Document:

Amendment #1 to Credit and Security Agreement

Exhibit 10.21 
 
AMENDMENT NO. 1 TO THE CREDIT AGREEMENT AND SECURITY AGREEMENT 
 
Amendment No. 1 dated as of December 19, 2002 (this
“Amendment”) to (i) the Credit Agreement dated as of June 21, 2002 (as amended, supplemented and otherwise modified through the date hereof, the “Credit Agreement”) among Advanced Medical Optics, Inc.,
a Delaware corporation (the “Borrower”), each Lender from time to time party thereto, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ML&Co.”), as Syndication
Agent, ABN AMRO Bank N.V., as Documentation Agent, Bank of America, N.A., as Administrative Agent, Foreign Currency Fronting Lender and L/C Issuer, and ML&Co. and Banc of America Securities LLC, as Co-Lead Arrangers, and (ii) to the Security
Agreement referred to in the Credit Agreement. Capitalized terms not otherwise defined in this Amendment shall have the same meanings as specified therefor in the Credit Agreement. 
 
PRELIMINARY STATEMENTS 
 
(1) The Borrower has requested that the Lenders agree to amend and otherwise modify the Credit Agreement and
the other Loan Documents as set forth in this Amendment. 
 
(2) The Lenders have indicated their willingness to agree to so amend and otherwise modify the Credit Agreement and the other Loan Documents, but only on the terms and subject to the satisfaction of the conditions set forth herein.

 
NOW, THEREFORE, in consideration of the
premises and of the mutual covenants and agreements contained herein and in the Loan Documents, the parties hereto hereby agree as follows: 
 
SECTION 1. Amendments to Certain Provisions of the Credit Agreement. The Credit Agreement is, upon the occurrence of the Amendment
Effective Date (as hereinafter defined), hereby amended as follows: 
 
(a) Section 1.01 of the Credit Agreement is hereby amended by amending and restating in its entirety the following definition to read as follows: 
 
“Consolidated Senior
Indebtedness” means, as of any date of determination, for the Borrower and its Subsidiaries on a Consolidated basis, the sum of (a) the Revolving Credit Outstandings, (b) the Term Outstandings and (c) all other Indebtedness described in
clauses (a), (b) (other than with respect to contingent obligations), (d) and (f) of the definition of Indebtedness which has not been subordinated to other Indebtedness. 
 
(b) Section 2.06(a) of the Credit Agreement is hereby amended by replacing the phrase
“each Fiscal Year” appearing in the first line thereof with the phrase “each Fiscal Year beginning with the Fiscal Year ending December 31, 2003”. 
 
(c) Notwithstanding the limitations contained in Section 2.06(b) of the Credit Agreement, the
Borrower shall, immediately upon receipt of any Net Cash Proceeds of a Disposition of any interest held by it in SIS Group, Vision Web, Inc. or Vision Web Holdings, LLC, prepay the Loans and Cash Collateralize the L/C Obligations by an amount equal
to such Net Cash Proceeds. 
 
(d)
Section 6.02(b) of the Credit Agreement is hereby amended by adding the phrase “beginning with the fiscal quarter ending September 30, 2002,” to the beginning of such Section, and 
 

 
any
requirement of delivery of a Compliance Certificate prior to the fiscal quarter ending September 30, 2002 is hereby waived. 
 
(e) Section 6.21 of the Credit Agreement is hereby amended by replacing the phrase “Pledged Shares” appearing
therein with the phrase “Pledged Equity”. 
 
(f) Section 7.05(e) of the Credit Agreement is hereby amended by replacing the phrase “10 years” appearing therein with the phrase “15 years”. 
 
(g) Section 7.12 of the Credit Agreement is hereby amended by replacing the amounts set forth
opposite the periods “Fiscal Year 2003”, “Fiscal Year 2004” and “Fiscal Year 2005”, with the amounts “$25,000,000”, “$20,000,000” and “$17,500,000”, respectively. 
 
