Document:

Exhibit

10.4

 

SECOND AMENDMENT TO

EWN II AGREEMENT

 

THIS

SECOND AMENDMENT TO EWN II AGREEMENT (hereinafter referred to as the

“Amendment”) by and between MCI WORLDCOM Communications, Inc. (“WorldCom”) and

The Nasdaq Stock Market, Inc. (“Nasdaq”), is binding when signed by Nasdaq,

provided it is subsequently accepted by WorldCom. The rates, charges, discounts

and commitments set forth herein are effective no later than June 1, 2002

(“Second Amendment Effective Date”).

 

WITNESSETH:

 

WHEREAS,

heretofore, Nasdaq and WorldCom’s predecessor in interest entered into that

certain EWN II Agreement dated as of November 19, 1997, as amended by that

certain First Amendment to EWN II Agreement signed by Nasdaq on January 5, 2001

(the “Agreement”), with respect to certain services to be provided to Nasdaq by

WorldCom, as more particularly described therein; and

 

WHEREAS,

Nasdaq and WorldCom wish to amend the Agreement as set forth herein;

 

NOW,

THEREFORE, in consideration of the premises, the terms and conditions stated herein,

and other good and valuable consideration, the receipt and sufficiency of which

is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.             Definitions.  All capitalized terms used

herein and not expressly defined herein shall have the respective meanings

given to such terms in the Agreement. 

All references in the Agreement to the defined term “MCI” shall be

deemed amended to read  “WorldCom” and

refer to MCI WORLDCOM Communications, Inc.

 

2.             Removal

of Achievement Credits.  The

Agreement is hereby amended in Section 3.1 by deleting the second and third

sentences therein in their entirety.

 

3.             Revenue

Commitment.  The Agreement is

amended in Section 3.3 by deleting the existing provision in its entirety and

inserting the following in lieu thereof:

 

“3.3.  Revenue Commitment.  The

minimum revenue commitment under this Agreement shall be *****, net of all applicable federal, state and local taxes that Nasdaq agrees

to pay in Section 3.4 (said amount shall hereinafter be referred to as the “Revenue

Commitment”), calculated using all charges incurred for WorldCom Services based

on **** (as ****

may be amended from time to time by mutual

agreement).

 

In the event that Nasdaq fails to satisfy the

Revenue Commitment by May 31, 2002 (commencing with charges incurred as of the

Effective Date and ending with charges incurred as of May 31, 2002), or in the

event Nasdaq terminates the Agreement on or prior to May 31, 2002, for reasons

other than material breach by WorldCom, or in the event WorldCom terminates

this Agreement prior to May 31, 2002, due to material breach by Nasdaq, then

Nasdaq shall pay WorldCom (a) an amount (which both parties agree is

reasonable) equal to the difference between: (i) the aggregate charges incurred

from the Effective Date to the termination

 

***** 

Confidential Treatment has been requested for the redacted

portions.  The confidential redacted

portions have been filed separately with the Securities and Exchange Commission.

 

 

date and (ii) the Revenue Commitment (“Shortfall Amount”).  WorldCom will credit toward such Revenue

Commitment any amounts incurred by Nasdaq during such initial term and

subsequently paid in accordance with this Agreement.  If this Agreement is terminated and there follows such

termination a De-Installation Plan period as described in Section 29.3, then

Nasdaq shall be entitled to receive credit toward  achievement of the Revenue Commitment any amounts incurred and

subsequently paid in connection with such De-installation Plan period referred

to in Section 29.3. Any Shortfall Amount paid by Nasdaq shall be credited

against charges incurred by Nasdaq in connection with a De-Installation Plan

period.

 

Nasdaq may terminate the Agreement prior to the

end of the initial term (as described in Section 29.1 below) (a) for

convenience or (b) for reasons other than (1) material breach by WorldCom or

(2) as otherwise permitted in the Agreement for Nasdaq to terminate without

liability, or WorldCom may terminate this Agreement due to material breach by

Nasdaq, provided that upon such termination by either party, in addition to any

Shortfall Amount described above, Nasdaq shall pay WorldCom an amount (which

both parties agree is reasonable) equal to the aggregate sum of: (i) each fixed

monthly recurring charge specified in Attachment 3 multiplied by (ii) the

number of calendar months (prorated for partial months) remaining in the

Contract Period (as described in Attachment 3) that corresponds to each fixed

monthly charge on the date of termination (“Early Termination Charge”).”  Notwithstanding the preceding, Nasdaq shall

not be liable for any Early Termination Charge where the Agreement provides

that it may be terminated without Nasdaq incurring any further liability.

 

4.             Technology

Relook.  The Agreement is amended in

Section 8.2 by inserting the following new sentence to the end thereof:  “The rights and obligations set forth in

this Section 8.2 are intended to represent general day-to-day obligations of

the parties, and are not intended to be construed as requiring the same type of

obligations as set forth in Section 8.3 below .”

 

The Agreement is further amended by adding a new Section 8.3 to read as

follows:

 

“8.3   If at

any time before *****,

Nasdaq provides WorldCom with a comprehensive document that sets forth Nasdaq’s

specific requirements for the Network (or network services in replacement

thereof), as well as any technologies or concepts that Nasdaq desires for

WorldCom to review in connection therewith, then no later than ****, WorldCom shall deliver to Nasdaq a

written proposal that responds to Nasdaq’s requirements and describes any

significant new or improved physical (i.e., hardware or software) technologies

(collectively, “New Technology”) then generally available in the marketplace

that WorldCom believes would materially improve upon the functional and/or

financial performance of the WorldCom Service to Nasdaq taking into

consideration the geographic scope of the Network, the breadth of the services

provided, and the cost of acquiring the new technology. WorldCom’s proposal

will also address any technologies or concepts Nasdaq requested to be

reviewed.  No later than **** after receipt of WorldCom’s proposal,

Nasdaq shall provide a written response to WorldCom that either (a) accepts the

WorldCom proposal, or (b) rejects all or a portion of the WorldCom proposal in

good faith for reasons that are specifically set forth in its rejection notice,

which reasons may include, without limitation, solely pricing concerns.  If Nasdaq rejects WorldCom’s proposal in

whole or in part, WorldCom shall deliver to Nasdaq a second proposal no later

than **** after WorldCom’s receipt

of Nasdaq’s written rejection. 

Thereafter, the parties shall arrange to promptly meet to discuss their

stated positions and attempt to resolve any outstanding differences.  The parties shall seek in good faith to

reach agreement by ****, as to all

issues, including without limitation (a) the applicability of any New

Technology to the WorldCom Service as

 

***** 

Confidential Treatment has been requested for the redacted

portions.  The confidential redacted

portions have been filed separately with the Securities and Exchange

Commission.

 

2

 

contemplated in this paragraph, (b) adjustments to Nasdaq’s

rates and charges hereunder in order to implement New Technology, if any, and

(c) the schedule for implementing New Technology, if any.  If Nasdaq accepts WorldCom’s proposal or the

parties reach agreement regarding New Technology, the parties shall promptly

enter into an appropriate amendment to the Agreement and any new or adjusted

pricing would be effective ****.   If the parties are unable to reach

agreement by ****, then

Nasdaq may provide WorldCom with written notice no later than ****, that Nasdaq elects to terminate the

Agreement effective ****.

Termination of the Agreement by Nasdaq as permitted under this paragraph would

be without liability for early termination charges set forth in Section 3.3 of

this Agreement, however the provisions of Section 18.4  below shall not apply  to such a termination by Nasdaq.   If the parties agree that there is no New

Technology, the Agreement shall continue in full force and effect in accordance

with its terms.”

 

5.             Installation Schedule.  The Agreement is amended in Section 9.2 by deleting the provision in its entirety and

inserting the following in lieu thereof:

 

“The parties will agree on a schedule ending 18 months from the

Effective Date that includes the milestones in Attachment 7 and all

Installations for Subscribers on EWNI and which is subject to change by mutual

agreement of the parties (Installation Schedule).  WORLDCOM will use its Best Efforts to meet

the Installation Schedule in 18 months. 

For 20 months from the Effective Date, the remedies under Attachment 7

do not apply to any Installation.  After

the end of the 20th month following the Effective Date, WORLDCOM shall be

subject to the remedies in Attachment 7 with respect to all Installations.  The application of remedies in accordance

with this Section shall be subject to Section 20.2.”

