Document:

Prepared by MerrillDirect

Exhibit 10.12

 

PERSONAL AND CONFIDENTIAL

May
2, 2001

Mr.
Peter T. Paul

550 Riviera Circle

Larkspur, CA 94939

Dear
Peter:

             This
letter agreement (“Agreement”) will confirm the terms negotiated and reached
between you and GreenPoint Financial Corp. (“GreenPoint”) concerning your
separation from GreenPoint, GreenPoint Bank (the “Bank”), GreenPoint Credit,
LLC (“Credit”), and each of their respective affiliates (collectively, the
“GreenPoint Entities”).  Under this
Agreement, you and GreenPoint will be, from time to time, referred to
collectively as the “Parties”. This Agreement has been entered into between the
Parties after each of the Parties consulted with its respective counsel.

             1.          Separation Date.  You hereby give notice that effective May 1,
2001 (the “Separation Date”) you will be resigning from your employment with
the GreenPoint Entities, including, without limitation, your positions as Vice
Chairman of GreenPoint and the Bank and as President and Chief Executive
Officer of Credit.  Further, you hereby
give notice that effective on the Separation Date you will be resigning from
the Board of Directors and the Management Committee of any of the GreenPoint
Entities on which you serve as a member, except that, subject to Paragraph
2(c), at this time you will not be resigning as a member of the Boards of
Directors of GreenPoint and the Bank. 
Your notice and commitment to resign are firm and irrevocable.

             2.          Consideration.  In exchange for your execution of this
Agreement (provided you do not revoke your acceptance) and your compliance with
all of its terms, you will be provided with the payments, benefits and rights
set forth in this Agreement.

             (a)         Consulting Services.  Subject to the terms and conditions herein,
GreenPoint agrees to retain you as a consultant to Thomas S. Johnson and Bharat
B. Bhatt, in their capacity as Chairman and Chief Executive Officer and
President and Chief Operating Officer, respectively, of GreenPoint and the Bank
for the period commencing on the Separation Date and ending on May 1, 2003 (the
“Consulting Period”); provided, however, that either you or
GreenPoint can earlier terminate the Consulting Period for any reason in the
sole discretion of either you or GreenPoint. 
You acknowledge that while serving as a consultant under the terms of
this Agreement you shall not possess the power or authority to make binding
commitments on behalf of any of the GreenPoint Entities or their respective
employees, officers or directors. While you are serving as a consultant under
the terms of this Agreement, you agree that you will be available on an as
needed basis, as determined in the sole discretion of Mr. Johnson or Mr. Bhatt,
to provide advice regarding new and existing projects.  The ability of Mr. Johnson and Mr. Bhatt to
request consultation and your obligation to provide consulting services under
the terms of this Agreement shall not be assigned or transferred to any other
person or entity.

             (b)        Consulting Fees.  While serving as a consultant during the
Consulting Period, GreenPoint shall pay you a consulting fee of $120,000 per
year, payable in 12 equal monthly installments in arrears on the first day of
each month, with the first such payment being made on June 1, 2001.  It is agreed that you will submit invoices
to GreenPoint for reasonable expenses incurred by you in connection with
consulting services you provide under the terms of this Agreement and that
GreenPoint will reimburse you for these reasonable expenses in accordance with
its policy as in effect from time to time. 
While serving as a consultant during the Consulting Period, your
services are to be rendered as an independent contractor, and you are solely
responsible for the payment of all Federal, state, local and foreign taxes that
are required by applicable laws or regulations to be paid with respect to the
consulting fees.  GreenPoint shall not
make any deductions, withholdings or payments from the consulting fees payable
to you under this Agreement.  You agree
to indemnify GreenPoint for any tax liability it may incur by virtue of any
payments made by GreenPoint to you should you fail to file and pay all
appropriate taxes as a self-employed person. 
Upon the cessation of your consulting services, whether by you or by
GreenPoint for any reason in the sole discretion of either you or GreenPoint,
GreenPoint’s obligation to pay you the consulting fees shall cease, provided
that GreenPoint shall be obligated to pay you a pro-rata portion of the monthly
consulting fee in respect of the month in which your services cease.

             (c)         Board Memberships.  While serving as a consultant during the
Consulting Period, you shall continue to have the right to serve as a member of
the Board of Directors of each of GreenPoint and the Bank.  Upon your cessation of service as a
consultant, either upon the expiration of the Consulting Period or as a result
of termination of your services by you or by GreenPoint for any reason in the
sole discretion of either you or GreenPoint, you shall automatically cease to
be a member of such Boards of Directors. 
You acknowledge that, other than the consulting fees provided herein,
you shall not be entitled to receive any fees for your service to the Boards of
Directors of GreenPoint and the Bank, nor shall you be entitled to participate
in any benefit or compensation plan or program.  It is agreed that you will submit invoices to GreenPoint for
reasonable expenses incurred by you in connection with your membership on these
Boards and that GreenPoint will reimburse you for these reasonable expenses in
accordance with its policy as in effect from time to time.

             (d)        Benefit Plans. You acknowledge
that effective as of the Separation Date and thereafter while serving as a
consultant you shall not be entitled to participate in any of the employee
benefit, compensation or incentive plans of any of the GreenPoint Entities,
except as specifically provided herein and, as appropriate, you will be given
the opportunity to elect COBRA continuation health insurance coverage under the
applicable health insurance plan maintained by Credit and may continue health
insurance coverage until the end of the COBRA period at your own expense by
paying the monthly insurance premium in full each month.  You acknowledge that the GreenPoint Entities
provide valuable pension, welfare, fringe and other compensatory benefits to
certain eligible employees.  You agree
that even if a court or government agency were to determine that during the
Consulting Period you and GreenPoint (or any of the other GreenPoint Entities)
had a common law employer-employee relationship, you still will be bound by
this Agreement and will not be entitled to receive from any of the GreenPoint
Entities or have any of the GreenPoint Entities provide on your behalf any
different or additional pay, or any benefits, insurance coverage, tax payments
or withholding, or compensation of any kind. 
You hereby knowingly and voluntarily waive any right you may have to
demand, claim or obtain participation, benefits or payments in or from the
pension, welfare and/or fringe benefits plans, policies, programs or other
arrangements maintained by any of the GreenPoint Entities for their employees
on the ground of the performance of services under this Agreement.

