set-off.

       

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

       

      For
this purpose, the Other Agreement Amount (or the relevant portion of such
amounts) may be converted by the JPM Affiliate effecting the set-off into the
currency in which the obligation of such JPM Affiliate is denominated at the
rate of exchange at which such JPM Affiliate would be able, acting in a
reasonable manner and in good faith, to purchase the relevant amount of such
currency. If an obligation is unascertained, a JPM Affiliate may in good faith
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 clause (5) shall be effective to create a charge or other
security interest. This clause (5) shall be without prejudice and in addition to
any right of set-off, combination of accounts, lien or other right to which any
entity is at any time otherwise entitled (whether by operation of law, contract
or otherwise), and shall not be exercised in contravention of any regulatory
requirement or rules or interest of any commodities, options or futures
exchange.

       

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

       

      (6)  Termination –
Miscellaneous.  This Annex I-a may be terminated by J.P. Morgan
Securities Inc. upon notice to the Client. A failure or delay in exercising any
right, power or privilege in respect of this Annex I-a shall not be presumed to
operate as a waiver, and a single or partial exercise of any right, power or
privilege shall not be presumed to preclude any subsequent or further exercise
of that right, power or privilege. Wherever possible, each provision of this
Annex I-a shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Annex I-a shall be prohibited by or
invalid or unenforceable under such laws, such provision shall be ineffective to
the extent of such prohibition, invalidity or unenforceability without otherwise
affecting the validity or enforceability of such provision or the remaining
provisions of this Annex I-a.

       

       

      
        	
                JERIT
      FINANCE CO JPM, LLC

              	
                J.P.
      MORGAN SECURITIES INC.

              
	
                By:
      /s/ Jeffrey D.
      Goldberg

              	
                By:  /s/ Mark D.
      Pasierb

              
	
                Name:
      Jeffrey D. Goldberg

              	
                Name:
      Mark D. Pasierb

              
	
                Title:
      Authorized Signatory

              	
                Title:
      Executive Director

              
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                JPMORGAN
      CHASE BANK, N.A.,

              
	 
      	
                For
      itself and as Attorney-in-Fact on behalf of:

              
	 
      	
                J.P.
      MORGAN FUTURES INC.

              
	 
      	
                J.P.
      MORGAN SECURITIES LTD.

              
	 
      	
                J.P.
      MORGAN SECURITIES ASIA PRIVATE LIMITED

              
	 
      	
                JPMORGAN
      SECURITIES JAPAN CO., LTD.

              
	 
      	
                J.P.
      MORGAN MARKETS AUSTRALIA PTY LIMITED

              
	 
      	
                With
      respect to this Annex I-a only

              
	 
      	 
      
	 
      	 
      
	 
      	
                By:  /s/ Matthew
      Griffith

              
	 
      	
                Name:
      Matthew Griffith

              
	 
      	
                Title:
      Vice President

              

      

      

      

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

      

       

      ANNEX
II

       

      Names
and Addresses for Communications Between Parties

       

       

      Pursuant
to Section 13 ("Notices and Other Communications"), the following addresses
shall be applicable:

       

       

      
        
          
            	            
      J.P. Morgan Securities Contacts:	 
	 	 
	
                                
      Finance Desk Head

                  	
                    Craig
      Delany

                  
	 
      	
                    (212)
      834-2227

                  
	 
      	 
      
	
                                
      Confirmations

                  	
                    J.P.
      Morgan Securities Inc.

                  
	 
      	
                    Confirmations
      Processing

                  
	 
      	
                    500
      Stanton Christiana Road

                  
	 
      	
                    Newark,
      Delaware 19713-2107

                  

          

        

      

       

      Client
Contacts:

       

       

      JER
US Debt Co-Investment Vehicle, L.P.

      1650
Tysons Blvd., Suite 1600 McLean, VA 22102

      Attn:
Mike McGillis

      Tel.:
(703) 714-8182

      Fax:
(703) 714-8137

      Email:
mike.mcgillis@jer.com

       

       

      JER
US Debt Co-Investment Vehicle, L.P.

      1650
Tysons Blvd., Suite 1600

      McLean,
VA 22102

      Attn:
George Yeboah

      Tel.:
(703) 714-8375

      Fax:
(703) 714-8137

      Email:
george.yeboah@jer.com

       

       

      JER
US Debt Co-Investment Vehicle, L.P.

      1650
Tysons Blvd., Suite 1600

      McLean,
VA 22102

      Attn:
Jeff Goldberg

      Tel.:
(703) 336-8386

      Fax:
(703) 714-8137

      Email:
jeff.goldberg@jer.com

       

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

      

       

      Annex
V

      Margin
for Forward Transactions

       

       

      This
Annex V forms a part of the Master Repurchase Agreement dated as of September
12, 2008 (the "Agreement") between J.P. Morgan Securities Inc. and JERIT Finance
CO JPM, LLC. Capitalized terms used but not defined in this Annex V shall have
the meanings ascribed to them in the Agreement.

       

       

      
        	
                1.

              	
                Definitions.
      For purposes of the Agreement and this Annex V, the following terms shall
      have the following meanings:

              

      

       

       

      "Forward
Exposure”, the amount of loss a party would incur upon canceling a Forward
Transaction and entering into a replacement transaction, determined in
accordance with market practice or as otherwise agreed by the
parties;

       

       

      "Forward
Transaction", any Transaction agreed to by the parties as to which the Purchase
Date has not yet occurred;

       

       

      "Net
Forward Exposure", the aggregate amount of a party's Forward Exposure to the
other party under all Forward Transactions hereunder reduced by the aggregate
amount of any Forward Exposure of the other party to such party under all
Forward Transactions hereunder;

       

       

      "Net
Unsecured Forward Exposure", a party's Net Forward Exposure reduced by the
Market Value of any Forward Collateral transferred to such party (and not
returned) pursuant to Paragraph 2 of this Annex V.

       

       

      
        	
                2.

              	
                Margin
      Maintenance.

              

      

       

       

      
        	
                 
      

              	
                (a)

              	
                If
      at any time a party (the "In-the-Money Party") shall have a Net Unsecured
      Forward Exposure to the other party (the "Out-of-the-Money Party") under
      one or more Forward Transactions, the In the-Money Party may by notice to
      the Out-of-the-Money Party require the Out-of-the-Money Party to transfer
      to the In-the-Money Party Securities or cash reasonably acceptable to the
      In-the-Money Party (together with any Income thereon and proceeds thereof,
      "Forward Collateral") having a Market Value sufficient to eliminate such
      Net Unsecured Forward Exposure. The Out-of-the-Money Party may by notice
      to the In-the-Money Party require the In-the-Money Party to transfer to
      the Out-of-the-Money Party Forward Collateral having a Market Value that
      exceeds the In-the-Money Party's Net Forward Exposure ("Excess Forward
      Collateral Amount"). The rights of the parties under this subparagraph
      shall be in addition to their rights under subparagraphs (a) and (b) of
      Paragraph 4 and any other provisions of the
  Agreement.

              

      

       

       

      
        	
                 
      

              	
                (b)

              	
                The
      parties may agree, with respect to any or all Forward Transactions
      hereunder, that the respective rights of the parties under subparagraph
      (a) of this Paragraph may be exercised only where a Net Unsecured Forward
      Exposure or Excess Forward Collateral Amount, as the case may be, exceeds
      a specified dollar amount or other specified threshold for such Forward
      Transactions (which amount or threshold shall be agreed to by the parties
      prior to entering into any such Forward
  Transactions).

              

      

       

       

       

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

       

       

      
        	
                 
      

              	
                (c)

              	
                The
      parties may agree, with respect to any or all Forward Transactions
      hereunder, that the respective rights of the parties under subparagraph
      (a) of this Paragraph to require the elimination of a Net Unsecured
      Forward Exposure or Excess Forward Collateral Amount, as the case may be,
      may be exercised whenever such a Net Unsecured Forward Exposure or Excess
      Forward Collateral Amount exists with respect to any single Forward
      Transaction hereunder (calculated without regard to any other Forward
      Transaction outstanding hereunder).

              

      

       

       

      
        	
                 
      

              	
                (d)

              	
                The
      parties may agree, with respect to any or all Forward Transactions
      hereunder, that (i) one party shall transfer to the other party Forward
      Collateral having a Market Value equal to a specified dollar amount or
      other specified threshold no later than the Margin Notice Deadline on the
      day such Forward Transaction is entered into by the parties or (ii) one
      party shall not be required to make any transfer otherwise required to be
      made under this Paragraph if, after giving effect to such transfer, the
      Market Value of the Forward Collateral held by such party would be less
      than a specified dollar amount or other specified threshold (which amount
      or threshold shall be agreed to by the parties prior to entering into any
      such Forward Transactions).