 

6.             Staffing

Levels.  The Agreement is amended in

Section 14.4 by amending the first sentence therein to read as follows:

 

“WorldCom will maintain the number of dedicated

professional personnel, and the professional grade levels of such personnel,

supporting Nasdaq, including, but not limited to, NCC and operations personnel,

engineering resources, and account team personnel (performing technical

consultation services, sales/business services and customer consultation

support services) at the number and professional grade levels as of Nasdaq’s

execution of this Agreement.  WorldCom

will not reduce the number or the professional grade levels of such personnel

supporting Nasdaq without Nasdaq’s prior written approval which will not be

unreasonably withheld or delayed. WorldCom’s obligations under the preceding

two sentences will not be construed to (a) limit WorldCom’s ability to

terminate any such personnel for cause (provided that “cause” shall not mean

reductions in force or similar cost-cutting practices) in accordance with

company policies, provided WorldCom uses its reasonable efforts to promptly

find a suitable replacement for such employee, or (b) place WorldCom in default

under this paragraph as a result of staffing vacancies arising from voluntary

employee action (e.g., resignations) or promotion, provided that WorldCom uses

its reasonable efforts to promptly find a suitable replacement for such

employee.  No more than once per

quarter, upon Nasdaq’s written request, WorldCom will provide Nasdaq with a

report detailing the WorldCom personnel assigned to Nasdaq and their

professional grade levels (i.e., titles); WorldCom’s failure to deliver such a

report will not be deemed a breach of a material obligation by WorldCom under

the Agreement provided that WorldCom is otherwise in actual compliance with its

staffing obligations under the preceding sentences of this Section 14.4.  Nothing in this paragraph will be deemed to

limit WorldCom’s obligations under Section 14.6 below.”

 

7.             Notices.  The Agreement is amended in Section 16.1 by

deleting the contact address for WorldCom and inserting the following in lieu

thereof:

 

3

 

	

  “Name:

  	

   

  	

  *****

  
	

  Title:

  	

   

  	

  ****

  
	

  Address:

  	

   

  	

  5 International Drive

  
	

   

  	

   

  	

  Rye Brook, NY 10573

  
	

  Telephone:

  	

   

  	

  ****

  

 

The Agreement is amended in Section 16.1 by deleting the contact

address for Nasdaq and inserting the following in lieu thereof:

 

	

  “Name:

  	

   

  	

  *****

  
	

  Title:

  	

   

  	

  ****

  
	

  Address:

  	

   

  	

  80 Merritt Boulevard

  
	

   

  	

   

  	

  Trumbull, CT 06611

  
	

  Telephone:

  	

   

  	

  ****

  

 

The Agreement is further amended in Section 16.2 by deleting the

contact information for “MCI” and inserting the following in lieu thereof:

 

“For WorldCom:

MCI WORLDCOM

Communications, Inc.

Law and Public Policy –

Business Transactions

5 International Drive

Rye Brook, New York  10573”

 

8.        Warranties;

Exclusivity; Right of First Refusal. 

The Agreement is amended in Section 18.4 by deleting the first sentence

in its entirety and inserting the following in lieu thereof:

 

“18.4.   In

the event that this Agreement is terminated either for cause or as otherwise

permitted in this Agreement (except in the case of termination by Nasdaq

pursuant to Section 8.3 above) or upon expiration of the term hereof, Nasdaq

may provide WorldCom Notice that it intends to license, lease, purchase or

otherwise obtain an assignment of all or any portion of the Separable

Components.”

 

The Agreement is also

amended in Section 18.4 by adding the following sentence to the end of Section

18.4:

 

“The provisions of this paragraph shall also apply to and survive any

rejection, termination or expiration of this Agreement by WorldCom (or its

successors or assigns) in a proceeding under any chapter of the United States

Bankruptcy Code or any other state or federal liquidation, insolvency,

receivership or financial restructuring proceeding.”

 

The Agreement is amended in Section 18.7 by deleting the existing

clause (iii) in its entirety and inserting the following in lieu thereof:

 

***** 

Confidential Treatment has been requested for the redacted

portions.  The confidential redacted

portions have been filed separately with the Securities and Exchange

Commission.

 

4

 

“(iii) that the person executing this Agreement on

behalf of Nasdaq has been given the authority to bind Nasdaq and the Agreement

constitutes or will constitute a legally binding and enforceable obligation of

Nasdaq, except as such enforceability may be limited, unless otherwise

provided, by provisions of applicable bankruptcy, insolvency, fraudulent

conveyance, reorganization, moratorium or similar law affecting creditor’s

rights and remedies generally or by general principles of equity;”

 

The Agreement is amended

in Section 18.8 by deleting the existing clause (iii) in its entirety and

inserting the following in lieu thereof:

 

“(iii) that the

person executing this Agreement on behalf of WorldCom has been given the

authority to bind WorldCom  and the

Agreement constitutes or will constitute a legally binding and enforceable

obligation of WorldCom, except as such enforceability may be limited, unless

otherwise provided, by provisions of applicable bankruptcy, insolvency,

fraudulent conveyance, reorganization, moratorium or similar law affecting

creditor’s rights and remedies generally or by general principles of equity;”

 

The Agreement is amended by adding a new Section 18.9 to read as

follows:

 

“18.9   Nasdaq warrants to WorldCom that during the

term of this Agreement, but in no event beyond May 31, 2005 (unless the parties

specifically agree otherwise):

 

(a)   Nasdaq shall obtain all of its EWN Services

solely and exclusively from WorldCom. As used herein, “EWN Services” means

those network transmission, network management, network maintenance, network

monitoring services, and customer premises equipment required by Nasdaq for,

and associated with either: (i) the operation of the enterprise wide network

described in this Agreement but only between, and including, the switches at

each of the Nasdaq data centers and each Subscriber’s premises (and not

including any components or services affecting only the Nasdaq or Subscriber

side of such switches), or (ii) the functionality associated with SDP’s (as

defined in Attachment 3) as of the date of Nasdaq’s execution of the Second

Amendment to the Agreement.  Each party

agrees to negotiate in good faith the pricing for any new or additional EWN

Services. The provisions of the Section 18.9(a) do not survive the completion

of performance or the rejection, termination or expiration of this Agreement.

 

(b)   As long as WorldCom is not in breach of any

of its material obligations under the Agreement, Nasdaq shall give WorldCom the

right to meet or improve upon the lowest bona fide third party offer (including

pricing and material terms and conditions) for the supply of any network

transmission, network management, network and equipment maintenance, network

monitoring services, and/or customer premises equipment other than EWN Services

that is extended to Nasdaq or to any entity that is acquired by Nasdaq.  WorldCom shall have at least, but no more

than, ten (10) business days following its receipt of a written description of

the best such third party offer(s) in which to provide Nasdaq or the subject

entity with WorldCom’s proposal for the subject services.  However, to the extent Nasdaq is subject to

nondisclosure obligations that prohibit disclosure to WorldCom of any

particular third party offer, then Nasdaq shall instead provide WorldCom with a

written description of Nasdaq’s requirements for the subject services and/or

products, including without limitation, pricing.  If Nasdaq determines in its reasonable and good faith discretion

WorldCom’s proposal is equal or superior to the best third party offer(s) in

all material respects and Nasdaq or the affected entity intends to purchase the

subject products and/or services, then Nasdaq shall award, or shall cause the

affected entity to award, the subject services to WorldCom whereupon the

parties shall negotiate in good faith a mutually acceptable contract.   Nothing in this Section

 

5

 

shall require Nasdaq or

any entity acquired by Nasdaq to violate the terms (e.g., exclusivity

covenants) of any pre-existing written agreement between any such entity and a

third party vendor, provided that neither Nasdaq nor any acquired entity shall

renew any such agreements beyond their existing service term unless and until

WorldCom has been presented with the opportunity to bid for the subject services

as contemplated herein and failed to be awarded the business. Subject to any

applicable non-disclosure obligations applicable to Nasdaq or the affected

entity, Nasdaq will provide WorldCom upon request with reasonable information

relating to any such pre-existing contractual obligation. The provisions of the

Section 18.9(b) do not survive the completion of performance or the

termination, rejection or expiration of this Agreement.”

 

9.                                      Regulatory

Responsibilities.  The Agreement is

amended in Section 27.4 by deleting the second sentence in its entirety and

inserting the following in lieu thereof:

 

“In the event a rule, regulation,

or final decision of a court or regulatory body having jurisdiction over

WorldCom has the effect of substantially prohibiting WorldCom from providing

WorldCom Services, WorldCom may terminate this Agreement upon written Notice to

Nasdaq without liability under the provisions of the Termination Section of this

Agreement, but subject to the provisions of Section 18.4 and 29.3.”

 

10.                               Tariff.  The Agreement is amended in

Section 28.2 by deleting the second sentence in its entirety and inserting the

following in lieu thereof:

 

“If WorldCom attempts to enforce against the Corporations or a

Subscriber the term of any tariff which is inconsistent with this Agreement

(including, but not limited to, terms affecting pricing or performance) and

adversely affects the Corporations or a Subscriber, their use of WorldCom

Service, or WorldCom’s performance of its obligations, or warranties or representations,

then Nasdaq can terminate this Agreement in accordance with Section 29.2,

including reasonable efforts acceptable to both parties to amend the applicable

tariff to make its terms consistent with this Agreement.”