             Notwithstanding
anything contained herein to the contrary, solely with respect to the option to
acquire GreenPoint common stock granted under the (i) Stock Option Agreement
between GreenPoint and you dated as of March 30, 1999 pursuant to GreenPoint’s
Amended and Restated 1994 Stock Incentive Plan, you will vest in an additional
25,000 option shares on the earlier to occur of (q) March 30, 2002 and (r) your
death or Disability or a Change in Control (as those terms are defined in the
1994 Stock Incentive Plan) and (ii) Stock Option Agreement between GreenPoint
and you dated as of January 20, 2000 pursuant to GreenPoint’s 1999 Stock
Incentive Plan, you will vest in an additional 41,666 option shares on the
earlier to occur of (t) January 20, 2002 and (u) your death or Disability or a
Change in Control (as those terms are defined in the 1999 Stock Incentive
Plan); in each case, without regard to the earlier termination of the
Consulting Period by you or GreenPoint for any reason in the sole discretion of
either you or GreenPoint.  The option
shares that vest as provided in the immediately preceding sentence will remain
exercisable for a period of one year from the applicable vesting date, which
period, in each case, will not be extended as a result of your death or
Disability or a Change in Control (as those terms are defined in the 1994 and 1999
Stock Incentive Plans) prior to the expiration of each respective exercise
period.  In addition, while serving as a
consultant during the Consulting Period, solely with respect to the 2000 grant,
you will vest in an additional 41,668 option shares on the earlier to occur of
(w) January 20, 2003 and (x) your death or Disability or a Change in Control
(as those terms are defined in the 1999 Stock Incentive Plan); provided,
however, that if the applicable vesting date is the date set forth in
(w) above, you will not vest in the additional 41,668 option shares if, by
January 20, 2003, the Consulting Period has been terminated by you or
GreenPoint for any reason in the sole discretion of you or GreenPoint. The
option shares, if any, that vest as provided in the immediately preceding
sentence will remain exercisable for a period of one year from the applicable
vesting date, which period will not be extended as a result of your death or
Disability or a Change in Control (as those terms are defined in the 1999 Stock
Incentive Plan) prior to the expiration thereof. The option shares that are
fully vested on May 1, 2001 (which GreenPoint acknowledges to be 50,000 option
shares with respect to the 1999 grant and 41,666 option shares with respect to
the 2000 grant) will remain exercisable until April 30, 2002, which period will
not be extended as a result of your death or Disability or a Change in Control
(as those terms are defined in the 1994 and 1999 Stock Incentive Plans) prior
to the expiration thereof. You shall have the right to exercise the vested
portion of any such option upon the payment of the exercise price and any
applicable withholding taxes until the expiration of the periods set forth
herein.  To the extent any vested option
shares are unexercised as of the expiration of the applicable vesting period
set forth herein, they shall expire and be forfeited immediately. You
acknowledge that except as provided herein (y) any rights in respect of any
other equity awards granted to you under the Stock Incentive Plans referred to
above shall expire and be forfeited as of the Separation Date, including,
without limitation, the option to acquire GreenPoint common stock under the
Stock Option Agreement between GreenPoint and you dated as of February 9, 2001
pursuant to GreenPoint’s 1999 Stock Incentive Plan and (z) all other terms of
the Stock Option Agreements referred to above as well as the 1994 and 1999
Stock Incentive Plans (as they may be amended from time to time) shall remain
in effect.

             You
acknowledge that the determination of whether you are “retired” or otherwise
qualify for “retirement” as those terms 
(or any derivative terms) are used under the plans, policies, programs,
practices, etc. maintained by any of the GreenPoint Entities from time to time
will be made solely and exclusively under the terms and conditions of each
applicable plan, policy, program, practice, etc., and nothing in this Agreement
shall modify or otherwise change the terms or meaning of any such plan, policy,
program, practice, etc. with respect to your rights or the rights of any other
person, or the obligations of any of the GreenPoint Entities thereunder.

             3.          Employment Letter
Agreement/Restrictive Covenants. 
You acknowledge that pursuant to the employment letter agreement between
you and GreenPoint dated as of December 4, 1998 (the “Employment Letter”)
(attached hereto and made part hereof as Exhibit I), you will continue
to be subject to the restrictive covenants set forth in Exhibit B
thereto through the Separation Date and thereafter for the applicable periods
set forth therein.  You and the
GreenPoint Entities acknowledge and agree that with respect to the restrictive
covenants set forth in Exhibit B to the Employment Letter, the
“Restricted Period” ends on January 1, 2003.

             4.          Termination of Change in Control
Agreement.  You acknowledge and
agree that effective as of May 1, 2001, the Change in Control Agreement entered
into between you and GreenPoint as of March 30, 1999 is terminated, and you
further agree that the Paul Releasors (as defined in Paragraph 5 below) have no
rights and the GreenPoint Releasees (as defined in Paragraph 5 below) have no
obligations thereunder. 

             5.          Release of Claims by Paul.  You, including for this purpose your
representatives, agents, heirs, executors, administrators, successors, assigns,
present or former spouse, dependants, children and family members (“Paul
Releasors”), hereby release the GreenPoint Entities, including for this purpose
their respective members, subsidiaries, affiliated entities, predecessors,
successors and assigns, and third party beneficiaries, and all of their
respective current and former employees, officers, directors, management
committees, fiduciaries and agents (“GreenPoint Releasees”), of and from any
and all claims, actions, causes of action, suits, and demands, including
attorney’s fees and costs, whatsoever, in law or equity, which against the
GreenPoint Releasees the Paul Releasors ever had, now have or hereafter can,
shall or may have for, upon, or by reason of any matter, cause or thing
whatsoever in connection with any relationship between the Paul Releasors and
the GreenPoint Releasees, known or unknown, including, without limitation,
rights under federal, state or local laws prohibiting age or other forms of
discrimination, including Title VII of the Civil Rights Act of 1964; Sections
1981 through 1988 of Title 42 of the United States Code; the Age Discrimination
in Employment Act of 1967; the Older Workers Benefit Protection Act; the
Employee Retirement Income Security Act of 1974; the Fair Labor Standards Act;
the Americans with Disabilities Act; the Family and Medical Leave Act; the
National Labor Relations Act; the Immigration Reform Control Act; the
Occupational Safety and Health Act; any and all other federal, state or local
human rights, retaliation, whistle blower, discrimination, bias, civil rights,
wage-hour, benefits, pension or labor laws or any other federal, state or local
law, rule, regulation or ordinance, including, without limitation, those state
laws that are set forth in Exhibit II to this Agreement, any wrongful
discharge, public policy, contract, tort or common law; and any alleged
entitlement to costs, fees or expenses, including attorneys’ fees, but
excluding any claims under this Agreement and any right to receive vested
benefits, if any, under the Stock Incentive Plans referred to in Paragraph 2
above and any tax-qualified retirement plan maintained by GreenPoint in which
you are a participant as of the Separation Date, any right to receive COBRA
continuation health insurance coverage and any right to claim unemployment
insurance benefits.

The GreenPoint Releasees and the Paul
Releasors acknowledge and agree that the Paul Releasors are not waiving any
rights or claims against the GreenPoint Releasees that may arise after the date
on which this Agreement becomes effective.

