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EXHIBIT 10.1C    
  

 
 

SECOND AMENDMENT AND CONSENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT    
  

    SECOND AMENDMENT AND CONSENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April 19, 2001 (this
"Amendment"), to the Existing Credit Agreement (as hereinafter defined), by and among (i) THE SELMER COMPANY, INC., a Delaware corporation
("Selmer"), (ii) STEINWAY, INC., a Delaware corporation ("Steinway"), (iii) UNITED
MUSICAL INSTRUMENTS USA, INC., an Indiana corporation ("UMI" and together with Selmer and Steinway, the
"Borrowers"), (iv) those signatories hereto and identified on Schedule I (as may be amended from time to time) as Guarantors (the
"Guarantors"), (v) the lenders (the "Lenders") from time to time party to the Agreement (defined
below) and GMAC COMMERCIAL CREDIT LLC, a New York limited liability company (the "Administrative Agent"), as administrative agent for the Lenders
hereunder. 

 
 

RECITALS    

    The
Borrowers, Guarantors, the Administrative Agent and the Lenders have entered into the Existing Credit Agreement, pursuant to which the Lenders are providing to Selmer and Steinway
a $120,000,000 revolving credit facility, a $22,500,000 term loan facility and a $45,000,000 term loan facility, each of which are secured by certain accounts receivable, real estate, and other
collateral of Selmer, Steinway and UMI and guaranteed by the Guarantors. Steinway Musical Instruments, Inc. ("SMI") has requested that the Lenders consent: (i) to SMI's issuance of
$150,000,000 83/4% Senior Notes due 2011 (the "Senior Notes") which will be guaranteed by the Borrowers and the Guarantors and (ii) to SMI's use of the proceeds of the issuance
of the Senior Notes to redeem the Senior Subordinated Notes and to prepay certain Revolving Credit Loans and permanently reduce the Aggregate Maximum Revolving Credit Commitment Amount to $85,000,000
(the issuance of the Senior Notes and the use of proceeds described in (i) and (ii) above are referred to herein as the "Transaction"). The Lenders have agreed to consent to the
Transaction subject to the conditions described herein and the parties hereto desire to amend certain provisions of the Existing Credit Agreement as hereinafter provided to effectuate the same. 

    In
consideration of the foregoing and of the mutual covenants and undertakings herein contained, the parties hereto hereby agree that the Existing Credit Agreement is amended as
hereinafter provided. 

 
 

ARTICLE I
  Definitions    

    1.  Definitions. (a) In addition to the definitions set forth in the heading and the recitals to this Amendment, the
following definitions shall apply hereto: 

    "Agreement" means the Existing Credit Agreement as amended, supplemented or otherwise modified from time to time up to and including
this Amendment. 

    "Existing Credit Agreement": the Second Amended and Restated Credit Agreement, dated as of September 14, 2000, among
(i) Selmer, (ii) Steinway, (iii) UMI, (iv) the Guarantors, (v) the Lenders and (vi) the Administrative Agent as amended or otherwise modified from time to
time prior to the Second Amendment Effective Date. 

    "Redemption Documents": a duly executed, irrevocable Officers' Certificate pursuant to Section 3.01 of the Senior Subordinated
Notes Indenture directing the Senior Subordinated Trustee to effect the redemption of all of the outstanding Senior Subordinated Notes (and to pay to the Administrative Agent for application in
accordance with the Agreement any amounts not used to effect such redemption) and a sufficient number of copies of the irrevocable notice of redemption notifying the Senior Subordinated Note Holders
of such redemption on or before June 30, 2001 to 

 

be mailed to such note holders on the date of the effectiveness of the consent set forth in Article IV hereof, in each case in form and substance satisfactory to the Administrative Agent. 

    "Senior Notes": those certain Senior Notes issued by SMI in the aggregate principal face amount not to exceed $150,000,000 pursuant to
the Senior Notes Indenture. 

    "Senior Notes Documents": the collective reference to the Senior Notes, the Senior Notes Indenture, and the Senior Notes Purchase
Agreement. 

    "Senior Notes Holders": the holders of the Senior Notes. 

    "Senior Notes Indenture": that certain Indenture, dated as of April 19, 2001, among the Steinway Senior Notes Parties and the
Senior Notes Trustee, as in effect on the date hereof. 

    "Senior Notes Purchase Agreement": that certain Purchase Agreement, dated as of April 19, 2001, by and between SMI and UBS
Warburg LLC, providing for the purchase and sale of the Senior Notes, as in effect on the date hereof. 

    "Senior Notes Trustee": Firstar Bank, N.A., as trustee for the Senior Notes Holders pursuant to the Senior Notes Indenture and any
successors or assigns of such trustee. 

    "Steinway Senior Notes Parties": SMI, Selmer, Emerson, SPC, Steinway, SMIT, S&B Retail, Boston Piano Co., O.S. Kelly, The O.S. Kelly
Company, UMI Holdings, UMI. 

    (b) Unless
otherwise indicated, capitalized terms that are used but not defined herein shall have the meanings ascribed to them in the Existing Credit Agreement. 

 
 

ARTICLE II
  Representations    

    1.  Representations. Each of the Borrowers and Guarantors hereby represents and warrants as follows: 

    (a) It
has full power, authority and legal right to enter into this Amendment and perform all of its respective obligations hereunder. The execution, delivery and
performance hereof is within its powers and has been duly authorized, is not in contravention of any law(s) which might have a material adverse effect upon it, the Collateral, its operations,
financial condition or prospects, or in contravention of the terms of its by-laws, certificate of incorporation, declaration of trust or other documents relating to its formation, as
applicable, or to the conduct of its business or of any material agreement or undertaking to which it is a party or by which it is bound, and will not conflict with or result in any breach of any of
the provisions of, or constitute a default under, or result in the creation of any Lien upon any of its assets under, the provisions of any agreement, charter, instrument, by-law,
declaration of trust or other instrument to which it is a party or by which it or its assets may be bound. 

    (b) It
is duly organized and in good standing under the laws of its respective state of organization and it is qualified to do business and is in good standing in which
qualification and good standing are necessary for it to conduct its businesses and own its properties and where the failure to so qualify would have a Material Adverse Effect. 

    (c) This
Amendment has been duly executed and delivered on its behalf and this Amendment constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 

2

 

    (d) The conditions contained in Article V hereof have been satisfied. 

    (e) Each
of the Loan Documents is on the date hereof in full force and effect. 

    (f)  No
Default or Event of Default has occurred and is continuing. 

    (g) It
has not granted any Lien on any of its property or assets to the Senior Notes Trustee or any Senior Notes Holder. 

 
 

ARTICLE III
  Amendments to Existing Credit Agreement    

    1.  Amendments to Section 1. (a) Section 1.1 of the Existing Credit Agreement is hereby amended by
inserting the following defined terms in the appropriate alphabetical order: 

    "Senior Notes": those certain Senior Notes issued by SMI from time to time in the aggregate principal face amount not to exceed
$150,000,000 pursuant to the Senior Notes Indenture. 

    "Senior Notes Documents": the collective reference to the Senior Notes, the Senior Notes Indenture, and the Senior Notes Purchase
Agreement. 

    "Senior Notes Holders": the holders of the Senior Notes. 

    "Senior Notes Indenture": that certain Indenture, dated as of April 19, 2001, among SMI, Selmer, Emerson, SPC, Steinway, SMIT,
S&B Retail, Boston Piano Co., O.S. Kelly, The O.S. Kelly Company, UMI Holdings, UMI and the Senior Notes Trustee, as amended, supplemented and otherwise modified from time to time. 

    "Senior Notes Purchase Agreement": that certain Purchase Agreement, dated as of April 11, 2001, by and between SMI and UBS
Warburg LLC, providing for the purchase and sale of the Senior Notes, as amended, supplemented or modified from time to time. 

    "Senior Notes Trustee": Firstar Bank, N.A., as trustee for the Senior Notes Holders pursuant to the Senior Notes Indenture and any
successors or assigns of such trustee." 

    "SMI Note": that certain Subordinated Promissory Note of Selmer payable to SMI, dated April 19, 2001 in an aggregate principal
amount of $150,000,000." 

    (b) Section 1.1
of the Existing Credit Agreement is hereby amended by deleting the definition of "Aggregate Maximum Revolving Credit Commitment Amount" in its
entirety and replacing it with the following: 

    "Aggregate Maximum Revolving Credit Commitment Amount": $85,000,000; subject to reduction by the Borrowers in accordance with Section
3.5 hereof." 

    (c) Section 1.1
of the Existing Credit Agreement is hereby amended by inserting at the end of the definition of the term "Change in Control" the words "or any
other event or condition that would constitute a "Change of Control" as defined in the Senior Notes Indenture". 

    (d) Section 1.1
of the Existing Credit Agreement is hereby amended by inserting in the third line of the definition of the term "Other Documents" after the words
"the Senior Subordinated Note Documents," the words "the Senior Notes Documents,". 

    (e) Section 1.1
of the Existing Credit Agreement is hereby amended by inserting in the third line of the definition of the term "Scheduled Principal Payments"
after the words "Senior Subordinated Notes", the words ", the Senior Notes". 

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    (f)  Section 1.1 of the Existing Credit Agreement is hereby amended by deleting the definition of "Trustee" in its entirety and replacing it with the following: 

    "Trustees":
the collective reference to the Senior Trustee and the Senior Subordinated Trustee." 

    2.  Amendment to Section 2.1(c). Section 2.1(c) of the Existing Credit Agreement is hereby deleted in its
entirety and replaced by the following: 

    "(c)
The Term Loans shall be Eurodollar Loans unless they are Converted to Alternate Base Rate Loans in accordance with Section 5.2 hereof." 

    3.  Amendment to Section 3.1(b). Section 3.1(b) of the Existing Credit Agreement is hereby deleted in its
entirety and replaced by the following: 

    "(b)
The Revolving Credit Loans shall be Eurodollar Loans unless they are Converted to Alternate Base Rate Loans in accordance with Section 5.2 hereof." 

    4.  Amendments to Section 3.7(a). Section 3.7(a) of the Existing Credit Agreement is hereby amended by
(i) deleting in the first, eighth and ninth lines the word "Lender" and replacing it with the words "Administrative Agent" and (ii) deleting in the sixth and seventh lines the word
"Lender's" and replacing it with the words "Administrative Agent's". 

    5.  Amendments to Section 4.1(a). Section 4.1(a) of the Existing Credit Agreement is hereby amended by:
(i) deleting in the sixteenth line thereof the words "Lender retains" and replacing them with the words "Lenders retain" and (ii) deleting in the seventeenth line thereof the words "to
the Lender to terminate such Letter of Credit prior to each extension date" and replacing them with the words "to the Lenders to refuse to extend such Letter of Credit prior to such automatic
extension". 

    6.  Amendments to Section 4.1(c). Section 4.1(c) of the Existing Credit Agreement is hereby amended by: 

     (i) inserting
in the first line of subparagraph (iii) after the words "Administrative Agent" the words "for the benefit of the Lenders"; 

    (ii) inserting
in the second line of subparagraph (iv) after the words "Administrative Agent" the words "for the benefit of the Lenders"; 

    (iii) inserting
in the second, third, eleventh, thirteenth and fourteenth lines of subparagraph (v) after the words "Administrative Agent" the words "and each
Lender"; and 

    (iv) inserting
in the tenth line of subparagraph (v) after the words "Administrative Agent" the words "or any Lender". 

    7.  Amendment to Section 5.2. Section 5.2 of the Existing Credit Agreement is hereby amended by deleting
in the last line thereof the words "the Loans shall bear interest at the Alternate Base Rate" and replacing them with the words "the Loans shall be Alternate Base Rate Loans". 

