Document:

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                                                                   EXHIBIT 10.25

                       REDBACK NETWORKS INC. 2001 NON PLAN

                          NOTICE OF STOCK OPTION GRANT

             You have been granted the following option to purchase Common Stock
of Redback Networks Inc. (the "Company"):

<TABLE>
<CAPTION>

<S>               <C>                                         <C>
                  Name of Optionee:                           Georges Antoun

                  Total Number of Shares Granted:             1,000,000

                  Type of Option:                             Nonstatutory Stock Option

                  Exercise Price Per Share:                   $ 4.17

                  Date of Grant:                              August 29, 2001

                  Date Exercisable:                           This option may be exercised, in accordance with the
                                                              vesting schedule.

                  Vesting Commencement Date:                  August 29, 2001

                  Vesting Schedule:

                                                              This option shall become exercisable with respect to
                                                              options to purchase the first 25% the Shares when
                                                              you complete 12 months of continuous service with
                                                              the Company or a subsidiary of the Company from
                                                              the vesting commencement date and with respect to
                                                              an additional 2.0833% of the Shares subject to this
                                                              option when you complete each month of continuous
                                                              service thereafter.

                  Expiration Date:                            August 29, 2011
</TABLE>

In the event a Change in Control occurs (as defined in the attached Stock Option
Agreement) before your employment terminates and (1) your service with the
Company or a subsidiary of the Company is terminated by the Company or its
successor without Cause or (2) your scope of responsibilities are materially
reduced or (3) you're your salary is reduced (other than in a Company wide
reduction in salary) then your stock option granted hereunder will immediately
be fully vested and exercisable with respect to all shares. For purposes of the
forgoing, Cause shall mean: (1) any breach of the Proprietary Information and
Inventions Agreement between you and the Company or any other written agreement
between you and the Company if such breach causes material harm to the Company;
(2) any willful misconduct that causes material harm to the Company, including
without limitation repeated failure to follow the directions of the person to
whom you report; (3) conviction of, or plea of guilty or no contest to a felony
under the laws of the US or any state thereof; (4) misappropriation of any
assets of the Company or any other acts of Fraud or embezzlement; or the abuse
of alcohol or controlled substances that has a detrimental effect upon your
performance of duties for the Company.

By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the Stock Option Agreement, which is attached to and
made a part of this document.

OPTIONEE:                            REDBACK NETWORKS INC.

/s/ Georges Antoun                   By: /s/ Kevin A DeNuccio
--------------------------               -------------------------------------

                                    Title: Chief Executive Officer and President
                                           ------------------------------------

<PAGE>

                       REDBACK NETWORKS INC. 2001 NON-PLAN

                             STOCK OPTION AGREEMENT

Tax Treatment       This  option is  intended to be a  nonstatutory
                    option,  as provided in the Notice of Stock Option
                    Grant.

Vesting             This option becomes exercisable in installments, as
                    shown in the Notice of Stock Option Grant.

                    In addition, this option becomes exercisable in
                    full if your service as an employee, consultant or
                    director of the Company or a subsidiary of the
                    Company terminates because of death. If your
                    service as an employee, consultant or director of
                    the Company (or a subsidiary of the Company)
                    terminates because of total and permanent
                    disability, then the exercisable portion of this
                    option will be determined by adding 12 months to
                    your actual period of service.

                    Except for the acceleration provisions specified in
                    the grant, no additional shares become exercisable
                    after your service as an employee, consultant or
                    director of the Company or a subsidiary of the
                    Company has terminated for any reason.

Term                This option expires in any event at the close of
                    business at Company headquarters on the day before
                    the 10th anniversary of the Date of Grant, as shown
                    in the Notice of Stock Option Grant. (It will
                    expire earlier if your service terminates, as
                    described below.)

Regular             If your service as an employee,
Termination         consultant or director of the Company or a
                    subsidiary of the Company terminates for any reason
                    except death or total and permanent disability,
                    then this option will expire at the close of
                    business at Company headquarters on the date three
                    months after your termination date. The Company
                    determines when your service terminates for this
                    purpose.

Death               If you die as an employee, consultant or director
                    of the Company or a subsidiary of the Company, then
                    this option will expire at the close of business at
                    Company headquarters on the date 12 months after
                    the date of death.

Disability          If your service as an employee, consultant or
                    director of the Company or a subsidiary of the
                    Company terminates because of your total and
                    permanent disability, then this option will expire
                    at the close of business at Company headquarters on
                    the date six months after your termination date.

                                        2

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                    For all purposes under this Agreement, "total and permanent
                    disability" means that you are unable to engage in any
                    substantial gainful activity by reason of any medically
                    determinable physical or mental impairment which can be
                    expected to result in death or which has lasted, or can be
                    expected to last, for a continuous period of not less than
                    one year.

Leaves of Absence   For purposes of this option, your service does not terminate
                    when you go on a military leave, a sick leave or another
                    bona fide leave of absence, if the leave was approved by the
                    Company in writing and if continued crediting of service is
                    required by the terms of the leave or by applicable law. But
                    your service terminates when the approved leave ends, unless
                    you immediately return to active work.

Restrictions on     The Company will not permit you to exercise this option
  Exercise          if the issuance of shares at that time would violate
                    any law or regulation.

Notice of Exercise  When you wish to exercise this option, you must notify the
                    Company by filing the proper "Notice of Exercise" form at
                    the address given on the form. Your notice must specify how
                    many shares you wish to purchase. Your notice must also
                    specify how your shares should be registered (in your name
                    only or in your and your spouse's names as community
                    property or as joint tenants with right of survivorship).
                    The notice will be effective when it is received by the
                    Company.

                    If someone else wants to exercise this option after your
                    death, that person must prove to the Company's satisfaction
                    that he or she is entitled to do so.

 Form of Payment    When you submit your notice of exercise, you must include
                    payment of the option exercise price for the shares you are
                    purchasing. Payment may be made in one (or a combination of
                    two or more) of the following forms:

                    .  Your personal check, a cashier's check or a money order.

                    .  Certificates for shares of Company stock that you own,
                       along with any forms needed to effect a transfer of those
                       shares to the Company. The value of the shares,
                       determined as of the effective date of the option
                       exercise, will be applied to the option exercise price.
                       Instead of surrendering shares of Company stock, you may
                       attest to the ownership of those shares on a form
                       provided by the Company and have the same number of
                       shares subtracted from the option shares issued to you.
                       However, you may not surrender, or attest to the
                       ownership of, shares of Company stock in payment of the
                       exercise price if your action would cause the Company to
                       recognize compensation expense (or additional
                       compensation expense) with respect to this option for
                       financial reporting purposes.

                                       3

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                    .    Irrevocable directions to a securities broker approved
                         by the Company to sell all or part of your option
                         shares and to deliver to the Company from the sale
                         proceeds an amount sufficient to pay the option
                         exercise price and any withholding taxes. (The balance
                         of the sale proceeds, if any, will be delivered to
                         you.) The directions must be given by signing a special
                         "Notice of Exercise" form provided by the Company.