 

11.          Term

and Termination.  The Agreement is

amended in Section 29.1 through 29.4 by deleting the existing provisions in

their entirety and inserting the following in lieu thereof:

 

“29.1   The initial term of this Agreement shall

commence on the Effective Date and expire on 

May 31, 2005, unless rejected, terminated or canceled earlier by either

party in accordance with the provisions hereof, including without limitation a

termination by Nasdaq pursuant to Section 8.3 above.

 

29.2.   Termination for Cause.  In the event Nasdaq or WorldCom

breaches a material obligation under this Agreement, the other party may

terminate the Agreement (a) upon 60 days Notice, or (b) upon less than 60 days

Notice if approved by a court of competent jurisdiction or if otherwise

consented to by the breaching party, or (c) immediately upon Notice to the

breaching party upon the occurrence of section (ii) or (v) of the fourth

sentence of this paragraph. The party receiving the Notice shall have 60 days

from the receipt of such Notice to cure the stated breach, except where this

Agreement expressly provides for an alternate cure period or such shorter

period as determined by a Court of competent jurisdiction.  If the party has not cured the breach within

the applicable cure period, the termination shall be automatically effective in

the case of termination under clause (c) above, and in the case of clauses (a)

or (b) above, effective upon a final Notice of termination being given to the

breaching party. The parties agree that each

of the following events, by way of example and not limitation, shall constitute

a material breach and cause for termination of Agreement “with cause:”  (i) Nasdaq’s failure to pay or to secure

payment of WorldCom charges in accordance with its rights and obligations under

Section 3.2; (ii) if either party becomes insolvent, makes an assignment for

 

6

 

the benefit of

creditors, files a voluntary petition or has an involuntary petition filed or

action commenced against it under the United States Bankruptcy Code, or any

similar federal or state law, becomes the subject of any proceedings related to

its liquidation, insolvency or for the appointment of a receiver or similar

officer for it, makes an assignment for the benefit of all or substantially all

its creditors, or enters into an agreement for the composition, extension, or

readjustment of all or substantially all of its obligations; (iii) if WorldCom

breaches a material obligation under this Agreement or under any material

agreement with a third party that has an adverse affect on Nasdaq’s rights and

obligations under this Agreement (and fails to cure such breach in accordance

with the terms of such agreement) which is reasonably required in order for

WorldCom to meet its obligations hereunder; or (iv) if either party assigns

this Agreement in violation of the provisions of Section 32; or (v) WorldCom’s

failure to satisfy any of the “Critical Performance SLAs” set forth in

Attachment 7 hereto.  Additionally, if

WorldCom rejects this Agreement in accordance with Section 365 of the United

States Bankruptcy Code, as may be amended, or any similar federal or state law,

then Nasdaq may exercise the rights set forth in this Section 29.2 without

notice and terminate this Agreement without liability.”

 

29.3   Except

for a termination for Nasdaq’s breach of Section 3.2(iv), within 60 days of the

date of the termination (either for cause or as otherwise permitted in this

Agreement), or cancellation Notice of this Agreement, the parties shall agree

on a plan (the “De-installation Plan”), which shall include Regional

de-installation, and continuation of other obligations—including network

management—for a period of eighteen (18) months after the end of the last term,

and which shall take into account changes in the Specifications which may

reasonably be expected to be appropriate as the WorldCom Services are

discontinued pursuant to such plan.  If

the parties have not reached agreement on a De-installation Plan within this

60-day period, either party may initiate arbitration procedures.  Unless otherwise agreed by the parties, the

arbitrator(s) shall hear the matter and produce a De-installation Plan within

60 days of the arbitration. The provisions of this paragraph shall also apply

to and survive any rejection, termination or expiration of this Agreement by

WorldCom (or its successors or assigns) in a proceeding under any chapter of

the United States Bankruptcy Code or any other state or federal liquidation,

insolvency, receivership or financial restructuring proceeding.”

 

29.4   [Intentionally Omitted]”

 

12.          Survival.  The Agreement is amended in Section 37 by

deleting the existing provision in its entirety and inserting the following in

lieu thereof:

 

“Section

37.  Survival of Provisions.  The obligations of the Payment,

Confidentiality, Use of Nasdaq/WorldCom name and Marks, Indemnification,

Limitation of Liability, Arbitration sections of this Agreement, any

warranties, and any other provisions which by their nature or as otherwise set

forth in the Agreement are intended to survive shall survive the completion of

performance, expiration or any termination or rejection, of the Agreement,

including in a proceeding under any chapter of the United States Bankruptcy

Code or any other state or federal liquidation, insolvency, receivership or

financial restructuring proceeding.”

 

13.         

Revised Pricing.  Notwithstanding

any other provision herein, effective June 1, 2002, the Agreement is amended in

Attachment 3 by deleting such Attachment in its entirety and replacing it with

a new Attachment 3 in the form attached hereto and incorporated herein by this

reference.

 

14.          Acceptance

Test.  The Agreement is amended in

Attachment 6 by deleting the reference therein to “*****  Acceptance Test” and inserting “**** Acceptance Test” in lieu thereof.

 

***** 

Confidential Treatment has been requested for the redacted

portions.  The confidential redacted

portions have been filed separately with the Securities and Exchange Commission.

 

7

 

15.          Critical

Performance SLAs.  The Agreement is

amended in Attachment 7 by adding the following to the end thereof:

 

“Critical Performance

SLAs

 

Upon the occurrence of any of the following events

(each of which is a “Critical Performance SLA”), Nasdaq may terminate the

Agreement for cause pursuant to Section 29.2(c) of the Agreement provided it

sends termination notice within *****

following Nasdaq’s receipt of WorldCom’s monthly Network SLA report (as

defined below):

 

(a)                                  Network Availability – If Network

Availability (with backup) fails to equal or exceed ****  during the PPM, measured on a calendar month basis,

for **** consecutive calendar months.  This is measured from the LAN at the Data Center to the Router

port at the Customer premise.

 

(b)                                 Chronic Availability Problems – If Network

Availability (with backup) fails to equal or exceed **** more than **** times in any rolling **** month period. This is

measured from the LAN at the Data Center to the Router port at the Customer

premise.

 

(c)           Catastrophic Outages - If, in any

**** month rolling period, there occurs **** or more Catastrophic Outages (as

defined below), one of which has a duration exceeding **** and the other of

which exceeds ****.  A “Catastrophic

Outage” for purposes of this provision is defined as any Network outage that

prevents broadcast, multicast and /or IP transmission such that **** or more of

the Service Configurations are out of service.

 

Measurement of WorldCom’s compliance with the Critical

Performance SLAs shall be in accordance with this Attachment 7 and the

Agreement, except as expressly modified in this subsection.  The Critical Performance SLAs do not limit

any performance credits for which Nasdaq would otherwise qualify under

Attachment 7.  None of the following events

shall be included in the determination of WorldCom’s compliance with any of the

Critical Performance SLAs:

 

(i)                                     Any

force majeure events as described in Section 44 of the Agreement (including

without limitation, to the extent caused by any acts or omissions on the part

of Nasdaq, its affiliates, or any of their third party contractors,

subcontractors or agents [other than WorldCom’s contractors, subcontractors, or

agents]; governmental regulation, national emergency, acts of terrorism).

 

(ii)                                  Scheduled

maintenance on the Network.

 

 

 

***** 

Confidential Treatment has been requested for the redacted

portions.  The confidential redacted

portions have been filed separately with the Securities and Exchange Commission.

 

8

 

Monthly Network SLA

Report.

 

By the **** Business Day of each calendar month,

WorldCom will provide Nasdaq with a monthly report describing Network

performance during the preceding calendar month. WorldCom’s failure to deliver

such a report will not be deemed a breach of a material obligation by WorldCom

under the Agreement provided that WorldCom is otherwise in actual compliance

with the Network performance obligations under this Attachment 7.”

 

16.          Attachment

11.   The Agreement is amended by

deleting the existing Attachment 11 and Appendix F therein and inserting a new

Attachment 11 and Appendix F in the form attached hereto and incorporated by

reference.

 

17.          Attachment

13.   The Agreement is amended in

Attachment 13 as follows:

 

“(a)         deleting the reference to “*****  “ and inserting “****”in lieu thereof;

 

(b)           deleting

the reference to “****” and inserting “****”;

 

(c)           deleting

the reference to “****” and inserting “****” in lieu thereof;

 

(d)           deleting

the reference to “****” and inserting “****” in lieu thereof;

 

(e)           deleting

the reference to “****” and inserting “****” in lieu thereof; and

 

(f)            deleting

the reference to “****” and inserting “****” in lieu thereof.”

 

18.          SIAC Network Connections.  The

Agreement is amended by adding a new Attachment 14 in the form attached hereto

and incorporated herein by this reference.