              

      

       

       

      
        	
                 
      

              	
                (e)

              	
                If
      any notice is given by a party to the other under subparagraph (a) of this
      Paragraph at or before the Margin Notice Deadline on any business day, the
      party receiving such notice shall transfer Forward Collateral as provided
      in such subparagraph no later than the close of business in the relevant
      market on such business day. If any such notice is given after the Margin
      Notice Deadline, the party receiving such notice shall transfer such
      Forward Collateral no later than the close of business in the relevant
      market on the next business day.

              

      

       

       

      
        	
                 
      

              	
                (f)

              	
                Upon
      the occurrence of the Purchase Date for any Forward Transaction and the
      performance by the parties of their respective obligations to transfer
      cash and Securities on such date, any Forward Collateral in respect of
      such Forward Transaction, together with any Income thereon and proceeds
      thereof, shall be transferred by the party holding such Forward Collateral
      to the other party; provided, however, that neither
      party shall be required to transfer such Forward Collateral to the other
      if such transfer would result in the creation of a Net Unsecured Forward
      Exposure of the transferor.

              

      

       

       

      
        	
                 
      

              	
                (g)

              	
                The
      Pledgor (as defined below) of Forward Collateral may, subject to agreement
      with and acceptance by the Pledgee (as defined below) thereof, substitute
      other Securities reasonably acceptable to the Pledgee for any Securities
      Forward Collateral. Such substitution shall be made by transfer to the
      Pledgee of such other Securities and transfer to the Pledgor of such
      Securities Forward Collateral. After substitution, the substituted
      Securities shall constitute Forward
Collateral.

              

      

       

       

       

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

       

      
        	
                3.

              	
                Security
      Interest.

              

      

       

       

      
        	
                 
      

              	
                (a)

              	
                In
      addition to the rights granted to the parties under Paragraph 6 of the
      Agreement, each party ("Pledgor") hereby pledges to the other party
      ("Pledgee") as security for the performance of its obligations hereunder,
      and grants Pledgee a security interest in and right of setoff against, any
      Forward Collateral and any other cash, Securities or property, and all
      proceeds of any of the foregoing, transferred by or on behalf of Pledgor
      to Pledgee or due from Pledgee to Pledgor in connection with the Agreement
      and the Forward Transactions
hereunder.

              

      

       

       

      
        	
                 
      

              	
                (b)

              	
                Unless
      otherwise agreed by the parties, a party to whom Forward Collateral has
      been transferred shall have the right to engage in repurchase transactions
      with Forward Collateral or otherwise sell, transfer, pledge or hypothecate
      Forward Collateral, including in respect of loans or other extensions of
      credit to such party that may be in amounts greater than the Forward
      Collateral such party is entitled to as security for obligations
      hereunder, and that may extend for periods of time longer than the periods
      during which such party is entitled to Forward Collateral as security for
      obligations hereunder; provided, however, that no such
      transaction shall relieve such party of its obligations to transfer
      Forward Collateral pursuant to Paragraph 2 or 4 of this Annex V or
      Paragraph 11 of the Agreement.

              

      

       

       

      
        	
                4.

              	
                Events of
      Default.

              

      

       

       

      
        	
                 
      

              	
                (a)

              	
                In
      addition to the Events of Default set forth in Paragraph 11 of the
      Agreement, it shall be an additional "Event of Default" if either party
      fails, after one business day's notice, to perform any covenant or
      obligation required to be performed by it under Paragraph 2 or any other
      provision of this Annex.

              

      

       

       

      
        	
                 
      

              	
                (b)

              	
                In
      addition to the other rights of a nondefaulting party under Paragraphs 11
      and 12 of the Agreement, if the nondefaulting party exercised or is deemed
      to have exercised the option referred to in Paragraph 11(a) of the
      Agreement:

              

      

       

       

      
        	
                 
      

              	
                (i)

              	
                The
      nondefaulting party, without prior notice to the defaulting party, may (A)
      immediately sell, in a recognized market (or otherwise in a commercially
      reasonable manner) at such price or prices as the nondefaulting party may
      reasonably deem satisfactory, any or all Forward Collateral subject to any
      or all Forward Transactions hereunder and apply the proceeds thereof to
      any amounts owing by the defaulting party hereunder or (B) in its sole
      discretion elect, in lieu of selling all or a portion of such Forward
      Collateral, to give the defaulting party credit for such Forward
      Collateral in an amount equal to the price therefor on such date, obtained
      from a generally recognized source or the most recent closing bid
      quotation from such a source, against any amounts owing by the defaulting
      party hereunder.

              

      

       

       

       

      
        
           

        

        
          29

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (ii)

              	
                Any
      Forward Collateral held by the defaulting party, together with any Income
      thereon and proceeds thereof, shall be immediately transferred by the
      defaulting party to the nondefaulting party. The nondefaulting party may,
      at its option (which option shall be deemed to have been exercised
      immediately upon the occurrence of an Act of Insolvency), and without
      prior notice to the defaulting party, (i) immediately purchase, in a
      recognized market (or otherwise in a commercially reasonable manner) at
      such price or prices as the nondefaulting party may reasonably deem
      satisfactory, securities ("Replacement Securities") of the same class and
      amount as any Securities Forward Collateral that is not delivered by the
      defaulting party to the nondefaulting party as required hereunder or (ii)
      in its sole discretion elect, in lieu of purchasing Replacement
      Securities, to be deemed to have purchased Replacement Securities at the
      price therefor on such date, obtained from a generally recognized source
      or the most recent closing offer quotation from such a source, whereupon
      the defaulting party shall be liable for the price of such Replacement
      Securities together with the amount of any cash Forward Collateral not
      delivered by the defaulting party to the nondefaulting party as required
      hereunder.

              

      

       

       

      Unless
otherwise provided in Annex I, the parties acknowledge and agree that (1) the
Forward Collateral subject to any Forward Transaction hereunder are instruments
traded in a recognized market, (2) in the absence of a generally recognized
source for prices or bid quotations for any Forward Collateral, the
nondefaulting party may establish the source therefor in its sole discretion and
(3) all prices and bids shall be determined together with accrued Income (except
to the extent contrary to market practice with respect to the relevant Forward
Collateral).

       

       

      
        	
                5.

              	
                No Waivers.
      Etc. Without limitation of the provisions of Paragraph 17 of the
      Agreement, the failure to give a notice pursuant to subparagraph (a), (b),
      (c) or (d) of Paragraph 2 of this Annex V will not constitute a waiver of
      any right to do so at a later date.

              

      

       

      
        
           

        

        
          30

          
            

          

        

        
           

        

      

      

       

      Annex
VI

      Buy/Sell
Back Transactions

       

       

      This
Annex VI forms a part of the Master Repurchase Agreement dated as of September
12, 2008 (the "Agreement") between J.P. Morgan Securities Inc. and JERIT Finance
CO JPM, LLC. Capitalized terms used but not defined in this Annex VI shall have
the meanings ascribed to them in the Agreement.

       

       

      
        	
                1.

              	
                In
      the event of any conflict between the terms of this Annex VI and any other
      term of the Agreement, the terms of this Annex VI shall
      prevail.

              

      

       

       

      
        	
                2.

              	
                Each
      Transaction shall be identified at the time it is entered into and in the
      relevant Confirmation as either a Repurchase Transaction or a Buy/Sell
      Back Transaction.

              

      

       

       

      
        	
                3.

              	
                In
      the case of a Buy/Sell Back Transaction, the Confirmation delivered in
      accordance with Paragraph 3 of the Agreement may consist of a single
      document in respect of both of the transfers of funds against Securities
      which together form the Buy/Sell Back Transaction or separate
      Confirmations may be delivered in respect of each such
      transfer.

              

      

       

       

      
        	
                4.

              	
                Definitions.  The
      following definitions shall apply to Buy/Sell Back
      Transactions:

              

      

       

       

      (a)           "Accrued
Interest", with respect to any Purchased Securities subject to a Buy/Sell Back
Transaction, unpaid Income that has accrued during the period from (and
including) the issue date or the last Income payment date (whichever is later)
in respect of such Purchased Securities to (but excluding) the date of
calculation. For these purposes unpaid Income shall be deemed to accrue on a
daily basis from (and including) the issue date or the last Income payment date
(as the case may be) to (but excluding) the next Income payment date or the
maturity date (whichever is earlier);

       

       

      (b)           "Sell
Back Differential", with respect to any Buy/Sell Back Transaction as of any
date, the aggregate amount obtained by daily application of the Pricing Rate for
such Buy/Sell Back Transaction to the Purchase Price for such Buy/Sell Back
Transaction on a 360 day per year basis (unless otherwise agreed by the parties
for the Transaction) for the actual number of days during the period commencing
on (and including) the Purchase Date for such Buy/Sell Back Transaction and
ending on (but excluding) the date of determination;

       

       

      (c)           "Sell
Back Price", with respect to any Buy/Sell Back Transaction:

       

       

      (i)
in relation to the date originally specified by the parties as the Repurchase
Date pursuant to Paragraph 2(q) of the Agreement, the price agreed by the
Parties in relation to such Buy/Sell Back Transaction, and

       

       

      (ii)
in any other case (including for the purposes of the application of Paragraph 4
or Paragraph 11 of the Agreement), the product of the formula (P + D) - (IR +
C), where—

       

       

      P
= the Purchase Price

       

       

      
        
           

        

        
          31

          
            

          

        

        
           

        

      

      D
= the Sell Back Differential

       

       

      IR
= the amount of any Income in respect of the Purchased Securities paid by the
issuer on any date falling between the Purchase Date and the Repurchase
Date

       

       

      C
= the aggregate amount obtained by daily application of the Pricing Rate for
such Buy/Sell Back Transaction to any such Income from (and including) the date
of payment by the issuer to (but excluding) the date of
calculation.