(h) Section 7.13 of the Credit Agreement is
hereby amended by replacing the amount “$10,000,000” appearing therein with the amount “$13,000,000”. 
 
SECTION 2. Amendments to the Security Agreement. Upon the occurrence of the Amendment Effective Date, Schedule II to the Security
Agreement is hereby amended and restated in its entirety to read as set forth in Annex A hereto. 
 
SECTION 3. Conditions Precedent to the Effectiveness of This Amendment. This Amendment (other than Sections 1 and 2) shall become effective as of the first date on which the Administrative Agent
shall have received counterparts of this Amendment executed by the Borrower and the Required Lenders or, as to any of the Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Amendment. Sections 1 and 2 of this
Amendment shall become effective as of the first date (the “Amendment Effective Date”) on which, and only if, each of the following conditions precedent shall have been satisfied (with the execution and delivery hereof by the
Borrower constituting a representation and warranty by the Borrower as to the matters set forth in clauses (b) and (c) below): 
 
(a) The Administrative Agent shall have received the Consent attached hereto executed by the Borrower and AMO Holdings,
LLC. 
 
(b) The representations and
warranties contained in each of the Loan Documents shall be true and correct in all material respects on and as of the Amendment Effective Date, after giving effect to this Amendment, as though made on and as of such date (except for any such
representation and warranty that, by its terms, refers to a specific date other than the Amendment Effective Date, in which case as of such specific date). 
 
(c) After giving effect to this Amendment, no event shall have occurred and be continuing or shall result from the
effectiveness of this Amendment that constitutes a Default. 
 
(d) All of the accrued fees (including an amendment fee as agreed to between the Borrower and the Administrative Agent on behalf of the Lenders) and expenses of the Administrative Agent (including the
accrued fees and expenses of counsel for the Administrative Agent in connection with the closing and post-closing matters related to the Credit Agreement and in connection herewith) that are then due and payable shall have been paid in full.

 
This Amendment is subject to the provisions of Section 10.01 of
the Credit Agreement, except that no amendment or waiver of any provision of this Section 3, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrower and
the Required Lenders. 
 

SECTION 4. Reference to and Effect on the Loan Documents. (a) On and after the
Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the Notes
and each of the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit
Agreement, as amended by this Amendment. 
 
(b) On
and after the Amendment Effective Date, each reference in the Security Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Security Agreement, and each
reference in the Credit Agreement and each of the other Loan Documents to “the Security Agreement”, “thereunder”, “thereof” or words of like import referring to the Security Agreement, shall mean
and be a reference to the Security Agreement, as amended by this Amendment. 
 
(c) The Credit Agreement, the Notes and each of the other Loan Documents, as amended by Sections 1 and 2, are and shall continue to be in full force and effect and are hereby in all respects ratified
and confirmed. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any of the Secured Parties or the Administrative Agent under any of the
Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. 
 
SECTION 5. Costs and Expenses. The Borrower hereby agrees to pay, upon demand, all of the reasonable costs and expenses of the Administrative Agent (including, without limitation, the reasonable
fees and expenses of counsel for the Administrative Agent) in connection with the preparation, execution, delivery, administration, modification and amendment of this Amendment and all of the agreements, instruments and other documents delivered or
to be delivered in connection herewith, all in accordance with the terms of Section 10.04 of the Credit Agreement. 
 
SECTION 6. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of this Amendment. 
 
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 
 

SECTION 7. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York. 
 
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers, thereunto duly authorized, as of the date first written above. 
 

	 THE BORROWER
  

ADVANCED MEDICAL OPTICS, INC.

	
	 By:
	 	 /s/    RICHARD A. MEIER

	 	 	 Name: Richard A. Meier
 Title: CVP & CFO

 
 
 
 

	 BANK OF AMERICA, N.A.,
 as Administrative Agent

	
	 By:
	 	 /s/    GARY FLIEGER

	 	 	 Name: Gary Flieger
 Title: Vice President

 

 
THE LENDERS

 

	 BANK OF AMERICA, N.A., as a Lender
	 	 	 	 UNION BANK OF CALIFORNIA, N.A.