 

19.          Network

Architecture Diagram.  The Agreement

is amended by adding a new Attachment 15 in

the form attached hereto and incorporated herein by this reference, which depicts

the architecture of the Network upon implementation of the Second Amendment to

the Agreement.

 

20.          Termination of Letter Agreement.  That certain letter agreement between the

parties dated January 25, 2002, regarding the upgrade of the EWN II Network is

hereby terminated and this Amendment is intended to embody the parties’

agreement with respect to the Upgrade Services described therein in order to

meet Nasdaq’s April 2002 user acceptance testing objective.

 

21.          Entire

Agreement.  Except as expressly modified

by this Amendment, the Agreement shall be and remain in full force and effect

in accordance with its terms and shall constitute the legal, valid, binding and

enforceable obligations of Nasdaq and WorldCom.  This Amendment, including the Agreement and the applicable

tariffs of WorldCom and its affiliates, is the complete agreement of the

parties and supersedes any prior agreements or representations, whether oral or

written, with respect thereto.

 

*****  Confidential Treatment has been requested

for the redacted portions.  The

confidential redacted portions have been filed separately with the Securities

and Exchange Commission.

 

9

 

22.          Successors

and Assigns.  This Amendment shall

be binding upon and inure to the benefit of the permitted successors and

permitted assigns of the parties hereto.

 

10

 

23.          Acceptance

Deadline.  This Amendment, and the

offer set forth herein, shall be void and the offer described herein  withdrawn, if Nasdaq does not execute and deliver

the Amendment to WorldCom by no later than June 17, 2002.

 

IN WITNESS WHEREOF, WorldCom and Nasdaq have caused this Amendment to

be executed by their duly authorized representatives as of the dates set forth

below.

 

	

  The Nasdaq Stock Market, Inc.

  	

  MCI WORLDCOM Communications, Inc.

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  

  	

  /s/

  	

   Steven Randich

  	

   

  	

  By:

  	

  /s/

  

  	

  John

  McGuire

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Name:

  

  	

  Steven

  Randich

  	

   

  	

   

  	

  Jon

  McGuire

  	

   

  
	

   

  	

   

  	

   

  	

  Senior

  Vice President

  
	

  Title:

  	

  EVP

  & CIO

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Date:

  

  	

      6-17-02

  	

   

  	

   

  	

  Date:

  

  	

   6-27-02

  	

   

  
	

   

  	

   

  	

   

  	

   

  
												

 

11

 

ATTACHMENT 3

 

PRICING AND SERVICES INTERVALS

 

I.                                         MONTHLY

RECURRING CHARGES.

 

A.  Definitions.  The following definitions shall apply for

purposes of this Attachment 3:

 

“Classic” refers to those Service

Configurations connected to an SDP that is located on the Subscriber’s

premises.

 

“Classic Dual T-1 Configuration” means *****.

 

“Classic Single T-1 Configuration” means ****.

 

“SDP” means ****.

 

“Service Configuration” means any of the following circuit and

equipment configurations that may be ordered by Subscribers to access the

Network:  Classic Dual T-1

Configuration, Shared Dual T-1 Configuration, Shared Dual DS0 Configuration,

Classic Single T-1 Configuration, Shared Single T-1 Configuration, Shared

Single T-1 with ISDN Configuration, Shared Single DS0 Configuration, Shared

Single DS0 with ISDN Configuration.

 

“Shared” refers to those Service

Configurations that are connected to an SDP that is not located at the

Subscriber’s premises but resides in the network and multiple Subscribers

communicate with the SDP to receive the Broadcast Feed data.

 

“Shared SDP Implementation Notice” means a

written notice that Nasdaq may deliver one time to WorldCom requesting

implementation of the “Variable Charges Applicable After Shared SDP

Implementation” rate table set forth in Section I. B. below.

 

“Shared Dual DS0 Configuration” means ****.

 

“Shared Single DS-0 Configuration” means ****.

 

“Shared Single DS-0 w/ ISDN Configuration”

means ****.

 

 

***** 

Confidential Treatment has been requested for the redacted

portions.  The confidential redacted

portions have been filed separately with the Securities and Exchange Commission.

 

12

 

“Shared Dual T-1 Configuration” means two

T-1 access circuits, two WAN Interface Card, and associated Router/Hub Port hardware and cabling, all of which receives networks monitoring and

maintenance services hereunder and is connected to a Shared SDP.

 

“Shared Single T-1 Configuration” means

one T-1 access circuit, one WAN Interface Card, and associated Router/Hub Port hardware and cabling, all of which receives networks monitoring and

maintenance services hereunder and is connected to a Shared SDP.

 

“Shared Single T-1 with ISDN Configuration”

means one T-1 access circuit, WAN Interface Card, 4 port ISDN BRI, and

associated Router/Hub Port hardware and cabling, all of which receives network monitoring and maintenance services

hereunder and is connected to a Shared SDP.

 

B.  Charges.   WorldCom will bill Nasdaq for the Services

on a monthly basis. Subject to the provisions of section I.C. below, the

monthly recurring charge for the Services will be as specified in the table

below, depending upon the corresponding contract period. Beginning January 1,

2003, the fixed monthly charge will be subject to adjustment upwards each

monthly billing period by an amount equal to the aggregate sum of the product

of (a) the total number of configurations, calculated for each type of Service

Configuration, installed on the Network on the last day of the applicable

billing monthly period, multiplied by (b) the applicable “Variable Charge”

corresponding to such Service Configuration as specified in the applicable

table below.   The Table I Variable

Charges (Variable

Charges Applicable Prior to Shared SDP Implementation) shall apply

unless and until the implementation of the Table II Variable Charges (Variable

Charges Applicable After Shared SDP Implementation) following

WorldCom’s receipt of a Shared SDP Implementation Notice. Any adjusted monthly

charge derived through the above formula for any given monthly billing period

will not be carried forward to the subsequent monthly billing period;

calculation of any adjustment to the fixed monthly charge will be based off of

the applicable fixed monthly charge amount specified in the table below.

 

	

  Contract  Period

  	

   

  	

  Fixed

  Monthly Charge

  	

   

  	

  Variable

  Charges

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  6/1/

  2002 – 12/ 31/2002

  	

   

  	

  See

  Formula Below*

  	

   

  	

  None

  Apply

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  1/1/2003

  – 12/31/2003

  	

   

  	

  ****

  	

   

  	

  See

  Tables of Variable Charges below

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  1/1/2004

  – 12/31/2004

  	

   

  	

  ****

  	

   

  	

  See

  Tables of Variable Charges below

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  1/1/2005

  – 5/31/2005

  	

   

  	

  ****

  	

   

  	

  See

  Tables of Variable Charges below

  

 

*  The fixed monthly charge for

this seven month period will be an amount equal to: *****.  The

parties will enter into an amendment to the Agreement to document this figure

once determined.

 

**Subject to upward adjustment based on the Variable Charges, pursuant

to the formula described in the above paragraph and the tables of Variable

Charges below.

 

13

 

TABLES OF VARIABLE CHARGES

 

 

Table I.  Variable

Charges Applicable Prior to Shared SDP Implementation Date

 

	

  Service

  Configuration

  	

   

  	

  Monthly

  Variable Charge per Service Configuration

  
	

  Dual T-1 Service Configurations

  	

   

  	

  ****

  
	

  Single T-1 Service Configurations

  	

   

  	

  ****

  

 

Table II.  Variable

Charges Applicable After Shared SDP Implementation

 

	

  Service

  Configuration

  	

   

  	

  Monthly

  Variable Charge per Service Configuration

  
	

  Classic Dual T-1

  	

   

  	

  ****

  
	

  Classic Single T-1

  	

   

  	

  ****

  
	

  Shared Dual T-1

  	

   

  	

  ****

  
	

  Shared Dual DS0

  	

   

  	

  ****

  
	

  Shared Single T-1

  	

   

  	

  ****

  
	

  Shared Single T-1 w/ISDN

  	

   

  	

  ****

  
	

  Shared Single DS0

  	

   

  	

  ****

  
	

  Shared Single DSO w/ISDN

  	

   

  	

  ****

  

 

 

Notes to Tables:

 

(a)  The charges in Table II above will be effective

commencing on the first day of the second full monthly billing cycle after

WorldCom’s receipt of the Shared SDP Implementation Notice.

 

***** 

Confidential Treatment has been requested for the redacted

portions.  The confidential redacted

portions have been filed separately with the Securities and Exchange

Commission.