       

       

      
        	
                5.

              	
                When
      entering into a Buy/Sell Back Transaction the parties shall also agree on
      the Sell Back Price and the Pricing Rate to apply in relation to such
      Buy/Sell Back Transaction on the scheduled Repurchase Date. The parties
      shall record the Pricing Rate in at least one Confirmation applicable to
      such Buy/Sell Back Transaction.

              

      

       

       

      
        	
                6.

              	
                Termination
      of a Buy/Sell Back Transaction shall be effected on the Repurchase Date by
      transfer to Seller or its agent of Purchased Securities against the
      payment by Seller of (i) in a case where the Repurchase Date is the date
      originally agreed to by the parties pursuant to Paragraph 2(q) of the
      Agreement, the Sell Back Price referred to in Paragraph 4(c)(i) of this
      Annex; and (ii) in any other case, the Sell Back Price referred to in
      Paragraph 4(c)(ii) of this Annex.

              

      

       

       

      
        	
                7.

              	
                For
      the avoidance of doubt, the parties acknowledge and agree that the
      Purchase Price and the Sell Back Price in Buy/Sell Back Transactions shall
      include Accrued Interest (except to the extent contrary to market practice
      with respect to the Securities subject to such Buy/Sell Back Transaction,
      in which event (i) an amount equal to the Purchase Price plus Accrued
      Interest to the Purchase Date Shall be paid to Seller on the Purchase Date
      and shall be used, in lieu of the Purchase Price, for calculating the Sell
      Back Differential, (ii) an amount equal to the Sell Back Price plus the
      amount of Accrued Interest to the Repurchase Date shall be paid to Buyer
      on the Repurchase Date, and (iii) the formula in Paragraph 4(c)(ii) of
      this Annex VI shall be replaced by the formula "(P + AI + D) - (IR + C)",
      where "AI" equals Accrued Interest to the Purchase
  Date).

              

      

       

       

      
        	
                8.

              	
                Unless
      the parties agree in Annex I to the Agreement that a Buy/Sell Back
      Transaction is not to be repriced, they shall at the time of repricing
      agree on the Purchase Price, the Sell Back Price and the Pricing Rate
      applicable to such Transaction.

              

      

       

       

      
        	
                9.

              	
                Paragraph
      5 of the Agreement shall not apply to Buy/Sell Back
      Transactions.  Seller agrees, on the date such Income is
      received, to pay to Buyer any Income received by Seller in respect of
      Purchased Securities that is paid by the issuer on any date falling
      between the Purchase Date and the Repurchase
  Date.

              

      

       

       

      
        	
                10.

              	
                References
      to "Repurchase Price" throughout the Agreement shall be construed as
      references to "Repurchase Price or the Sell Back Price, as the case may
      be."

              

      

       

       

      
        	
                11.

              	
                In
      Paragraph 11 of the Agreement, references to the "Repurchase Prices" shall
      be construed as references to "Repurchase Prices and Sell Back
      Prices."

              

      

       

      

      

      

32ex10-1.htm

    
      

       

      Exhibit
10.1

       

       

      

       

       

      EMPLOYMENT
AGREEMENT

       

       

      This
Employment Agreement (this “Agreement”) by and between Employers Holdings, Inc.,
a Nevada corporation (the “Company”) and Douglas D. Dirks (the “Employee”) is
entered into as of the 17th day of December, 2008, effective as of January
1, 2009 (the “Effective Date”).

       

       

      RECITALS

       

       

      A. The Employee has knowledge and
experience applicable to the position of Chief Executive Officer.

       

       

      B. The Company desires to continue to
employ the Employee to perform certain services for the Company, its parent, if
any, and their respective subsidiaries and affiliates (the “Company
Affiliates”), as may be required or requested of the Employee in his position as
Chief Executive Officer, and the Employee desires to continue to be so employed
by the Company and to perform such services for the Company and the Company
Affiliates.

       

       

      In
consideration of the premises above and mutual covenants and promises set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which are mutually acknowledged, the parties agree as follows:

       

      TERMS

       

       

      
        	
                1.

              	
                Employment.

              

      

       

       

      The Company agrees to continue to
employ the Employee and the Employee accepts such continued employment upon the
terms and conditions specified herein. The Employee agrees to continue to devote
substantially all of his time and effort during working hours in the performance
of the duties called for herein and agrees that any other non-employment related
duties (i.e., industry related groups, service on boards, etc.) will not be
allowed to materially interfere with the performance of the duties called for
herein.

       

       

      
        	
                2.

              	
                Term.

              

      

       

       

      The term of this Agreement shall
commence on the Effective Date, and continue for four (4) years (the “Initial
Term”), until December 31, 2012, and, thereafter, shall automatically renew for
successive two (2) year periods (each, an “Additional Term;” the Initial Term
and any Additional Terms, collectively the “Term”), unless either party gives
written notice to the other no later than six (6) months prior to expiration of
the Initial Term or any Additional Term, as applicable, of an intent not to
renew this Agreement; subject, however to earlier termination of the Employee's
employment with the Company in accordance with this Agreement (the “Termination
Date”).  The expiration of this Agreement at the end of the Term, in
and of itself, shall not constitute, nor be construed or interpreted as, a
termination of the Employee's 

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

       

      employment
that would make him eligible for benefits or payments under Section 7
below.  This Agreement shall expire upon the termination of the
Employee's employment for any reason, subject to the provisions of subsection
10(h) below.

       

       

      
        	
                3.

              	
                Services and
      Duties.

              

      

       

       

      The Employee shall continue to serve as
Chief Executive Officer and shall perform such duties as may be assigned by the
Board of Directors of the Company (the “Board”) from time to time.  At
the request of the Board, the Employee shall also serve as a director of the
Company and/or one or more of the Company Affiliates at no additional
compensation.  The Employee agrees that upon the termination of his
employment with the Company, he shall resign from the Board and any and all
boards of the Company Affiliates effective on the Termination Date.

       

       

      
        	
                4.

              	
                Compensation and
      Benefits.

              

      

       

       

      
        	
                 
      

              	
                (a)

              	
                During the term of this Agreement,
      the Company shall pay
      to the Employee an annual salary of not less than $675,000 (“Base Salary”), which amount shall be paid
      according to the Company’s regular payroll practices. The
      Company agrees to review the Base Salary on an annual basis and adjust
      the salary to comply
      with the executive compensation policy in effect at the time of the
      review.  Any increase made to the annual salary will establish
      the new Base Salary for the Employee.  All payments made
      pursuant to this Agreement, including but not limited to this subsection
      4(a), shall be reduced by and
      subject to withholding for all federal, state, and local taxes and any
      other withholding required by applicable laws and
      regulations.

              

      

       

       

      
        	
                 
      

              	
                (b)

              	
                The Company will provide an annual incentive (the
      “Annual
      Incentive”) to the Employee during the Term
      based on the Employee’s and the Company’s performance, as determined by
      the Board (or a committee thereof) in its sole
      discretion.  In this regard, the Board (or a committee thereof)
      shall set
      an annual
      incentive target
      of not less than
      seventy percent (70%) of Base Salary, and the Annual Incentive shall be paid in
      accordance with the Company’s regular practice for its senior
      officers, as in effect from time to time. To the extent not duplicative of
      the specific benefits provided herein, the Employee shall
      be eligible to participate in all incentive compensation, retirement,
      supplemental retirement, and deferred compensation plans, policies and
      arrangements that are provided generally to other senior officers of the
      Company at a level (in terms of the
      amount and types of benefits and incentive compensation that the Employee
      has the opportunity to receive and the terms thereof) determined in the
      sole discretion of the Board (or a committee
      thereof).

              

      

       

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (c)

              	
                The Employee agrees that
      the amounts payable
      and benefits provided under this Agreement, including but not limited to
      any amounts payable or benefits provided under this Section 4 and Section 7 constitute good,
      valuable and separate consideration for the non-competition,
      assignment and
      release of liability provisions contained herein. The Employee
      acknowledges that he is aware of the effect of the non-competition,
      assignment and release of liability provisions contained herein and agrees
      that the amounts payable and benefits provided under this Agreement, including
      but not limited to the amounts payable and benefits provided under
      this Section 4 and
      Section 7, if
      any, constitute
      sufficient consideration for his agreement to these
      provisions.