             5A.       Release of Claims by GreenPoint.  The GreenPoint Entities, including for this
purpose their respective members, subsidiaries, affiliated entities,
predecessors, successors and assigns, and third party beneficiaries, and all of
their respective current and former employees, officers, directors, management
committees, fiduciaries and agents (“GreenPoint Releasors”) hereby release you,
including for this purpose your representatives, agents, heirs, executors,
administrators, successors, assigns, present or former spouse, dependants,
children and family members (“Paul Releasees”), of and from any and all claims,
actions, causes of action, suits, and demands, including attorney’s fees and
costs, whatsoever, in law or equity, which against the Paul Releasees the
GreenPoint Releasors ever had, now have or hereafter can, shall or may have
for, upon, or by reason of any matter, cause or thing whatsoever in connection
with any relationship between the GreenPoint Releasors and the Paul Releasees,
known or unknown, including, without limitation, the use by you or the
Headlands Foundation, Headlands Estates or the Headlands Group of the Headlands
name or the lighthouse logo previously used by Headlands Mortgage Company,
rights under any federal, state or local law, rule, regulation or ordinance,
public policy, contract, tort or common law, and any alleged entitlement to
costs, fees or expenses, including attorneys’ fees, except that the GreenPoint
Releasors expressly do not waive any claim, cause of action, right of indemnity
or any other relief they may have or be entitled to against the Paul Releasees
under this Agreement, or for breach of fiduciary duty, criminal conduct, fraud,
misappropriation, embezzlement or violation of the restrictive covenants
described in Paragraph 3 above.

The Paul Releasees and the GreenPoint
Releasors acknowledge and agree that the GreenPoint Releasors are not waiving
any rights or claims against the Paul Releasees that may arise after the date
on which this Agreement becomes effective.

             6.          Waiver of Unknown Claims.  Except as otherwise excepted under or
excluded from Paragraphs 5 and 5A above, this is a full and final release
covering all unsuspected, unknown, undisclosed and unanticipated losses,
wrongs, injuries, debts, claims or damages to the GreenPoint Entities and you
which may have arisen, or may arise from any act or omission prior to the
effective date of this Agreement, and which arise out of or are related,
directly or indirectly, to the dealings between the GreenPoint Entities and you
prior to the effective date of this Agreement. 
Therefore, the GreenPoint Entities and you waive any and all rights or
benefits which the GreenPoint Entities and you may now have, or in the future
may have, under the terms of Section 1542 of the California Civil Code, which
provides as follows:

A
general release does not extend to claims, which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.

The GreenPoint Entities and you
acknowledge that the GreenPoint Entities and you have read this Agreement,
including the waiver of California Civil Code Section 1542, and that the
GreenPoint Entities and you have been provided the opportunity to consult with
counsel, and did consult with counsel chosen by the GreenPoint Entities and
you, about this Agreement and specifically about the waiver of Section 1542,
that the GreenPoint Entities and you understand this Agreement and the Section
1542 waiver, and so freely and knowingly enter into this Agreement.  The GreenPoint Entities and you acknowledge
that the GreenPoint Entities and you may hereafter discover facts different
from or in addition to those the GreenPoint Entities and you know or now
believe to be true with respect to the matters released or described in this
Agreement and the GreenPoint Entities and you agree that the releases and
agreements contained herein shall be and will remain effective in all respects
notwithstanding any later discovery of any such different or additional
facts.  The GreenPoint Entities and you
hereby assume any and all risk of any mistake in connection with the true facts
involved in the matters, disputes, or controversies described herein or with
regard to any facts, which are now unknown to the GreenPoint Entities and you
relating hereto.

             7.          No Claims Exist.  Solely with respect to the claims, etc.
released by the GreenPoint Releasors in Paragraph 5A above, GreenPoint confirms
that by or with respect to the GreenPoint Releasors or for the GreenPoint
Releasors or on behalf of the GreenPoint Releasors no claim, charge, complaint
or action by the GreenPoint Releasors against the Paul Releasees exists in any
forum or form. In the event that any such claim is filed, the GreenPoint
Releasors shall not be entitled to any relief or recovery therefrom. Solely
with respect to the claims, etc. released by the Paul Releasors in Paragraph 5
above, you confirm that by or with respect to the Paul Releasors or for the
Paul Releasors or on behalf the Paul Releasors no claim, charge, complaint or
action by the Paul Releasors against the GreenPoint Releasees exists in any
forum or form. In the event that any such claim is filed, the Paul Releasors
shall not be entitled to any relief or recovery therefrom. You agree that in
the event any class or collective action is or was commenced against the
GreenPoint Releasees based upon events occurring prior to the effective date of
this Agreement, the Paul Releasors immediately shall withdraw and/or opt out of
said class or collective action upon learning of the inclusion of the Paul
Releasors, otherwise you will be in breach of this Agreement.  You further agree that the Paul Releasors
shall not be entitled to any relief or recovery from any such class or
collective action should the Paul Releasors be included in any such action
knowingly or unknowingly.

             8.          Time to Consider and Right of
Revocation.  You understand that (a)
you have twenty-one (21) days to consider the terms and the meaning of this
Agreement, (b) you should seek advice from an attorney to consider the terms
and the meaning of this Agreement, (c) you may revoke this Agreement for a
period of seven (7) days following your signing of this Agreement, and (d) no
modifications, alterations, amendments or any other changes to this Agreement,
whether material or immaterial, restart, extend or renew the running of the
twenty-one (21) day period in which to consider this Agreement.  You acknowledge that if you execute this
Agreement prior to the expiration of the 21-day period or if you choose to
forego the advice of an attorney, you do so freely, knowingly and voluntarily
and waive any and all future claims that such action or actions would affect
the validity of this Agreement.  This
Agreement will not be effective or enforceable until the revocation period has
expired without any revocation by you. 
Any revocation within this period must be submitted in writing and
received within the revocation period by GreenPoint Financial Corp., 90 Park
Avenue, New York, New York, 10016, Attention: Dr. Mary M. Massimo, Human
Resources Division, and must state, “I hereby revoke my acceptance of the
letter agreement between GreenPoint Financial Corp. and me” or words to that
effect.  If the last day of the
revocation period is a Saturday, Sunday, or legal holiday in New York, then the
revocation period shall not expire until the next following day which is not a
Saturday, Sunday, or legal holiday.

             9.          Knowing and Voluntary.  The Parties agree that they have entered
into this Agreement after having had the opportunity to consult an attorney,
with such consultation as the Parties deemed appropriate and that the Parties
have a full understanding of their rights and obligations under this Agreement
and of the effect of executing this Agreement. 
The Parties further acknowledge that their execution of this Agreement
is made voluntarily and with full understanding of its consequences and has not
been coerced in any way.  In connection
with this matter, the Parties have consulted with and have been represented by
counsel, and the Parties acknowledge that they chose their respective counsel
and are satisfied in all respects with the advice, services and representation
provided by such counsel.  The terms of
this Agreement are the product of mutual negotiation and compromise between the
Parties.  The meaning, effect and terms
of this Agreement have been fully explained to the Parties by their respective
counsel.

             10.        Non-Admission.  The Parties acknowledge and agree that this
Agreement shall not be construed as an admission of any fault, wrongdoing or
liability whatsoever on the part of either of the Parties and that each of the
Parties expressly denies that it violated any law, public policy, contract, any
of the policies, practices or procedures of the GreenPoint Entities or had any
liability to each other.