 

14

 

(b)  Commencing January 1, 2003, any Dual T-1 or

Single T-1 Service Configuration that is connected to more than 18 SDPs will be

charged by WorldCom as   separate

Service Configurations, pending installation of a physically separate Service

Configuration.  The number of separate

Service Configurations that will be charged will be: the total number of

connected SDPs on the configuration, divided by 18 and rounded to the next

highest whole number  (e.g,

37 SDPs divided by 18 = 2.055 rounded up to 3 Service Configurations).

 

(c)  Only Subscriber sites with 3 or fewer

presentation devices (PDs) and no non-display application programming interfaces

(APIs) are eligible for conversion to a Shared SDP Service Configuration.

 

(d)  If WorldCom installs a Service Configuration

and, due to delay of  Subscriber (e.g.,

failure to extend its demarc) continuing for 30 days after such installation,

WorldCom is prevented  from placing the

Service Configuration in operation, WorldCom may begin billing Nasdaq as if the

Service Configuration were operating.

 

C.            Bandwidth Parameter.  The pricing in Section I.B. above is valid

for broadcast circuits (i.e., the primary and secondary circuits carrying

outgoing broadcast feeds from Nasdaq’s data centers) with bandwidth of up to ***** each; WorldCom will

increase such bandwidth as necessary to meet Nasdaq’s requirements under

Attachment 11 – Appendix F.  The **** capacity referenced above is

predicated on Nasdaq’s completion of Broadcast Reduction Phase 2 (i.e.,

increasing the maximum number of SDPs per T1 pair from the current 6 up to 18

SDPs). Should Nasdaq require more than ****

in bandwidth per primary and secondary circuit, the parties will negotiate

promptly in good faith reasonable adjustments to the above pricing.   Out of each of the **** bandwidths described above, up to 176 kbps (i.e., 8 kbps per SDP times 22 SDPs)

per Subscriber T-1 pair is available for query/response (“Q/R”) traffic (i.e.,

traffic in the form of queries originating from Subscriber workstations and

terminating at Nasdaq data centers, and the responses thereto) provided that the Q/R traffic for any SDP does

not exceed 8 kbps per SDP.

 

D.            ****   Connection.  In addition to the charges in Section I.B

above, WorldCom will bill Nasdaq for the ****

Network connection described in Attachment 14 at **** per month commencing from March 22, 2002.  The standard non-recurring provisioning

charges described in Section II below shall apply to **** connections.

 

*****  Confidential Treatment has been requested for the redacted

portions.  The confidential redacted

portions have been filed separately with the Securities and Exchange Commission.

 

15

 

[Intentionally Left Blank]

 

 

16

 

II.    STANDARD

PROVISIONING PRICING.

 

	

   

  	

   

  	

  Interval

  	

   

  	

  FOC

  	

   

  	

  Non-Recurring

  Charge

  
	

  Installation

  	

   

  	

  *****

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Move (Internal

  Move)

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Relocation

  (External Move)

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Disconnect

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Hardware Removal

  as part of Disconnect

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Change Order

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

NOTES: Each provisioning

interval shall begin upon WorldCom receipt of a complete and accurate order

from Nasdaq. Longer time periods for any activity may be agreed upon on an

individual case basis by the parties.

 

WorldCom may invoice

Nasdaq for any installation non-recurring charge no earlier than five (5) days

following installation of the local access circuit.

 

Nasdaq agrees to use its

reasonable efforts to assist WorldCom in the recovery of WorldCom equipment

from a Subscriber’s premises in the event the Subscriber disconnects service in

connection with its discontinuance of operations.

 

 

*This figure is a monthly

average, and is calculated exclusive of delays caused by Subscriber (e.g.,

failure to extend demarc).

 

**WorldCom and Nasdaq

will coordinate the removal of Components within a three-day period.

 

 

Additional Charges:

 

Nasdaq shall be charged

**** for each Expedite, if the Expedite is requested within the period

specified for any Interval.

 

*****  Confidential Treatment has been requested for the redacted

portions.  The confidential redacted

portions have been filed separately with the Securities and Exchange

Commission.

 

17

 

Definitions:

 

FOC – Firm Order

Commitment – the maximum number of WorldCom Days from the date WorldCom

receives Nasdaq’s order for the Service until WorldCom notifies Nasdaq of its

firm commitment to all dates involving Subscriber or Corporation premises

visits.

 

ICB – To be determined on

an individual case basis.

 

Interval – The number of

WorldCom Days from the date WorldCom receives the order from Nasdaq within

which the service will be completed.

 

18

 

ATTACHMENT 11

 

Appendix F

 

 

[See following pages]

 

 

19

 

APPENDIX

F

 

 

*****

 

 

*****  Confidential Treatment has been requested for the redacted

portions.  The confidential redacted

portions have been filed separately with the Securities and Exchange

Commission.

 

20

 

ATTACHMENT 14

 

*****

 

 

****

 

 

*****  Confidential Treatment has been requested for the redacted

portions.  The confidential redacted

portions have been filed separately with the Securities and Exchange

Commission.

 

21

 

ATTACHMENT 15

 

Network Diagram

 

(as of implementation of 2nd Amendment to

Agreement)

 

 

*****

 

 

*****  Confidential Treatment has been requested for the redacted

portions.  The confidential redacted

portions have been filed separately with the Securities and Exchange Commission.

 

22EXHIBIT 4(a)

               MEDSTRONG INTERNATIONAL CORPORATION 2002 STOCK PLAN

1.      Purpose.

      The purpose of the  MedStrong  International  Corporation  2002 Stock Plan
(the  "Plan")  is  to  encourage  key   employees  of  MedStrong   International
       ----
Corporation (the "Company") and of any present or future parent or subsidiary of
                  -------
the  Company  (each  a  "Related   Corporation"   and   collectively,   "Related
                         ---------------------                           -------
Corporations")  and other  individuals who render services to the Company or any
------------
Related Corporation,  by providing opportunities to participate in the ownership
of the Company  and its future  growth  through  (a) the grant of options  which
qualify as  "incentive  stock  options"  ("ISOs")  under  Section  422(b) of the
                                           ----
Internal Revenue Code of 1986, as amended (the "Code"); (b) the grant of options
                                                ----
which do not qualify as ISOs ("Non-Qualified  Options");  (c) awards of stock in
                               ----------------------
the Company ("Awards");  and (d) opportunities to make direct purchases of stock
              ------
in  the  Company  ("Purchases").  Either  an ISO or a  Non-Qualified  Option  is
                    ---------
referred to  hereafter  individually  as an "Option"  and they are  collectively
referred to as "Options."  Options,  Awards and authorizations to make Purchases
are referred to hereafter  collectively as "Stock  Rights." As used herein,  the
terms  "parent" and  "subsidiary"  mean  "parent  corporation"  and  "subsidiary
corporation,"  respectively,  as those  terms are  defined in Section 424 of the
Code.

2.      Administration of the Plan.

      (a) Board or Committee  Administration.  The Plan shall be administered by
the  Compensation  committee (the  "Committee") of the Board of Directors of the
                                    ---------
Company  (the  "Board").  The  Committee  shall  be  comprised  of two  or  more
                -----
directors.  All references in this Plan to the Committee shall mean the Board if
no  Committee  has been  appointed.  Subject  to  ratification  of the  grant or
authorization  of each Stock Right by the Board (if so  required  by  applicable
state law), and subject to the terms of the Plan,  the Committee  shall have the
authority to: (i) determine to whom (from among the class of employees  eligible
under  paragraph  3 to receive  ISOs) ISOs shall be  granted,  and to whom (from
among the class of  individuals  and  entities  eligible  under  paragraph  3 to
receive  Non-Qualified  Options and Awards and to make Purchases)  Non-Qualified
Options,  Awards and  authorizations  to make  Purchases  may be  granted;  (ii)
determine  the time or times at which  Options  or Awards  shall be  granted  or
Purchases  made;  (iii)  determine the purchase  price of shares subject to each
Option or  Purchase,  which  prices  shall not be less  than the  Minimum  Price
specified in paragraph 6; (iv) determine whether each Option granted shall be an
ISO or a Non-Qualified  Option;  (v) determine (subject to paragraph 7) the time
or times when each  Option  shall  become  exercisable  and the  duration of the
exercise period;  (vi) extend the period during which outstanding Options may be
exercised;  (vii)  determine  whether  restrictions  are to be imposed on shares
subject to Options, Awards and Purchases and the nature of such restrictions, if
any,  and  (viii)  interpret  the Plan  and  prescribe  and  rescind  rules  and

                                       29
<PAGE>
regulations relating to it. If the Committee determines to issue a Non-Qualified
Option, it shall take whatever actions it deems necessary,  under Section 422 of
the Code and the regulations promulgated thereunder,  to ensure that such Option
is not treated as an ISO. The  interpretation  and construction by the Committee
of any  provisions  of the Plan or of any Stock Right  granted under it shall be
final unless  otherwise  determined by the Board. The Committee may from time to
time adopt such rules and  regulations  for carrying out the Plan as it may deem
advisable.