    8.  Amendment to Article 5. Article 5 of the Existing Credit Agreement is hereby amended by inserting the
following language as Section 5.10 thereof: 

    "Section 5.10    Increased Costs. (a) If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or
directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on
such Lender's or such corporation's capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have 

4

 

achieved but for such adoption, change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be
material, then from time to time, the Borrowers shall promptly pay to such Lender such additional amount or amounts as will compensate such Lender or such corporation for such reduction. 

    (b) If
any Lender becomes entitled to claim any additional amounts pursuant to this Section, it shall promptly notify the Borrowers (with a copy to the Administrative
Agent) of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this Section submitted by such Lender to the Borrowers (with a copy to
the Administrative Agent) shall be conclusive in the absence of manifest error. The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder. Notwithstanding the preceding provisions of this Section, no Lender shall be entitled to receive any additional amount as compensation for any such reduction in return
on capital experienced more than 180 days prior to the date that such Lender has notified the Borrowers thereof." 

    9.  Amendment to Section 6.17. Section 6.17 of the Existing Credit Agreement is hereby deleted in its
entirety and replaced with the following: 

  "6.17 Indebtedness. Except for the inter-company loan of Selmer to Vincent Bach permitted pursuant to Section 9.2
of this Agreement, as of the Closing Date, the aggregate accounts payable and/or accrued expenses of it are not materially different from its Interim Balance Sheet, dated June 30, 2000,
supplied to the Administrative Agent and the Lenders. Without limiting the foregoing, (a) in the case of Selmer, it additionally represents that as of the Closing Date: (i) the only
Indebtedness due or which may become due from Selmer (as well as from any other Loan Party) to Textron or its assignees arises or shall arise under or in connection with the Textron Note Purchase
Agreement; and (ii) the only Indebtedness due or which may become due from Selmer (as well as from any other Loan Party) to the holders of the Subordinated Notes are evidenced by the Senior
Subordinated Notes in an aggregate principal amount not to exceed $110,000,000, which are in substantially the form heretofore provided to the Administrative Agent and (b) in the case of SMI,
the only Indebtedness due or which may become due from SMI (as well as from any other Loan Party) to the holders of the Senior Notes are evidenced by the Senior Notes in an aggregate principal amount
not to exceed $150,000,000, which are in substantially the form heretofore provided to the Administrative Agent. Except for the Indebtedness referred to in subsections (a) and
(b) immediately set forth above, the capital expenditures, Financing Leases and purchase money obligations permitted under Section 9.2 of this Agreement, the SMIT Notes, the SMI Note,
and the Obligations to the Lenders arising from time to time under this Agreement, no Loan Party has or shall have during the term of this Agreement, any long term Indebtedness with a maturity of one
year or more." 

    10. Amendment to Section 8.2(k). Section 8.2(k) of the Existing Credit Agreement is hereby amended by
inserting in the first line thereof after the words "Textron, ITT," the words "the Senior Notes Trustee, any Senior Notes Holder,". 

    11. Amendment to Section 8.3. Section 8.3 of the Existing Credit Agreement is hereby amended by inserting
in the eleventh line thereof after the words "the Senior Subordinated Note Holders" the words ", the Senior Notes Trustee, the Senior Notes Holders". 

    12. Amendment to Section 8.16. Section 8.16 of the Existing Credit Agreement is hereby deleted in its
entirety and replaced by the following: 

  "8.16 Guarantees/General Security Agreements. Cause each of its future Subsidiaries that is not an "Unrestricted
Subsidiary" (as defined in the Senior Subordinated Indenture or the Senior Notes 

5

 

Indenture) and that, under the terms of either the Senior Subordinated Indenture or the Senior Notes Indenture, is required to become a "Guarantor" thereunder, to execute and deliver to the
Administrative Agent and each Lender an instrument pursuant to which such Subsidiary shall become a Loan Party hereunder and bound hereby to the extent set forth in Section 12.22 hereof and a
separate Guarantee and such Security Documents as shall be necessary or advisable, in the opinion of the Administrative Agent, for such Subsidiary to grant Liens on substantially all of its property
in favor of the Administrative Agent for the ratable benefit of the Lenders. The Administrative Agent and each Lender shall also be entitled to such incumbency certificates, certified copies of
charter documents and resolutions and such legal opinions and other documents and instruments as shall be consistent with those delivered pursuant to Section 7.2 hereof." 

    13. Amendment to Section 8.17. Section 8.17 of the Existing Credit Agreement is hereby amended by
inserting in the last line thereof after the words "Senior Subordinated Notes" the words "or Senior Notes, in each case". 

    14. Amendments to Section 9.2. Section 9.2 of the Existing Credit Agreement is hereby amended by: 

     (i) adding
at the end of paragraph (b) the words, "provided, that the same shall be subordinated to the Obligations and be evidenced by a written instrument
which has been delivered and pledged to the Administrative Agent for the benefit of the Lenders"; 

    (ii) deleting
in the first line of subparagraph (f), "(f)" and replacing it with "(g)"; 

    (iii) deleting
in the first line of subparagraph (g), "(g)" and replacing it with "(h)"; and 

    (iv) inserting
the following language as new paragraph (f): 

    "(f) the
Senior Notes and any guarantees of the Senior Notes and any refinancings of the same with senior notes or subordinated notes that are obligations of SMI
provided that such refinancings are on similar and customary terms and conditions that are no less favorable in any material respect to the Loan Parties or the Lenders than the terms governing the
Senior Notes;". 

    15. Amendment to Section 9.3(a). Section 9.3(a) of the Existing Credit Agreement is hereby amended by
inserting in the fifth line thereof after the words "Senior Subordinated Note Holders" the words ", the Senior Notes Trustee, the Senior Notes Holders". 

    16. Amendments to Section 9.4. (a) Section 9.4(a) of the Existing Credit Agreement is hereby
amended by deleting in the third line thereof after the words "Textron Note Purchase Agreement", the words "and (iii) except for" and replacing them with the words ", (iii) Guarantee
Obligations in connection with the Senior Notes, and (iv)". 

    (b) Section 9.4(b)
of the Existing Credit Agreement is hereby amended by inserting in the third line thereof after the words "Senior Subordinated Note Holders"
the words "the Senior Notes Trustee, the Senior Notes Holders". 

    17. Amendment to Section 9.9. Section 9.9 of the Existing Credit Agreement is hereby amended by inserting
in the twenty-sixth line thereof after the words "Senior Subordinated Note Holders" the words ", the Senior Notes Trustee, the Senior Notes Holders". 

    18. Amendments to Section 9.11. (a) Section 9.11(a) of the Existing Credit Agreement is hereby
amended by deleting in the twenty-sixth line thereof the words "or (v)" and replacing them with the words "(v) the repurchase or redemption by SMI of not more than $14,000,000 aggregate
principal amount of Senior Notes in any calendar year, provided that (A) no Default or Event of Default has occurred and is continuing or would result therefrom and (B) the Borrowers
have aggregate Available RC Commitments immediately after such repurchase or redemption that equal or exceed $25,000,000, 

6

 

(vi) the refinancing of the Senior Notes in accordance with Section 9.2(f) hereof, (vii) the payment, prepayment or redemption by Selmer of its Indebtedness to SMI under the SMI
Note, or (viii)". 

    (b) Section 9.11
of the Existing Credit Agreement is hereby amended by inserting the following language at the end of such Section as paragraph (c): 

    "(c) SMI
will not effect a legal or covenant defeasance pursuant to Article 8 of the Senior Notes Indenture without the prior written consent of the
Administrative Agent." 

    19. Amendments to Section 9.15. Section 9.15 of the Existing Credit Agreement is hereby amended by
(i) deleting in the second line the words "Loan" and replacing it with the word "Note" and (ii) deleting in the second line thereof the words "and (c)" and replacing them with the words
", (c) the Senior Notes Documents and (d)". 

    20. Amendments to Section 10. (a) Section 10(c) of the Existing Credit Agreement is hereby amended
by inserting in the first line thereof after the words "when due" the word "and". 

    (b) Section 10(i) of
the Existing Credit Agreement is hereby amended by inserting in the ninth line thereof, after the words "General Intangibles and/or"
the word "in". 

    (c) Section 10(n)
of the Existing Credit Agreement is hereby amended by inserting in the fourth line thereof after the words "Textron, ITT" the words ", the
Senior Notes Trustee, the Senior Notes Holders". 

    (d) Section 10(q)
of the Existing Credit Agreement is hereby amended by inserting at the end thereof after the semicolon, the word "or"; 

    (e) Section 10
of the Existing Credit Agreement is hereby amended by adding the following language as paragraph (r): 

    "(r)
for any reason, Selmer does not redeem all of the outstanding Senior Subordinated Notes on or before June 30, 2001; 

    (f)  Section 10
of the Existing Credit Agreement is hereby amended by deleting in the sixth line of the last paragraph of such Section the word "Lean" and
replacing it with the words "Loan". 

    21. Amendments to Section 11.4. Section 11.4 to the Existing Credit Agreement is hereby amended by
deleting the last sentence thereof in its entirety and replacing it with the following: 

    "The
Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request
of the Lenders, the Required Lenders or the Majority Lenders as applicable in accordance with the terms of this Agreement, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Lenders and all future holders of the Loans." 

    22. Amendments to Section 12.7. Section 12.7 of the Existing Credit Agreement is hereby amended by
(i) inserting in the ninth line thereof after the words "Administrative Agent" the words "and/or the Lenders, as applicable" and (ii) inserting in the eleventh line thereof after the
words "Administrative Agent" the words "and/or the Lenders as applicable". 

 
 

ARTICLE IV
  Consent and Agreement    

    1.  The
Administrative Agent and the Lenders hereby (i) consent to the execution and delivery of the Senior Notes Indenture (including the guarantees set forth
therein), the issuance of the Senior Notes and the use of the proceeds thereof to redeem the Senior Subordinated Notes (notwithstanding any Lien that the Administrative Agent and the Lenders may have
in such proceeds) and prepay the 

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Revolving Credit Loans as hereinafter provided, (ii) subordinate all Liens that they may have under any Loan Document in the Senior Subordinated Note Redemption Proceeds (as hereinafter
defined) to the Lien of the Subordinated Notes Trustee solely for the benefit of the holders of the Senior Subordinated Notes and (iii) consent to the amendment of the Senior Subordinated Note
Indenture in the form attached hereto as Exhibit A, subject in each such case to the conditions (which are in addition to those set forth in Article V hereof) that, simultaneously with
the issuance of the Senior Notes, and in no event later than April 30, 2001, (x) SMI shall deliver or caused to be delivered to the Senior Subordinated Note Trustee the Redemption
Documents together with immediately available Dollars in an amount, not to exceed $114,000,000, equal to the amount required to redeem all outstanding Senior Subordinated Notes on or before
June 30, 2001 (such funds, the "Senior Subordinated Note Redemption Proceeds") and the Administrative Agent shall have received satisfactory
evidence thereof, (y) SMI shall deliver to the Administrative Agent for application to the prepayment of any outstanding Revolving Credit Loans immediately available Dollars in an amount equal
to the excess of the net proceeds of the Senior Notes over the amount delivered to the Subordinated Note Trustee pursuant to the immediately preceding clause (x) and shall permanently reduce
the Aggregate Maximum Revolving Credit Amount to $85,000,000, and (z) no Loan Party shall have granted a Lien in any of its property or assets to the Senior Notes Trustee or any Senior Notes
Holder. The parties hereto hereby acknowledge and agree that a failure by SMI to comply with the conditions set forth in the immediately preceding sentence shall be an Event of Default (as defined in
the Agreement) and that in such event or in the event that all of the outstanding Senior Subordinated Notes are not redeemed on or before June 30, 2001, the subordination of such Lien shall be
void ab initio and of no force and effect. The Administrative Agent and the Lenders further agree that any Event of Default (as defined in the
Agreement) which shall
occur and be continuing solely as the result of the occurrence of an Event of Default as defined in the Senior Subordinated Notes Indenture on or after the date hereof shall be deemed to be waived
upon the payment of all amounts owing under the Senior Subordinated Notes, the satisfaction and discharge thereof and the satisfaction and discharge of all other obligations of any Loan Party to the
Senior Subordinated Note Holders under the Senior Subordinated Indenture unless such Event of Default (as defined in the Agreement) is also a Default or Event of Default as defined in the Senior Notes
Indenture. The parties hereto hereby further agree that the Net Proceeds of the sale of any asset of any Loan Party shall first be applied to the Obligations as set forth in Section 5.4 of the
Agreement and (i) any excess of such Net Proceeds remaining after such application and (ii) any proceeds of any sale of any Qualified Capital Stock (as defined in the Senior Notes
Indenture) shall be delivered to the Administrative Agent to be applied to the outstanding Obligations in accordance with Section 12.4 of the Agreement. 