	
	 By
	 	 /s/    LARRY GORDON

	 	 	 	 By:
	 	 /s/    STEPHEN W. DUNNE

	 	 	 Name: Larry Gordon
	 	 	 	 	 	 Name: Stephen W. Dunne

	 	 	 Title:   Principal
	 	 	 	 	 	 Title:   Vice President

 

	 BANK ONE, NA
	 	 	 	 MERRILL LYNCH CAPITAL CORP

	
	 By
	 	 /s/    JOSEPH PERDENZA

	 	 	 	 By:
	 	 /s/    MICHAEL E. O’BRIEN

	 	 	 Name: Joseph Perdenza
	 	 	 	 	 	 Name: Michael E. O’Brien

	 	 	 Title:   Director
	 	 	 	 	 	 Title:   Vice President

 

	 SENIOR DEBT PORTFOLIO, By Boston Management and Research, as Investment Advisor
	 	 	 	 EATON VANCE SENIOR INCOME TRUST, By Eaton Vance Management, as Investment Advisor

	
	 By
	 	 /s/    SCOTT H. PAGE

	 	 	 	 By
	 	 /s/    SCOTT H. PAGE

	 	 	 Name: Scott H. Page
	 	 	 	 	 	 Name: Scott H. Page

	 	 	 Title:   Vice President
	 	 	 	 	 	 Title:   Vice President

 

	 EATON VANCE INSTITUTIONAL SENIOR LOAN FUND, By Eaton Vance Management, as Investment Advisor
	 	 	 	 OXFORD STRATEGIC INCOME FUND, By Eaton Vance Management, as Investment Advisor

	
	 By
	 	 /s/    SCOTT H. PAGE

	 	 	 	 By
	 	 /s/    SCOTT H. PAGE

	 	 	 Name: Scott H. Page
	 	 	 	 	 	 Name: Scott H. Page

	 	 	 Title:   Vice President
	 	 	 	 	 	 Title:   Vice President

 

	 EATON VANCE CDO III, LTD., By Eaton Vance Management, as Investment Advisor
	 	 	 	 EATON VANCE CDO IV, LTD., By Eaton Vance Management, as Investment Advisor

	
	 By
	 	 /s/    SCOTT H. PAGE

	 	 	 	 By
	 	 /s/    SCOTT H. PAGE

	 	 	 Name: Scott H. Page
	 	 	 	 	 	 Name: Scott H. Page

	 	 	 Title:   Vice President
	 	 	 	 	 	 Title:   Vice President

 

	 COSTANTINUS EATON VANCE CDO V, LTD., By Eaton Vance Management, as Investment Advisor
	 	 	 	 GRAYSON & CO., By Boston Management and Research, as Investment Advisor

	
	 By
	 	 /s/    SCOTT H. PAGE

	 	 	 	 By
	 	 /s/    SCOTT H. PAGE

	 	 	 Name: Scott H. Page
	 	 	 	 	 	 Name: Scott H. Page

	 	 	 Title:   Vice President
	 	 	 	 	 	 Title:   Vice President

 

	 BIG SKY SENIOR LOAN FUND, LTD., By Eaton Vance Management, as Investment Advisor
	 	 	 	 ARES VI CLO LTD.

	
	 By
	 	 /s/    SCOTT H. PAGE

	 	 	 	 By:
	 	 /s/    JEFF MOORE

	 	 	 Name: Scott H. Page
	 	 	 	 	 	 Name: Jeff Moore

	 	 	 Title:   Vice President
	 	 	 	 	 	 Title:   Vice President

 

	 PUTNAM DIVERSIFIED INCOME TRUST
	 	 	 	 PUTNAM MASTER INCOME TRUST

	
	 By
	 	 /s/    BETH MAZER

	 	 	 	 By
	 	 /s/    BETH MAZER

	 	 	 Name: Beth Mazer
	 	 	 	 	 	 Name: Beth Mazer

	 	 	 Title:   VP
	 	 	 	 	 	 Title:   VP

 