      (b) Committee Actions.  The Committee may select one of its members as its
chairman, and shall hold meetings at such time and places as it may determine. A
majority of the  Committee  shall  constitute a quorum and acts of a majority of
the members of the Committee at a meeting at which a quorum is present,  or acts
reduced  to or  approved  in writing by all the  members  of the  Committee  (if
consistent with applicable state law), shall be the valid acts of the Committee.
From time to time the Board may increase the size of the  Committee  and appoint
additional  members thereof,  remove members (with or without cause) and appoint
new members in substitution  therefor,  fill vacancies however caused, or remove
all members of the Committee and thereafter directly administer the Plan.

      (c) Grant of Stock Rights to Board  Members.  Subject to the provisions of
paragraph 3 below, if applicable,  Stock Rights may be granted to members of the
Board.  All grants of Stock  Rights to  members of the Board  shall in all other
respects be made in accordance  with the  provisions of this Plan  applicable to
other  eligible  persons.  Consistent  with the provisions of paragraph 3 below,
members  of the Board who  either (i) are  eligible  to receive  grants of Stock
Rights  pursuant to the Plan or (ii) have been granted  Stock Rights may vote on
any matters  affecting the  administration of the Plan or the grant of any Stock
Rights  pursuant  to the Plan,  except  that no such  member  shall act upon the
granting  to  himself or herself  of Stock  Rights,  but any such  member may be
counted in  determining  the  existence  of a quorum at any meeting of the Board
during  which  action is taken with  respect to the  granting  to such member of
Stock Rights.

      (d)  Exculpation.  No  member  of the  Board  or the  Committee  shall  be
personally  liable  for any  action  taken or any  failure to take any action in
connection  with the  Plan or the  granting  of Stock  Rights  under  the  Plan,
provided that this  subparagraph  2(d) shall not apply to (i) any breach of such
member's  duty of  loyalty  to the  Company  or its  stockholders,  (ii) acts or
omissions  not in good faith or involving  intentional  misconduct  or a knowing
violation of law, (iii) acts or omissions  that would result in liability  under
Section 174 of the General Corporation Law of the State of Delaware, as amended,
and (iv) any  transaction  from which the member  derived an  improper  personal
benefit.

      (e) Indemnification.  Service on the Committee shall constitute service as
a member of the Board.  Each member of the Committee  shall be entitled  without
further  act on his or her part to  indemnity  from the  Company to the  fullest

                                       30
<PAGE>
extent provided by applicable law and the Company's Certificate of Incorporation
and/or  By-laws  in  connection  with  or  arising  out of any  action,  suit or
proceeding  with  respect to the  administration  of the Plan or the granting of
Stock Rights  thereunder  in which he or she may be involved by reason of his or
her being or having  been a member of the  Committee,  whether  or not he or she
continues  to be a member of the  Committee  at the time of the action,  suit or
proceeding.

3.      Eligible Employees and Others.

      ISOs may be  granted  only to  employees  of the  Company  or any  Related
Corporation.  Non-Qualified Options, Awards and authorizations to make Purchases
may be granted to any  employee,  officer or  director  (whether  or not also an
employee) or consultant of the Company or any Related Corporation. The Committee
may  take  into   consideration  a  recipient's   individual   circumstances  in
determining  whether to grant a Stock Right.  The granting of any Stock Right to
any individual or entity shall neither entitle that individual or entity to, nor
disqualify such individual or entity from,  participation  in any other grant of
Stock Rights.

4.      Stock Rights.

      (a) Number of Shares Subject to Rights.  The stock subject to Stock Rights
shall be  authorized  but unissued  shares of Common  Stock of the Company,  par
value  $0.001  per share  (the  "Common  Stock"),  or  shares  of  Common  Stock
reacquired by the Company in any manner.  The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall  initially  not exceed
1,000,000 shares. The aggregate number of shares which may be issued pursuant to
the Plan is subject to  adjustment  as  provided in  paragraph  13. If any Stock
Right granted  under the Plan shall expire or terminate  for any reason  without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part,  the shares of Common Stock  subject to such Stock Right shall
again be available for grants of Stock Rights under the Plan.

      (b) Nature of Awards. In addition to ISOs and Non-Qualified  Options,  the
Committee may grant or award the following  Stock  Rights.  Participants  may be
granted the right to purchase Common Stock,  subject to such restrictions as may
be specified by the  Committee  ("Restricted  Shares").  Such  restrictions  may
include,  but are not limited to, the  requirement of continued  employment with
the Company or a Related Corporation and achievement of performance  objectives.
The Committee shall determine the purchase price of the Restricted  Shares,  the
nature of the restrictions and the performance objectives, all of which shall be
set forth in the agreement relating to each right awarded to purchase Restricted
Shares.  The  performance  objectives  shall consist of (A) one or more business
criteria,  and (B) a target level or levels of performance  with respect to such
criteria.  In addition to the  foregoing,  awards of Common Stock may be made to

                                       31
<PAGE>
participants as bonuses or as additional  compensation,  as may be determined by
the Committee.

5.      Granting of Stock Rights.

      Stock Rights may be granted  under the Plan at any time on or after August
9, 2002 and prior to August 8, 2012.  The date of grant of a Stock  Right  under
the Plan will be the date  specified by the  Committee at the time it grants the
Stock Right; provided, however, that such date shall not be prior to the date on
which the Committee acts to approve the grant.

6.      Minimum Option Price; ISO Limitations.

      (a) Price for Non-Qualified  Options,  Awards and Purchases.  The exercise
price per share specified in the agreement relating to each Non-Qualified Option
granted,  and the  purchase  price  per share of stock  granted  in any Award or
authorized  as a  Purchase,  under  the Plan  shall in no event be less than the
minimum legal consideration required therefor under the laws of any jurisdiction
in which the Company or its successors in interest may be organized.

      (b)  Price for  ISOs.  The  exercise  price  per  share  specified  in the
agreement relating to each ISO granted under the Plan shall not be less than the
fair market  value per share of Common  Stock on the date of such grant.  In the
case of an ISO to be granted to an employee  owning stock  possessing  more than
ten percent (10%) of the total combined  voting power of all classes of stock of
the Company or any Related  Corporation,  the price per share  specified  in the
agreement  relating  to such ISO shall not be less than one  hundred ten percent
(110%) of the fair market  value per share of Common Stock on the date of grant.
For purposes of determining  stock ownership under this paragraph,  the rules of
Section 424(d) of the Code shall apply.

      (c) $100,000 Annual Limitation on ISO Vesting.  Each eligible employee may
be granted  Options  treated as ISOs only to the extent that,  in the  aggregate
under this Plan and all  incentive  stock  option  plans of the  Company and any
Related  Corporation,  ISOs do not become exercisable for the first time by such
employee  during any  calendar  year with  respect to stock having a fair market
value (determined at the time the ISOs were granted) in excess of $100,000.  The
Company intends to designate any Options granted in excess of such limitation as
Non-Qualified Options.

      (d)  Determination  of Fair  Market  Value.  If,  at the time an Option is
granted under the Plan,  the Company's  Common Stock is publicly  traded,  "fair
market  value" shall be  determined as of the date of grant or, if the prices or
quotes  discussed  in this  sentence  are  unavailable  for such date,  the last
business day for which such prices or quotes are available  prior to the date of
grant and shall mean (i) the  average  (on that date) of the high and low prices
of the Common Stock on the principal national  securities  exchange on which the
Common  Stock is  traded,  if the  Common  Stock is then  traded  on a  national
securities  exchange;  or (ii) the  closing bid price (or average of bid prices)

                                       32
<PAGE>
last   quoted  (on  that  date)  by  an   established   quotation   service  for
over-the-counter  securities,  if the Common Stock is not reported on a national
securities  exchange.  If the Common Stock is not publicly traded at the time an
Option is granted under the Plan,  "fair market value" shall mean the fair value
of  the  Common  Stock  as  determined  by  the  Committee   after  taking  into
consideration  all  factors  which  it  deems  appropriate,  including,  without
limitation,  recent  sale and  offer  prices  of the  Common  Stock  in  private
transactions negotiated at arm's length.

7.      Option Duration.

      Subject to earlier  termination  as provided in  paragraphs 9 and 10 or in
the  agreement  relating to such  Option,  each Option  shall expire on the date
specified by the  Committee,  but not more than (i) ten (10) years from the date
of grant in the case of Options generally, and (ii) five (5) years from the date
of grant in the case of ISOs granted to an employee owning stock possessing more
than ten  percent  (10%) of the total  combined  voting  power of all classes of
stock of the Company or any Related  Corporation,  as determined under paragraph
6(b).  Subject to earlier  termination  as provided in  paragraphs 9 and 10, the
term of each ISO shall be the term set forth in the original instrument granting
such ISO.