             11.        Non-Disclosure.  (i) You:

                           (a)         agree that you shall not, except as
necessary to satisfy your duties as a shareholder of GreenPoint or as a
director of GreenPoint and the Bank, or as required to enforce this Agreement,
or as compelled by law (and upon being so compelled will notify GreenPoint
immediately), publicize or disclose to any person or entity any term of or the
making of this Agreement or the facts or circumstances relating thereto; provided,
however, you shall disclose in the appropriate circumstances the
restrictive covenants described in Paragraph 3 above.  This covenant of confidentiality includes, but is not limited to,
the terms or the making of this Agreement and your receipt of the consideration
hereunder.  Other than to discuss the
terms hereof with your spouse, attorney or tax advisor (each of whom must first
agree not to make any disclosure that you yourself could not make), you will
not disclose to anyone any facts, documents or other information in connection
with this matter.  Upon receipt of any
inquiry regarding this matter by prospective employers or others, you, or any
of your representatives, shall state only that your separation from the
GreenPoint Entities was mutually agreeable. You shall be liable for any damages
caused by your or any other person’s violation of this covenant;

                           (b)        confirm that, as of the date of the
execution of this Agreement, you have not violated the terms of this covenant
of confidentiality; and

                           (c)         understand and agree that any violation
of this covenant of confidentiality will constitute a material breach of this
agreement, which will cause GreenPoint to suffer immediate, substantial and
irreparable injury and which will be a sufficient basis for an award of
injunctive relief and monetary damages without affecting the remainder of this
Agreement and without affecting GreenPoint’s right to seek or obtain other
equitable or legal relief or remedies.

                                        (ii)
GreenPoint agrees that it shall not, except as compelled by law, or as required
by the U.S. Securities and Exchange Commission or the New York Stock Exchange,
or as necessary to continue to operate its business, as determined in its sole
discretion, or as required to enforce this Agreement, publicize or disclose to
any person or entity any term of or the making of this Agreement. You
understand and acknowledge that GreenPoint shall attach this Agreement as an
Exhibit to its Forms 10-Q and/or Forms 10-K filed with the U.S. Securities and
Exchange Commission. Upon receipt of any inquiry regarding this matter by
prospective employers of you or by others, executive officer representatives of
GreenPoint who are authorized to discuss this matter, shall state only that
your separation from the GreenPoint Entities was mutually agreeable. GreenPoint
confirms that, as of the date of the execution of this Agreement, it has not
violated the terms of this covenant of confidentiality.

             12.        Cooperation/Non-Disparagement.  You agree not to make any remarks or take
any actions that directly or indirectly negatively impact the operations of the
GreenPoint Entities. You further agree not to make disparaging or derogatory
remarks concerning GreenPoint Entities to any third party.  GreenPoint agrees to use reasonable efforts
to ensure that the executive officer representatives of GreenPoint who are authorized
to discuss this matter do not make disparaging or derogatory remarks concerning
you to any third party.

             13.        Return of Property.  You agree to return to GreenPoint by April
30, 2001 any property of the GreenPoint Entities in your possession, including
but not limited to computer equipment (hardware, including laptop computers,
and software), beepers, cellular telephones, keys, credit cards, expense
accounts, and identification and access and control cards; provided,
however, that until April 30, 2002 GreenPoint will leave on the phone number
previously assigned to you in GreenPoint’s Larkspur, CA office a message in
your voice advising of your forwarding phone number and will establish on the
e-mail address previously assigned to you by GreenPoint an automatic reply
advising of your new phone number, postal address and e-mail address.  You agree to account by April 30, 2001 for
all expenses not already accounted for (e.g., credit card bills) and to
reimburse GreenPoint by April 30, 2001 for any cash advances or unauthorized
expenses.  Except for records properly
obtained and maintained by you in your capacity as a shareholder and director,
you also agree to return all documents, in whatever form you possess them (e.g.,
whether in hard-copy or electronically) bearing upon the business of the GreenPoint
Entities, including but not limited to research data, production reports,
product descriptions, customer lists, phone lists, manuals, reports or other
records relating to the business or processes of the GreenPoint Entities and
you will not maintain, in any form, any copies of such documents.

             14.        Entire Agreement.  This Agreement (including the attachments
hereto) constitutes our complete agreement and, except as provided in Paragraph
15 below, may not be changed except by a writing signed by you and
GreenPoint.  This Agreement shall be
binding upon and inure to the benefit of you, GreenPoint and the successors,
assigns, beneficiaries, heirs and legal representatives of you and GreenPoint.

             15.        Construction.  This Agreement shall be governed and interpreted
by and in accordance with the laws of the State of California without regard to
its conflict of laws provision.  In the
event any provision of this Agreement shall be deemed unenforceable or void,
all remaining provisions of this Agreement shall remain in full force and
effect, except as specified below.  In
the event that any of the provisions of this Agreement shall be deemed by any
court of competent jurisdiction, or any arbitrator in any proceedings in which
the GreenPoint Releasees, the Paul Releasors, the Paul Releasees or the
GreenPoint Releasors shall be a party, to be unenforceable because of its
duration, scope, or area, it shall be deemed to be and shall be amended to
conform to the scope, period of time and geographical area which would permit
it to be enforced.  The court or
arbitrator shall make such other modifications as are necessary to effectuate
the intent of the Parties in entering into this Agreement.

             16.        No Payment of Legal Fees.  Each of the Parties shall be responsible for
its own legal fees or costs incurred, if any, in connection with the
negotiation and settlement of this Agreement.

             17.        Legal and Administrative Proceedings.  During the Consulting Period, you agree to
cooperate, assist, and participate, without charge and with reasonable travel
expenses and disbursements, in connection with any legal, administrative or
other similar proceeding in which you were involved during your employment with
the GreenPoint Entities and their respective predecessors and in any other legal,
administrative or other similar proceeding filed against or brought by the
GreenPoint Entities, including but not limited to meetings with attorneys for
the GreenPoint Entities and appearing at and testifying truthfully at any
proceeding where your presence is required. 
Specifically, you agree to be available on an as needed basis (as
reasonably determined by GreenPoint); provided, however, that (a)
GreenPoint will provide advance notice to you each time GreenPoint will need
you to be available, and (b) GreenPoint’s need for you to be available will not
unreasonably conflict with your employment or personal schedule.

             18.        Resolution of Disputes.  Except as may be required to enforce any
restrictive covenants set forth herein or in the Employment Letter, including Exhibit
B thereto, any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled solely by arbitration, in
accordance with the rules of the American Arbitration Association (“AAA”), in
Marin County, California, or if the AAA does not have an office in Marin
County, California, then in San Francisco, California.  In such arbitration, each party shall bear
its own legal fees and related costs, except that the parties shall share
equally the fee of the arbitrator.  To
the extent that any claim is found not to be properly subject to arbitration,
such claim shall be either decided by the U. S. District Court or the
appropriate state court in and for the District or County, as the case may be,
in San Francisco, California, and all such claims shall be adjudicated by a
judge sitting without a jury, to ensure rapid adjudication of those claims and
proper application of existing law.