 
 

Article V
  Conditions to Effectiveness    

    This
Amendment, and the modifications to the Existing Credit Agreement provided for herein, shall become effective on the date (the "Second Amendment Effective
Date") on which all of the following conditions have been (or are concurrently being) satisfied: 

    1.  This
Amendment shall have been duly executed and delivered by each party thereto. 

    2.  the
Administrative Agent shall have received executed copies of each of the Senior Notes Documents, in form and substance satisfactory to it. 

    3.  Each
of the representations and warranties made by the Borrowers and Guarantors in or pursuant to the Loan Documents shall be true and correct in all material
respects on and as of the Second Amendment Effective Date as if made on and as of such date (except to the extent the same relate to another, earlier date, in which case they shall be true and correct
in all material respects as of such earlier date). 

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    4.  No Default or Event of Default shall have occurred and be continuing. 

    5.  The
Administrative Agent shall have received, with a counterpart for each Lender, the executed legal opinion of Milbank Tweed Hadley & McCloy, counsel to the
Borrowers, in form and substance
satisfactory to the Lender and counsel to the Lender, and covering such matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require. 

    6.  All
corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by the Existing Credit
Agreement and this Amendment shall be reasonably satisfactory in form and substance to the Administrative Agent, and the Administrative Agent shall have received such other documents in respect of any
aspect or consequence of the transactions contemplated hereby or thereby as it shall reasonably request. 

 
 

ARTICLE VI
  Miscellaneous    

    1.  Payment of Expenses. Without limiting its obligations under Section 12.8 of the Agreement, the Borrowers
jointly and severally agree to pay or reimburse the Administrative Agent for all of its reasonable costs and expenses incurred in connection with this Amendment, including, without limitation, the
reasonable costs and expenses of Cadwalader, Wickersham & Taft, counsel to the Administrative Agent and expressly acknowledge that their obligations hereunder constitute "Obligations" within
the meaning of the Existing Credit Agreement. 

    2.  No Other Amendments; Confirmation. Except as expressly amended, modified and supplemented hereby and by the
documents related hereto, the provisions of the Existing Credit Agreement and the other Loan Documents shall remain in full force and effect. 

    3.  Affirmation by Loan Parties. Each Loan Party hereby reaffirms its obligations under the Loan Documents executed by
such Loan Party. 

    4.  Governing Law; Counterparts. (a) This Amendment and the rights and obligations of the parties hereto shall
be governed by, and construed and interpreted in accordance with, the laws of the State of New York. 

    (b) This
Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this Amendment signed by all the parties shall be lodged with each of the Borrowers and the Administrative Agent, as the
Administrative Agent. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. 

    IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written. 

	

 	
 	
THE SELMER COMPANY, INC.,

  Borrower
	

 	
 	

By	
 	

/s/ DENNIS M. HANSON   
 Title: Chief Financial Officer

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STEINWAY, INC.,

  Borrower
	

 	
 	

By	
 	

/s/ DENNIS M. HANSON   
 Title: Treasurer and Chief Financial Officer
	

 	
 	
UNITED MUSICAL INSTRUMENTS USA, INC., Borrower
	

 	
 	

By	
 	

/s/ DENNIS M. HANSON   
 Title: Assistant Treasurer
	

 	
 	
GMAC COMMERCIAL CREDIT LLC,

as Administrative Agent and as a Lender
	

 	
 	

By	
 	

/s/ FRANK IMPERATO   
 Title: Senior Vice President
	

 	
 	
GMAC COMMERCIAL CREDIT LLC,

as Lender
	

 	
 	

By	
 	

/s/ FRANK IMPERATO   
 Title: Senior Vice President
	

 	
 	
FLEET CAPITAL CORPORATION,

as Lender
	

 	
 	

By	
 	

/s/ MARK SCHAFER   
 Title: Vice President
	

 	
 	
GUARANTY BUSINESS CREDIT CORPORATION,

as Lender
	

 	
 	

By	
 	

/s/ MICHAEL D. HADDAD   
 Title: President and Chief Executive Officer

10

 
 
 

SCHEDULE I
  GUARANTORS    
  

	
Steinway Musical Instruments, Inc.,

Guarantor	
 	

 
	

By	
 	

/s/ DENNIS M. HANSON   
	
 	

 
	Title: Chief Financial Officer	 	 
	

800 South Street

Suite 425

Waltham, MA 02453	
 	

 
	
Emerson Musical Instruments, Inc.,

Guarantor	
 	

 
	

By	
 	

/s/ DENNIS M. HANSON   
	
 	

 
	Title: Assistant Treasurer	 	 
	

28135 West Hively Avenue

Elkhart, IN 46517	
 	

 
	
The Steinway Piano Company, Inc.,

Guarantor	
 	

 
	

By	
 	

/s/ DENNIS M. HANSON   
	
 	

 
	Title: Treasurer	 	 
	

600 Industrial Parkway

Elkhart, IN 46516	
 	

 
	
The SMI Trust,

Guarantor	
 	

 
	

By	
 	

/s/ DENNIS M. HANSON   
	
 	

 
	Title: Trustee	 	 
	

800 South Street

Suite 425

Waltham, MA 02453	
 	

 
	
S&B Retail, Inc.,

Guarantor	
 	

 
	

By	
 	

/s/ DENNIS M. HANSON   
	
 	

 
	Title: Treasurer and Chief Financial Officer	 	 
	

455 Route 17 South

Paramus, New Jersey 07652	
 	

 

11

 

	
Boston Piano Company, Inc.,

Guarantor	
 	

 
	

By	
 	

/s/ DENNIS M. HANSON   
	
 	

 
	Title: Treasurer and Chief Financial Officer	 	 
	

37-11 19th Avenue

Long Island City, NY 11105	
 	

 
	
The O.S. Kelly Corporation,

Guarantor	
 	

 
	

By	
 	

/s/ DENNIS M. HANSON   
	
 	

 
	Title: Treasurer	 	 
	

P.O. Box 1267

318 E. North Spring Street

Springfield, OH 45503	
 	

 
	
The O.S. Kelly Company,

Guarantor	
 	

 
	

By	
 	

/s/ DENNIS M. HANSON   
	
 	

 
	Title: Treasurer	 	 
	

P.O. Box 1267

318 E. North Spring Street

Springfield, OH 45503	
 	

 
	
United Musical Instruments Holdings, Inc.,

Guarantor	
 	

 
	

By	
 	

/s/ DENNIS M. HANSON   
	
 	

 
	Title: Assistant Treasurer	 	 
	

100 Industrial Parkway

Elkhart, IN 46516	
 	

 

12

QuickLinks

EXHIBIT 10.1C

SECOND AMENDMENT AND CONSENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

RECITALS

ARTICLE I Definitions

ARTICLE II Representations

ARTICLE III Amendments to Existing Credit Agreement

ARTICLE IV Consent and Agreement

Article V Conditions to Effectiveness

ARTICLE VI Miscellaneous

SCHEDULE I GUARANTORS<PAGE>

                                                                    Exhibit 10.1

EXECUTION COPY

                          XCHANGE(R) RESELLER AGREEMENT

This Agreement, made as of this 31st day of March, 2001 (the "Effective
Date"), by and between Exchange Applications, Inc., a Delaware corporation
having a principal place of business at One Lincoln Plaza, 89 South Street,
Boston, Massachusetts 02111 ("Xchange"), and Carreker Corporation, a Delaware
corporation having a principal place of business at 4055 Valley View Lane,
Suite 1000, Dallas, Texas 75244 ("Carreker").

                          W I T N E S S E T H  T H A T :

WHEREAS, Xchange is the owner of a customer relations management product
known as Xchange EnAct, which consists of consulting methodologies and
software and is more particularly described in the Product Schedule attached
hereto as Schedule A.

WHEREAS, Carreker desires to become a reseller of EnAct to potential users in
the Subject Field and Territory (as hereinafter defined);

NOW, THEREFORE, in consideration of the mutual promises and covenants of the
parties as hereinafter set forth, the parties agree as follows:

1.       DEFINITIONS

1.1      For purposes of this Agreement, the following terms shall have the
respective meanings set forth below:

         "Banking Services" shall have the meaning set forth on Schedule B to
this Agreement.

         "Calendar Year" means January 1 through December 31 in any given
year.

         "Carreker" shall have the meaning set forth in the introductory
paragraph hereto.

         "Carreker Maintenance Fees" shall mean all fees received by Carreker
for providing maintenance and customer support services in connection with
the Software pursuant to Sublicense and Services Agreements.

         "Consulting Services" shall have the meaning set forth on Schedule A
hereto.

         "Documentation" means the user guides, instruction manuals, training
manuals, pamphlets and other materials related to the use of EnAct by
Sublicensees as more particularly described in the Product Schedule.

         "Effective Date" shall have the meaning set forth in the
introductory paragraph hereto.

         "EnAct" means the Xchange EnAct customer relations management
solution suite owned by Xchange as more particularly described in the Product
Schedule.

         "EnAct Royalty" shall have the meaning set forth on Schedule D of
this Agreement.

         "Event of Release" shall have the meaning set forth in Section 2.9
hereof.

<PAGE>

                                      -2-

         "Guaranteed Royalties" shall have the meaning set forth in Section
3.2 hereof. Guaranteed Royalties shall consist of the applicable EnAct
Royalty and Maintenance Royalty as set forth on Schedule D hereto.

         "License" shall have the meaning set forth in Section 2.2 of this
Agreement.

         "Indemnified Party" shall have the meaning set forth in Section 9.3
of this Agreement.

         "Indemnifying Party" shall have the meaning set forth in Section 9.3
of this Agreement.

         "Initial Term" means the time period from March 31, 2001 through
March 31, 2002.

         "Maintenance Royalty" shall have the meaning set forth on Schedule D
attached to this Agreement.

         "Maintenance Fee" shall have the meaning set forth in Section 5.2
hereof.

         "Methodologies" means the methodologies of EnAct as more
particularly described in the Product Schedule.

         "Non-Exclusive Term" shall have the meaning set forth in Section 4.2
of this Agreement.

         "New Development" shall mean any variation, derivative work,
improvement, new discovery, enhancement or other modification to EnAct
developed or created by Carreker whether independently or jointly with
Xchange or any other party.

         "Product Schedule" shall mean the schedule attached hereto as
Schedule A.