              

      

       

       

      
        	
                 
      

              	
                (d)

              	
                In addition to the compensation
      called for in this
      Agreement, the Employee shall be entitled to receive any and all employee benefits and perquisites generally
      provided from time to time to other similarly situated officers of the
      Company as well as the benefits and
      perquisites listed on “Exhibit A” attached hereto and incorporated
      herein by this reference.

              

      

       

       

      
        	
                5.

              	
                Insurance.

              

      

       

       

      The Employee agrees to submit to a
physical examination at a reasonable time as requested by the Company for the
purpose of the Company’s obtaining life insurance on the life of the Employee
for the benefit of the Company; provided, however, that the Company shall bear
the costs for such examinations and shall pay all premiums on any life insurance
obtained as a result of such examinations.  The Employee further
agrees to submit to drug testing in accordance with the Company's policies and
procedures.

       

       

      
        	
                6.

              	
                Termination.

              

      

       

       

      
        	
                 
      

              	
                (a)

              	
                The Company, at any time, may
      terminate this Agreement and the Employee's employment
      immediately for
      “Cause”.  Cause is defined
      as:

              

      

       

       

      
        	
                 
      

              	
                (i)

              	
                A material breach of this
      Agreement by
      the Employee;

              

      

       

       

      
        	
                 
      

              	
                (ii)

              	
                Failure or inability of
      the Employee to obtain or maintain any
      required licenses or
certificates;

              

      

       

       

      
        	
                 
      

              	
                (iii)

              	
                Willful violation by the Employee of any law, rule or
      regulation, including but not limited to any material insurance law or
      regulation, which
      violation may, as determined by the Company, adversely affect the ability
      of the Employee to perform his duties
      hereunder or may subject the Company to liability or negative publicity; or

              

      

       

       

      
        	
                 
      

              	
                (iv)

              	
                Conviction or commission of or the entry of a guilty plea or
      plea of no contest
      to any felony or to any other crime involving moral
      turpitude.

              

      

       

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (b)

              	
                The Employee may terminate this
      Agreement and his
      employment with the Company immediately for “Good Reason,” which shall mean the occurrence
      of any of the events described in subsections 6(b)(i), (ii)
      or (iii) below
      with respect to which
      the Employee has notified the Company of the existence thereof within no
      more than ninety (90) days of the initial existence thereof
      and which is not cured by the Company
      within thirty (30) days of the Company’s receipt of written notice from the
      Employee of the events alleged to constitute such Good Reason:

              

      

       

       

      
        	
                 
      

              	
                (i)

              	
                A material diminution in the
      Employee’s base compensation;

              

      

       

       

      
        	
                 
      

              	
                (ii)

              	
                A material diminution in the
      Employee’s authority, duties or
      responsibilities;
  or

              

      

       

       

      
        	
                 
      

              	
                (iii)

              	
                Any other action or inaction that
      constitutes a material breach by the Company of this Agreement (as may be amended
      from time to time).

              

      

       

       

      In addition, the Employee may terminate
this Agreement and his employment with the Company at any time for any other reason or for no reason, but such termination shall not
constitute termination for “Good Reason.”

       

       

      
        	
                 
      

              	
                (c)

              	
                The Company may also terminate
      this Agreement and
      the Employee's employment upon the occurrence of one or more
      of the following events or reasons, subject to applicable law (or, in the case of subsection
      6(c)(i) below, termination of this Agreement and the Employee's employment
      will be automatic):

              

      

       

      
        	
                 
      

              	
                (i)

              	
                Death of the Employee;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                The Employee is deemed to be disabled
      in accordance with the policies of the Company or the law or if the Employee is unable to perform the
      essential job functions of the Employee’s position with the Company, with
      or without reasonable accommodation, for a period of more than 100
      business days in any 120 consecutive business day period. The Employee is entitled to any and all
      short term or long term disability programs, like any other employee, in
      accordance with the terms of such programs and the
      policies of the
      Company;
  or

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                At any time for any other reason or no reason in the sole and absolute
      discretion of the
      Company.

              

      

       

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
        	
                7.

              	
                Payments Upon
      Termination.

              

      

       

       

      
        	
                 
      

              	
                (a)

              	
                Qualifying
      Termination and Severance Pay.  If the Company terminates the Employee's employment prior to the expiration of the Term but other than during the CIC Period (as defined
      below) for any reason
      other than
      as specified above in subsection
      6(a) for Cause, subsection 6(c)(i) by reason of the death of the Employee, or subsection 6(c)(ii) for disability, or if the
      Employee terminates his
      employment for Good Reason pursuant to subsection 6(b), the Employee shall receive the following
      severance pay (the “Severance Pay”):

              

      

       

       

      
        	
                 
      

              	
                (i)

              	
                In lieu of any further salary
      payments to the Employee for periods subsequent to the Termination Date and in lieu of any severance
      benefit otherwise payable to the Employee, an amount equal to two (2) times Base Salary, payable in equal bi-weekly installments on
      the Company’s regular payroll
      dates as in effect on
      such Termination Date, for twenty-four (24) months following the Termination Date, commencing with the payroll date applicable to the first full payroll period
      following the Termination Date; provided, however, that such
      payments shall be delayed to the extent required under Section
      25 below.  The payments shall be subject to normal
      payroll deductions.

              

      

       

       

      
        	
                 
      

              	
                (ii)

              	
                Continuation of the medical, dental and vision insurance coverage in effect on
      the Termination Date for a period of eighteen (18) months following the Termination Date
      with the Company
      paying the employer portion of the premium and the Employee paying the
      employee portion, including dependents if applicable, of the premium during
      such eighteen (18)
      month period, provided that the Employee elects to continue such
      insurance coverage under the Consolidated Omnibus Budget Reconciliation
      Act of 1986, as amended (“COBRA”). The Employee is solely responsible for taking the
      actions necessary to exercise his rights under COBRA for the insurance
      coverage the
      Employee has in
      effect, including
      coverage for
      dependents if applicable, on the Termination Date.

              

      

       

       

      
        	
                 
      

              	
                (b)

              	
                Severance
      Pay as Liquidated Damages.  The parties agree, in the event of
      a material
      breach of this
      Agreement by the Company, following which the Employee
      terminates his employment, that actual damages are
      speculative and that the amount of the Severance Pay or, if applicable, the CIC Severance
      Pay (as defined
      below) set forth
      herein is liquidated damages and is a reasonable estimate of what damages
      would be for a material breach of this
      Agreement.

              

      

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

       

      
        	
                 
      

              	
                (c)

              	
                Conditions
      to Severance Pay
      ,
      CIC Severance Pay
      or Non-Competition Pay.  The Employee agrees and acknowledges that the following
      must be satisfied by the Employee before he is entitled to the Severance
      Pay or, if applicable, the CIC Severance
      Pay provided for
      herein or the
      Non-Competition
      Pay as defined and described in subsection 10(a):

              

      

       

       

      
        	
                 
      

              	
                (i)

              	
                That the Employee returns any and all equipment, software,
      data, property and information of the Company and the Company
      Affiliates, including
      documents and records or copies thereof relating in any way to any
      proprietary information of the Company or any of the Company Affiliates whether prepared by the Employee
      or any other person or entity.  That the Employee further agrees that he
      shall not retain any proprietary information of the Company or any of the Company
      Affiliates after the
      Termination
      Date;

              

      

       

       

      
        	
                 
      

              	
                (ii)

              	
                That the Employee executes a Global Release of Liability, in
      a form to be
      determined by the Company in its sole discretion, which releases the Company and the Company
      Affiliates from liability for any and all
      claims, complaints and causes of
      action, whether based in law
      or equity, arising
      from, related
      to or associated with
      the Employee’s employment by the Company or under this Agreement and that such release has become
      effective and non-revocable.  That the Employee further acknowledges and
      agrees that he has not made and will not make any assignment of
      any claim, cause or right of action, or any right of any kind whatsoever,
      arising from, related
      to or associated with
      the employment of the
      Employee by the
      Company; and

              

      

       

       

      
        	
                 
      

              	
                (iii)

              	
                That the Employee reaffirms the covenants contained
      herein, in writing,
      including, but not limited to, the covenants set forth in Section 10.
      

              

      

       

       

      Notwithstanding anything in this
Agreement to the contrary,
in any case where the first and last days of the applicable release and nonrevocability periods provided for in the Global Release of
Liability (the “Applicable Release Period”) are in two separate taxable years, any
payments required to be made to the Employee under this Agreement that are treated as deferred
compensation for purposes of Section 409A (as defined below) shall be made in the later taxable year,
as soon as practicable, but
in no event later than thirty (30) days following the conclusion of the
Applicable Release Period.