             19.        Headlands Name/Logo. The
GreenPoint Entities agree not to contest or object to the use by the Headlands
Foundation, a California non profit public benefit corporation (the
"Headlands Foundation") of (i) the term "Headlands" in the
name of the Headlands Foundation and (ii) the lighthouse logo previously used
by Headlands Mortgage Company; provided, however, that (A) the
Headlands Foundation continues to qualify as a 501(c)(3) corporation under the
Internal Revenue Code of 1986, as amended, and (B) the Headlands Foundation
does not directly or indirectly engage in the business activity of residential
finance, including, without limitation, originating or servicing mortgage
loans.

 

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If the above
correctly reflects your understanding of the agreement negotiated and reached
between you and GreenPoint, kindly sign an original of this letter agreement
below where indicated and return it to me. 
The other original is for your files.

 

Very
truly yours,

	  	/s/	Mary M. Massimo	 
	 	

	 
	 	Mary M. Massimo	 
	 	Senior Vice President and	 
	 	Human
  Resources Director	 
	 	GreenPoint Financial Corp.	 

 

ACCEPTED
AND AGREED:

 

	/s/  	Peter
  T. Paul	 
	 	

	 
	 	Peter
  T. Paul	 
	 	 	 
	Date:	May 2, 2001	 

 

Peter T. Paul

Headlands Mortgage Company

Dear Mr. Paul:

             In
connection with the proposed transaction by and among GreenPoint Financial
Corp. (“GreenPoint”), Headlands Mortgage Company (“Headlands”) and GFC
Acquisition Corp. (“GFC”) (the “Merger”) and subject to the consummation of the
Merger, GreenPoint is pleased to extend to you an offer of employment in consideration
of the substantial contributions you are expected to make and the value that we
know you will bring to GreenPoint.  The
terms of the offer are as follows:

	1.	Term.
  GreenPoint agrees to employ you, and you agree to enter into the employ of
  GreenPoint, subject to the terms and conditions of this letter agreement, for
  the period commencing on the effective date of the Merger and ending on the
  second anniversary thereof (the “Term”), subject to earlier termination as
  set forth below.
	 	 
	2.	Title;
  Position. During the Term, you
  shall serve as a Vice Chairman of GreenPoint, as a member of the Board of
  Directors of GreenPoint (the “Board”) and as the Chief Executive Officer of
  Headlands, with responsibilities commensurate with such positions.   During the Term, you agree to devote your
  full attention, time, skill and energy to the business and affairs of
  GreenPoint and to use your best efforts to perform such responsibilities in a
  professional manner.   In the event
  that your employment with GreenPoint and its affiliates is terminated for any
  reason, you shall automatically cease to be a member of the Board.
	 	 
	3.	Compensation.  Your starting annual base salary will be
  $300,000.  You will be eligible to
  participate in a cash incentive compensation program, pursuant to the terms
  and conditions of the program made available to you by GreenPoint from time
  to time.
	 	 
	4.	Stock
  Options.   On the effective date of the Merger, you
  will be granted an option to purchase 75,000 shares of common stock of
  GreenPoint (the “Option”).  The Option
  will vest and become exercisable in three equal installments on each of the
  first, second and third anniversaries of the date of grant.  The Option will be governed by the terms
  of GreenPoint's Stock Option Plan and a Stock Option Agreement to be entered
  into between you and GreenPoint. 
  While employed by GreenPoint, you will be eligible to receive annual
  option grants as determined by the Compensation Committee of the Board.
	 	 
	5.	Other
  Benefits.  You will be eligible to participate in the
  benefit plans, programs and arrangements generally made available to you by
  GreenPoint from time to time on the terms and conditions thereof, including
  paid vacation, life insurance, health insurance, disability insurance and
  retirement benefits.  In addition, you
  shall be entitled to change in control protection for covered transactions or
  events occurring after the effective date of the Merger, in accordance with
  GreenPoint's standard change in control agreement for executives in the form
  attached hereto as Exhibit A.

 

	

6.	Termination
  of Employment.  If after the effective date of the Merger
  and prior to the second anniversary thereof, your employment is terminated by
  GreenPoint without Cause or you terminate your employment for Good Reason (each
  a “Qualifying Termination”), you will be paid the following amounts: (a) any
  earned and unpaid portion of your annual base salary through the date of
  termination, and (b) base salary for the period (the “Continuation Period”)
  equal to the longer of (x) twelve months or (y) the number of months from the
  date of termination until the second anniversary of the effective date of the
  Merger, as and when such amounts were otherwise payable in accordance with
  GreenPoint’s normal payroll practice. 
  In addition, during the Continuation Period (or, if earlier, the date
  you commence employment with a new employer), you will be entitled to
  continued health, life and disability insurance benefits on a similar basis
  as such benefits are generally provided to active employees of GreenPoint
  from time to time, including cost sharing. 
  The termination payments and benefits set forth in this Section 6 will
  not be paid to you to the extent you are also entitled to receive the payments
  and benefits provided under the change in control agreement described in
  Section 5 hereto.

For
purposes of this letter agreement, “Cause” shall mean:

	 	(i)	acts
  or omissions constituting gross negligence, recklessness or willful
  misconduct by you in respect of your fiduciary obligations or otherwise
  relating to the business of GreenPoint or any of its affiliates;
	 	 	 	 
	 	(ii)	a
  material breach by you of this letter agreement; or
	 	 	 	 
	 	(iii)	your
  conviction of or entry of a plea of nolo contendere to a charge of fraud,
  misappropriation or  embezzlement.

             

              For purposes of this letter agreement, “Good
Reason” shall mean:

	 	(i)	a
  reduction in your title and/or compensation (each as provided herein) or the
  assignment to you of any duties not consistent with those of a senior
  executive of GreenPoint, except in connection with GreenPoint’s termination
  of your employment for Cause;
	 	 	 
	 	(ii)	any
  material breach of this letter agreement by GreenPoint, including, but not
  limited to, a reduction by GreenPoint in your annual base salary as set forth
  herein or a change in the conditions of your employment (e.g.,
  including, without limitation, a failure by GreenPoint to provide you with
  incentive compensation and benefit plans that provide incentive compensation
  opportunity or benefits, in each case comparable to those made available
  under the plans or programs provided to you by GreenPoint on the effective
  date of the Merger and at the appropriate level for the duties of a similarly
  situated officer), other than an alteration in the terms of the programs or benefit
  plans of general applicability; or
	 	 	 
	 	(iii)	the
  relocation of your principal office location to a location more than 25 miles
  from its location as of the effective date of the Merger, except for required
  business travel consistent with your duties.

 

Notwithstanding
the foregoing, no event, action or omission shall constitute Good Reason if you
shall have consented in writing thereto. 
You agree to provide GreenPoint with 30 days advance written notice of
any termination of your employment for Good Reason and that any such notice of
termination for Good Reason will set forth with specificity the basis for and
the events claimed to constitute Good Reason.