         "Proprietary Material" shall include EnAct and any component thereof
and any other information, materials or data received by Carreker from
Xchange, in written, oral, machine-readable or other form, including, but not
limited to, designs, concepts, ideas, New Developments, know-how, technology
and other information that has been identified by Xchange as proprietary or
confidential (hereinafter referred to in the paragraph as "Information");
provided that "Proprietary Material" shall not include Information that
Carreker can prove by clear and convincing written evidence to be information
which:

         (i)   is or becomes generally available in the public domain without
the fault of Carreker;

         (ii) is already known to Carreker prior to disclosure hereunder
without an obligation of confidentiality to Xchange (provided, however, that
this exception shall not include any New Development); or

         (iii) is disclosed to Carreker by a third party without restriction
and without breach of any separate confidentiality obligation owed to Xchange.

         "Quarter" means the following periods consisting of three
consecutive calendar months in any given Calendar Year: January 1 through
March 31; April 1 through June 30; July 1 through September 30; and October 1
through December 31.

<PAGE>

                                      -3-

         "Renewal Term" shall have the meaning set forth in section 4.1 of
this Agreement.

         "Revenues" means all income, fees or revenues of any kind generated
by and/or payable to Carreker arising out of, relating to or in connection
with EnAct, or any of its components, including but not limited to all
royalty fees, service fees, consulting fees, maintenance fees, revenues
generated pursuant to any Sublicense and Services Agreements and all other
income, revenues and fees related to the rights afforded to Carreker pursuant
to this Agreement (however denominated); provided, however, that Revenues
shall not include any Carreker Maintenance Fees but only to the extent that
such Carreker Maintenance Fees do not exceed 16.66% of the total amount of
the license fee for the Software collected pursuant to such Sublicense and
Services Agreements.

                         In any new sublicensing  arrangements  entered into
by Carreker in which EnAct is licensed with other services or products
provided by Carreker, the percentage of total revenues received by Carreker
attributable to EnAct and which shall be included in Revenues shall be
determined in an equitable and commercially reasonable manner given the
relative contributions of EnAct and the other products or services provided
by Carreker the initial determination of which will be the Sublicensee's
allocation of such amounts pursuant to a formal Sublicensee approved business
case, a Sublicensee approved benefit tracking report or a separate
acknowledgement letter from the Sublicensee with respect to its obligation to
Carreker. Notwithstanding the foregoing, in the event that EnAct is combined
with other services or products which are then being provided by Carreker
pursuant to an existing customer arrangement, the revenues attributable to
EnAct and which shall be included in Revenues shall be the difference between
the total amount of revenues received by Carreker less the amount of revenues
that would have been received without EnAct. The following are examples of
Revenues; provided, however, that such examples shall not alter or amend the
foregoing terms of this definition:

                         (a) FLAT CONTINGENCY WITH NO CAP - In this
situation, the value of approved or implemented and tracked benefits that are
agreed to by the client times the relevant contingency rate will be deemed to
be the price for EnAct and will be accrued at the time client agrees to
payment for same.

         o        Example - Approved EnAct value as agreed by client in business
                  case of $10,000,000 recurring annual revenue (net of expenses)
                  times 20% benefit approval contingency rate = $2,000,000
                  contingency fee payment

         o        Example - Realized benefits value as agreed by client and
                  presented in benefit tracking reports of $15,000,000 recurring
                  annual revenue (net of expenses) times 15% benefit approval
                  contingency rate = $2,250,000 contingency fee payment

                         (b) FLAT CONTINGENCY WITH A CAP OR WITH A NEGOTIATED
CLIENT SETTLEMENT FOR SERVICES AND RECOMMENDATIONS - In this situation the
value approved or implemented and tracked benefits that are agreed to by the
client times the relevant prorated contingency rate for the total benefits
derived from the project will be deemed to be the price for EnAct and will be
accrued at the time client agrees to payment for same.

<PAGE>

                                      -4-

         o        Example - Approval of Enact value as agreed by client in
                  business case of $10,000,000 plus approval of other Carreker
                  recommendations as agreed by client in business case(s) of
                  $10,000,000 for total benefit approvals of $20,000,000. Total
                  contingency fees at 30% would equal $6,000,000 but are subject
                  to a cap of $5,000,000. Thus, the effective pro rata
                  contingency rate is 25% and the price for EnAct will be deemed
                  to be $2,500,000.

                         (c) TIERED CONTINGENCY WITHOUT A CAP - In this
situation, the value approved or implemented and tracked benefits that are
agreed to by the client times the lowest applicable component of the
contingency rate schedule will be applied to determine the amount of
contingency fees derived from the project. These contingency fees will be
deemed to be the price for EnAct and will be accrued at the time client
agrees to payment for same.

         o        Example -- Approval of Enact value as agreed by client in
                  business case of $10,000,000 plus approval of other Carreker
                  recommendations as agreed by client in business case(s) of
                  $10,000,000 for total benefit approvals of $20,000,000. Total
                  contingency fees at 20% for the first $10,000,000 and 15% for
                  benefits in excess of $10,000,000 would equal $3,500,000.
                  Benefits derived from other Carreker recommendations will be
                  deemed to occur at the highest rate first when distributing
                  the contingency fees. Thus, the effective rate for any and all
                  EnAct value would be deemed to be 15% and the price for EnAct
                  will be deemed to be $1,500,000.

                         The term Revenues shall not include any sales, use,
or value added taxes (except those taxes which are solely measured by
Carreker's income) duties or reimbursements of reasonable out of pocket
expenses (including travel expenses) but only to the extent such amounts are
(a) included in payments made to Carreker by any Sublicensees, (b) separately
stated and (c) properly reported and/or paid by Carreker.

         "Royalty Fees" shall have the meaning set forth in Section 3.1 of
this Agreement. Royalty Fees shall consist of the applicable EnAct Royalty
and Maintenance Royalty as set forth on Schedule D hereto.

         "Software" means the computer programs of EnAct listed in the
Product Schedule including any software licensed by Xchange from any third
party that Xchange is permitted to sublicense to Carreker, provided, however,
that no such third party software licensed by Carreker shall be included in
the definition of Software and/or EnAct for purposes of Section 8 and Section
9.1 of this Agreement.

         "Source Code Escrow Agreement" shall have the meaning set forth in
Section 2.9 of this Agreement.

         "Source Code License" shall have the meaning set forth in Section
2.9 of this Agreement.

         "Special Transactions" shall have the meaning set forth in Schedule
D of this Agreement.

         "Sublicense and Services Agreement" shall have the meaning set forth
in Section 2.2 of this Agreement.

<PAGE>

                                      -5-

         "Sublicensee" means any party with whom Carreker enters into a
Sublicense and Services Agreement pursuant to the terms of this Agreement

         "Subject Field" shall have the meaning set forth in Schedule B
attached to this Agreement.

         "Trademarks" shall have the meaning set forth in Section 2.2 of this
Agreement.

         "Territory" shall have the meaning set forth in Schedule B attached
to this Agreement.

         "Term" shall mean the Initial Term, the Non-Exclusive Term and all
Renewal Terms, if any.

         "Updates" means any error corrections, modifications, enhancements,
new versions or updates to the Software furnished by Xchange to Carreker
pursuant to this Agreement that are made generally commercially available at
no additional charge (other than shipping) to other licensees of the Software
who have contracted to receive maintenance support. Updates shall not include
any error corrections, modifications, enhancements, new versions or updates
which (i) Xchange licenses separately from EnAct, (ii) are marketed under any
trademark or trade name other than EnAct, (iii) are produced and/or
distributed on a custom basis, or (iv) Xchange is prohibited from furnishing
to Carreker.

         "Unearned Royalties" shall have the meaning set forth in Section 5.2
hereof.

         "Xchange" shall have the meaning set forth in the introductory
paragraph hereto.

         "Xchange Services" shall have the meaning set forth on Schedule D
attached to this Agreement.

2.       APPOINTMENT OF RESELLER AND GRANT OF LICENSE

2.1      Xchange hereby appoints Carreker as a reseller of EnAct but only to
Sublicensees in the Subject Field and within the Territory and Carreker
hereby accepts such appointment. This appointment (i) is subject to the
provisions and is only for the Term, (ii) is personal to Carreker and (iii)
may not be assigned or transferred in any way, in whole or in part, nor may
Carreker appoint sub-resellers of any kind. Carreker agrees that, in acting
as a reseller for Xchange, it will at all times conduct itself in accordance
with its warranties, duties and obligations set forth in this Agreement.
Provided that Carreker is in full compliance with its obligations under this
Agreement and has paid all Guaranteed Royalties and Royalty Fees as required
by Section 3, this reseller appointment shall be exclusive for the Subject
Field in the Territory during the Initial Term and any Renewal Term. With the
exception of the joint marketing of Special Transactions and subject to the
provisions of Section 2.7, and provided that Carreker is not in breach of
this Agreement, Xchange will not market EnAct, or authorize any third party
to market or license EnAct, to any customers in the Subject Field within the
Territory during the Initial Term or any Renewal Term.

2.2      Xchange hereby grants to Carreker a limited, nonexclusive,
nontransferable license (the "License") to (i) market EnAct, (ii) use the
Methodologies to provide Consulting Services, (iii) sublicense the Software
and Documentation and (iv) to make copies of the Software and

<PAGE>

                                      -6-

Documentation for (a) archival purposes and (b) distribution but the only for
distribution in accordance with Section 2.3 below, in all cases only to
Sublicensees in the Subject Field and within the Territory pursuant to
written sublicenses (the "Sublicense and Services Agreements") which shall
contain at a minimum provisions substantially and materially as set forth on
Schedule C hereof and the form of which shall be subject to the advanced
written approval of Xchange. Xchange also hereby grants to Carreker a
limited, non-transferable and personal license (without the right to
sublicense) to use the trademarks, service marks and trade names set forth on
Schedule F (collectively, the "Trademarks"), but only in connection with
Carreker's activities as contemplated by this Agreement and as permitted by
Section 6.

2.3      Carreker is only authorized to copy the Software for (i)
distribution to Sublicensees as part of EnAct pursuant to Sublicense and
Services Agreements and (ii) for Carreker's archival or back up purposes; no
other copies shall be made without Xchange's prior written consent. Carreker
is only authorized to copy and distribute to Sublicensees the portions of the
Documentation that are specifically designated for such copying and
distribution in writing by Xchange. Carreker shall not copy and distribute
the Software and Documentation in a manner inconsistent with the provisions
of the Sublicenses and Services Agreement as described on Schedule C hereto.
Carreker shall provide the following information and materials to Xchange not
less than ten days after to the distribution of any copies of the Software to
any Sublicensee:

         1.)  Sublicensee name;
         2.)  Execution date of Sublicense and Services Agreement;
         3.)  Software and Documentation to be copied; and
         4.)  Install Date.

All titles, Trademarks, copyright, patent and restricted rights notices shall
be reproduced in such copies. All copies shall be individually numbered and
Carreker shall keep records of the number and location of all such copies.
All copies of the Software made by Carreker are subject to the terms of this
Agreement.

2.4      Carreker shall not use or duplicate any component of EnAct or make
any component of EnAct available to third parties other than as specified in
this Agreement. Carreker agrees that it shall not perform, and shall not
cause or permit, the reverse engineering, disassembly, or decompilation of
any component of EnAct.

2.5      Xchange shall retain all right, title, patent, copyright, trademark
and other proprietary rights in EnAct including the Software, Documentation,
Methodologies and any Updates, New Developments, enhancements, modifications
or translations thereof. Carreker and its Sublicensees shall not acquire any
rights in any of the components of EnAct other than those specified in this
Agreement and the Sublicense and Services Agreements.