	 PUTNAM MASTER INTERMEDIATE INCOME TRUST
	 	 	 	 PUTNAM PREMIER INCOME TRUST

	
	 By
	 	 /s/    BETH MAZER

	 	 	 	 By
	 	 /s/    BETH MAZER

	 	 	 Name: Beth Mazer
	 	 	 	 	 	 Name: Beth Mazer

	 	 	 Title:   VP
	 	 	 	 	 	 Title:   VP

 

	 PUTNAM VARIABLE TRUST – PVT DIVERSIFIED INCOME FUND
	 	 	 	 CHARTER VIEW PORTFOLIO, By INVESCO Senior Secured Management, Inc., as Investment
Adviser

	
	 By
	 	 /s/    BETH MAZER

	 	 	 	 By
	 	 /s/    THOMAS H. B. EWALD

	 	 	 Name: Beth Mazer
	 	 	 	 	 	 Name: Thomas H. B. Ewald

	 	 	 Title:   VP
	 	 	 	 	 	 Title:   Authorized Signatory

 

	 DIVERSIFIED CREDIT PORTFOLIO LTD., By INVESCO Senior Secured Management, Inc., as Investment
Adviser
	 	 	 	 INVESCO EUROPEAN CDO I S.A., By INVESCO Senior Secured Management, Inc., as Collateral
Manager

	
	 By
	 	 /s/    THOMAS H. B. EWALD

	 	 	 	 By
	 	 /s/    THOMAS H. B. EWALD

	 	 	 Name: Thomas H. B. Ewald
	 	 	 	 	 	 Name: Thomas H. B. Ewald

	 	 	 Title:   Authorized Signatory
	 	 	 	 	 	 Title:   Authorized Signatory

 

	 SARATOGA CLO I, LIMITED, By INVESCO Senior Secured Management, Inc., as Asset Manager
	 	 	 	 SEQUILS-LIBERTY, LTD., By INVESCO Senior Secured Management, Inc., as Collateral Manager

	
	 By
	 	 /s/    THOMAS H. B. EWALD

	 	 	 	 By
	 	 /s/    THOMAS H. B. EWALD

	 	 	 Name: Thomas H. B. Ewald
	 	 	 	 	 	 Name: Thomas H. B. Ewald

	 	 	 Title:   Authorized Signatory
	 	 	 	 	 	 Title:   Authorized Signatory

 

	 BRYN MAWR CLO, Ltd., By Deerfield Capital Management LLC as its Collateral Manager
	 	 	 	 ROSEMONT CLO, Ltd., By Deerfield Capital Management LLC as its Collateral Manager

	
	 By
	 	 /s/    DALE BURROW

	 	 	 	 By
	 	 /s/    DALE BURROW

	 	 	 Name: Dale Burrow
	 	 	 	 	 	 Name: Dale Burrow

	 	 	 Title:   Senior Vice President
	 	 	 	 	 	 Title:   Senior Vice Presiden

 

	 SEQUILS-CUMBERLAND I, LTD., By Deerfield
 Capital Management LLC as its Collateral Manager
	 	 	 	 OCTAGON INVESTMENT PARTNERS II, LLC,
 By Octagon Credit Investors, LLC, as sub-investment manager

	
	 By:
	 	 /s/    DALE BURROW

	 	 	 	 By:
	 	 /s/    ANDREW D. GORDON

	 	 	 Name: Dale Burrow
 Title:   Senior Vice President
	 	 	 	 	 	 Name: Andrew D. Gordon
 Title:   Portfolio Manager

 

	 OCTAGON INVESTMENT PARTNERS IV., LTD.,
 By Octagon Credit Investors, LLC, as collateral manager
	 	 	 	 OCTAGON INVESTMENT PARTNERS V, LTD.,
 By Octagon Credit Investors, LLC, as Portfolio Manager