                                        You
may terminate your employment with GreenPoint at any time without Good Reason
by giving GreenPoint written notice not less than 120 days in advance of the
date of termination.  Upon any
termination of your employment (other than a Qualifying Termination), this
letter agreement shall terminate without further obligation to you other than
for the payment of earned and unpaid annual base salary through the date of
termination.

	7.	Restrictive
  Covenants.  In consideration of the grant of the
  Option and other good and valuable consideration (as more fully described in
  Exhibit B hereto), you will be subject to the restrictive covenant agreement
  set forth in Exhibit B attached hereto. 
  In addition, you will not disclose the terms of this letter agreement
  to any third party, except your spouse, if any, and your accountant and
  attorney, and any prospective employer. The provisions of the restrictive
  covenants set forth herein and in Exhibit B will remain in full force and
  effect until the expiration of the period specified therein, notwithstanding
  the earlier termination of your employment hereunder or of the Term of this
  letter agreement.
	 	 
	8.	Other
  Agreements.  This letter agreement supersedes and
  terminates all prior employment, severance or change of control agreements
  and understandings between you and Headlands or its affiliates.  You agree that your outstanding options to
  acquire shares of Headlands Common Stock will be treated as provided for in
  the Agreement and Plan of Merger dated as of December 8, 1998 by and among,
  GreenPoint, Headlands and GFC.

 

As I am sure you understand, the
effectiveness of this letter agreement and of the offer of employment is
contingent upon (a) GreenPoint, Headlands and GFC entering into the Agreement
and Plan of Merger and the consummation of the transaction contemplated by that
Agreement, and (b) your acceptance of this offer by signing an original of this
letter.  If these conditions are
satisfied, your employment with GreenPoint will start as of the effective date
of the Merger.

We look forward to your acceptance of
this offer and to a long and mutually rewarding relationship.

Sincerely,

 

	/S/  S. A. Ibrahim	 
	

	 
	S.
  A. Ibrahim	 
	Executive
  Vice President	 

 

I accept the offer of employment made to
me by

GreenPoint Financial Corp. dated December 4, 1998.

In accepting this offer, I agree that I did not rely

on any promises or representations, other than 

those made in this letter.

	Signature:	/S/  Peter T. Paul	 
	 	

	 
	 	Peter
  T. Paul	 
	 	 	 
	Date:	December
  6, 1998	 

EXHIBIT
B

Restrictive
Covenant Agreement

             You
acknowledge that during the course of your employment with GreenPoint Financial
Corp. (“GreenPoint”) you will have complete access to highly confidential
information and trade secrets relating to GreenPoint's and GreenPoint's
subsidiaries', divisions' or any affiliated or related entities'
("Affiliated Entities") non-conforming mortgage banking business (the
“Non-Conforming Mortgage Banking Business”), which is not generally in the
public domain.  For purposes of these
restrictive covenants, "Non-Conforming Mortgage Banking Business"
means the business of originating, purchasing, selling and servicing mortgage
loans that are non-conforming with respect to documentation or other
underwriting criteria or credit.  Such
trade secrets and confidential information include, but are not limited to,
production reports, product descriptions, customer lists, phone lists, sales
and marketing strategies and plans for future business, business development
and methods, procedures and devices, business and customer contacts.  Moreover, you will have complete access to
GreenPoint's and/or its Affiliated Entities' expertise in the Non-Conforming
Mortgage Banking Business, its strategies and, perhaps most significantly, its
highly trained staff.  You specifically
acknowledge and agree that the Non-Conforming Mortgage Banking Business is a
highly specialized "niche". 
You further acknowledge and agree that as a result of your access to the
trade secrets and confidential information during the course of your employment
at Headlands Mortgage Company (“Headlands”) and its affiliates and GreenPoint
you developed skill and expertise in the area of the Non-Conforming Mortgage
Banking Business which allows you to provide unique and special services to
GreenPoint in the area of the Non-Conforming Mortgage Banking Business.

             All
of these factors place you in a unique position to advantageously compete with
GreenPoint and/or its Affiliated Entities or assist a competitor in competing
with GreenPoint and/or its Affiliated Entities in the Non-Conforming Mortgage
Banking Business by utilizing such trade secrets or confidential information,
including utilizing such information to lure away key GreenPoint
employees.  You further agree that such
unfair competition would cause irreparable harm to GreenPoint.

             Therefore,
in consideration of the grant of the Option (as that term is defined in the
letter agreement between GreenPoint and you dated December 4, 1998 (the “Letter
Agreement”)) and for the consideration being received by you in connection with
the transaction (the “Merger”) contemplated by the Agreement and Plan of Merger
by and among GreenPoint, Headlands and GFC Acquisition Corp. (the “Merger
Agreement”), which transaction is a transaction described in Section 16601 of
the California Business and Professions Code and acknowledging that you are a
selling shareholder of Headlands for purposes of said Section 16601, you
voluntarily, knowingly and willfully agree to the following:

	1.	For
  the period commencing on the effective date of the Merger and ending two (2)
  years after your separation from employment from GreenPoint for any reason
  (the “Restricted Period”), you will not directly or indirectly solicit,
  induce, influence, aid or suggest to any employee whose employment directly
  or indirectly relates or related to GreenPoint's Non-Conforming Mortgage Banking
  Business and who was employed as of the effective date of the Merger or at
  any time since by Headlands, GreenPoint or any Affiliated Entity (a
  "GreenPoint Employee"), to leave GreenPoint's or any Affiliated
  Entity's employ or to seek employment with you (including any business entity
  you own, control, manage or operate) or any other employer.  Nor will you provide information about a
  GreenPoint Employee to any potential employer of you or a GreenPoint Employee
  or in any way assist, directly or indirectly, a potential employer of you or
  a GreenPoint Employee to solicit, induce, influence, aid or suggest the
  employment of a GreenPoint Employee.

 

	
2.	During
  your employment with GreenPoint and its Affiliated Entities and at all times
  thereafter, you specifically agree to hold all trade secrets and confidential
  information, including without limitation the trade secrets and confidential
  information referenced above, in the strictest confidence, and that you will
  not, without GreenPoint's prior written consent, disclose, divulge or reveal
  to any person or business entity, or use for any purpose other than for the
  exclusive benefit of GreenPoint or any Affiliated Entity, any such trade
  secrets and confidential information, except (i) in connection with the implementation
  or enforcement of the Letter Agreement, or (ii) pursuant to judicial or
  administrative process (but you will notify GreenPoint immediately if you
  receive such process).
	 	 