2.6      Notwithstanding any language in this Agreement that could be
interpreted otherwise, EnAct is supplied by Xchange ONLY under the License
and Carreker and Carreker's Sublicensees are prohibited from using or
duplicating EnAct except as expressly permitted in this Agreement or the
applicable Sublicense and Services Agreement.

2.7      Nothing in this Agreement is intended to restrict or affect, nor
shall any such provision restrict or affect, (a) any contracts, licenses,
sublicenses or other agreements in effect as of the Effective Date between
Xchange (or any party duly authorized by Xchange) and any licensee,

<PAGE>

                                      -7-

sublicensee or other user of EnAct or any component thereof and (b) the right
of Xchange (or any party duly authorized by Xchange) to market, sell,
license, sublicense, distribute or otherwise commercially exploit EnAct, or
any component thereof, to (i) any and all users or potential users outside of
the Territory, whether or not such users or potential users are within the
Subject Field, (ii) any and all users or potential users outside of the
Subject Field, whether or not such users or potential users are within the
Territory or (iii) any and all licensees, sublicenses or other parties that
use or are authorized to use EnAct or any component thereof pursuant to any
contracts, licenses, sublicenses or other agreements in effect as of the
Effective Date.

2.8      During the Initial Term or any Renewal Term, Xchange shall make
reasonable commercial efforts to provide notice (electronic, written or oral)
to Carreker of any entities which express to Xchange an interest in EnAct and
which Xchange believes are potential Sublicensees for EnAct in the Subject
Field and within the Territory. During the Initial Term and any Renewal Term,
Xchange shall also use reasonable commercial efforts to include Carreker as a
subcontractor of services in its provision of EnAct outside of the Territory
as Xchange, in its sole discretion, deems appropriate.

2.9      The parties shall execute, concurrent with the execution of this
Agreement, a Software Escrow Agreement (the "Software Escrow Agreement") in
the form attached hereto as Exhibit 1. Xchange hereby grants to Carreker a
non-exclusive, non-assignable, and non-transferable right and license (the
"Source Code License") to possess and use the Deposit Materials (as defined
in the Software Escrow Agreement) solely for internal purposes to provide
maintenance and support of the Software used by Sublicensees until the
expiration or termination of this Agreement; provided, however, that such
Source Code License shall not be exercisable unless and until an Event of
Release (as defined below) occurs and the Deposit Materials are released
pursuant to the Software Escrow Agreement. Title to the Deposit Materials
shall remain at all times with Xchange and the Deposit Materials shall remain
confidential and proprietary to Xchange. Carreker's rights to possess and use
the Deposit Materials do not give Carreker any right to disclose, market,
sublicense, distribute or in any other manner make the Deposit Materials (or
their derivatives) available to third parties. Carreker shall not, under any
circumstances, copy, duplicate, or otherwise reproduce the Deposit Materials
in any manner other than as required for maintenance and support of the
Software and as required for archival backup. Carreker shall not copy,
distribute, or in any way disseminate the Deposit Materials, or any
information or ideas contained in the Deposit Materials, to any party without
the prior express written permission of Xchange. Carreker shall take all
steps necessary to maintain the confidentiality of the Deposit Materials. In
the Event that Carreker acquires the Deposit Materials pursuant to the
Software Escrow Agreement, (a) this Agreement may not be terminated for
Xchange's failure to provide the maintenance and support services set forth
in this Agreement, (b) Xchange shall be relieved of, and Carreker shall
assume, all of Xchange's maintenance and support obligations pursuant to this
Agreement, (c) Carreker shall be relieved of its obligation to make
Maintenance Fee payments pursuant to Section 5.2 and Xchange shall be
relieved of its obligation to provide a credit pursuant to Section 5.2, and
(d) all other provisions of this Agreement shall remain in full force and
effect. The parties acknowledge and agree that the Software Escrow Agreement
shall be supplementary to this Agreement pursuant to 11 U.S.C. Section 365(n)
and that if Xchange, as a debtor in possession, or trustee in bankruptcy in a
case under Title 11 of the United States Code rejects this Agreement,
Carreker may elect to retain its rights under this Agreement as provided in
11 U.S.C. Section 365(n).

                  An "Event of Release" shall mean (a) the dissolution or
liquidation of Xchange

<PAGE>

                                      -8-

or the institution by or against Xchange of any bankruptcy, reorganization,
debt arrangement, assignment for the benefit of creditors or other proceeding
under any bankruptcy or insolvency law or dissolution, receivership or
liquidation proceeding that remains unstayed or undismissed for a period of
ninety (90) days; or (b) any unjustified and permanent failure on the part of
Xchange to materially fulfill its maintenance and support obligations in
accordance with the terms of this Agreement after written notice of such
failure and an opportunity to cure within thirty (30) days of such written
notice and without the occurrence of any breach by Carreker.

3.       ROYALTIES

3.1      Subject to the requirements for Guaranteed Royalties set forth in
Section 3.2 and 3.3 below, Carreker shall pay to Xchange the royalty fees
(the "Royalty Fees") during the Initial Term and each Renewal Term thereafter
as set forth on Schedule D hereto.

3.2      Carreker shall pay to Xchange nonrefundable guaranteed royalty
payments (the "Guaranteed Royalties") for the Initial Term in the amounts and
on the due dates set forth in Schedule D attached hereto. If Carreker
exercises its option to renew this Agreement pursuant to Section 4.1 of this
Agreement for any Renewal Term, Carreker shall make payment for Guaranteed
Royalties for such Renewal Term as set forth on Schedule D hereto. Carreker
shall pay all Guaranteed Royalties notwithstanding the actual amount of
Revenues earned by Carreker in the Initial Term or any Renewal Term
thereafter and no Guaranteed Royalties shall be subject to refund.

3.3      If the Royalty Fees earned during the course of the Initial Term or
any Renewal Term thereafter exceed the amount of any installment, or
combination of installments of the Guaranteed Royalties previously made for
such term, then any and all Royalty Fees earned in excess of the total amount
of the Guaranteed Royalties previously paid for such Initial Term or Renewal
Term shall be calculated on a Quarterly basis and shall be due and payable on
the 30th day after the end of the Quarter in question beginning with the
first Quarter within which such excess Royalty Fees are earned. All such
payments shall be used to offset any future Guaranteed Royalties to be due
and owing in such Initial Term or Renewal Term, as the case may be.

3.4      All Guaranteed Royalties, Royalty Fees or Maintenance Fees are
payable in U.S. Dollars. The Guaranteed Royalties, Royalty Fees and
Maintenance Fees shall be exclusive of all federal, state local or other
sales, use, value added excise or other taxes (except those which are solely
measured by Xchange's Income) whether currently imposed or applicable in the
future, all of which Carreker shall be liable for and all of which Carreker
shall be responsible for reporting and paying. In the event that Xchange is
required to pay any such tax, Carreker shall reimburse Xchange for the same
within five days of any written or oral demand made by Xchange. To the extent
that Revenues are to be paid to Carreker in currency other than United States
dollars, then for purposes of calculating Royalty Fees, Maintenance Fees or
Carreker Maintenance Fees, such amounts shall be converted into United States
dollars on the date such Revenues are recorded as income on the books of
Carreker at the then current exchange rate as set forth on that date (or the
next business day if such date is not a business day) in the Wall Street
Journal.

3.5      Any Guaranteed Royalties, Royalty Fees or Maintenance Fees payable
to Xchange that are not paid when due shall bear interest at the rate of one
percent (1%) per month, compounded monthly, or at the maximum rate permitted
by law. Amounts received by Xchange hereunder shall first be credited against
any unpaid interest accrued pursuant to this Section 3.5, and accrual

<PAGE>

                                      -9-

of such interest shall be in addition to and without limitation of any and
all additional rights or remedies which Xchange may have hereunder or at law
or in equity. In the event that Xchange is required to bring any action to
collect any amounts due under this Agreement, Xchange shall be entitled to
reimbursement by Carreker for the reasonable costs of such collection
(including without limitation reasonable attorneys' fees).

4.       TERM; TERMINATION

4.1      During the Initial Term and for so long as this Agreement is in
effect, Carreker shall have the perpetual option to renew this Agreement for
additional terms (each a "Renewal Term") beginning with the period from April
1, 2002 to December 31, 2002, and for each Calendar Year thereafter by (a)
providing written notice to Xchange no later than (i) March 1, 2002 for the
first Renewal Term and (ii) October 1 of the Calendar Year prior to each
Renewal Term thereafter, and (b) making payment of the Guaranteed Royalties
for such Renewal Terms as set forth in Section 3.

4.2      If Carreker does not exercise its option to renew this Agreement at
the end of the Initial Term or any Renewal Term and the total amount of
Royalty Fees actually earned by Xchange during the Initial Term and any
Renewal Term does not exceed the Guaranteed Royalties for the Initial Term
and any Renewal Term, then Carreker shall be permitted to continue to act as
a reseller of EnAct under the terms of this Agreement on a non-exclusive
basis until Royalty Fees have been earned in an amount equal to all such
Guaranteed Royalties (the "Non-Exclusive Term").

4.3      Upon termination or expiration of this Agreement, Carreker shall
immediately cease all marketing and other activities relating to EnAct.
However, in the event that this Agreement expires or terminates for any
reason other than pursuant to Sections 4.4 or 4.6 hereof, Carreker may
continue to provide Consulting Services and other maintenance or user
services to Sublicensees during the remainder of the term of any Sublicense
and Services Agreement in effect at that time. In the event that this
Agreement is terminated pursuant to sections 4.4 or 4.6, Xchange shall have
the option to require Carreker to assign its rights and interests in any such
Sublicense and Services Agreement by providing written notice to Carreker and
such assignment shall be effective upon the thirtieth (30th) day after such
notice. Notwithstanding any expiration or termination, all applicable
provisions of the Agreement shall apply in the event that Carreker continues
to provide Consulting Services and other maintenance or user services to
Sublicensees.

4.4      This Agreement shall automatically terminate if Carreker shall file
a petition in bankruptcy, shall be adjudicated a bankrupt, shall take
advantage of the insolvency laws of any jurisdiction to which it is subject,
shall make an assignment for the benefit or creditors, shall be voluntarily
or involuntarily dissolved, shall admit in writing its inability to pay debts
as they come due, shall have a receiver, trustee or other court officer
appointed for its property, shall have had a bankruptcy petition filed
against it that has not been discharged within sixty days of the filing
thereof or shall commit any other act of bankruptcy.

4.5      Carreker shall have the option to terminate this Agreement if
Xchange shall file a petition in bankruptcy, shall be adjudicated a bankrupt,
shall take advantage of the insolvency laws of any jurisdiction to which it
is subject, shall make an assignment for the benefit or creditors, shall be
voluntarily or involuntarily dissolved, shall admit in writing its inability
to pay debts as they come due, shall have a receiver, trustee or other court
officer appointed for its property, shall

<PAGE>

                                     -10-

have had a bankruptcy petition filed against it that has not been discharged
within sixty (60) days of the filing thereof or shall commit any other act of
bankruptcy.

4.6      If Carreker shall fail to perform or shall be in breach of any of
its obligations hereunder, and shall have failed or been unable to remedy
said failure or breach within thirty (30) days after receipt of written
notice from Xchange with respect thereto, Xchange may terminate this
Agreement, hereunder, by giving written notice of termination to Carreker. In
addition to the foregoing, Xchange shall be entitled all remedies available
under law or equity.