                    .    Irrevocable directions to a securities broker or lender
                         approved by the Company to pledge option shares as
                         security for a loan and to deliver to the Company from
                         the loan proceeds an amount sufficient to pay the
                         option exercise price and any withholding taxes. The
                         directions must be given by signing a special "Notice
                         of Exercise" form provided by the Company.

Withholding
Taxes and           You will not be allowed to exercise this option unless you
Stock Withholding   make arrangements acceptable to the Company to pay any
                    withholding taxes that may be due as a result of the option
                    exercise. These arrangements may include withholding shares
                    of Company stock that otherwise would be issued to you when
                    you exercise this option. The value of these shares,
                    determined as of the effective date of the option exercise,
                    will be applied to the withholding taxes.

Restrictions on     By signing this Agreement, you agree not to sell any option
Resale              shares at a time when applicable laws, Company policies or
                    an agreement between the Company and its underwriters
                    prohibit a sale. This restriction will apply as long as you
                    are an employee, consultant or director of the Company or a
                    subsidiary of the Company.

Transfer of Option  Prior to your death, only you may exercise this option. You
                    cannot transfer or assign this option. For instance, you may
                    not sell this option or use it as security for a loan. If
                    you attempt to do any of these things, this option will
                    immediately become invalid. You may, however, dispose of
                    this option in your will or a beneficiary designation.

                    Regardless of any marital property settlement agreement, the
                    Company is not obligated to honor a notice of exercise from
                    your former spouse, nor is the Company obligated to
                    recognize your former spouse's interest in your option in
                    any other way.

Retention Rights    Neither your option nor this Agreement give you the right to
                    be retained by the Company or a subsidiary of the Company in
                    any capacity. The Company and its subsidiaries reserve the
                    right to terminate your service at any time, with or without
                    cause.

Committee           This Agreement shall be  administered  by the Committee. The
                    Committee shall consist exclusively of two or more directors
                    of the Company, who shall be appointed by the Board. In
                    addition, the composition of the Committee shall satisfy:

                                       4

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                         (a) Such requirements as the Securities and Exchange
                    Commission may establish for administrators acting under
                    plans intended to qualify for exemption under Rule 16b-3 (or
                    its successor) under the Exchange Act; and

                         (b) Such requirements as the Internal Revenue Service
                    may establish for outside directors acting under plans
                    intended to qualify for exemption under section 162(m)(4)(C)
                    of the Code.

               The Committee shall interpret the Agreement. The Committee's
               determinations under this Agreement made in good faith shall be
               final and binding on all persons.

Stockholder    You, or your estate or heirs, have no rights as a stockholder of
Rights         the Company until you have exercised this option by giving the
               required notice to the Company and paying the exercise price. No
               adjustments are made for dividends or other rights if the
               applicable record date occurs before you exercise this option,
               except as described below.

 Adjustments   In the event of a subdivision of the outstanding Common Shares, a
               declaration of a dividend payable in Common Shares, a declaration
               of a dividend payable in a form other than Common Shares in an
               amount that has a material effect on the price of Common Shares,
               a combination or consolidation of the outstanding Common Shares
               (by reclassification or otherwise) into a lesser number of Common
               Shares, a recapitalization, a spin-off or a similar occurrence,
               the Committee shall make such adjustments as it, in its sole
               discretion, deems appropriate in one or more of (a) the number of
               Common Shares covered by each outstanding Option or (b) the
               Exercise Price under each outstanding Option. Except as provided
               in this paragraph, an Optionee no rights by reason of any issue
               by the Company of stock of any class or securities convertible
               into stock of any class, any subdivision or consolidation of
               shares of stock of any class, the payment of any stock dividend
               or any other increase or decrease in the number of shares of
               stock of any class. To the extent not previously exercised,
               Options shall terminate immediately prior to the dissolution or
               liquidation of the Company.

               In the event that the Company is a party to a merger or other
               reorganization, outstanding Options and Restricted Shares shall
               be subject to the agreement of merger or reorganization. Such
               agreement shall provide for (a) the continuation of the
               outstanding Awards by the Company, if the Company is a surviving
               corporation, (b) the assumption of the outstanding Awards by the
               surviving corporation or its parent or subsidiary, (c) the
               substitution by the surviving corporation or its parent

                                       5

<PAGE>

                    or subsidiary of its own awards for the outstanding Awards,
                    (d) full exercisability or vesting and accelerated
                    expiration of the outstanding Awards or (e) settlement of
                    the full value of the outstanding Awards in cash or cash
                    equivalents followed by cancellation of such Awards.

                    Within the limitations of this Agreement, the Committee may
                    modify, extend or assume outstanding options or may accept
                    the cancellation of outstanding options (whether granted by
                    the Company or by another issuer) in return for the grant of
                    new options for the same or a different number of shares and
                    at the same or a different exercise price. The foregoing
                    notwithstanding, no modification of an Option shall, without
                    the consent of the Optionee, alter or impair his or her
                    rights or obligations under such Option. The Committee may
                    at any time (a) offer to buy out for a payment in cash or
                    cash equivalents an Option previously granted or (b)
                    authorize an Optionee to elect to cash out an Option
                    previously granted, in either case at such time and based
                    upon such terms and conditions as the Committee shall
                    establish.

Deferral of         The Committee (in its sole discretion) may permit or require
Delivery of Shares  an Optionee to have Common Shares that otherwise would be
                    delivered to such Optionee as a result of the exercise of an
                    Option converted into amounts credited to a deferred
                    compensation account established for such Optionee by the
                    Committee as an entry on the Company's books. Such amounts
                    shall be determined by reference to the Fair Market Value of
                    such Common Shares as of the date when they otherwise would
                    have been delivered to such Optionee. A deferred
                    compensation account established under this paragraph may be
                    credited with interest or other forms of investment return,
                    as determined by the Committee. An Optionee for whom such an
                    account is established shall have no rights other than those
                    of a general creditor of the Company. Such an account shall
                    represent an unfunded and unsecured obligation of the
                    Company and shall be subject to the terms and conditions of
                    the applicable agreement between such Optionee and the
                    Company. If the conversion of Options is permitted or
                    required, the Committee (in its sole discretion) may
                    establish rules, procedures and forms pertaining to such
                    conversion, including (without limitation) the settlement of
                    deferred compensation accounts established under this
                    paragraph.

                    .    "Affiliate" means any entity other than a Subsidiary,
                         if the Company and/or one or more Subsidiaries own not
                         less than 50% of such entity.

                    .    "Award" means any award of an Option or a Restricted
                         Share under the Plan.

                    .    "Board" means the Company's Board of Directors, as
                         constituted from time to time.