	3.	You
  acknowledge that GreenPoint will engage in the Non-Conforming Mortgage
  Banking Business throughout the country. You acknowledge that if you were to
  become an employee of or a consultant to a competing organization, your new
  duties and the products, services and technology of the competing
  organization would be so similar or related to those employed by you as an
  employee of GreenPoint that it would be very difficult for you not to rely on
  or use the trade secrets and confidential information referenced above.  You further acknowledge that you, and any
  such entity to which you may be rendering services, cannot avoid using the
  trade secrets and confidential information, because even in the best good
  faith, you cannot as a practical matter avoid using the knowledge of the
  trade secrets and confidential information in your work with such an
  entity.  Accordingly, during the
  Restricted Period, you will not, directly or indirectly, own, manage,
  operate, control or participate in the ownership, management, operation or
  control of or be connected as a principal, employee, officer, director,
  independent contractor, representative, stockholder, financial backer,
  partner, advisor or in any other individual or representative capacity any
  business which engages in the Non-Conforming Mortgage Banking Business, nor
  will you canvas and advertise for or otherwise assist or advise any business
  entity to engage in, start or develop a Non-Conforming Mortgage Banking
  Business ("engage in the Non-Conforming Mortgage Banking
  Business"), in any area in which Headlands or its affiliates were
  authorized to engage in the Non-Conforming Mortgage Banking Business prior to
  the effective date of the Merger, except as provided hereunder.  Included in this covenant not to engage in
  the Non-Conforming Mortgage Banking Business, you agree you will not (i) solicit
  Non-Conforming Mortgage Banking Business or otherwise deal directly or
  indirectly with any customers, appraisers, vendors, correspondents, brokers,
  lender associates or affiliated entities, of GreenPoint or its Affiliated
  Entities at any time with respect to the Non-Conforming Mortgage Banking
  Business; (ii) directly or indirectly divert or attempt to divert from
  GreenPoint or its Affiliated Entities any Non-Conforming Mortgage Banking
  Business; and (iii) directly or indirectly interfere or attempt to interfere
  with the relationships between GreenPoint or its Affiliated Entities, their
  customers, appraisers, vendors, brokers or affiliates, employees of
  customers, appraisers, vendors, correspondents, brokers, lender associates or
  affiliates with respect to the Non-Conforming Mortgage Banking Business.
	 	 	 
	4.	This
  Agreement does not prohibit you from working for any financial institutions
  or other business entities that engage in the Non-Conforming Mortgage Banking
  Business, provided that you do not engage in the Non-Conforming Mortgage
  Banking Business (as defined above) of any such entity.
	 	 
	5.	Notwithstanding
  the foregoing, you shall not be prohibited from investing and owning not more
  than one percent (1%) of the outstanding shares of common stock of any
  corporation, the shares of which are publicly traded pursuant to the
  Securities Exchange Act of 1934, and/or passively invest as a limited partner
  in any non-publicly traded security or be employed by government or quasi
  governmental agencies such as the Federal National Mortgage Association and
  the Federal Housing Loan Mortgage Corporation.
	 	 	 
	6.	You
  acknowledge and agree that:  (i) the
  purposes of the foregoing covenants, including without limitation the
  noncompetition covenants, are to protect the goodwill, trade secrets and
  confidential information of GreenPoint and of Headlands and its affiliates
  acquired by GreenPoint, and to prevent you from interfering with the
  Non-Conforming Mortgage Banking Business of GreenPoint as a result of or
  following termination of your employment with GreenPoint; (ii) that the
  foregoing covenants, including without limitation the noncompetition
  covenants, are being given in part in consideration for the consideration
  being received by you as a result of the transaction contemplated by the
  Merger Agreement, that such transaction is a transaction described in Section
  16601 of the California Business and Professions Code and that you are a
  selling shareholder of Headlands for purposes of said Section 16601; (iii)
  because of the nature of the Non-Conforming Mortgage Banking Business and
  because of the nature of the trade secrets and confidential information to
  which you have access, it would be impractical and excessively difficult to
  determine the actual damages of GreenPoint 
  or its Affiliated Entities in the event you breached any of the
  covenants of this Restrictive Covenant Agreement; and (iv) remedies at law
  (such as monetary damages) for any breach of your obligations hereunder would
  be inadequate. You therefore agree and consent that if you commit any breach
  of a covenant hereunder or threaten to commit any such breach, GreenPoint
  shall have the right (in addition to, and not in lieu of, any other right or
  remedy that may be available to it) to temporary and permanent injunctive relief
  from a court of competent jurisdiction, without posting any bond or other
  security and without the necessity of proof of actual damage.  With respect to any provision of this
  Restrictive Covenant Agreement finally determined by a court of competent
  jurisdiction to be unenforceable, you, GreenPoint and its Affiliated Entities
  hereby agree that such court shall have jurisdiction to reform this
  Restrictive Covenant Agreement or any provision hereof so that it is
  enforceable to the maximum extent permitted by law, and the parties agree to
  abide by such court’s determination. 
  If any of the covenants of this Restrictive Covenant Agreement are determined
  to be wholly or partially unenforceable in any jurisdiction, such
  determination shall not be a bar to or in any way diminish the right of
  GreenPoint to enforce any such covenant in any other jurisdiction.  
	 	 	 
	7.	You
  agree that these restrictive covenants shall be governed and interpreted by
  and in accordance with the laws of the State of California without regard to
  its conflicts of laws provision.  You
  agree and understand that the provisions of this Restrictive Covenant
  Agreement shall remain in full force and effect until the expiration of the
  period specified herein notwithstanding the earlier termination of your
  employment or of the Letter Agreement.
	 	 	 
	8.	You
  agree that the above provisions are reasonable and enforceable and that
  compliance with all of the above provisions is necessary to protect the
  business and goodwill of GreenPoint and its Affiliated Entities.

 

 

	Signature:	/S/  Peter T. Paul	 
	 	

	 
	 	Peter
  T. Paul	 
	 	 	 
	Date:	December
  6, 1998	 

 

	 	Alabama
  Age Discrimination Law, Alabama Code Sec. 25-1-20 et seq.
  

  Payment of Wages, Alabama Code Sec. 36-6-1
	 	
	 	Alaska
  Human Rights Law, Alaska Statutes Sec. 18.80.010 et seq.
  

  Payment of Wages, Alaska Statutes Sec. 23.05.140(b) and (d)
	 	
	 	Arizona
  Civil Rights Law, Arizona Revised Statutes Sec. 41-1401 et seq.
  

  Arizona Equal Pay Law, Arizona Revised Statutes Sec. 23-240 et seq.
  

  Payment of Wages, Arizona Statutes Annotated Sec. 23-353 et seq.
	 	
	 	Arkansas
  Civil Rights Act, Arkansas Code Annotated Title 16, Ch. 123, Sec. 101-108 

  Arkansas Equal Pay Law, Arkansas Code Annotated Title 11, Ch. 4, Sub. Ch. 4,
  Sec. 11-

  4-601 through 11-4-612
	 	
	 	The
  California Fair Employment and Housing Act 

  The California Sexual Orientation Bias Laws 

  The California Confidentiality of Medical Information Law 

  The Unruh Act 

  The California Apprenticeship Program Bias Law 

  The California Military Personnel Bias Law 

  The California Moore-Brown Roberti Family Rights Act 

  The California Parental Leave Law for School Visits 

  The California Comparable Worth Law 

  The California Wage and Hour Laws 

  The California Occupational and Safety and Health Act
	 	
	 	Colorado
  Anti-Discrimination Act of 1957, Co. 
  St. Section 24-34-302 et seq.
  