4.7      If Carreker shall not have paid Xchange the full amount of any
outstanding Guaranteed Royalties, Royalty Fees or Maintenance Fees for the
Initial Term or any Renewal Term as of the date of any termination or
expiration, then the unpaid balance of such Guaranteed Royalties, Royalty
Fees or Maintenance Fees shall become due and payable within ten (10) days
following the date of termination.

4.8      In the event of any termination or expiration of this Agreement,
and, if applicable, upon the date that the rights afforded to Carreker in
Section 4.3 shall cease, Carreker (i) shall deliver to Xchange all copies of
EnAct or Proprietary Material in Carreker's possession, custody or control;
and (ii) shall destroy all copies of EnAct or Proprietary Material, and
render unusable information and data relating to thereto stored in any
storage facility which for any reason cannot be delivered to Xchange. An
authorized representative of Carreker shall certify in writing to Xchange
that all Proprietary Material in its possession, custody or control has been
delivered to Xchange, destroyed or rendered unusable. Xchange shall have the
option to terminate or require Carreker to terminate any Sublicense and
Services Agreements pursuant to which the Sublicensee is in default.

4.9      Notwithstanding any termination or expiration of this Agreement,
Carreker shall remain liable to Xchange for payments accruing pursuant to
this Agreement. Termination of this Agreement by expiration or otherwise
shall not release Carreker from any of its obligations or liabilities accrued
or incurred hereunder or rescind or give rise to any right to rescind any
payment made to Xchange hereunder; provided, however, that in the event that
Carreker terminates this Agreement pursuant to Section 4.5, the amount then
currently due or accruing to Xchange pursuant to this Agreement shall be
equal to the greater of (a) the total amount of Guaranteed Royalties for the
term, whether it be the Initial Term or any Renewal Term, in which the
Agreement is terminated prorated in accordance with the number of days that
the Agreement shall have been in effect during such term or (b) the total
amount of Royalty Fees (excluding Guaranteed Royalties) due and payable to
Xchange at the time of termination. In no event shall Carreker be entitled to
any refund of payments already made to Xchange

4.10     Carreker hereby agrees that it shall not be entitled to damages of
any kind or to an injunction or order of any kind arising out of or in
connection with or relating to the termination or expiration of this
Agreement or its appointment as a reseller of Xchange and, to the maximum
extent permitted by law, waives any right, defense, action or claim it may
have under any law, rule, regulation or decision in whole or in part for the
protection of franchisees, resellers, dealers and/or distributors.

4.11     Sections 2.4, 2.5, 4, 6.2, 6.5, 7.1(xi), 8.2, 8.3, 8.4, 8.6, 9,
10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.8, 10.9, 11 and 12 shall survive any
expiration or termination of this Agreement.

<PAGE>

                                     -11-

5.       TRAINING; MAINTENANCE; SUPPORT

5.1      Provided that Carreker is in full compliance with the terms of this
Agreement, including without limitation the payment of all Royalty Fees,
Guaranteed Royalties and Maintenance Fees (as defined in Section 5.2),
Xchange shall use reasonable commercial efforts to provide maintenance and
support services for the Software in accordance with Schedule E attached
hereto. Such maintenance and support services shall be provided during the
Initial Term, any Renewal Term and for a period of twelve months after the
date of the last Guaranteed Royalty payment made by Carreker; provided,
however, that if Carreker makes any Royalty Fee payments in excess of
Guaranteed Royalties after the date of the last Guaranteed Royalty payments,
Xchange shall provide such maintenance and support in connection with
Carreker's support of the Sublicense and Services Agreements contributing to
such excess Royalty Fee for a period of 12 months after such payment.
Carreker shall designate at least one system manager and one alternate, in
the event the system manager is not available, for receipt of maintenance and
support services from Xchange. Xchange's maintenance and support obligations
pursuant to this Section 5.1 shall be limited to the most current version of
the Software and the next most current version of the Software; provided,
however, that with respect to such next most current version, such
maintenance and support obligations shall only be in effect until twelve
months after the release of the current version.

5.2      Unless otherwise agreed to by the parties, Carreker's obligation to
pay Maintenance Fees shall be automatically renewed on an annual basis from
the date of the Guaranteed Royalty payment or any Royalty Fee payment in
excess of Guaranteed Royalties and each such Maintenance Fee shall be equal
to ten percent (10%) of each applicable prior EnAct Royalty (whether
attributable to a Guaranteed Royalty payment or a Royalty Fee payment) and
shall be paid annually in advance on the yearly anniversary date of the Enact
Royalty in question. Guaranteed Royalties that become due and payable during
any Renewal Term pursuant to Schedule D hereto shall be reduced by ten
percent (10%) of the cumulative amount of any Unearned Royalties (as defined
below) that accrue during the Initial Term or any prior Renewal Term, to the
extent that such Unearned Royalties have not already been deducted from prior
Guaranteed Royalties. "Unearned Royalties" shall mean the difference between
the total amount of EnAct Royalty paid by Carreker during the Initial Term or
during any Renewal Term less the actual amount of EnAct Royalties that would
have been paid based solely upon Royalty Fees (and not Guaranteed Royalties)
for such Initial Term or Renewal Term. In the event that a Sublicensee does
not renew its annual maintenance arrangement under its Sublicense and
Services Agreement, Xchange shall provide to Carreker a credit, prorated as
appropriate to reflect actual usage of maintenance during the period in
question, equal to 10% of the EnAct Royalty paid by Carreker attributable to
such Sublicense and Services Agreement to be applied against the Maintenance
Royalty payment component of the next scheduled Guaranteed Royalty and, if
applicable, in each Maintenance Fee payment thereafter.

5.3      Carreker is responsible for providing to Sublicensees (i) first line
support, skilled instructors and technical assistance to Sublicensees with
respect to the Software and (ii) for providing complete support, including
Consulting Services, for all other components of EnAct. Such first line
support (referred to in clause (i) of the prior sentence) shall include, but
not be limited to, answering questions about using the Software, ensuring
that the Software is used by Sublicensees in accordance with the
Documentation, and determining the origin of problems.

<PAGE>

                                     -12-

5.4      Provided that Carreker is in full compliance with the terms of this
Agreement, including without limitation the payment of all Royalty Fees and
Guaranteed Royalties, Xchange shall provide to Carreker one (1) copy of each
Update (in object code format), and to the corresponding Documentation, if
any. Carreker shall be responsible for copying and distributing Updates and
other maintenance to Sublicensees; provided, however that Carreker shall not
distribute any such Updates to any Sublicensee that is not in full compliance
with the terms of its Sublicense and Services Agreement.

5.5      In the event that Xchange performs maintenance services with respect
to the Software that, pursuant to Schedule E should have been performed by
Carreker, then Carreker will reimburse Xchange for such services that were
reasonably incurred by Xchange at Xchange's then current rates. Carreker will
also reimburse Xchange for all actual and reasonable expenses incurred in the
performance of such services.

5.6      Xchange shall use reasonable commercial efforts to provide Xchange
Services in accordance with the applicable provisions set forth on Schedule D
hereto.

6.     TRADEMARKS

6.1      Carreker shall identify itself as an authorized reseller of EnAct in
connection with all of its reselling activities which are contemplated by
this Agreement. Carreker only shall use the Trademarks in connection with the
marketing of EnAct in accordance with the terms of this Agreement. The
Trademarks shall remain the sole property of Xchange and shall inure to the
benefit of Xchange and Carreker will have no rights in such marks except as
expressly set forth herein. Carreker's use of Trademarks shall be under
Xchange's trademark policies and procedures then in effect.

6.2      Carreker shall not market EnAct in any way which implies that EnAct
is the proprietary product of Carreker or of any party other than Xchange.
Carreker shall not use, directly or indirectly, in whole or in any part
thereof, any Trademark prior to or subsequent to the term of this Agreement
or as part of Carreker's corporate or business name or in any other manner
not specified by this Agreement. Carreker shall not use any other mark likely
to cause confusion with the Trademarks as any portion of Carreker's trade
name or trademark for any products of Carreker.

6.3      Carreker agrees with respect to each Trademark, to include in each
advertisement, brochure, or other such use of the Trademark, the trademark
symbol "(R)" and the following statement:

"EnAct(R)" (or other Trademark) is a registered trademark of Exchange
Applications Inc., Boston, Massachusetts 02111

or such other or further statement as Xchange may reasonably request.

6.4      Carreker shall not remove, deface or change, or cause to be removed,
defaced or changed, as the case may be, any Documentation or any labels,
tags, packaging, serial numbers, notices, model numbers, designations or
other information or material of any kind affixed to or incorporated in any
component of Enact. All advertising copy, ideas, campaigns, programs, in
whatever form and in any media, undertaken by or on behalf of Carreker and
related in any way

<PAGE>

                                     -13-

or referring, in whole or in part, to Xchange or EnAct must be specifically
approved by Xchange, in writing, prior to dissemination to the public or any
potential Sublicensees. Carreker shall permit Xchange to make reasonable
quality control inspections with respect to the use of the Trademarks, but
Xchange shall not be liable to Carreker, Carreker's Sublicensees or others
for its failure to do so or for any defects which it discovers or could or
would have discovered by so doing.

6.5      Upon the expiration or termination of this Agreement, Carreker shall
have no further rights to use the Trademarks; and at no time shall Carreker
make any claim thereto or against the use thereof by Xchange or other duly
authorized party. Xchange shall not have any liability to Carreker for any
claims made by third parties relating to Carreker's use of the Trademarks.

7.       DUTIES AND REPRESENTATIONS OF CARREKER

7.1      Carreker covenants, represents and agrees that it will have the
personnel, knowledge and skill necessary to market and sublicense EnAct and
provide all necessary or desirable services to Sublicensees in connection
therewith, and agrees that it shall, at its sole expense:

       (i) provide Sublicensees with Consulting Services, installation
services, first line maintenance services and other assistance in the use of
EnAct complying, at a minimum, with Sections 5.1, 5.3, and 5.4 hereof;

       (ii) require its personnel to successfully complete such training on
the marketing, use, configuration, installation, and servicing of EnAct as
Xchange may, from time to time, reasonably require;

       (iii) fully comply with all product literature, user manuals or other
Documentation provided to Carreker for use with EnAct;

       (iv) keep complete and accurate records of warranty claims and
requests for maintenance services or other assistance and of actions taken in
response thereto, and promptly make available all such records to Xchange,
upon receipt of a written request;

       (v) promote, advertise and market EnAct to potential customers in the
Subject Field and within the Territory;

       (vi) avoid deceptive, misleading, illegal, or unethical practices that
may be detrimental to Xchange or to EnAct;

       (vii) not make any representations, warranties, or guarantees (oral or
written) to Sublicensees concerning EnAct that are inconsistent with or in
addition to those made in this Agreement by Xchange;

       (viii) not infringe Xchange's or any third party's copyright or other
proprietary rights in EnAct and not enter into any Sublicense and Services
Agreement that by its terms or by operation of law will abridge or infringe
upon Xchange's proprietary rights in and/or to EnAct;

       (ix) comply with all applicable federal, state, local and foreign laws
and regulations in performing its duties with respect to its performance of
this Agreement;

<PAGE>

                                     -14-

       (x) provide Quarterly reports certified by an officer of Carreker
detailing Revenues, and Royalty Fees on a Quarterly and year to date basis
and such reports shall be in the form provided by Xchange and shall include
such additional information pertaining to Revenues and Royalty Fees as
Xchange reasonably requests. Such reports shall be delivered to Xchange no
later than the 45th day after the end of the applicable Quarter or year; and

       (xi) at its own expense, keep and maintain complete and accurate books
and records concerning the Revenues and the use and marketing of EnAct during
the Term and for period of three (3) years thereafter. During the Term and
for such three (3) year period thereafter, Xchange, or its authorized
representative, shall have the right to examine and audit, at Xchange's
expense and during normal business hours, all of Carreker's books and records
which may reasonably pertain to this Agreement at Carreker's place of
business as set forth in the preamble to this Agreement. If an audit reveals
that Carreker has underpaid Royalty Fees to Xchange, due to (a)
underreporting its royalties or fees, (b) the failure of Carreker or any
Sublicensee to properly allocate revenues or fees to EnAct in a commercially
reasonable manner or (c) any other reason, Carreker shall immediately pay
such underpaid Royalty Fees plus interest as provided for in Section 3.5. If
the underpaid Royalty Fees are in excess of five percent (5%), then, in
addition to the past due fees and interest due thereon, Carreker shall pay
Xchange's reasonable costs of conducting the audit. Xchange shall be entitled
to conduct no more than two audits during any Calendar Year within the Term.