                                       6

<PAGE>

               .    "Change in Control" shall mean:

                         (a) The consummation of a merger or consolidation of
                    the Company with or into another entity or any other
                    corporate reorganization, if persons who were not
                    stockholders of the Company immediately prior to such
                    merger, consolidation or other reorganization own
                    immediately after such merger, consolidation or other
                    reorganization 50% or more of the voting power of the
                    outstanding securities of each of (i) the continuing or
                    surviving entity and (ii) any direct or indirect parent
                    corporation of such continuing or surviving entity;

                         (b) The sale, transfer or other disposition of all or
                    substantially all of the Company's assets;

                         (c) A change in the composition of the Board, as a
                    result of which 50% or fewer of the incumbent directors are
                    directors who either (i) had been directors of the Company
                    on the date 24 months prior to the date of the event that
                    may constitute a Change in Control (the "original
                    directors") or (ii) were elected, or nominated for election,
                    to the Board with the affirmative votes of at least a
                    majority of the aggregate of the original directors who were
                    still in office at the time of the election or nomination
                    and the directors whose election or nomination was
                    previously so approved; or

                         (d) Any transaction as a result of which any person is
                    the "beneficial owner" (as defined in Rule 13d-3 under the
                    Exchange Act), directly or indirectly, of securities of the
                    Company representing at least 50% of the total voting power
                    represented by the Company's then outstanding voting
                    securities. For purposes of this Subsection (d), the term
                    "person" shall have the same meaning as when used in
                    sections 13(d) and 14(d) of the Exchange Act but shall
                    exclude (i) a trustee or other fiduciary holding securities
                    under an employee benefit plan of the Company or of a Parent
                    or Subsidiary and (ii) a corporation owned directly or
                    indirectly by Definitions the stockholders of the Company in
                    substantially the same proportions as their ownership of the
                    common stock of the Company.

               A transaction shall not constitute a Change in Control if its
               sole purpose is to change the state of the Company's
               incorporation or to create a holding company that will be owned
               in substantially the same

                                       7

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          proportions by the persons who held the Company's securities
          immediately before such transaction.

          .    "Code" means the Internal Revenue Code of 1986, as amended.

          .    "Committee" means a committee of the Board, as described in
               Article 2.

          .    "Common Share" means one share of the common stock of the
               Company.

          .    "Company" means Redback Networks Inc., a Delaware corporation.

          .    "Consultant" means a consultant or adviser who provides bona fide
               services to the Company, a Parent, a Subsidiary or an Affiliate
               as an independent contractor. Service as a Consultant shall be
               considered employment for all purposes of this Stock Option
               Agreement.

          .    "Employee" means a common-law employee of the Company, a Parent,
               a Subsidiary or an Affiliate.

          .    "Exchange Act" means the Securities Exchange Act of 1934, as
               amended.

          .    "Exercise Price" means the amount for which one Common Share may
               be purchased upon exercise of such Option, as specified in the
               applicable Stock Option Agreement.

          .    "Fair Market Value" means the market price of Common Shares,
               determined by the Committee in good faith on such asis as it
               deems appropriate. Whenever possible, the determination of Fair
               Market Value by the Committee shall be based on the prices
               reported in The Wall Street Journal. Such determination shall be
                           -----------------------
               conclusive and binding on all persons.

          .    "NSO" means a stock option not described in sections 422 or 423
               of the Code.

          .    "Option" means an NSO granted under this Agreement and entitling
               the holder to purchase Common Shares.

          .    "Optionee" means an individual or estate who holds an Option.

          .    "Outside Director" shall mean a member of the Board

                                       8

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               who is not an Employee.

          .    "Parent" means any corporation (other than the Company) in an
               unbroken chain of corporations ending with the Company, if each
               of the corporations other than the Company owns stock possessing
               50% or more of the total combined voting power of all classes of
               stock in one of the other corporations in such chain. A
               corporation that attains the status of a Parent on a date after
               the adoption of the Plan shall be considered a Parent commencing
               as of such date agreement between the Company and an Optionee
               that contains the terms, conditions and restrictions pertaining
               to his or her Option.

          .    "Subsidiary" means any corporation (other than the Company) in an
               unbroken chain of corporations beginning with the Company, if
               each of the corporations other than the last corporation in the
               unbroken chain owns stock possessing 50% or more of the total
               combined voting power of all classes of stock in one of the other
               corporations in such chain.

Applicable     This Agreement will be interpreted and enforced under the
Law            laws of the State of Delaware (without regard to their
               choice-of-law provisions).

The Plan and
Other
Agreements     This Agreement constitutes the entire understanding between you
               and the Company regarding this option. Any prior agreements,
               commitments or negotiations concerning this option are
               superseded. This Agreement may be amended only by another written
               agreement, signed by both parties.

      BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
             TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

                                       9Exhibit 10.18

[LETTERHEAD OF GOLDMAN SACHS]

                                  CONFIRMATION

DATE:     January 31, 2002 (revised from January 17, 2002 confirmation)

TO:       Mercury Interactive Corporation
          1325 Borregas Avenue
          Sunnyvale, CA 94089
          Telephone No.: (408) 822-5591
                         --------------
          Facsimile No.: (408) 822-5320
                         --------------
          Attention    : Susan Skaer, General Counsel

FROM:     Goldman Sachs Capital Markets, L.P.

SUBJECT:  Swap Transaction

REF NO:   NUUS201PG 052 000000

--------------------------------------------------------------------------------

The purpose of this revised communication is to set forth the terms and
conditions of the above referenced transaction entered into on the Trade Date
specified below (the "Transaction") between Goldman Sachs Capital Markets, L.P.
("GSCM"), guaranteed by The Goldman Sachs Group, Inc. ("Goldman Group"), and
Mercury Interactive Corporation ("Counterparty"). This communication supersedes
and replaces all prior communications between the parties hereto with respect to
the Transaction described below. This communication constitutes a "Confirmation"
as referred to in the Swap Agreement specified below .

1.  The definitions and provisions contained in the 2000 ISDA Definitions (the
"Definitions"), as published by the International Swaps and Derivatives
Association, Inc. are incorporated into this Confirmation.

2. This Confirmation evidences a complete and binding agreement between you and
us as to the terms of the Transaction to which this Confirmation relates and
incorporates by reference the form of the ISDA Master Agreement (Local
Currency-Single Jurisdiction) (the "ISDA Form Master"), including the
modifications set forth in Annex A attached hereto, and the ISDA Credit Support
Annex (the "ISDA Form CSA" and, together with the ISDA Form Master, the "ISDA
Forms"), including the modifications set forth in Annex B attached hereto, as if
we had executed such ISDA Forms effective as of the Trade Date of the first
Transaction between us. In the event of any inconsistency between the
Definitions, the ISDA Forms and this Confirmation, this Confirmation will
govern.

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

Notional Amount:                  USD 300,000,000, subject to reduction in
                                  accordance with paragraph 4 herein.

Bonds:                            Mercury Interactive Corporation (the "Issuer")
                                  Maturity:  July 1, 2007
                                  Coupon:  4.75% Convertible Subordinated
                                  Debentures
                                  CUSIP: 589405AB5

Trade Date:                       January 17, 2002

                                        1

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Effective Date:                    January 22, 2002

Termination Date:                  The earlier of (a) July 1, 2007, subject to
                                   adjustment in accordance with the Modified
                                   Following Business Day Convention or (b)
                                   with respect to any portion of this
                                   Transaction terminated in accordance with
                                   paragraph 4 herein, the Termination Effective
                                   Date.