	
	 By:
	 	 /s/    ANDREW D. GORDON

	 	 	 	 By:
	 	 /s/    ANDREW D. GORDON

	 	 	 Name: Andrew D. Gordon
 Title:   Portfolio Manager
	 	 	 	 	 	 Name: Andrew D. Gordon
 Title:   Portfolio Manager

 

	 JUPITER LOAN FUNDING LLC
	 	 	 	 WINGED FOOT FUNDING TRUST

	
	 By:
	 	 /s/    DIANA L. MUSHILL

	 	 	 	 By:
	 	 /s/    DIANA L. MUSHILL

	 	 	 Name: Diana L. Mushill
 Title:   Asst. Vice President
	 	 	 	 	 	 Name: Diana L. Mushill
 Title:   Authorized Agent

 

	 OLYMPIC FUNDING TRUST, SERIES 1999-1
	 	 	 	 MUIRFIELD TRADING LLC

	
	 By:
	 	 /s/    DIANA L. MUSHILL

	 	 	 	 By:
	 	 /s/    DIANA L. MUSHILL

	 	 	 Name: Diana L. Mushill
 Title:   Authorized Agent
	 	 	 	 	 	 Name: Diana L. Mushill
 Title:   Asst. Vice President

 

	 CENTURION CDO VI, LTD., By American Express Asset Management Group, Inc., as Collateral
Manager
	 	 	 	 SEQUILS – CENTURION V, LTD., By American Express Asset Management Group, Inc., As Collateral
Manager

	
	 By:
	 	 /s/    LEANNE STAVRAKIS

	 	 	 	 By:
	 	 /s/    LEANNE STAVRAKIS

	 	 	 Name: Leanne Stavrakis
 Title:   Director – Operations
	 	 	 	 	 	 Name: Leanne Stavrakis
 Title:   Director – Operations

 

	 AURUM CLO 2002-1 LTD., By Stein Roe & Farnham Incorporated, as Investment Manager
	 	 	 	 LANDMARK II CDO LIMITED, By Aladdin Asset Management LLC, as Manager

	
	 By:
	 	 /s/    KATHLEEN A. ZARN

	 	 	 	 By:
	 	 /s/    JOSEPH MORONEY

	 	 	 Name: Kathleen A. Zarn
 Title:   Senior Vice President
	 	 	 	 	 	 Name: Joseph Moroney, CFA
 Title:   Authorized Signatory

 

	 KZH CNC LLC
	 	 	 	 KZH STERLING LLC

	
	 By:
	 	 /s/    ROWENA SMITH

	 	 	 	 By:
	 	 /s/    ROWENA SMITH

	 	 	 Name: Rowena Smith
 Title:   Authorized Agent
	 	 	 	 	 	 Name: Rowena Smith
 Title:   Authorized Agent

 

 

	 ADDISON CDO, LIMITED (#1279), By Pacific Investment Management Company LLC, as its Investment
Advisor
	 	 	 	 CAPTIVA IV FINANCE LTD (Acct. 1275), as advised by Pacific Investment Management Company
LLC

	
	 By:
	 	 /s/    MOHAN V. PHANSALKAR

	 	 	 	 By:
	 	 /s/    DAVID DYER

	 	 	 Name: Mohan V. Phansalkar
 Title:   Executive Vice President
	 	 	 	 	 	 Name: David Dyer
 Title:   Director

 

	 INTERCONTINENTAL CDO S.A. (#1284), By Pacific Investment Management Company LLC, as its Investment
Advisor
	 	 	 	 JISSEKIKUU FUNDNIG, LTD. (#1288), By Pacific Investment Management Company LLC, as its Investment
Advisor

	
	 By:
	 	 /s/    MOHAN V. PHANSALKAR

	 	 	 	 By:
	 	 /s/    MOHAN PHANSALKAR

	 	 	 Name: Mohan V. Phansalkar
 Title:   Executive Vice President
	 	 	 	 	 	 Name: Mohan V. Phansalkar
 Title:   Executive Vice President