       

       

      
        	
                 
      

              	
                (d)

              	
                Voluntary
      Termination by the Employee.  The Employee may terminate
      his
      employment and
      this Agreement for
      reasons other than those identified in subsection 6(b) upon not less than
      sixty (60) days prior written notice.
       If the Employee terminates
      his employment and
      this Agreement
      pursuant to this subsection 7(d), he shall be entitled only to the
      following:

              

      

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (i)

              	
                Any unpaid salary through the
      Termination
      Date;
      and

              

      

       

       

      
        	
                 
      

              	
                (ii)

              	
                Payment for any accrued and unused
      vacation as of the
      Termination Date.

              

      

       

       

      
        	
                 
      

              	
                (e)

              	
                Qualifying
      Change in Control Termination.  If, before the expiration of the
      Term, the Company terminates
      the Employee's
      employment within the period commencing six (6) months prior
      to and ending twenty-four (24) months following
      a Change in Control
      (as defined below), such period referred to herein as
      the “CIC
      Period,” for any reason other than as specified above in subsection 6(a) for Cause, subsection 6(c)(i) for the death of the Employee, or subsection 6(c)(ii) for disability, or if the
      Employee terminates his employment for Good Reason pursuant to subsection 6(b), the Employee shall receive
      the severance pay
      set forth in
      subsections (i) and (ii) below (the “CIC Severance Pay”), provided that if the
      Employee’s employment is
      terminated during the
      six (6) month period
      prior to a Change in
      Control, the Employee
      shall be entitled to
      CIC Severance Pay only if such termination (x) was by the Company other than for Cause but
      at the request or direction of
      any person that has entered into an agreement
      with the Company the consummation of which would constitute a Change in
      Control, (y) was by the Employee for Good Reason and the circumstance or event
      that constitutes Good
      Reason occurred at the request or direction of such
      person or (z) was by the Company without Cause and
      the Employee reasonably demonstrates that such termination
      was otherwise in
      connection with or in
      anticipation of a Change in Control; and if the Employee is not
      entitled to CIC Severance Pay hereunder, then the Employee's termination of employment will not be deemed to
      have occurred during the CIC Period for purposes of subsection
      7(a):

              

      

       

       

      
        	
                 
      

              	
                (i)

              	
                In lieu of any further salary payments to the
      Employee for periods subsequent to the Termination Date and in lieu of any severance
      benefit otherwise payable to the Employee, a lump sum cash payment equal to three (3) times the sum of (A) Base Salary
      and (B) the average of the annual bonus amounts earned by the
      Employee for the three (3) years preceding the year in which the Change in Control occurs; provided, however, that if the
      Termination Date occurs prior to January 1, 2010, then (B)
      shall instead
      be the average of
      the annual bonus
      amounts earned by the Employee in 2007 and 2008.  Such payment shall be made as soon
      as practicable (but in no event later than sixty (60) days) following the Termination Date; provided, however, that such
      payments shall be delayed to the extent required under Section
      25 below;
  and

              

      

       

       

      
        	
                 
      

              	
                (ii)

              	
                Continuation of the medical, dental and
      vision insurance coverage in effect on
      the Employee's
      Termination Date for a period of
      eighteen (18) months following the Termination Date
      with the Company
      paying the employer
      portion of the premium and the Employee paying the
      employee

              

      

       

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

       

      
         

        
          	
                   
      

                	
                   

                	
                  portion, including dependents if
      applicable, of the
      premium during such
      eighteen (18)-month period, provided that the
      Employee elects to continue such insurance coverage under COBRA. The
      Employee is solely
      responsible for taking the actions necessary to exercise his rights under
      COBRA for the insurance coverage the Employee has in effect, including
      coverage for
      dependents if
      applicable, on the Termination
Date.

                

        

         

      

       

      
        	
                 
      

              	
                (f)

              	
                Definition
      of Change in Control.
       For purposes of this Agreement,
      a “Change in Control” shall be deemed to have occurred
      if the event set forth in any one of the following paragraphs shall have
      occurred:

              

      

       

       

      
        	
                 
      

              	
                (i)

              	
                Any one person, or more than one
      person acting as a group, acquires ownership of stock of the Company that, together with stock held by
      such person or group, constitutes more than 50% of the total fair market
      value or total voting power of the stock of the Company;
    or

              

      

       

       

      
        	
                 
      

              	
                (ii)

              	
                Any one person, or more than one person
      acting as a group, acquires (or has acquired during the
      twelve (12)-month period ending on the date
      of the most recent acquisition by such person or persons) ownership of
      stock of the Company possessing 35% or more of the total voting
      power of the stock of the Company;
  or

              

      

       

       

      
        	
                 
      

              	
                (iii)

              	
                A majority of members of the Board is replaced during any
      twelve (12)-month period by directors whose
      appointment or election is not endorsed by a majority of the members of
      the Board before the date of the
      appointment or election;
  or

              

      

       

       

      
        	
                 
      

              	
                (iv)

              	
                Any one person or group acquires
      (or has acquired
      during the immediately preceding twelve (12)-month period ending on the
      date of the most recent acquisition) assets of the Company with an
      aggregate gross fair market value of not less than forty percent (40%) of
      the aggregate gross fair market value of the assets of the
      Company immediately prior to such acquisition.  For this
      purpose, gross fair market value shall mean the fair value of the affected
      assets determined without regard to any liabilities associated with such
      assets.

              

      

       

       

      Notwithstanding the foregoing, (1) a “Change in Control” shall not be deemed to have occurred by
virtue of the consummation of any transaction or series of integrated
transactions immediately following which the holders of the common stock of the
Company immediately prior
to such transaction or series of transactions continue to have substantially the
same proportionate ownership in an entity that owns all or substantially all of the
assets of the Company immediately following such transaction or series of

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      transactions, and (2) a “Change in Control” shall not be deemed to have occurred as result of
any secondary offering of
Company common stock to the general public through a registration statement
filed with the Securities and Exchange Commission.  The Board shall determine whether a Change in Control has
occurred hereunder in a manner consistent with the provisions of Section
409A.

       

       

      
        	
                 
      

              	
                (g)

              	
                No
      Duplication of Payments or Benefits.  Notwithstanding any
      provision of this
      Agreement to the
      contrary, the
      Employee shall not be eligible to receive any payments or
      benefits under both subsections 7(a) and 7(e); but rather, to the extent the
      conditions set forth in subsection 7(a) and subsection 7(e) are satisfied, the Employee
      shall be eligible to receive benefits under only subsection 7(e).

              

      

       

       

      
        	
                 
      

              	
                (h)

              	
                Golden
      Parachute (Section
      280G) Excise
      Taxes.

              

      

       

       

      
        	
                 
      

              	
                (i)

              	
                Subject to subsection 7(h)(ii) below, if it is determined that any payment or benefit received or
      to be received by the Employee, whether pursuant to this
      Agreement or otherwise (the “Severance Payments”), is a “parachute payment” within the meaning of
      section 280G of the Internal Revenue Code (the
      “Code”) (all such payments and benefits,
      including the Severance Payments as applicable, but excluding the Gross-Up
      Payment (as defined below) being hereinafter called “Total Payments”) that will be subject (in whole or part)
      to the tax imposed
      under section 4999 of the Code (the
      “Excise Tax”), then the Company shall pay to
      the Employee on or as soon as practicable
      following the day on which the Excise Tax is remitted by the Employee (but not later than the end of
      the taxable year following the year in which the Excise Tax is
      incurred and subject
      to the provisions set forth in Section 25 below, including if applicable,
      the Six Month Delay (as defined in such section)) an additional amount (the
      “Gross-Up Payment”) such that the net amount
      retained by the Employee, after deduction of any Excise
      Tax on the Total Payments and any federal, state and local income and
      employment taxes and Excise Tax upon the Gross-Up
      Payment, shall be equal to the Total
      Payments.

              

      

       

       

      
        	
                 
      

              	
                (ii)

              	
                In the event that the amount of
      the Total Payments does not exceed 110% of the largest amount that would
      result in no portion of the Total Payments being subject to the Excise Tax
      (the “Safe Harbor”), the non-cash portion of the Total Payments
      shall first be
      reduced (if necessary, to zero), and the cash portion of the Total Payments shall thereafter be reduced (if
      necessary, to zero) so that the amount of the Total Payments is equal to
      the Safe Harbor.