Fixed Amounts:
--------------

Fixed Rate Payer:                  GSCM

Fixed Rate Payer Payment Dates:    Semi-annually, on each January 1 and July 1,
                                   commencing on July 1, 2002, and ending on the
                                   Termination Date, subject to adjustment in
                                   accordance with the Following Business Day
                                   Convention.

Fixed Rate:                        4.75%

Fixed Rate Day Count Fraction:     30/360

Fixed Rate Period End Dates:       Not Adjusted

Floating Amounts:
-----------------

Floating Rate Payer:               Counterparty

Floating Rate Payer Payment Dates: Semi-annually, on each January 1 and July 1,
                                   commencing on July 1, 2002, and ending on the
                                   Termination Date, subject to adjustment in
                                   accordance with the Following Business Day
                                   Convention.

Floating Rate Option:              USD-LIBOR-BBA

Floating Rate Designated Maturity: 6 Months

Initial Floating Rate Setting:     1.84%

Floating Rate Spread:              Plus 0.86%

Floating Rate Reset Dates:         The first day of each Calculation Period

Floating Rate Day Count Fraction:  Actual/360

Floating Rate Period End Dates:    Adjusted in accordance with the Following
                                   Business Day Convention.

Business Days:                     New York and London

Calculation Agent:                 GSCM

Governing Law:                     New York law

                                        2

<PAGE>

4.  Termination:

In the event that (i) Issuer converts, in whole or in part, any of the Bonds
into shares of common stock of Issuer upon the valid exercise by holders of such
Bonds (such holders not to include the Issuer or any of its affiliates) of their
conversion right or (ii) Issuer redeems, in whole or in part, any of the Bonds
at their stated redemption price pursuant to its right of optional redemption
(such redemption not to include Bonds held by the Issuer or any of its
affiliates), the portion of this Transaction equal to the principal amount of
the Bonds that Issuer either converts or redeems as provided in (i) and (ii)
above (the "Termination Amount"), shall terminate as of the actual date of
conversion or redemption (the "Termination Effective Date"). On the Termination
Effective Date, (i) a Termination Date will be deemed to have occurred with
respect to a portion of this Transaction equal to the Termination Amount and all
Fixed Amount and Floating Amount payments with respect to the terminated portion
of this Transaction shall be due and payable on said date and (ii) the Notional
Amount shall be reduced by the related Termination Amount and all payment
calculations will be based on the remaining portion of this Transaction after
giving effect to such partial termination.

Termination in accordance with this paragraph 4 shall be contingent upon
Counterparty providing notice of such conversion or redemption to Goldman not
later than two Business Days following the Termination Effective Date, which
notice shall include written certification acceptable to Goldman confirming the
date such conversion or redemption and the principal amount of the Bonds
converted or redeemed.

5.  Credit Support Documents:    Standard Guaranty of Goldman Group.

6.  Credit Support Providers:    With respect to GSCM, Goldman Group.

7.  Account Details:
USD Payments to GSCM:
For the Account of:              Goldman Sachs Capital Markets, L.P.
Name of Bank:                    Citibank. N.A. New York
Account No:                      40670834
Fed ABA No:                      021000089
GSCM Inquiries                   Goldman Sachs Capital Markets, L.P.
                                 Telephone No.: 212-902-2686
                                 Facsimile No.: 212-902-5692

Payments to Counterparty:        In accordance with Counterparty's written
                                 instructions as set forth below or otherwise
                                 delivered to GSCM. GSCM shall make no payments
                                 without having received (i) such written
                                 instructions and (ii) a fully executed
                                 facsimile copy of this Confirmation or other
                                 written acceptance of the terms hereof.
For the Account of:
Name of Bank:
Account No:
Attention:
ABA No.:

8.  Offices:

     (a) The Office of GSCM for this Transaction is 85 Broad Street, New York,
New York 10004.

     (b) The Office of Counterparty for this Transaction is 1325 Borregas
Avenue, Sunnyvale, California 94089.

                                        3

<PAGE>

9. Counterparty hereby agrees (a) to check this revised Confirmation (Reference
No.: NUUS201PG) carefully and immediately upon receipt so that errors or
discrepancies can be promptly identified and rectified and (b) to confirm that
the foregoing correctly sets forth the terms of the agreement between GSCM and
Counterparty with respect to the particular Transaction to which this
Confirmation relates, by manually signing this Confirmation and providing the
other information requested herein and immediately returning an executed copy to
Swap Administration, facsimile No. 212-902-5692.

                                       Very truly yours,

                                       GOLDMAN SACHS CAPITAL MARKETS, L.P.

                                       By:  Goldman Sachs Capital Markets, Inc.,
                                            General Partner

                                       By:  /s/ Daniel A. Ruperto
                                            Name:  Daniel A. Ruperto
                                            Title: Vice President

Agreed and Accepted By:

MERCURY INTERACTIVE CORPORATION

By:  /s/ Susan J. Skaer
     Name:  Susan J. Skaer
     Title: Vice President, General Counsel and Secretary

Counterparty Reference No.:
                           ----------------------

                                        4

<PAGE>

                                     Annex A

The following provisions shall be in lieu of a Schedule and shall be deemed to
modify and supplement the ISDA Form Master.

(a) "Specified Entity" means, in relation to GSCM, Goldman, Sachs & Co., Goldman
Sachs Capital Markets, L.P., Goldman Sachs International, Goldman Sachs (Asia)
Finance, Goldman Sachs Financial Markets, L.P., and Goldman Sachs Mitsui Marine
Derivative Products, L.P. for the purpose of Section 5(a)(v), and shall not
apply for purposes of Sections 5(a)(vi), 5(a)(vii) and 5(b)(iv); and means, in
relation to Counterparty, any Significant Subsidiary (as defined in the
Indenture between Counterparty and State Street Bank and Trust Company of
California, N.A., dated as of July 3, 2000).

(b) "Cross Default" will apply to GSCM and to Counterparty, provided that (i)
the phrase "or becoming capable at such time of being declared" shall be deleted
from clause (1) of such Section 5(a)(vi) so that only Specified Indebtedness
that has actually been accelerated triggers this Event of Default. "Threshold
Amount" means in relation to GSCM, US$50,000,000 (or its equivalent in another
currency) and in relation to Counterparty, US$10,000,000 (or its equivalent in
another currency).

(c) "Credit Event Upon Merger" will apply to GSCM and will apply to
Counterparty.

(d) Payments on Early Termination. For the purpose of Section 6(e): [Loss] will
apply and the Second Method will apply.

(e) The parties agree to amend the following subsections of Section 5(a) as
follows: clause (ii): in the fifth line of this clause, delete the word
"thirtieth" and insert the word "twentieth".