 

	 SEQUILS-MAGNUM, LTD (#1280), By Pacific Investment Management Company LLC, as its Investment
Advisor
	 	 	 	 WRIGLEY CDO, LTD. (#1285), By Pacific Investment Management Company LLC, as its Investment
Advisor

	
	 By:
	 	 /s/    MOHAN V. PHANSALKAR

	 	 	 	 By:
	 	 /s/    MOHAN PHANSALKAR

	 	 	 Name: Mohan V. Phansalkar
 Title:   Executive Vice President
	 	 	 	 	 	 Name: Mohan V. Phansalkar
 Title:   Executive V. Vice PresidentEXHIBIT 10.2

                AMENDMENT TO ASSIGNMENT AND ASSUMPTION AGREEMENT

         THIS  AMENDMENT TO ASSIGNMENT  AND  ASSUMPTION  AGREEMENT  (hereinafter
referred to as the "Amending  Agreement") is entered into as of this 13th day of
August 2002,  by and between  Stage Coach  Investments  Ltd.  Liability  Co. (on
behalf of  Mariano  Decola,  William  Howdon  and their  assigns),  and R. James
Nicholson (collectively  hereinafter referred to as "Assignor");  Matrix Funding
Corp., a Colorado  corporation,  (hereinafter  referred to as  "Assignee"),  and
Nicholson Enterprises, Inc.(hereinafter referred to as "NEI")

                                    RECITALS

         WHEREAS,  on the  twentieth  day of June,  1996  Assignor  and Assignee
entered  into  an  agreement  titled   "Assignment  and  Assumption   Agreement"
(hereinafter  referred  to as  the  "Initial  Agreement")  for  the  purpose  of
assigning certain real property  interests to promote the development of certain
real  property  located  in the city of Fort  Lupton,  County of Weld,  State of
Colorado,  and more fully  described  in that  certain  Fort  Lupton Golf Course
Residential and Planned Unit Development Agreement,  (hereinafter referred to as
the "PUD Agreement") dated November 28, 1995; and

         WHEREAS,  the parties to the Initial Agreement have, over the past five
years,  diligently pursued the development of the property to the PUD agreement,
such property now commonly known as Coyote Creek (hereinafter referred to as the
"Project"); and

         WHEREAS, since the execution of the Initial Agreement, the Assignor and
Assignee  have  agreed to  certain  clarifications  to the terms of the  Initial
Agreement which they desire to record herein.

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

         1.  Preferred  Return  Calculation.  The Preferred  Return  required in
Paragraph  6  of  the  Initial  Agreement,  shall  be  computed  upon  the  Farm
Acquisition  Costs  ($1,300,000)  and up to an additional Five Hundred  Thousand
dollars ($500,000) deposited into the Development Account which amount is agreed
by the parties to be in the amount of $1,800,000 and is the total subject to the
preferred  return.(hereinafter  referred to as the "Preferred  Capital Amount").
The Preferred Return shall be calculated  annually on the average annual balance
of the Preferred Capital Amount on December 31 of each year.

<PAGE>

         2. Funds Advanced by Matrix in excess of the Preferred  Capital Amount.
Any  funds  advanced  by  Matrix  in  excess  of the  Preferred  Capital  Amount
(hereinafter referred to as the "Excess Funds") shall be treated as a commercial
loan in support of the  Project and shall  accrue  interest at 1% over the prime
rate as published by the Wall Street Journal. Interest and principal paid on the
Excess Funds shall be charged as a Project Cost.  Funds that Matrix  anticipates
to advance pursuant to the proposed  settlement  agreement with the city of Fort
Lupton for purchase of prepaid Golf Course  enhancement fees, prepaid C-BT water
fees and cost of related  letters of credit  shall be included in Project  Costs
and bear interest in the same manner.

         3. Interest on Initial Outside Development Loan. Interest and loan fees
on the initial  development  loan  procured by Matrix from First  Security  Bank
("FSB")  dated June 21, 1996 shall be borne  solely by Matrix and shall not be a
Project Cost.  This interest and loan fees shall not be shown in the  accounting
records of the Project.