              

      

       

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (iii)

              	
                For purposes of determining whether any of
      the Total Payments will be subject to the Excise Tax and the amount of
      such Excise Tax, (A) no portion of the Total Payments
      shall be taken into account which, in the opinion of tax counsel
      (“Tax
      Counsel”) selected by the Board in existence immediately prior to
      the Change in Control, does not constitute a
      “parachute
      payment” within the
      meaning of section 280G(b)(2) of the Code, including by reason of
      section 280G(b)(4)(A) of the Code, (B) the Severance Payments shall be
      reduced only to the
      extent necessary so that the Total Payments (other than those referred to
      in clause (A)) in their entirety constitute
      reasonable compensation for services actually rendered within the meaning
      of section 280G(b)(4)(B) of the Code
      or are otherwise not
      subject to disallowance as deductions by reason of section 280G of the Code, in the
      opinion of Tax Counsel, and (C) the value of any non-cash benefit or any deferred
      payment or benefit included in the Total Payments shall be determined by
      the Company's independent
      auditor in
      accordance with the
      principles of sections 280G(d)(3) and (4) of the
      Code.  If the Employee disputes the Company's
      calculations (in whole or in part), the reasonable opinion of Tax Counsel
      with respect to the matter in dispute shall
      prevail.

              

      

       

       

      
        	
                 
      

              	
                (iv)

              	
                If the Excise Tax is finally
      determined to be less than the amount taken into account hereunder in
      calculating the Gross-Up Payment, the Employee shall repay to the Company,
      at the time that the amount of such reduction in Excise Tax is
      finally determined,
      the portion of the Gross-Up Payment attributable to such reduction (plus
      that portion of the Gross-Up Payment attributable to the Excise Tax and
      federal, state and local income and employment taxes imposed on the
      Gross-Up Payment being repaid by the Employee to the
      extent that such repayment results in a reduction in Excise Tax and/or a
      federal, state or local income or employment tax deduction) plus interest
      on the amount of such repayment at 120% of the rate provided in section
      1274(b)(2)(B) of the Code.  If
      the Excise Tax is determined to exceed the amount taken into account
      hereunder in calculating the Gross-Up Payment (including by reason of any
      payment the existence or amount of which cannot be determined at the time
      of the Gross-Up Payment), the Company shall make
      an additional Gross-Up Payment in respect of such excess (plus any
      interest, penalties or additions payable by the Employee with respect to
      such excess) at the time that the amount of such excess is finally
      determined.

              

      

       

       

      
        	
                 
      

              	
                (v)

              	
                The Employee and the Company shall
      each reasonably cooperate with the other in connection with any
      administrative or judicial proceedings concerning the existence or amount
      of liability for Excise Tax with respect to the Total
      Payments.  The Company also shall pay to the Employee all legal
      fees and expenses incurred by the Employee in connection with any tax
      audit or proceeding to the extent attributable to the application of
      section 4999 of the Code to any payment or benefit provided hereunder.
      Such payments shall be made within sixty (60)
      business days after 

              

      

       

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

       

      
         

        
          	
                   
      

                	
                   

                	
                  delivery of the Employee's written
      request for payment accompanied with such evidence of fees and expenses
      incurred as the Company reasonably may require (but in no event shall any
      such payment be made after the end of the calendar year
      following the calendar year in which the expenses were incurred), provided
      that no such payment shall be made in respect of fees or expenses incurred
      by the Employee after the later of the tenth (10th) anniversary of the
      effective date of the Employee's
      termination with the Company or the Employee's death and, provided
      further, that, upon the Employee’s “separation from
      service” (as such
      term is defined under Section 409A) with the Company, in no event shall
      any additional such payments be made prior to the
      date that is six (6) months after the date of the Employee’s “separation from
      service” to the
      extent such payment delay is required under section 409A(a)(2)(B) of the
      Code.

                

        

         

      

       

      
        	
                8.

              	
                Licensing.

              

      

       

       

      The Employee has obtained and
possesses, or will obtain and possess, and will maintain throughout the Term
hereof, all licenses, approvals, permits, and authorization (the “Licenses”)
necessary to perform the Employee’s duties hereunder (if any).  Any
costs, attorneys’ fees, investigation fees or other expenses incurred in
connection with obtaining or maintaining such Licenses shall be borne by the
Company, provided that payment of such fees or costs by the Company shall be
made no later than the end of the year following the year in which the expenses
were incurred.  The Employee warrants that the Employee is fully
eligible, under all standards and requirements, to obtain, possess, and maintain
such Licenses and that the Employee will commit no acts during the Term hereof
that would jeopardize or eliminate the Employee’s ability to possess or maintain
such Licenses.

       

       

      
        	
                9.

              	
                Rules and
      Regulations.

              

      

       

       

      The Employee shall observe, enforce,
and comply with the policies, philosophies, strategies, rules, and regulations
of the Company, as they may be promulgated and/or modified from time to time,
and shall carry out and perform the orders, directions, and policies of the
Company, as they may be stated and/or amended from time to time, either orally
or in writing.  A violation of this Section 9 by the Employee is a
material breach of this Agreement.

       

       

      
        	
                10.

              	
                Restrictive
      Covenants.

              

      

       

       

      In consideration of the amounts payable
and benefits provided under Section 4, and, if applicable, Section 7 and
subsection 10(a), the other compensation paid hereunder, and other good and
valuable consideration, the receipt and sufficiency of which is acknowledged by
the parties, the parties agree to the following provisions of this Section
10:

       

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

       

      
        	
                 
      

              	
                (a)

              	
                Non-Competition. The Employee understands and agrees that the
      Company and the
      Company Affiliates do business throughout the State of
      Nevada and other states.  The Employee further understands and agrees
      that he is a high ranking officer of the Company and will have access to
      confidential and trade secret information and goodwill of the Company and the Company Affiliates that will allow the Employee to unfairly compete with the
      Company and the
      Company Affiliates justifying this restriction.
       If the Employee's
      employment is
      terminated (by either
      the Employee or the Company), whether or not during the
      Term, for any reason other than
      as specified above in subsection 6(c)(i) by reason of the death of the Employee, or
      subsection 6(c)(ii) for disability, then for a period of twenty-four (24)
      months commencing on the date of such termination of
      employment,
      the Employee agrees that, without the written
      permission of the Company, he will not engage (whether as owner, partner,
      controlling stockholder, controlling investor, employee, director, adviser, consultant, or otherwise)
      in any business that is in direct competition with the business being conducted by the Company or
      any of the
      Company
      Affiliates as of the date the Employee terminates
      employment, in Nevada
      or in any other state in which the
      Company is conducting such business (the “Non-Compete Area”) as of the date the Employee terminates
      employment; provided
      that if the Employee's employment is terminated (x) during the Term by the
      Employee for any reason other than (I) as specified above in subsection
      6(b) for Good Reason, (II) as specified above
      in
      subsection
      6(c)(i) by reason of death, or (III) as specified above
      in subsection
      6(c)(ii) by reason of disability, or (y) following the expiration of the Term (by either the Employee or the
      Company) for any reason other than as
      specified above in
      subsection
      6(a) by the Company for “Cause,” in subsection 6(c)(i) by reason of
      the death of the Employee, or subsection 6(c)(ii) for
      disability, then the
      Employee shall be entitled to, in lieu of any further salary
      payments to the Employee for periods subsequent to such termination of
      employment and in
      lieu of any severance benefit otherwise payable to the Employee, an amount
      (the “Non-Competition Pay”) equal to two (2) times Base Salary, payable in equal bi-weekly
      installments on the Company’s regular payroll dates as in
      effect on such
      termination date, for twenty-four (24) months following
      such termination date, commencing with the payroll
      date applicable to the first full payroll period following such termination date; provided, however, that such
      payments shall be delayed to the extent required under
      Section 25 below.  The payments
      shall be subject to normal payroll deductions. Notwithstanding anything in this
      Agreement to the contrary, if the non-competition provision in this subsection 10(a)
      is, or at any time
      becomes,
      nonenforceable, then
      the Employee shall not be entitled to any unpaid Non-Competition Pay that would otherwise be due under
      this subsection
      10(a).

              

      

       

       

      
        	
                 
      

              	
                (b)

              	
                Non-Solicitation. Without limiting the generality
      of the foregoing, the
      Employee agrees that
      for a period of
      twenty-four (24)
      months following the
      Employee's
      termination of employment (for any reason, by either the
      Employee or the Employer), he will not, without the prior
      written consent of the Company, directly or indirectly solicit or attempt
      to solicit, within
      the Non-Compete Area, any business from any person or entity that the
      Company or any of the
      Company Affiliates called upon, solicited, or
      conducted business with as of such
  

              

      

       

       

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

       

      
         

        
          	
                   
      

                	
                   

                	
                  termination date, any persons or entities that
      have been customers of the Company or any of the Company Affiliates
      or recruit any person
      who has been or is an employee of the Company or any of the Company
      Affiliates, during
      the preceding one
      (1)-year period from
      such termination date.  In addition, the Employee agrees that he shall
      not directly or
      indirectly solicit or encourage any employee of the Company or any of the Company
      Affiliates to go to
      work for or with the
      Employee for a period
      of one
      (1)-year following
      such termination date. 