(f) Documents to be delivered upon the execution of this Confirmation for the
purpose of Section 4(a) are: (i) with respect to both GSCM and Counterparty, a
copy of the most recent, publicly available audited annual financial statements
and/or of the unaudited quarterly financial statements of, in the case of GSCM,
Goldman Group, and, in the case of Counterparty, Counterparty, prepared in
accordance with generally accepted accounting principles in the country in which
the party is organized; (ii) with respect to GSCM only, the Standard Guaranty of
Goldman Group; and, (iii) with respect to Counterparty only, certified
resolutions of its board of directors or other governing body authorizing this
Confirmation and the Transactions contemplated hereby.

(g) Jurisdiction. The parties hereby agree to amend Section 13(b) by deleting
"non-" from the second line of clause (i).

(h) Netting of Payments. Subparagraph (ii) of Section 2(c) will not apply to
Transactions.

(i) Accuracy of Specified Information. Section 3(d) is hereby amended by adding
in the third line thereof after the word "respect" and before the period, the
phrase "or, in the case of audited or unaudited financial statements, a fair
presentation of the financial condition of the relevant person."

(j) Additional Representations. The parties agree to amend Section 3 by adding
new Sections 3(e), (f), (g), and (h) as follows:

                                        5

<PAGE>

     (e) Eligible Contract Participant. It is an "eligible contract participant"
     as defined in the U.S. Commodity Exchange Act.

     (f) Non-Reliance. It is acting for its own account, and it has made its own
     independent decisions to enter into that Transaction and as to whether that
     Transaction is appropriate or proper for it based upon its own judgment and
     upon advice from such advisers as it has deemed necessary. It is not
     relying on any communication (written or oral) of the other party as
     investment advice or as a recommendation to enter into that Transaction; it
     being understood that information and explanations related to the terms and
     conditions of a Transaction shall not be considered investment advice or a
     recommendation to enter into that Transaction. No communication (written or
     oral) received from the other party shall be deemed to be an assurance or
     guarantee as to the expected results of that Transaction.

     (g) Assessment and Understanding. It is capable of assessing the merits of
     and understanding (on its own behalf or through independent professional
     advice), and understands and accepts, the terms, conditions and risks of
     that Transaction. It is also capable of assuming, and assumes, the risks of
     that Transaction.

     (h) Status of Parties. The other party is not acting as a fiduciary for or
     an adviser to it in respect of that Transaction.

(k) Transfer. The following amendments are hereby made to Section 7: (i) in the
third line, insert the words "which consent will not be arbitrarily withheld or
delayed," immediately before the word "except"; and (ii) in clause (a), insert
the words "or reorganization, incorporation, reincorporation, or reconstitution
into or as," immediately before the word "another."

(l) Severability. This Agreement shall be deemed to be invalid and unenforceable
if any provision of Sections 1(c), 2, 5, 6, or 11 (or any definition or
provision in Section 14 to the extent it relates to, or is used in or in
connection with, any such Section) shall be held to be invalid or unenforceable.

(m) Waiver of Trial by Jury. Each party hereby irrevocably waives any and all
right to trial by jury in any Proceeding.

                                     Annex B

The following provisions shall apply with respect to Paragraph 13 to the ISDA
Form CSA.

(a) Credit Support Obligations.

     (i) "Credit Support Amount" has the meaning specified in Paragraph 3,
     except that the Credit Support Amount for Counterparty shall never be less
     than the Independent Amount.

     (ii)  Eligible Collateral. The following items will qualify as "Eligible
     Collateral" for Counterparty.

                                        6

<PAGE>

                                                             Valuation
                                                            Percentage
                                                            ----------

          (A)      Cash                                         100%

          (B)      negotiable debt obligations                 98.5%
                   issued by the U.S. Treasury
                   Department having an original
                   maturity at issuance of not
                   more than one year ("Trea-
                   sury Bills")

          (C)      negotiable debt obligations                 98.5%
                   issued by the U.S. Treasury
                   Department having an original
                   maturity at issuance of more
                   than one year but not more
                   than 10 years ("Treasury Notes")

          (D)      negotiable debt obligations                 98.5%
                   issued by the U.S  Treasury
                   Department having an original
                   maturity at issuance of more
                   than 10 years ("Treasury Bonds")

          (E)      negotiable debt obligations                 98.5%
                   which are issued and/or
                   guaranteed as to both principal
                   and Interest by the Federal Home
                   Loan Mortgage Corporation
                   ("FHLMC"), the Federal National
                   Mortgage Association ("FNMA"),
                   or the Government National Mort-
                   gage Association ("GNMA"),
                   including mortgage-backed
                   securities and REMICs (collectively,
                   "Agency Securities"), but excluding
                   interest only securities, principal only
                   securities and residual interests.

     (iii) Thresholds.

                   (A) "Independent Amount" means with respect to Counterparty:
                   2% of the initial Notional Amount.

                   (B) "Threshold" means with respect to GSCM: Not applicable,
                   it being understood that GSCM shall be only a Secured Party
                   hereunder and not a Pledgor and shall be under no obligation
                   to Transfer Collateral hereunder; and with respect to
                   Counterparty: zero.

                   (C) "Minimum Transfer Amount" means with respect to a party,
                   $1,000,000; provided, however, that if an Event of Default
                               --------  -------
                   has occurred and is continuing with respect to a party, the
                   Minimum Transfer Amount with respect to such party shall be
                   zero.

                   (D) Rounding. The Delivery Amount and Return Amount will be
                   rounded up and down, respectively, to the nearest integral
                   multiple of $100,000.

(b) Valuation and Timing.

     (i)   "Valuation Agent" means GSCM.

                                        7

<PAGE>

     (ii)  "Valuation Date" means each New York Banking Day.

     (iii) "Valuation Time" means the close of business in the city of the
     Valuation Agent on the Local Business Day before the Valuation Date or date
     of calculation, as applicable; provided that the calculations of Value and
     Exposure will be made as of approximately the same time on the same date.

     (iv) "Notification Time" means no later than 1:00 p.m., New York time, on a
     Local Business Day; provided, however, that the Valuation Agent will only
     give notice of its calculations to a party upon request by such party.

(c) Conditions Precedent. The following Termination Events will be a "Specified
Condition" for the party specified (that party being the Affected Party if the
Termination Event occurs with respect to that party): With respect to
Counterparty only, Credit Event Upon Merger and Illegality.

(d) Dispute Resolution.

     (i) "Resolution Time" means 1:00 p.m., New York time, on the Local Business
     Day following the date on which the notice is given that gives rise to a
     dispute under Paragraph 5.

     (ii) "Value". For the purpose of Paragraph 5(i)(C) and 5(ii), the Value of
     Posted Credit Support will be calculated as follows:

                   (A) The Value of Cash will be the face amount thereof,
                   multiplied by the applicable Valuation Percentage.