8.      Exercise of Option and Transfer of Shares Upon Exercise.

      Subject to the  provisions of paragraphs 9 through 12, each Option granted
under the Plan shall be exercisable as follows:

      (a) Vesting.  The Option shall either be fully  exercisable on the date of
grant  or  shall  become  exercisable  thereafter  in such  installments  as the
Committee may specify.

      (b) Full Vesting of Installments. Once an installment becomes exercisable,
it shall remain  exercisable  until  expiration  or  termination  of the Option,
unless otherwise specified by the Committee.

      (c) Partial  Exercise.  Each Option or installment may be exercised at any
time or from time to time,  in whole or in part,  for up to the total  number of
shares with respect to which it is then exercisable.

      (d)  Acceleration  of  Vesting.  The  Committee  shall  have the  right to
accelerate  the date that any  installment  of any Option  becomes  exercisable;
provided  that the  Committee  shall not,  without the  consent of an  optionee,
accelerate the permitted  exercise date of any installment of any Option granted
to any employee as an ISO if such acceleration  would violate the annual vesting
limitation  contained in Section  422(d) of the Code,  as described in paragraph
6(c).

                                       33
<PAGE>
      (e) Transfer of Shares Upon Exercise of the Non-Qualified  Options. In the
event that the shares  received upon the exercise of the  Non-Qualified  Options
are registered  under the  Securities Act of 1933, as amended,  the Optionee may
not sell more than  fifty  percent  (50%) of such  shares  within the first year
following  such  exercise,  and shall be  permitted  to sell all of such  shares
thereafter.  The  certificate(s)  issued reflecting any such shares shall bear a
legend substantially as follows: "No more than fifty percent (50%) of the shares
represented by this  certificate  may be sold within one year following the date
of original issue thereof. All of such shares may be sold thereafter."

9.      Termination of Employment.

      Unless otherwise  specified in the agreements relating to such ISOs, if an
ISO optionee  ceases to be employed by the Company and all Related  Corporations
other  than by  reason  of death or  disability  or as  otherwise  specified  in
paragraph  10,  no  further  installments  of  his  or  her  ISOs  shall  become
exercisable,  and his or her ISOs shall  terminate  on the earlier of (a) ninety
(90) days after the date of termination of his or her  employment,  or (b) their
specified  expiration  dates. For purposes of this paragraph 9, employment shall
be considered as continuing  uninterrupted during any bona fide leave of absence
(such as those  attributable  to illness,  military  obligations or governmental
service)  provided  that the period of such leave does not exceed 90 days or, if
longer,  any  period  during  which such  optionee's  right to  reemployment  is
guaranteed by statute. A bona fide leave of absence with the written approval of
the Committee shall not be considered an  interruption of employment  under this
paragraph 9, provided  that such written  approval  contractually  obligates the
Company or any Related  Corporation  to continue the  employment of the optionee
after the approved  period of absence.  ISOs granted under the Plan shall not be
affected  by a change of  employment  within or among the  Company  and  Related
Corporations, so long as the optionee continues to be an employee of the Company
or any  Related  Corporation.  Nothing  in the Plan  shall be deemed to give any
grantee  of any Stock  Right the right to be  retained  in  employment  or other
service by the Company or any Related Corporation for any period of time.

10.     Death; Disability; Voluntary Termination; Breach.

      (a) Death. If an ISO optionee ceases to be employed by the Company and all
Related  Corporations  by  reason  of his or her  death,  any ISO  owned by such
optionee may be exercised,  to the extent  otherwise  exercisable on the date of
death, by the estate,  personal  representative  or beneficiary who has acquired
the ISO by will or by the laws of descent and distribution, until the earlier of
(i) the specified  expiration date of the ISO or (ii) one (1) year from the date
of the optionee's death.

      (b)  Disability.  If an ISO optionee  ceases to be employed by the Company
and all Related  Corporations by reason of his or her disability,  such optionee

                                       34
<PAGE>
shall  have  the  right  to  exercise  any ISO held by him or her on the date of
termination  of  employment,  for the number of shares for which he or she could
have  exercised  it on  that  date,  until  the  earlier  of (i)  the  specified
expiration date of the ISO or (ii) one (1) year from the date of the termination
of  the  optionee's  employment.   For  the  purposes  of  the  Plan,  the  term
"disability"  shall mean "permanent and total  disability" as defined in Section
22(e)(3) of the Code or any successor statute.

      (c) Voluntary  Termination;  Breach. If an ISO optionee voluntarily leaves
the employ of the Company and all Related  Corporations or ceases to be employed
by the Company  and all Related  Corporations,  then,  in either such event,  in
addition  to  immediate  termination  of the  Option,  the  ISO  optionee  shall
automatically  forfeit all shares for which the  Company  has not yet  delivered
share  certificates  upon  refund by the Company of the  exercise  price of such
Option.  Notwithstanding  anything  herein  to the  contrary,  the  Company  may
withhold  delivery of share  certificates  pending the resolution of any inquiry
that could lead to a finding resulting in a forfeiture.

11.     Assignability.

      No Stock Right shall be assignable or  transferable  by the grantee except
by  will,  by  the  laws  of  descent  and  distribution  or,  in  the  case  of
Non-Qualified Options only, pursuant to a valid domestic relations order. Except
as set forth in the  previous  sentence,  during the  lifetime of a grantee each
Stock Right shall be exercisable only by such grantee.

12.     Terms and Conditions of Options.

      Options shall be evidenced by instruments (which need not be identical) in
such forms as the  Committee  may from time to time  approve.  Such  instruments
shall conform to the terms and  conditions  set forth in paragraphs 6 through 11
hereof and may contain such other  provisions as the Committee  deems  advisable
which are not inconsistent with the Plan, including  restrictions  applicable to
shares of Common Stock  issuable  upon  exercise of Options.  The  Committee may
specify that any  Non-Qualified  Option shall be subject to the restrictions set
forth herein with respect to ISOs, or to such other termination and cancellation
provisions as the Committee may  determine.  The Committee may from time to time
confer authority and responsibility on one or more of its own members and/or one
or more  officers of the Company to execute and deliver  such  instruments.  The
proper  officers of the Company are  authorized and directed to take any and all
action  necessary or advisable  from time to time to carry out the terms of such
instruments.

13.     Adjustments.

      Upon the occurrence of any of the following  events,  an optionee's rights
with respect to Options granted to such optionee  hereunder shall be adjusted as

                                       35
<PAGE>
hereinafter  provided,  unless  otherwise  specifically  provided in the written
agreement between the optionee and the Company related to such Option:

      (a) Stock Dividends and Stock Splits.  If the shares of Common Stock shall
be subdivided  or combined into a greater or smaller  number of shares or if the
Company  shall  issue  any  shares of Common  Stock as a stock  dividend  on its
outstanding  Common Stock, the number of shares of Common Stock deliverable upon
the  exercise  of  Options  shall  be   appropriately   increased  or  decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.

      (b)  Consolidations or Mergers.  If the Company is to be consolidated with
or acquired by another entity in a merger,  sale of all or substantially  all of
the Company's assets or otherwise (an "Acquisition"), the Committee or the board
of directors of any entity  assuming the  obligations  of the Company  hereunder
(the  "Successor  Board"),  shall,  as to outstanding  Options,  either (i) make
appropriate  provision for the continuation of such Options by substituting on a
equitable  basis for the  shares  then  subject to such  Options  either (A) the
consideration  payable with respect to the outstanding shares of Common Stock in
connection  with  the  Acquisition,   (B)  shares  of  stock  of  the  surviving
corporation  or  (C)  such  other   securities  as  the  Successor  Board  deems
appropriate,  the fair market value of which shall  approximate  the fair market
value  of the  shares  of  Common  Stock  subject  to such  Options  immediately
preceding the Acquisition; or (ii) upon written notice to the optionees, provide
that all Options must be  exercised,  to the extent then  exercisable,  within a
specified number of days of the date of such notice,  at the end of which period
the Options shall  terminate;  or (iii)  terminate all Options in exchange for a
cash payment equal to the excess of the fair market value of the shares  subject
to such  Options  (to the  extent  then  exercisable)  over the  exercise  price
thereof.

      (c) Recapitalization or Reorganization. In the event of a recapitalization
or  reorganization  of the  Company  (other  than  a  transaction  described  in
subparagraph  (b)  above)  pursuant  to which  securities  of the  Company or of
another  corporation are issued with respect to the outstanding shares of Common
Stock,  an optionee  upon  exercising an Option shall be entitled to receive for
the purchase  price paid upon such exercise the  securities he or she would have
received if he or she had exercised  such Option prior to such  recapitalization
or reorganization.