                

        

      

       

       

      
        	
                 
      

              	
                (c)

              	
                In the event the Employee violates subsection 10(a) or 10(b), the applicable period of time during which the respective restriction
      applies will automatically be extended for
      the period of time from which the Employee began such violation until he
      permanently ceases such violation.  If any provision of this covenant is invalid in
      whole or in part, it will be limited, whether as to time, area covered, or
      otherwise as and to the extent required for its validity under the
      applicable law and as so limited, will be
    enforceable.

              

      

       

       

      
        	
                 
      

              	
                (d)

              	
                Confidential
      Information.
      The Employee acknowledges that he has had or
      will have access to the  confidential information of the Company and the
      Company
      Affiliates
      (including, but not limited to, records regarding sales, price and cost
      information, marketing plans, customer names, customer lists, sales techniques,
      distribution plans or procedures, and other material relating to the
      business conducted by
      the Company and the Company Affiliates), proprietary, or trade secret
      information (the “Confidential
      Information”), and
      agrees never to use
      the Confidential Information other than for the sole benefit of the
      Company and the
      Company Affiliates and further agrees to never
      disclose such Confidential Information (except as may be required by
      regulatory authorities or as may be required by law) to any entity or person that
      is not an officer or employee of the Company or a Company Affiliate
      at the time of such
      disclosure (unless at
      such time such Confidential Information is subject to a policy of the
      Company or a Company
      Affiliate restricting
      disclosure to
      non-officers), in which case disclosure shall
      be limited solely to officers of the Company or the applicable Company
      Affiliate at the time
      of such disclosure, without the prior written consent of the Company.
       The Employee further acknowledges that this covenant to maintain
      Confidential Information is necessary to protect the goodwill and
      proprietary interests of the Company and the Company
      Affiliates and the
      restriction against the disclosure of Confidential Information is
      reasonable in light
      of the consideration and other value the Employee has received or will
      receive pursuant to this Agreement and otherwise pursuant to his
      employment by the Company.

              

      

       

       

      
        	
                 
      

              	
                (e)

              	
                From and following the Employee's termination of employment, the Employee agrees to cooperate with the Company and the Company Affiliates
      in any litigation,
      administrative proceeding, investigation or audit involving any matters
      with which the
      Employee has
      knowledge of from his employment with the Company.  The Company shall reimburse
      the
      Employee for reasonable
      expenses,

              

      

       

       

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

       

      
         

        
          	
                   
      

                	
                   

                	
                  including reasonable compensation for services
      rendered at his
      hourly rate of compensation as of such termination date, incurred in providing such
      assistance and approved by the Company.  The Company shall reimburse the
      Employee for such
      expenses incurred in
      accordance with the policies and procedures of the Company, but in no event no later than the end of the year
      following the year in which the expenses were incurred.

                

        

         

      

       

      
        	
                 
      

              	
                (f)

              	
                In the event of a violation of
      this Section 10, the Company and the Company
      Affiliates shall be
      entitled to any form of relief at law or equity, and the parties agree and
      acknowledge that injunctive relief is an appropriate, but not exclusive,
      remedy to enforce the provisions hereof.  The existence of any claim
      or cause of action of
      the
      Employee against the
      Company, whether predicated on this Agreement or otherwise, shall not
      constitute a defense of the Company’s enforcement of the covenants set
      forth in this Section 10.  The Employee hereby submits to the
      jurisdiction of the
      courts of the State of Nevada and federal courts therein for the purposes
      of any actions or proceedings instituted by the Company to enforce its
      rights under this Agreement, to seek money damages or seek injunctive
      relief.  The Employee further acknowledges and agrees
      (i) that the obligations contained in
      Section 10 of this Agreement are necessary to protect the
      interests of the Company and the Company
      Affiliates,
      (ii) that the restrictions contained herein
      are fair, do not
      unreasonably restrict
      the
      Employee's further
      employment and business opportunities, and are commensurate with the
      compensation arrangements set out in this Agreement and (iii) that such compensation arrangements
      constitute separate consideration for the obligations set
      forth in this Section
      10.  The covenants contained in Section
      10 shall each be construed as an agreement independent of any other
      provisions of this Agreement.  Both parties intend to make the
      covenants of Section 10 binding only to the extent that it may be
      lawfully done under
      existing applicable laws.  If a court of competent
      jurisdiction decides any part of any covenant is overly broad, thereby
      making the covenant unenforceable, the parties agree that such court shall
      substitute a reasonable, judicially enforceable limitation in place of the
      offensive part of the covenant and as so modified the covenant shall be as
      fully enforceable as set forth herein by the parties themselves in the
      modified form.

              

      

       

       

      
        	
                 
      

              	
                (g)

              	
                The Employee acknowledges that it is possible
      that the corporate
      structure of the Company could change during the term of this Agreement.
       The Employee hereby acknowledges and affirms
      that the Company may assign its rights under this Agreement, including but not limited to its
      rights to enforce the covenants set forth in subsections 10(a), 10(b) and
      10(c), to a
      third-party without the approval of or additional consideration to
      the
      Employee.
       The Employee acknowledges and agrees that the
      consideration called for herein is good and sufficient consideration for
      the Company's right
      to assign its rights under this
  Agreement.

              

      

       

       

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (h)

              	
                 Subsections 10(a) through
      (g), inclusive, of this Agreement
      shall survive either termination of the employment relationship
      and/or termination of this Agreement
      for the full period set forth in subsections 10(a) through (g),
    inclusive.

              

      

       

       

      
        	
                11.

              	
                Work for
      Hire.

              

      

       

       

      The Employee agrees that any work,
invention, idea or report that he produces or that results from or is suggested
by the work the Employee does on behalf of the Company or any of the Company
Affiliates is “work for hire” (hereinafter referred to as “Work”) and will be
the sole property of the Company.  The Employee agrees to sign any
documents, during or after employment that the Company deems necessary to
confirm its ownership of the Work, and the Employee agrees to cooperate with the
Company to allow the Company to take advantage of its ownership of such
Work.

       

       

      
        	
                12.

              	
                Assignment of
      Agreement.

              

      

       

       

      The Employee agrees that his services
are unique and personal and that, accordingly, the Employee may not assign his
rights or delegate his duties or obligations under this Agreement. The Company
may assign its rights, duties, and obligations under this Agreement to any
successor to its business.  This Agreement shall inure to the benefit
of and be binding upon the Company’s successors and assigns.

       

       

      
        	
                13.

              	
                Indemnification of the
      Employee.

              

      

       

       

      The Company shall indemnify the
Employee and hold him harmless for acts or decisions made by him in good faith
while performing services for the Company or any of the Company Affiliates to
the maximum extent allowed by law.  The Company shall also use its
reasonable efforts to obtain coverage for him under any insurance policy now in
force or hereinafter obtained during Term covering the officers and directors of
the Company against lawsuits, subject to the business judgment of the
Board.  The Company shall pay all expenses, including attorneys’ fees
of an attorney selected and retained by the Company to represent the Employee,
actually and necessarily incurred by the Employee in connection with the defense
of such act, suit, or proceeding and in connection with any related appeal,
including the cost of court settlements, provided that, to the extent required
by Section 409A, any such payment by the Company shall be made no later than the
end of the year following the year in which the expenses were
incurred.

       

       

      
        	
                14.

              	
                Notices.

              

      

       

       

      Any notice, document, or other
communication (hereinafter “Notice”) which either party may be required or may
desire to give to the other party shall be in writing, and any such notice may
be given or delivered personally or by mail or facsimile.  Any such
notices given or delivered personally shall be given or delivered by hand to an
officer of the entity to which they are being given or delivered or the
individual, as the case may be, and shall be deemed given or 

       

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

       

       

      delivered
when so given or delivered by hand.  Any such notices given or
delivered by facsimile will be deemed given or delivered upon receipt by the
sender of a successful facsimile transmission to the facsimile number below, and
any such notices given or delivered by mail shall be deemed given or delivered
three (3) days after it is deposited in the U.S. mail, certified or registered
mail, return receipt requested, with all postage and fees prepaid, addressed to
the person or entity in question as follows:

       

       

      If
to the Employee:

       

      Douglas
D. Dirks

       

      To
the address (or facsimile number, if applicable) on record with the
Company

       

      If
to the Company:

       

      General
Counsel

      Employers
Holdings, Inc.

      10375
Professional Circle

      Reno,  Nevada  89521-4802

      Fax:  (775)
886-1854

       

       

      or,
in either case, to such other address as either party may have previously
notified the other pursuant to the provisions of this Section 14.

       

       

      
        	
                15.

              	
                Severability.

              

      

       

       

      In the event that any provision hereof
shall be declared by a court of competent jurisdiction to be void or voidable as
contrary to law or public policy, such declaration shall not affect the
continuing validity or enforceability of any other provisions hereof insofar as
it may be reasonable and practicable to continue to enforce such other provision
in the absence of the provision which shall have been declared to be void and
voidable.

       

       

      
        	
                16.