                   (B) With respect to any Treasury Bills, Treasury Notes,
                   Treasury Bonds, or Agency Securities (referred to herein as
                   "Securities"), the sum of (I) (x) the mean of the high bid
                   and low asked prices quoted on such date by any principal
                   market maker for such Securities chosen by the Disputing
                   Party, or (y) if no quotations are available from a principal
                   market maker on such date, the mean of such high bid and low
                   asked prices as of the day, next preceding such date, on
                   which such quotations were available, plus (II) the accrued
                   interest on such Securities (except to the extent Transferred
                   to a party pursuant to any applicable provision of this
                   Agreement or included in the applicable price referred to in
                   (I) of this clause (B)) as of such date, multiplied by the
                   applicable Valuation Percentage.

(e) Distributions and Interest Amount.

     (i)   Interest Rate. The "Interest Rate" will be the overnight Federal
                          -------------------------------------------------
     Funds (Effective) rate, as advised by Telerate p. 120, minus 25 basis
     ---------------------------------------------------------------------
     points.
     -------

     (ii) Transfer of Interest Amount. The Transfer of the Interest Amount will
     be made on the last Local Business Day of each calendar month and on any
     Local Business Day that Posted Collateral in the form of Cash is
     Transferred to the Pledgor pursuant to Paragraph 3(b).

                                        8

<PAGE>

[LETTERHEAD OF GOLDMAN SACHS]

                                  CONFIRMATION

DATE:     February 26, 2002

TO:       Mercury Interactive Corporation
          1325 Borregas Avenue
          Sunnyvale, CA 94089
          Telephone No.: (408) 822-5591
                         --------------
          Facsimile No.: (408) 822-5320
                         --------------
          Attention    : Susan Skaer, General Counsel

FROM:     Goldman Sachs Capital Markets, L.P.

SUBJECT:  Swap Transaction

REF NO:   NUUS202P0

--------------------------------------------------------------------------------

The purpose of this communication is to set forth the terms and conditions of
the above referenced transaction entered into on the Trade Date specified below
(the "Transaction") between Goldman Sachs Capital Markets, L.P. ("GSCM"),
guaranteed by The Goldman Sachs Group, L.P. ("Goldman Group"), and Mercury
Interactive Corporation ("Counterparty"). This communication constitutes a
"Confirmation" as referred to in the Swap Agreement specified below.

1. The definitions and provisions contained in the 2000 ISDA Definitions (the
"Definitions"), as published by the International Swaps and Derivatives
Association, Inc. are incorporated into this Confirmation.

2. This Confirmation evidences a complete and binding agreement between you and
us as to the terms of the Transaction to which this Confirmation relates and
incorporates by reference the form of the ISDA Master Agreement (Local
Currency-Single Jurisdiction) (the "ISDA Form Master"), including the
modifications set forth in Annex A attached hereto, and the ISDA Credit Support
Annex (the "ISDA Form CSA" and, together with the ISDA Form Master, the "ISDA
Forms"), including the modifications set forth in Annex B attached hereto, as if
we had executed such ISDA Forms effective as of the Trade Date of the first
Transaction between us. In the event of any inconsistency between the
Definitions, the ISDA Forms and this Confirmation, this Confirmation will
govern.

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

Bonds:                         Mercury Interactive Corporation (the "Issuer")
                               Maturity: July 1, 2007
                               Coupon: 4.75% Convertible Subordinated Debentures
                               CUSIP: 589405AB5

Trade Date:                    February 19, 2002

Effective Date:                February 23, 2002

Termination Date:              July 1, 2007

<PAGE>
Swap I:
-------

Notional Amount I:                   Zero, subject to increase in accordance
------------------                   with paragraph 4 herein.

Fixed Amount I:
---------------

Fixed Rate Payer I:                  Counterparty

Fixed Rate Payer Payment Dates I:    Semi-annually, on each January 1 and
                                     July 1, commencing on July 1, 2002, and
                                     ending on the Termination Date, subject to
                                     adjustment in accordance with the Following
                                     Business Day Convention.

Fixed Rate I:                        4.75%

Fixed Rate Day Count Fraction I:     30/360

Fixed Rate Period End Dates I:       Not Adjusted

Floating Amount I:
------------------

Floating Rate Payer I:               GSCM

Floating Rate Payer Payment Dates I: Semi-annually, on each January 1 and
                                     July 1, commencing on July 1, 2002, and
                                     ending on the Termination Date, subject to
                                     adjustment in accordance with the Following
                                     Business Day Convention.

Floating Rate Option I:              USD-LIBOR-BBA

Floating Rate Designated Maturity I: 6 Months

Floating Rate Spread I:              0.86%

Floating Rate Reset Dates I:         The first day of each Calculation Period

Floating Rate Day Count Fraction I:  Actual/360

Floating Rate Period End Dates I:    Adjusted in accordance with the Following
                                     Business Day Convention.

Supplementary Amount:
---------------------

     Supplementary Amount Payer:     GSCM

     ---------------------------

     Supplementary Amount Payment    Semi-annually, on each January 1 and
     ----------------------------    July 1, commencing on July 1, 2002, and
     Dates:                          ending on the Termination Date, subject to
     ------                          adjustment in accordance with the Following
                                     Business Day Convention.

     Supplementary Amount:           (i) For so long as Notional Amount I is
     ---------------------           equal to zero, USD 608,333 and (ii) if on
                                     any date  Notional  Amount I exceeds zero
                                     (the "Supplementary Amount End Date"),
                                           -------------
                                     zero, provided, however, that the
                                     Supplementary Amount Payer shall  be
                                     -------------

                                        2

<PAGE>

                                     responsible for all accrued but yet unpaid
                                     amounts calculated to but excluding the
                                     Supplementary Amount End Date.
                                     -------------
                                     Notwithstanding anything to the contrary
                                     herein, for the first Supplementary Amount
                                     Payment Date only, the Supplementary Amount
                                     shall be USD 432,593.

Swap II:
--------

Notional Amount II:                  Zero, subject to increase in accordance
-------------------                  with paragraph 4 herein.

Fixed Amount II:
----------------

Fixed Rate Payer II:                 GSCM

Fixed Rate Payer Payment Dates II:   Semi-annually, on each January 1 and
                                     July 1, commencing on July 1, 2002, and
                                     ending on the Termination Date, subject to
                                     adjustment in accordance with the Following
                                     Business Day Convention.

Fixed Rate II:                       4.75%

Fixed Rate Day Count Fraction II:    30/360

Fixed Rate Period End Dates II:      Not Adjusted

Floating Amount II:

Floating Rate Payer II:              Counterparty

Floating Rate Payer Payment          Semi-annually, on each January 1 and
Dates II:                            July 1, commencing on July 1, 2002, and
                                     ending on the Termination Date, subject to
                                     adjustment in accordance with the Following
                                     Business Day Convention.

Floating Rate Option II:             USD-LIBOR-BBA

Floating Rate Designated

Maturity II:                         6 Months

Floating Rate Spread II:             0.86%

Floating Rate Reset Dates II:        The first day of each Calculation Period

Floating Rate Day Count Fraction II: Actual/360

Floating Rate Period End Dates II:   Adjusted in accordance with the Following
                                     Business Day Convention.