      (d) Modification of ISO's.  Notwithstanding the foregoing, any adjustments
made  pursuant to  subparagraphs  (a),  (b) or (c) with respect to ISOs shall be
made only after the Committee,  after  consulting  with counsel for the Company,
determines  whether such adjustments  would constitute a "modification"  of such
ISOs (as that term is  defined in  Section  424 of the Code) or would  cause any
adverse  tax  consequences  for the  holders  of  such  ISOs.  If the  Committee
determines that such  adjustments  made with respect to ISOs would  constitute a

                                       36
<PAGE>
modification  of such  ISOs or  would  cause  adverse  tax  consequences  to the
holders, it may refrain from making such adjustments.

      (e) Dissolution or Liquidation.  In the event of the proposed  dissolution
or liquidation of the Company,  each Option will terminate  immediately prior to
the  consummation  of such proposed  action or at such other time and subject to
such other conditions as shall be determined by the Committee.

      (f)  Issuances of  Securities.  Except as expressly  provided  herein,  no
issuance  by the  Company  of  shares  of  stock  of any  class,  or  securities
convertible into shares of stock of any class,  shall affect,  and no adjustment
by reason  thereof  shall be made with respect to, the number or price of shares
subject to Options.  No adjustments  shall be made for dividends paid in cash or
in property other than securities of the Company.

      (g) Fractional Shares. No fractional shares shall be issued under the Plan
and the optionee shall receive from the Company cash in lieu of such  fractional
shares.

      (h)  Adjustments.  Upon the  happening  of any of the events  described in
subparagraphs  (a), (b) or (c) above,  the class and aggregate  number of shares
set  forth  in  paragraph  4 hereof  that are  subject  to  Stock  Rights  which
previously have been or subsequently may be granted under the Plan shall also be
appropriately  adjusted to reflect the events  described in such  subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments to
be made under this paragraph 13 and,  subject to paragraph 2, its  determination
shall be conclusive.

14.     Means of Exercising Options.

      An Option  (or any part or  installment  thereof)  shall be  exercised  by
giving written notice to the Company at its principal office address, or to such
transfer  agent as the Company shall  designate.  Such notice shall identify the
Option being  exercised and specify the number of shares as to which such Option
is being  exercised,  accompanied  by full payment of the purchase price thereof
either (a) in United States  dollars in cash or by check,  (b) at the discretion
of the  Committee,  through  delivery  of shares of Common  Stock  having a fair
market value equal as of the date of the exercise to the cash exercise  price of
the Option, (c) at the discretion of the Committee, by delivery of the grantee's
personal  recourse  note bearing  interest  payable not less than annually at no
less than 100% of the  lowest  applicable  Federal  rate,  as defined in Section
1274(d) of the Code, (d) at the discretion of the Committee and consistent  with
applicable  law,  through  the  delivery  of an  assignment  to the Company of a
sufficient  amount of the proceeds  from the sale of the Common  Stock  acquired
upon exercise of the Option and an  authorization to the broker or selling agent
to pay that  amount to the  Company,  which sale  shall be at the  participant's

                                       37
<PAGE>
direction at the time of exercise, or (e) at the discretion of the Committee, by
any combination of (a), (b), (c) and (d) above.  If the Committee  exercises its
discretion  to permit  payment of the  exercise  price of an ISO by means of the
methods set forth in clauses  (b),  (c), (d) or (e) of the  preceding  sentence,
such  discretion  shall be  exercised in writing at the time of the grant of the
ISO in  question.  The  holder  of an  Option  shall  not have the  rights  of a
shareholder  with respect to the shares covered by such Option until the date of
issuance  of a stock  certificate  to such  holder  for such  shares.  Except as
expressly   provided   above  in   paragraph  13  with  respect  to  changes  in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar  rights  for  which  the  record  date is  before  the date  such  stock
certificate  is issued.  In the absence of an effective  registration  statement
covering the shares issuable upon exercise of any Stock Rights, such notice may,
at the  option of the  Committee,  also  include  a  statement  that the  person
exercising  the Stock Rights is purchasing the Common Stock as an investment and
not with a view to the sale or distribution of any of such Common Stock, and the
holder's  agreement  not to sell any Common Stock  received upon the exercise of
the Stock Rights  except  either (i) in compliance  with the  Securities  Act of
1933,  as amended  (provided  that the Company  shall be under no  obligation to
register  either the Plan, or any securities  obtained by the Optionee  pursuant
thereto,  with the Securities and Exchange  Commission),  or (ii) with the prior
written approval of the Company.

15.     Term and Amendment of Plan.

      This Plan was adopted by the Board on June 17, 2002, subject, with respect
to the validation of ISOs granted under the Plan, to approval of the Plan by the
stockholders  of the  Company at the next  Meeting of  Stockholders,  or in lieu
thereof,  by written consent. If the approval of stockholders is not obtained on
or prior to August 9, 2002, any grants of ISOs under the Plan made prior to that
date will be rescinded. The Plan shall expire at the end of the day on August 8,
2012, (except as to Options outstanding on that date). Subject to the provisions
of paragraph 5 above, Options may be granted under the Plan prior to the date of
stockholder  approval of the Plan.  The Board may terminate or amend the Plan in
any respect at any time,  except that,  without the approval of the stockholders
obtained  within  12  months  before  or after  the  Board  adopts a  resolution
authorizing  any of the following  actions:  (a) the total number of shares that
may be  issued  under  the Plan may not be  increased  (except  as  provided  in
paragraph  4(a) or by  adjustment  pursuant to  paragraph  13); (b) the benefits
accruing to participants under the Plan may not be materially increased; (c) the
requirements  as to  eligibility  for  participation  in  the  Plan  may  not be
materially modified; (d) the provisions of paragraph 3 regarding eligibility for
grants  of ISOs  may not be  modified;  (e) the  provisions  of  paragraph  6(b)
regarding the exercise price at which shares may be offered pursuant to ISOs may
not be  modified  (except by  adjustment  pursuant  to  paragraph  13);  (f) the
expiration date of the Plan may not be extended;  and (g) the Board may not take
any action which would cause the Plan to fail to comply with Rule 16b-3.  Except
as otherwise  provided in this paragraph 15, in no event may action of the Board

                                       38
<PAGE>
or stockholders alter or impair the rights of a grantee,  without such grantee's
consent, under any Option previously granted to such grantee.

16.     Application of Funds.

      The proceeds  received by the Company from the sale of shares  pursuant to
Options  granted  and  Purchases  authorized  under  the Plan  shall be used for
general corporate purposes.

17.     Notice to Company of Disqualifying Disposition.

      By accepting an ISO granted under the Plan, each optionee agrees to notify
the Company in writing  immediately  after such optionee  makes a  Disqualifying
Disposition  (as  described  in  Sections  421,  422  and  424 of the  Code  and
regulations  thereunder) of any stock acquired  pursuant to the exercise of ISOs
granted under the Plan.  Disqualifying  Disposition is generally any disposition
occurring  on or before the later of (a) the date two years  following  the date
the ISO was  granted  or (b) the date one  year  following  the date the ISO was
exercised.

18.     Withholding of Additional Income Taxes.

      Upon the exercise of a Non-Qualified  Option,  the grant of an Award,  the
making of a Purchase of Common  Stock for less than its fair market  value,  the
making of a Disqualifying  Disposition (as defined in paragraph 17), the vesting
or transfer of  restricted  stock or  securities  acquired on the exercise of an
Option hereunder,  or the making of a distribution or other payment with respect
to such  stock or  securities,  the  Company  may  withhold  taxes in respect of
amounts that constitute  compensation  includable in gross income. The Committee
in its discretion may condition (i) the exercise of an Option, (ii) the grant of
an Award,  (iii) the making of a Purchase of Common Stock for less than its fair
market value,  or (iv) the vesting or  transferability  of  restricted  stock or
securities   acquired  by  exercising  an  Option,   on  the  grantee's   making
satisfactory  arrangement  for such  withholding.  Such  arrangement may include
payment  by the  grantee  in cash or by check of the  amount of the  withholding
taxes or, at the  discretion  of the  Committee,  by the  grantee's  delivery of
previously  held shares of Common  Stock or the  withholding  from the shares of
Common Stock  otherwise  deliverable  upon exercise of a Option shares having an
aggregate fair market value equal to the amount of such withholding taxes.

19.     Governmental Regulation.

      The Company's  obligation  to sell and deliver  shares of the Common Stock
under  this  Plan is  subject  to the  approval  of any  governmental  authority
required in connection with the authorization,  issuance or sale of such shares.
Government  regulations may impose reporting or other obligations on the Company
with respect to the Plan.  For example,  the Company may be required to send tax

                                       39
<PAGE>
information  statements  to employees  and former  employees  that exercise ISOs
under the Plan, and the Company may be required to file tax information  returns
reporting  the income  received by grantees  of Options in  connection  with the
Plan.

20.     Governing Law.

      The validity and  construction of the Plan and the instruments  evidencing
Stock Rights shall be governed by the laws of Delaware.

                                       40

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