7.2      Carreker covenants and agrees that it will not use, market,
distribute, export, re-export, sell, ship or transfer EnAct or any component
thereof in violation of any applicable law, rule or regulation of the United
States, or any State of the United States or any foreign country of
applicable jurisdiction (including without limitation any United States or
foreign law, rule or regulation relating to technology export or transfer)
and it specifically agrees that it will not market, distribute, export,
re-export, sell, ship or transfer EnAct or any component thereof: (i) to any
end-user who Carreker knows or has reason to know will utilize EnAct or any
component thereof in the design, development or production of nuclear,
chemical or biological weapons; or (ii) to any end-user who has been
prohibited from participating in U.S. export transactions by any federal
agency of the U.S. Government.

8.       WARRANTIES; LIMITATIONS

8.1      Xchange warrants that (a) it has the right to license EnAct pursuant
to the terms set forth in this Agreement, (b) to the best of Xchange's
knowledge, EnAct does not infringe upon any patent, copyright, trademark,
trade secret or other proprietary right of any third party, in all cases
currently existing under the laws of the United States or any other
jurisdiction within the Territory and (c) at the time of initial delivery of
the Software (or any Update) to Carreker under this Agreement, and for a
period of one year after the delivery of such Software or Update, as the case
may be, each such copy will be a true copy of Xchange's standard version
thereof, as most recently released by Xchange and that its functionality will
materially conform to the Documentation furnished to Carreker for use
therewith.

8.2      EXCEPT AS SPECIFICALLY PROVIDED HEREIN, THE SOFTWARE IS NOT
ERROR-FREE AND IS BEING PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND AND
XCHANGE HEREBY DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED,
ORAL OR WRITTEN WITH RESPECT TO THE

<PAGE>

                                     -15-

SOFTWARE INCLUDING, WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF TITLE,
NON-INFRINGEMENT, NON-INTERFERENCE WITH ENJOYMENT, ACCURACY, SECURITY,
COMPATIBILITY, INTEGRATION, VALIDITY, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AND ALL WARRANTIES IMPLIED FROM ANY COURSE OF DEALING OR
USAGE OF TRADE. CARREKER ACKNOWLEDGES THAT EXCEPT AS EXPRESSLY PROVIDED
HEREIN NO OTHER WARRANTIES WITH RESPECT TO ENACT HAVE BEEN MADE TO CARREKER
BY OR ON BEHALF OF XCHANGE OR OTHERWISE FORM THE BASIS FOR THE BARGAIN
BETWEEN THE PARTIES.

8.3      XCHANGE'S TOTAL LIABILITY TO CARREKER FOR ANY CAUSE WHATSOEVER,
REGARDLESS OF THE FORM OF ANY CLAIM OR ACTION, SHALL NOT EXCEED THE ROYALTY
FEES PAID TO XCHANGE BY CARREKER WITH RESPECT TO THE TRANSACTIONS IN QUESTION
AND SHALL BE, TO THE EXTENT POSSIBLE, OFFSET FROM ANY GUARANTEED ROYALTIES OR
EXCESS ROYALTY FEES OWED BY CARREKER TO XCHANGE PURSUANT TO THIS AGREEMENT.
IN NO EVENT SHALL XCHANGE BE LIABLE FOR SPECIAL, PUNITIVE, INDIRECT,
INCIDENTAL, CONSEQUENTIAL OR TORT DAMAGES, INCLUDING WITHOUT LIMITATION ANY
DAMAGES RESULTING FROM LOSS OF USE, LOSS OF DATA, LOSS OF PROFITS, CLAIMS BY
THIRD PARTIES, LOSS OF BUSINESS ARISING OUT OF OR IN CONNECTION WITH THE
PERFORMANCE OF ENACT OR XCHANGE'S PERFORMANCE OF SERVICES OR OF ANY OTHER
OBLIGATIONS RELATING TO ENACT, EVEN IF XCHANGE HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF WHETHER ANY REMEDY HEREIN FAILS
OF ITS ESSENTIAL PURPOSE.

8.4      Xchange's warranties pursuant to Section 8 shall be limited to the
most current version of the Software. The sole remedy for the breach by
Xchange of the warranties set forth in Sections 8.1(a) and 8.1(b) shall be
limited to the indemnification provisions set forth in Section 9.1 below.
Xchange's obligations for breach of the warranty set forth in Section 8.1(c)
shall be limited, at Xchange's option, to corrections or replacement of that
portion of the Software which fails to conform to such warranty, a refund of
any Royalty Fees or Guaranteed Royalties paid by Carreker for the copies in
question or an offset of Royalty Fees or Guaranteed Royalties that have or
will become due and payable from Carreker for the copies in question. In no
event shall Xchange be liable for any breach of warranty unless notice
thereof is given to Xchange within one year from Xchange's delivery to
Carreker of the Software in question. Xchange shall have no liability insofar
as:

       (i) Carreker or a Sublicensee modifies the Software without the prior
written consent of Xchange;

       (ii)the Software is misused or exposed to environmental or operating
conditions beyond those specified in writing by Xchange;

       (iii) the Software is damaged, altered or affected by accident,
neglect, misuse or other abuse by other than Xchange employees or agents;

       (iv) the claimed defect or error has been caused, in whole or in part,
by persons other than Xchange or by products, equipment or computer programs
not provided by Xchange;

<PAGE>

                                     -16-

       (v) the Software is not used with the operating systems or hardware
specified in the Documentation or as otherwise specified in the Documentation.

8.5      In no event shall Xchange have any responsibility to correct any
database errors or any errors or damages caused by or arising out of hardware
defects or input errors.

8.6      Carreker shall make no representation or warranty concerning the
quality, performance or other characteristics of EnAct, or Xchange's
obligations with respect thereto, other than those which are consistent in
all respects with, and do not expand the scope of, the warranties set forth
herein. Carreker shall include in each Sublicense and Services Agreement
granting the right to use EnAct appropriate provisions effective to limit
Xchange's warranty liability as provided herein.

8.7      Provided that Carreker is in full compliance with the terms of this
Agreement, during the Initial Term or any Renewal Term, and unless otherwise
required by law, Xchange shall make no representation to customers or
prospective customers of Carreker concerning the quality, performance or
other characteristics of Carreker's performance of it obligations under this
Agreement without the consent of Carreker.

9.       INDEMNIFICATION

9.1      Except as provided in Sections 8 (other than 8.1(a) and 8.1(b)) and
9.2 and subject to Sections 9.3 and 9.4 below, Xchange will defend Carreker
against, or, at its option, settle any and all claims brought against
Carreker to the extent that such claim is based upon an assertion that EnAct
infringes any valid patent, copyright, trademark, trade secret or other
proprietary rights of a third party, in all cases currently existing under
the laws of the United States or any other jurisdiction within the Territory
and shall indemnify Carreker against any and all costs, damages, and expenses
(including, without limitation, reasonable attorneys' fees) finally awarded
against Carreker as a direct result of any such claim

9.2      Xchange shall have no liability for and, subject to Section 9.3
below, Carreker will, at its own expense defend Xchange against, or at its
own option settle, (i) any claims for any infringement based upon (a)
combination of EnAct with other products or services not furnished by Xchange
or (b) any addition to or modification of EnAct made after delivery of EnAct
to Carreker by any person other than Xchange, to the extent that such
infringement is caused in whole or in part by the combination, addition or
modification, (ii) any claims arising out of the use of a superseded or
altered release of EnAct if the infringement would have been avoided by the
use of a current or unaltered release of EnAct that Xchange provides to
Carreker; (iii) any claims arising out of the combination, operation or use
of any component of EnAct furnished under this Agreement with software,
hardware or other materials not furnished by Xchange if such infringement
would have been avoided by the use of EnAct without such software, hardware
or other materials and (iv) any claims arising out of or relating to any
breach by Carreker of this Agreement or any representations or warranties
made by Carreker which are inconsistent with, in addition to or beyond the
scope of those provided by Xchange in this Agreement; and Carreker shall
indemnify Xchange against any and all costs, damages, and expenses
(including, without limitation, reasonable attorneys' fees) finally awarded
against Xchange as a direct result of any such claim.

<PAGE>

                                     -17-

9.3      The rights of either party (the "Indemnified Party") to the
indemnification from the other party (the "Indemnifying Party") set forth in
Sections 9.1 and 9.2 above are subject to the Indemnifying Party receiving
from the Indemnified Party (i) prompt written notice of any such claim (but
failure to give such prompt notice shall not be a disqualification to
indemnification unless such failure results in material and permanent
prejudice to the defense of the claim), and (ii) all reasonable requested
assistance, in the defense or settlement of such claim or suit. The
Indemnifying Party shall provide reimbursement for out of pocket expenses
incurred by the Indemnified Party in providing requested assistance
hereunder. The Indemnifying Party shall be given the full and complete
authority and control of the defense or any negotiated settlement relative to
the subject matter of this Section 9.3; provided that the (a) Indemnified
party shall be entitled to appear, at its own expense, at any hearing or
proceeding related thereto and (b) any settlement or resolution entered into
by the Indemnifying Party must completely release the Indemnified Party from
the Indemnifying Party all liability related to the claim. In no event shall
the Indemnifying Party be responsible for the settlement of any claim by
entered into by the Indemnified Party unless such party (i) was given full
notice of the terms and conditions of the settlement and (ii) has expressed
its approval to such settlement in writing.

9.4      Should EnAct or any part thereof become, or in Xchange's opinion be
likely to become, the subject of a claim of infringement, Xchange shall use
reasonable commercial efforts to either procure for Carreker and its
Sublicensees the right to continue using EnAct or replace or modify EnAct to
make it non-infringing. In the event that Xchange is unable to procure such
rights or make such replacements or modifications by reasonable commercial
efforts, Xchange shall have the option to terminate this Agreement or any
relevant Sublicense and Services Agreements issued for the infringing
components of EnAct and provide a refund of the applicable Guaranteed
Royalties or Royalty Fees paid to Xchange by Carreker related thereto in an
amount that is fair and equitable under the circumstances and is depreciated
over a period of three (3) years.

9.5      This Section 9 states the entire liability of Xchange and the sole
and exclusive remedy of Carreker with respect to any claim of infringement by
EnAct or any other claim referred in this Section 9 brought against Carreker
by any Sublicensee, or brought against Carreker or any Sublicensee by a third
party.

10.      PROTECTION OF PROPRIETARY RIGHTS

10.1     Carreker acknowledges that the Proprietary Material is confidential
and constitutes valuable assets of Xchange or of a third party licensor of
Xchange. Carreker shall not use any Proprietary Material for any purpose not
specifically authorized in this Agreement, shall hold such Proprietary
Material in confidence and shall not disclose any Proprietary Material
licensed hereunder to any third parties.