Business Days:                       New York and London

Calculation Agent:                   GSCM

Governing Law:                       New York law

                                        3

<PAGE>

4.  Additional Amounts:

In the event that the price of 8.9888 shares (or the prevailing conversion rate
under the Indenture (as defined below)) (subject to the appropriate adjustment
in the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares) of the common stock of the Issuer (or
the securities received in exchange for the common stock of the Issuer in any
consolidation or merger of the Issuer with or into another entity, or any merger
of another entity into the Issuer) exceeds the Redemption Price for the
corresponding Redemption Period, as stated in Annex C, then the Notional Amount
I shall equal $300,000,000, effective as of such date to and including the
Termination Date.

In the event that (i) Issuer converts, in whole or in part, any of the Bonds
into shares of common stock of Issuer upon the valid exercise by holders of such
Bonds (such holders not to include the Issuer or any of its affiliates) of their
conversion right or (ii) Issuer redeems, in whole or in part, any of the Bonds
at their stated redemption price pursuant to its right of optional redemption
(such redemption not to include Bonds held by the Issuer or any of its
affiliates), the portion of this Transaction equal to the principal amount of
the Bonds that Issuer either converts or redeems as provided in (i) and (ii)
above (the "Additional Amount"), shall be added to the Notional Amount II as of
the actual date of conversion or redemption (the "Additional Amount Effective
Date").

The increases to the Notional Amount II in accordance with this paragraph 4
shall be contingent upon Counterparty providing notice of such conversion or
redemption to Goldman not later than two Business Days following the Additional
Amount Effective Date, which notice shall include written certification
acceptable to Goldman confirming the date such conversion or redemption and the
principal amount of the Bonds converted or redeemed.

5.  Credit Support Documents:        Standard Guaranty of The Goldman Sachs
                                     Group, L.P.

6.  Credit Support Providers:        With respect to GSCM, Goldman Group.

7.  Account Details:
USD Payments to GSCM:
For the Account of:                  Goldman Sachs Capital Markets, L.P.
Name of Bank:                        Citibank. N.A. New York
Account No:                          40670834
Fed ABA No:                          021000089
GSCM Inquiries                       Goldman Sachs Capital Markets, L.P.
                                     Telephone No.: 212-902-2686
                                     Facsimile No.: 212-902-5692

Payments to Counterparty:            In accordance with Counterparty's written
                                     instructions as set forth below or
                                     otherwise delivered to GSCM. GSCM shall
                                     make no payments without having received
                                     (i) such written instructions and (ii) a
                                     fully executed facsimile copy of this
                                     Confirmation or other written acceptance of
                                     the terms hereof.
For the Account of:
Name of Bank:
Account No:
Attention:
ABA No.:

                                        4

<PAGE>

8.  Offices:

     (a) The Office of GSCM for this Transaction is 85 Broad Street, New York,
New York 10004.

     (b) The Office of Counterparty for this Transaction is 1325 Borregas
Avenue, Sunnyvale, California 94089.

                                        5

<PAGE>

8. Counterparty hereby agrees (a) to check this Confirmation (Reference No.: [
]) carefully and immediately upon receipt so that errors or discrepancies can be
promptly identified and rectified and (b) to confirm that the foregoing
correctly sets forth the terms of the agreement between GSCM and Counterparty
with respect to the particular Transaction to which this Confirmation relates,
by manually signing this Confirmation and providing the other information
requested herein and immediately returning an executed copy to Swap
Administration, facsimile No. 212-902-5692.

                                       Very truly yours,

                                       GOLDMAN SACHS CAPITAL MARKETS, L.P.

                                       By:  Goldman Sachs Capital Markets, Inc.,
                                            General Partner

                                       By:  /s/ Daniel A. Ruperto
                                            Name:  Daniel A. Ruperto
                                            Title: Vice President

Agreed and Accepted By:
MERCURY INTERACTIVE CORPORATION

By:  /s/ Susan J. Skaer
     Name:  Susan J. Skaer
     Title: Vice President, General Counsel and Secretary

Counterparty Reference No.:
                           ----------------------

                                        6

<PAGE>

                                     Annex A

The following provisions shall be in lieu of a Schedule and shall be deemed to
modify and supplement the ISDA Form Master.

(a) "Specified Entity" means, in relation to GSCM, Goldman, Sachs & Co., Goldman
Sachs Capital Markets, L.P., Goldman Sachs International, Goldman Sachs (Asia)
Finance, Goldman Sachs Financial Markets, L.P., and Goldman Sachs Mitsui Marine
Derivative Products, L.P. for the purpose of Section 5(a)(v), and shall not
apply for purposes of Sections 5(a)(vi), 5(a)(vii) and 5(b)(iv); and means, in
relation to Counterparty, any Significant Subsidiary (as defined in the
Indenture between Counterparty and State Street Bank and Trust Company of
California, N.A., dated as of July 3, 2000 (the "Indenture")).

(b) "Cross Default" will apply to GSCM and to Counterparty, provided that (i)
the phrase "or becoming capable at such time of being declared" shall be deleted
from clause (1) of such Section 5(a)(vi) so that only Specified Indebtedness
that has actually been accelerated triggers this Event of Default. "Threshold
Amount" means in relation to GSCM, US$50,000,000 (or its equivalent in another
currency) and in relation to Counterparty, US$10,000,000 (or its equivalent in
another currency).

(c) "Credit Event Upon Merger" will apply to GSCM and will apply to
Counterparty.

(d) Payments on Early Termination. For the purpose of Section 6(e): Loss will
apply and the Second Method will apply.

(e) The parties agree to amend the following subsections of Section 5(a) as
follows: clause (ii): in the fifth line of this clause, delete the word
"thirtieth" and insert the word "twentieth".

(f) Documents to be delivered upon the execution of this Confirmation for the
purpose of Section 4(a) are: (i) with respect to both GSCM and Counterparty, a
copy of the most recent, publicly available audited annual financial statements
and/or of the unaudited quarterly financial statements of, in the case of GSCM,
Goldman Group, and, in the case of Counterparty, Counterparty, prepared in
accordance with generally accepted accounting principles in the country in which
the party is organized; (ii) with respect to GSCM only, the Standard Guaranty of
Goldman Group; and, (iii) with respect to Counterparty only, certified
resolutions of its board of directors or other governing body authorizing this
Confirmation and the Transactions contemplated hereby.

(g) Jurisdiction. The parties hereby agree to amend Section 13(b) by deleting
"non-" from the second line of clause (i).

(h) Netting of Payments. Subparagraph (ii) of Section 2(c) will not apply to
Transactions.

(i) Accuracy of Specified Information. Section 3(d) is hereby amended by adding
in the third line thereof after the word "respect" and before the period, the
phrase "or, in the case of audited or unaudited financial statements, a fair
presentation of the financial condition of the relevant person."

(j) Additional Representations. The parties agree to amend Section 3 by adding
new Sections 3(e), (f), (g), and (h) as follows:

                                        7

<PAGE>

     (e) Eligible Contract Participant. It is an "eligible contract participant"
     as defined in the U.S. Commodity Exchange Act.