              	
                Remedy for
      Breach.

              

      

       

       

      Both parties recognize that the
services to be performed by the Employee are special and unique.  The
Company will have the right to seek and obtain damages and any available
equitable remedies for the Employee’s breach of this Agreement.  The
Employee's remedy for any breach of this Agreement is strictly limited to the
Severance Pay or CIC Severance Pay, as the case may be, called for
herein.

       

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

       

      
        	
                17.

              	
                Mitigation of
      Damages.

              

      

       

       

      The Employee shall not be required to
mitigate damages or the amount of any payment provided under this Agreement by
obtaining other employment or otherwise after the termination of employment
hereunder, and any amounts earned by the Employee, whether from self-employment
or other employment shall not reduce the amount of any Severance Pay or CIC
Severance Pay, as the case may be, called for herein.

       

       

      
        	
                18.

              	
                Attorneys' Fees and
      Costs.

              

      

       

       

      In any claim or dispute between the
parties arising out of or associated with this Agreement or the breach hereof or
otherwise arising out of or associated with the Employee’s employment by the
Company, the prevailing party shall be entitled to recover all reasonable
attorneys' fees, expenses, and costs thereof or associated therewith, provided
that, to the extent required by Section 409A, any such payment by the Company
shall be made no later than the end of the year following the year in which such
fees, expenses and costs were incurred.  The term “prevailing party”
means the party obtaining substantially the relief sought via litigation or
through an action in arbitration.

       

       

      
        	
                19.

              	
                Integration, Amendment, and
      Waiver.

              

      

       

       

      This Agreement and such other written
agreements referenced in this Agreement, constitute the entire agreement between
the parties pertaining to the subject matter contained in it except as expressly
provided herein, and supersedes all prior agreements, representations,
assurances, and understandings of the parties, including any prior employment
agreements.  No amendment of, addition to, or modification of this
Agreement shall be binding unless executed in writing by the
parties.  Any term or provision of this Agreement may be waived in a
signed writing at any time by the party that is entitled to the benefit thereof,
provided, however, that any waiver shall apply only to the specific event or
omission waived and shall not constitute a continuing waiver.  Any
term or provision of this Agreement may be amended or supplemented at any time
by a written instrument executed by all the parties hereto.

       

       

      
        	
                20.

              	
                Captions.

              

      

       

       

      The captions and section headings of
this Agreement are for convenience and reference only, and shall have no effect
on the interpretation or construction of this Agreement.

       

       

      
        	
                21.

              	
                Applicable
      Law.

              

      

       

       

      The substantive laws of the State of
Nevada shall govern the validity, construction, interpretation, performance, and
effect of this Agreement.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      

       

       

      
        	
                22.

              	
                Arbitration.

              

      

       

       

      Any controversy, cause of action or
claim related to or arising out of or in connection with the Employee’s
employment with the Company, including but not limited to termination of such
employment or under this Agreement, other than an action to enforce the
provisions of Section 10 herein or the breach thereof, shall be settled by
arbitration according to the rules of the American Arbitration Association
applicable to disputes arising in Nevada and under Nevada law.  Any
party to the arbitration may enter judgment upon the award rendered by the
arbitrator in any court having jurisdiction thereof.  The arbitrator
shall not be entitled to amend or alter the terms of this
Agreement.  Notwithstanding this Section 22, the Company shall be
entitled to seek any available equitable remedy for enforcement of provisions of
this Agreement.

       

       

      
        	
                23.

              	
                Authorization.

              

      

       

       

      The Company and the Employee,
individually and severally, represent and warrant to the other party that it has
the authorization, power and right to deliver, execute and fully perform the
obligations under this Agreement in accordance with its terms. The Employee
represents and warrants to the Company that there is no restriction or
limitation, by reason of this Agreement or otherwise, upon the Employee’s right
or ability to enter into this Agreement and fulfill his obligations under this
Agreement.

       

       

      
        	
                24.

              	
                Acknowledgment.

              

      

       

       

      The Employee acknowledges that he has
been given a reasonable period of time to study this Agreement before signing
it.  The Employee certifies that he has fully read, has received an
explanation of, and completely understands the terms, nature, and effect of this
Agreement.  The Employee further acknowledges that he is executing
this Agreement freely, knowingly, and voluntarily and that the Employee’s
execution of this Agreement is not the result of any fraud, duress, mistake, or
undue influence whatsoever.  In executing this Agreement, the Employee
does not rely on any inducements, promises, or representations by the Company or
any person other than the terms and conditions of this Agreement.

       

       

      25.           Section 409A.

       

       

      Notwithstanding
anything to the contrary in this Agreement, the payment of consideration,
compensation, and benefits pursuant to this Agreement shall be interpreted and
administered in a manner intended to avoid the imposition of additional taxes
under section 409A of the Code and the regulations and guidance promulgated
thereunder (“Section 409A”). Notwithstanding any provision to the contrary in
this Agreement or otherwise, no payment or distribution under this Agreement or
otherwise that constitutes an item of “deferred compensation” under Section 409A
and becomes payable by reason of the termination of the Employee’s employment
hereunder shall be made to the Employee unless and until the termination of the
Employee’s employment constitutes a “separation from service” (as such term is
defined in Section 409A).

       

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      In
addition, no such payment or distribution of deferred compensation shall be made
to the Employee prior to the earlier of (a) the expiration of the six (6) month
period (the “Six Month Period”) measured from the date of the Employee’s
“separation from service” (as such term is defined in Section 409A), and (b) the
date of the Employee’s death, if the Employee is deemed at the time of such
separation from service to be a “specified employee” within the meaning of that
term under Section 409A (the “Six Month Delay”) and if such delayed commencement
is otherwise required to avoid an “additional tax” under section 409A(a)(1)(B)
of the Code. All payments and benefits that are delayed pursuant to the
immediately preceding sentence shall be paid to the Employee in a lump sum upon
expiration of such six (6) month period (or if earlier, upon the Employee’s
death).

       

      Notwithstanding
the foregoing provisions, to the extent permitted under Section 409A, any
separate payment or benefit under this Agreement or otherwise shall not be
“deferred compensation” subject to Section 409A and the Six Month Delay to the
extent provided in the exceptions in Treasury Regulation section 1.409A-1(b)(4)
and (b)(9) and any other applicable exception or provision under Section
409A.  Further, each individual installment payment that becomes
payable under this Agreement and each payment of the Severance Pay or if
applicable, the CIC Severance Pay or the Non-Competition Pay pursuant to
subsection 10(a) shall be a “separate payment” under Section
409A.  Specifically, to the extent the provisions of Treasury
Regulation section 1.409A-1(b)(9) are applicable to the Severance Pay or if
applicable, the CIC Severance Pay or the Non-Competition Pay pursuant to
subsection 10(a), the portion of such pay set forth in respectively, subsection
7(a)(i), subsection 7(e)(i) or subsection 10(a) above that is less than the
limit prescribed under Treasury Regulation section 1.409A-1(b)(9)(iii)(A) (or
any successor provision) (the “Delayed Amount”) shall be payable to the Employee
in the manner prescribed in subsection 7(a)(i), subsection 7(e)(i) or subsection
10(a), as applicable, without regard to the Six Month
Delay.  Following the Six Month Delay, (1) to the extent applicable,
the Employee shall receive a lump sum cash payment equal to the Severance Pay,
CIC Severance Pay or the Non-Competition Pay pursuant to subsection 10(a), as
applicable, he otherwise would have received during the Six Month Period (absent
the Six Month Delay) less the Delayed Amount and (2) the Employee shall receive
the remainder of his Severance Pay, CIC Severance Pay or the Non-Competition Pay
pursuant to subsection 10(a), as applicable, in the manner prescribed by
subsection 7(a), subsection 7(e) or subsection 10(a), as
applicable.

       

       

       

      IN
WITNESS WHEREOF, the parties have executed this Agreement effective as of the
Effective Date.

       

      
        
          
            
              
                	
                        COMPANY:

                      	 
      	
                        EMPLOYEE:

                      
	
                        By:

                      	 
      	 
      	
                        By:

                      	 
      
	 
      	

                        /s/
      Robert J. Kolesar

                      	
                         

                      	 
      	 
      	

                        /s/
      Douglas D. Dirks

                      	
                         

                      
	 
      	
                        Name:
      Robert J. Kolesar, 

                        Chairman
      of the Board

                      	 
      	 
      	
                        Name:
      Douglas D.
Dirks

                      

              

            

          

        

      

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

      

       

      

       

       

      Appendix
A

       

       

      

       

       

      Perquisites

       

       

      1.
Automobile Allowance in the amount of $1,300.00 per month

       

       

      2.
Annual Executive Physical Examination as a part of the Company’s executive
wellness program

       

       

      3.
Life Insurance as a part of the Company’s group life insurance program in an
amount equal to three (3) times the Employee’s Base Salary

       

       

      

       

20

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