10.2     Carreker shall limit access to Proprietary Material to those
employees whose use of or access to the Proprietary Material is necessary to
Carreker's use of EnAct. Carreker has entered or will enter into appropriate
written agreements with its employees to prevent the unauthorized use,
disclosure or copying of any Proprietary Material and shall take all
necessary precautions to protect and maintain the confidentiality of the
Proprietary Material, including at a minimum, those precautions Carreker
employs to protect its own confidential information. Carreker shall not
disclose, publish, display or otherwise make available to any person any of
the Proprietary Material or copies thereof without Xchange's prior written
consent. Carreker shall not duplicate,

<PAGE>

                                     -18-

copy or reproduce any of the Proprietary Material, except with the prior
written consent of Xchange.

10.3     Carreker shall not remove any copyright or other proprietary rights
notice included in any Proprietary Material and shall reproduce all such
notices on any copies of Proprietary Material which Carreker may make.

10.4     All title, copyright and other proprietary rights to all Proprietary
Material furnished by Xchange to Carreker and in all copies made by Carreker
shall be retained by Xchange or of its third party licensor.

10.5     Carreker shall provide to Xchange prompt notice and a complete
description (including copies of any related software or other materials) of
any New Development. All New Developments shall be deemed works for hire and
shall be owned exclusively by Xchange. In the event that under any applicable
law a New Development fails to constitute a work for hire, Carreker hereby
irrevocably assigns and transfers to Xchange, free from all liens and other
encumbrances, any and all title, rights and interests that it shall have or
come to have in any such New Development. If any part of a New Development
does not constitute a work for hire and is prohibited from assignment under
applicable law, then Carreker hereby grants to Xchange an exclusive,
transferable, perpetual, royalty free license (with the right to sublicense)
to make, use, copy, distribute, license, create derivative works from and
otherwise to exploit and enjoy in any way any such New Development or portion
thereof. At the end of the Term, Carreker shall have a perpetual,
non-exclusive, nontransferable, non-assignable, royalty free license to use
and sublicense any New Development that it creates independently or jointly
with a third party; provided, however, that (a) any such use or sublicense
shall be restricted to the New Development and shall not include any other
portion of EnAct and (b) any such sublicenses shall only be to end users.

10.6     Except as expressly permitted in Section 2.9, Carreker agrees that
it shall not cause or permit the reverse engineering, reverse assembly or
reverse compilation of the Proprietary Material. Carreker agrees not to use,
or to permit others to use, any Proprietary Material for the purpose of
creating, improving or otherwise assisting in the development and/or
marketing of any product which performs functions similar to, or competitive
with, EnAct. Carreker shall not disclose the results of any benchmark tests
or other evaluation of the Software to any third party without Xchange's
prior written consent.

10.7     Carreker shall notify Xchange promptly of any infringement,
unauthorized possession, disclosure, or use of Xchange's EnAct or any
Proprietary Materials by any Sublicense or other party or any violation of
the confidentiality or Software use provisions included in any Sublicense and
Services Agreement of which Carreker is aware. Xchange shall have the right,
in its sole discretion, to proceed against any party, including any
Sublicensee, with respect to any infringement, unauthorized possession,
disclosure, or use of EnAct or any Proprietary Materials and all damages
recovered in such action shall be payable solely to Xchange. Carreker shall
fully cooperate with Xchange at no cost to Xchange (except for reasonable out
of pocket costs) in all stages of any such action. Upon the request of
Xchange, Carreker will take such reasonable actions as Xchange may request
(including instituting and prosecuting appropriate legal proceedings) to
enforce the provisions of any Sublicense and Services Agreements and to
prevent or remedy any infringement, unauthorized possession, disclosure or
use of EnAct or Xchange's Proprietary Material by a Sublicensee. Xchange
shall bear the costs of any such action by

<PAGE>

                                     -19-

Carreker against any Sublicensee and shall be entitled to any and all damages
collected as a result thereof and such damages shall not act to reduce,
offset or refund any Guaranteed Royalties or Royalty Fees.

10.8     Carreker acknowledges that any breach of its obligations with
respect to proprietary rights of Xchange will cause Xchange irreparable
injury for which there are inadequate remedies at law and that Xchange shall
be entitled to equitable relief in addition to all other remedies available
to it.

10.9     Carreker understands and agrees that the Software is licensed by
Xchange for use by Sublicensees only in the Territory and that in addition to
the restrictions on the non-transferability of the Software agreed elsewhere
herein, Sublicensees may not move, remove or transmit the Software from such
location. This Agreement and the Software are subject to any and all clauses,
regulations, orders or other restrictions relative to export, re-export, or
redistribution of the Software and its components that may now or in the
future be imposed by the government of the United States or any agency
thereof (including without limitation the U.S. Department of Commerce).

11.      NON-SOLICITATION; NON-COMPETITION

11.1     During the Term and for a period of twenty-four (24) months
thereafter, neither party shall recruit or hire any employees of the other
party without the prior written consent of such other party except that
Carreker may recruit or hire the persons listed on Schedule G hereto. This
shall in no way, however, be construed to restrict, limit or encumber the
rights of any employee granted by law. In the event that all or any of the
persons listed on Schedule G hereto become employees or Carreker, Xchange
shall have the right to utilize such employees pursuant to a mutually agreed
to consulting agreement to be entered into between the parties. As to former
employees of Xchange that were also employees of Customer Analytics, Inc. or
Action Systems, Inc. prior to becoming employees of Xchange, Xchange agrees
to waive any prohibitions on such former employees accepting employment with
Carreker.

11.2     For the period commencing on the Effective Date and ending on the
later of (i) eighteen (18) months after the Effective Date or (ii) six (6)
months after the end of the Term, Carreker shall not market, advertise, sell,
resell, distribute, license, sublicense or otherwise provide or offer to
provide any products or services competitive with EnAct to any user, or
potential user, in the world within or without the Territory. If at any time
the provisions of this Section 11.2 shall be determined to be invalid or
unenforceable, by reason of being vague or unreasonable as to area, duration
or scope of activity, this Section 11.2 shall be considered divisible and
shall become and be immediately amended to only such area, duration and scope
of activity as shall be determined to be reasonable and enforceable by the
court or other body having jurisdiction over the matter; and Carreker agrees
that this Section 11.2 as so amended shall be valid and binding as though any
invalid or unenforceable provision had not been included herein.

12.      GENERAL

12.1     This Agreement and the Schedules and Exhibits attached hereto set
forth the entire agreement between the parties concerning the subject matter
hereof and supersedes all other agreements or understandings, written or
oral, relating thereto. No representation, promise, inducement or statement
of intention has been made by either party which is not set forth in this

<PAGE>

                                     -20-

Agreement and neither shall be bound by or liable for any alleged
representation, promise, inducement or statement of intention not so set
forth. No amendment or modification of this Agreement or any provision hereof
shall be binding upon any party hereto unless made in writing and signed by
the parties.

12.2     This Agreement shall be binding upon, and inure to the benefit of,
the parties and their respective successors, legal representatives, and
permitted assigns; provided, however, that this Agreement is personal to both
Carreker and Xchange.

12.3     This Agreement may not be assigned, sublicensed or otherwise
transferred by either party to any third party other than as provided herein
without the prior written consent of the other party; provided, however, that
the consent of Carreker shall not be required in that event that this
Agreement is assigned by Xchange to a purchaser of all, or substantially, all
its assets or equity. Any attempt by either party to assign, sublicense or
transfer the Software, this Agreement, or any of the rights or duties
contained herein other than as specifically set forth in this Section 12.3
shall be void.

12.4     Carreker shall for all purposes hereunder be an independent
contractor. This Agreement is not intended in any way to create the
relationship of employer and employee or principal and agent between Xchange
and Carreker and under no circumstances shall Carreker be considered an
employee or agent of Xchange. Carreker shall have no authority to vary, alter
or enlarge any of Xchange's obligations hereunder or to make representations,
warranties or guarantees on behalf of Xchange. Carreker shall make all
agreements with Sublicensees respecting EnAct in its own name and for its own
account and risk, and shall establish its own prices. Nothing in this
Agreement shall be construed to establish a relationship of co-partners or
joint ventures between the parties.

12.5     During the Initial Term and any Renewal Term of this Agreement,
Carreker shall be a member of the Xchange Alliance program and Xchange shall
provide such management and resources as it, in its sole discretion, deems
adequate to coordinate the relationship of the parties pursuant to this
Agreement. For the Initial Term and any Renewal Term, the CEO or other
officer of Xchange shall provide to Carreker a Quarterly briefing regarding
EnAct and any developments related thereto and Carreker shall be permitted
one seat on each of Xchange's Executive Advisory Board and Product Advisory
Board.

12.6     No waiver of any default hereunder shall operate as a waiver of any
other default or of a similar default on a future occasion. No waiver of any
term or condition hereof shall be effective unless the same shall be in
writing and signed by an authorized representative of the party waiving such
term or condition. No remedy referred to in this Agreement is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
referred to herein or otherwise available at law or in equity.

12.7     All notices to be given hereunder shall be in writing and shall be
sent by registered or certified mail, postage prepaid, duly addressed to the
to the Presidents of the respective parties at the addresses on the first
page hereof or to such other address as may be specified by written
notification sent to the other party. All notices shall be effective when
received.

12.8     Neither Xchange nor Carreker shall be liable for any delays in their
performance of any of its obligations hereunder due to causes beyond its
reasonable control, including, but not limited

<PAGE>

                                     -21-

to, fire, strike, war, riots, acts of any civil or military authority, acts
of God, judicial action, unavailability or shortages of materials or
equipment, failures or delays in delivery of vendors and suppliers or delays
in transportation.

12.9     Each party hereto agrees that it will not make any public disclosure
of the existence of this Agreement, any of its terms or any information
concerning the transactions contemplated herein without the prior consent of
the other party hereto. Notwithstanding the foregoing, no such consent shall
be required in the event that any disclosure is required by applicable law,
rule or regulation; provided, however, that with respect to any press release
required by any rules or regulations of the Securities and Exchange
Commission, the disclosing party shall provide the other party with a copy of
such release within a reasonable time prior to such disclosure.

12.10    This Agreement shall be governed by, and construed and enforced
with, the substantive law of the State of New York. The United Nations
Convention on Contracts for the International Sale of Goods shall not apply
to any of the transactions contemplated by this agreement. Any legal action
brought by either party against the other shall only be brought in a state
court of New York or the U.S. Federal District Court in New York. Distributor
hereby acknowledges, covenants and agrees that Xchange's execution of this
Agreement and any and/or all of Xchange's activities contemplated by this
Agreement shall not constitute, either individually or taken in whole or in
part, submission by Xchange to the jurisdiction of any country or State in
the Territory, as the case may be, or to any court located therein.

12.11    This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Execution and delivery of this Agreement by
facsimile transmission shall constitute execution and delivery of this
Agreement for all purposes, with the same force and effect as execution and
delivery of an original manually signed copy hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers or representatives as of the date
first written above.

CARREKER CORPORATION                       EXCHANGE APPLICATIONS, INC.

Signature: /s/ George Noga                 Signature: /s/ F. Daniel Haley
          -------------------------                  ------------------------
Name:     George Noga                      Name:     F. Daniel Haley
          -------------------------                  ------------------------
Title:    Senior Vice President and        Title:    Chief Strategy Officer
          Managing Director
          -------------------------                  ------------------------
Date:     March 31, 2001                   Date:     March 31, 2001
          -------------------------                  ------------------------

<PAGE>

                                     -22-

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