     (f) Non-Reliance. It is acting for its own account, and it has made its own
     independent decisions to enter into that Transaction and as to whether that
     Transaction is appropriate or proper for it based upon its own judgment and
     upon advice from such advisers as it has deemed necessary. It is not
     relying on any communication (written or oral) of the other party as
     investment advice or as a recommendation to enter into that Transaction; it
     being understood that information and explanations related to the terms and
     conditions of a Transaction shall not be considered investment advice or a
     recommendation to enter into that Transaction. No communication (written or
     oral) received from the other party shall be deemed to be an assurance or
     guarantee as to the expected results of that Transaction.

     (g) Assessment and Understanding. It is capable of assessing the merits of
     and understanding (on its own behalf or through independent professional
     advice), and understands and accepts, the terms, conditions and risks of
     that Transaction. It is also capable of assuming, and assumes, the risks of
     that Transaction.

     (h) Status of Parties. The other party is not acting as a fiduciary for or
     an adviser to it in respect of that Transaction.

(k) Transfer. The following amendments are hereby made to Section 7: (i) in the
third line, insert the words "which consent will not be arbitrarily withheld or
delayed," immediately before the word "except"; and (ii) in clause (a), insert
the words "or reorganization, incorporation, reincorporation, or reconstitution
into or as," immediately before the word "another."

(l) Severability. This Agreement shall be deemed to be invalid and unenforceable
if any provision of Sections 1(c), 2, 5, 6, or 11 (or any definition or
provision in Section 14 to the extent it relates to, or is used in or in
connection with, any such Section) shall be held to be invalid or unenforceable.

(m) Waiver of Trial by Jury. Each party hereby irrevocably waives any and all
right to trial by jury in any Proceeding.

                                        8

<PAGE>

                                     Annex B

The following provisions shall apply with respect to Paragraph 13 to the ISDA
Form CSA.

(a) Credit Support Obligations.

     (i) "Credit Support Amount" has the meaning specified in Paragraph 3,
     except that the Credit Support Amount for Counterparty shall never be less
     than the Independent Amount.

     (ii)  Eligible Collateral. The following items will qualify as "Eligible
     Collateral" for Counterparty.

                                                             Valuation
                                                             Percentage
                                                             ----------

     (A)      Cash                                              100%

     (B)      negotiable debt obligations                      98.5%
              issued by the U.S. Treasury
              Department having an original
              maturity at issuance of not
              more than one year ("Trea-
              sury Bills")

     (C)      negotiable debt obligations                      98.5%
              issued by the U.S. Treasury
              Department having an original
              maturity at issuance of more
              than one year but not more
              than 10 years ("Treasury Notes")

     (D)      negotiable debt obligations                      98.5%
              issued by the U.S  Treasury
              Department having an original
              maturity at issuance of more
              than 10 years ("Treasury Bonds")

     (E)      negotiable debt obligations                      98.5%
              which are issued and/or
              guaranteed as to both principal
              and Interest by the Federal Home
              Loan Mortgage Corporation
              ("FHLMC"), the Federal National
              Mortgage Association ("FNMA"),
              or the Government National Mort-
              gage Association ("GNMA"),
              including mortgage-backed
              securities and REMICs (collectively,
              "Agency Securities"), but excluding
              interest only securities, principal only
              securities and residual interests.

                                        9

<PAGE>

     (iii) Thresholds.

           (A) "Independent Amount" means with respect to Counterparty: 2% of
           the initial Notional Amount.

           (B) "Threshold" means with respect to GSCM: Not applicable, it being
           understood that GSCM shall be only a Secured Party hereunder and not
           a Pledgor and shall be under no obligation to Transfer Collateral
           hereunder; and with respect to Counterparty: zero.

           (C) "Minimum Transfer Amount" means with respect to a party,
           $1,000,000; provided, however, that if an Event of Default has
           occurred and is continuing with respect to a party, the Minimum
           Transfer Amount with respect to such party shall be zero.

           (D) Rounding. The Delivery Amount and Return Amount will be rounded
           up and down, respectively, to the nearest integral multiple of
           $100,000.

(b) Valuation and Timing.

     (i)   "Valuation Agent" means GSCM.

     (ii)  "Valuation Date" means each New York Banking Day.

     (iii) "Valuation Time" means the close of business in the city of the
     Valuation Agent on the Local Business Day before the Valuation Date or date
     of calculation, as applicable; provided that the calculations of Value and
     Exposure will be made as of approximately the same time on the same date.

     (iv)  "Notification Time" means no later than 1:00 p.m., New York time, on
     a Local Business Day; provided, however, that the Valuation Agent will only
     give notice of its calculations to a party upon request by such party.

(c) Conditions Precedent. The following Termination Events will be a "Specified
Condition" for the party specified (that party being the Affected Party if the
Termination Event occurs with respect to that party): With respect to
Counterparty only, Credit Event Upon Merger and Illegality.

(d) Dispute Resolution.

     (i) "Resolution Time" means 1:00 p.m., New York time, on the Local Business
     Day following the date on which the notice is given that gives rise to a
     dispute under Paragraph 5.

     (ii) "Value". For the purpose of Paragraph 5(i)(C) and 5(ii), the Value of
     Posted Credit Support will be calculated as follows:

           (A) The Value of Cash will be the face amount thereof, multiplied by
           the applicable Valuation Percentage.

           (B) With respect to any Treasury Bills, Treasury Notes, Treasury
           Bonds, or Agency Securities (referred to herein as "Securities"), the
           sum of (I) (x) the mean of the high bid and low asked prices quoted
           on such date by any principal market maker for such Securities chosen
           by the Disputing Party, or (y) if no quotations are available from a
           principal market maker on such date, the mean of such high bid and
           low asked prices as of the day, next preceding such date, on which
           such

                                       10

<PAGE>

           quotations were available, plus (II) the accrued interest on such
           Securities (except to the extent Transferred to a party pursuant to
           any applicable provision of this Agreement or included in the
           applicable price referred to in (I) of this clause (B)) as of such
           date, multiplied by the applicable Valuation Percentage.

(e) Distributions and Interest Amount.

     (i)   Interest Rate. The "Interest Rate" will be the overnight Federal
     Funds (Effective) rate, as advised by Telerate p. 120, minus 25 basis
     points.

     (ii)  Transfer of Interest Amount. The Transfer of the Interest Amount will
     be made on the last Local Business Day of each calendar month and on any
     Local Business Day that Posted Collateral in the form of Cash is
     Transferred to the Pledgor pursuant to Paragraph 3(b).

                                       11

<PAGE>

                                     Annex C

     Redemption Period                                    Redemption Price
--------------------------------------------------------------------------------
From July 1, 2003 through June 30, 2004                       $114.27
From July 1, 2004 through June 30, 2005                       $113.51
From July 1, 2005 through June 30, 2006                       $112.76
From July 1, 2006 through June 30, 2007                       $112.00

                                       12

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