         4.  Cost of Karl  Kasch &  Cimarron  Consultants.  The  costs  incurred
subsequent to December 31, 2001 of employing Karl Kasch and his company Cimarron
Consultants (collectively hereinafter referred to as "Kasch") related to the Ft.
Lupton  project  shall be considered a project cost and as such shall be charged
to and funded by the  project.  The costs so charged  shall  include  but not be
limited  to  the  following:  a)  general  administrative  expense  involved  in
preparation  of draws and  financial  reporting,  b)  supervising  the  platting
process,  c) the cost of sales and marketing on the project,  d)  negotiation of
water rights;  e)  negotiation  of easements and right of way; f) negotiation of
surface use agreements; g) Coyote Creek master association;  and h) construction
management.  This allocation of costs incurred  through Kasch shall be effective
on or after January 1, 2002 and the Project shall  reimburse NEI upon  execution
of this  Amending  Agreement  for the portion of Kasch's costs which are Project
Cost and which NEI has paid from January 1, 2002 to present.

         5. Annual Accounting. Exhibit A is incorporated herein and agreed to by
the parties as the  accounting  summary for the Project as of December 31, 2001.
Exhibit A presents  the  financial  status of the Project and  includes:  1) the
accumulated  Project Costs; 2) the accumulated  Project  Revenue;  3) the Excess
Funds;  4) the accrued  interest on the Excess Funds;  5) the Preferred  Capital
Amount; and 6) the accumulated Preferred Return on the Preferred Capital Amount.
An accounting  report shall be prepared each subsequent  year hereafter.  Matrix
and NEI shall annually agree on the submitted Annual Accounting Report.

         6. Legal Costs  Related to the Amending  Agreement.  The parties  agree
that 50% of the legal costs incurred in the  negotiation  and preparation of the
Amending  Agreement shall be considered a Project Cost. NEI shall be reimbursed,
as a Project Cost, for 50% of the cost of legal services  rendered by Bailey and
Peterson, P.C., relating to the amendment of the Initial Agreement which NEI has
previously paid.

<PAGE>

         7.  Definitions.  Except as  specifically  put  forth in this  Amending
Agreement all terms shall have the same meanings as in the Initial Agreement.

         8. Relationship  Between Agreements.  In the event of any inconsistency
between  the  terms of this  Amending  Agreement  and the  terms of the  Initial
Agreement, the terms of this Amending Agreement shall control.

         9. Full Force and  Effect.  The  parties  acknowledge  that the Initial
Agreement is in full force and effect,  that there is no default  thereunder  by
either party and that there are no other  agreements  between the parties except
as described therein.

         10. Paragraph  Headings.  The paragraph  headings are inserted only for
convenient  reference  and do not define,  limit or prescribe  the scope of this
Amending Agreement.

         11.  Facsimile  signatures.  Facsimile  signatures will be accepted and
have the same force and effect as original signatures.

         12.  Counterparts.  This document may be executed in  counterparts  and
such  execution  will have the same  force and  effect  as if the  document  was
executed simultaneously.

         IN WITNESS  WHEREOF the parties have caused this Amending  Agreement to
be executed as of the date set forth above.

                                    ASSIGNOR:

                                    /s/ Mariano DeCola
                                    -----------------------------------
                                    Mariano DeCola, Manager
                                    Stage Coach Investments, LLC

                                    /s/ R. James Nicholson
                                    -----------------------------------
                                    R. James Nicholson

<PAGE>

                                    ASSIGNEE:

                                    MATRIX  FUNDING CORP.

                                    /s/ Richard Schmitz
                                    ----------------------------------------
                                    By: Richard Schmitz, President

                                    Nicholson Enterprises, Inc.

                                    /s/  R. Scott Burrows
                                    -----------------------------------------
                                    R. Scott Burrows,  VP, Treasurer

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