  Colorado Equal Pay Law, Co. St. Section 8-5-101 et seq.
  

  Colorado Civil Rights Commission Regulations on Employment 

  Colorado Civil Rights Commission Age Discrimination Rules 

  Colorado Civil Rights Commission Creed and Religious Discrimination Rules 

  Colorado Civil Rights Commission Handicap Discrimination Rules 

  Colorado Civil Rights Commission National Origin Discrimination Rules 

  Colorado Civil Rights Commission Sex Discrimination Rules 

  Colorado Civil Rights Commission Employment Testing Rules
	 	
	 	Connecticut
  Human Rights and Opportunities Law, 814 Gen. Stat. Conn. 46-a-51 to 46-a-104 

  Equal Pay Law, Gen. Stat. Conn. Sec. 31-58(e), 31-75 and 31-76 

  Age Discrimination and Employment Insurance Benefits Law, Gen. Stat. Conn.
  Sec. 38a-543 

  Payment of Wages, Gen. Stat. Conn. Sec. 31-72
	 	
	 	Delaware
  Fair Employment Practices Act, 19 Delaware Code Annotated 710-718 

  Delaware Equal Pay Act, 19 Delaware Code Annotated 1107A 

  Delaware Handicap Discrimination Law, 19 Delaware Code Annotated 720-728 

  Payment of Wages (no official title), 19 Delaware Code Annotated Sec. 1103,
  Sec. 1109
	 	
	 	The
  District of Columbia Human Rights Act, D.C.Code §§1-2501 to 1-2557 

  The District of Columbia Employment Rights of Blind and Physically Disabled
  Persons 

  (“White Cane Act”), D.C.Code Ann. §6-1701 to 6-1709
	 	
	 	The
  Florida Civil Rights Act of 1992 

  The Florida Equal Pay Act, §725.07 Florida Statutes 

  The Florida Whistleblower Act §§448.102, et seq.,
  Florida Statutes 

  Florida’s Attorney’s Fees Provision for Successful Litigants in Suits for
  Unpaid Wages,

  §448.08, Florida Statutes
	 	
	 	Georgia
  Fair Employment Practices Act, Georgia Code Annotated Sec. 45-19-20 to
  45-19-45 

  Equal Employment for Persons with Disabilities Code, Georgia Code Annotated
  Sec, 34-6A-1 to 34-6A-6 

  Georgia Age Discrimination Act, Georgia Code Annotated Sec. 34-1-2-et seq.
  

  Equal Pay Law, Georgia Code Annotated Sec. 34-5-1 et seq.
  

  Payment of Wages, Georgia Code Annotated Sec. 34-7-2
	 	
	 	Hawaii
  Fair Employment Practices Law, 21 Hawaii Revised Statutes Ch. 378-1 to 378-9 

  Equal Pay Law, 

  Hawaii Revised Statutes Sec. 387-4 

  Payment of Wages, Hawaii Revised Statutes Sec. 388-3, et seq.
	 	
	 	Idaho
  Fair Employment Practices Act, I.C. Section 67-5901, et seq.
  

  Idaho Equal Pay Law, I.C. Section 44-1701, et seq.
  

  Idaho Civil Rights Law, I.C. Section 18-7301, et seq.
  

  Idaho Wage Claim Statute, I.C. Section 45-601, et seq.
	 	
	 	The
  Illinois State Wage and Hour Laws 

  The Illinois Equal Pay Laws 

  The Illinois Wage Payment and Collection Act 

  The Illinois Health and Safety Act The Illinois Human Rights Act 

  The Illinois Joint Agency Rules on Sex Discrimination 

  The Illinois Joint Agency Rules on National Origin and Discrimination
	 	
	 	Indiana
  Civil Rights Law, as amended 

  Indiana Equal Pay Act, as amended 

  Indiana Minimum Wage Law of 1965, as amended 

  Indiana Handicap Discrimination Law, as amended 

  Indiana Age Discrimination Act, as amended 

  Indiana Occupational Safety and Health Act of 1974, as amended
	 	
	 	Iowa
  Civil Rights Act of 1965, I.C. Section 216.1 et seq.
  

  Iowa Wage Payment Collection Law, I.C. Section 91A.1 et seq.
	 	
	 	Kansas
  Act Against Discrimination, K.S. Ch. 44, Art. 10 

  Kansas Equal Pay Law, K.S. Section 44-1205, et seq.
  

  Kansas Age Discrimination in Employment Act, K.S. Section 44-1111, et seq.
  

  Kansas Age Discrimination Guidelines 

  Kansas Laws for Payments of Compensation K.S. Section 44-301, et seq.
	 	
	 	Kentucky
  Civil Rights Act, as amended 

  Kentucky Equal Opportunities Act, as amended 

  Kentucky Equal Pay Law, as amended Kentucky Constitution
	 	
	 	The
  Louisiana Employment Discrimination Law, (La. R.S. Ann. Title 23, Ch. 3-A,
  §301 et seq.)
  

  The Louisiana Age Discrimination Law (La. R.S. Ann. Title 23, Ch. 9, §§311
  through 314) 

  The Louisiana Commission on Human Rights Act 
  (La. R.S. 51:2231 et seq.)
  

  The Louisiana Discrimination in Employment Act (La. R.S. 23:301 et seq.)
  

  The Louisiana Age Discrimination in Employment Act (La. R.S. 23:311 et seq.)
  

  The Louisiana Wage Payment Law (La. R.S. 23:631 et seq.) 

  The Louisiana Code of Civil Procedure, Art. 2592
	 	
	 	The
  Maine Human Rights Act, Me. Rev. Stat. Ann. tit. 5, §4551 et seq.
  

  The Maine Equal Pay Law, Me. Rev. Stat. Ann. tit. 26, Ch. 7, §628 

  The Maine Sexual Harassment Policies Law, Me. Rev. Stat. Ann. tit. 26, §806
	 	
	 	The
  Maryland Fair Employment Practices Act, Md. Code Ann. art. 49B, §1 et seq.
  

  The Maryland Handicapped Anti-Discrimination Regulations, Md. Regs, Code tit.
  14.03.02.01 et
  seq. 

  The Maryland Equal Pay Law, Md. Code Ann., Lab. & Empl., Subtitle 3,
  §§301 to 308
	 	
	 	The
  Massachusetts Fair Employment Practice Act, Mass. Gen. Laws ch. 151B, §§1 to
  10 

  The Equal Pay and Maternity Benefits Law, Mass. Gen. Laws ch. 149, §105A to
  105D 

  The Massachusetts Equal Rights Act, Mass. Gen. Laws ch. 93, §102 

  The Massachusetts Age Discrimination Law, Mass. Gen. Laws ch. 149, §24A to
  24I 

  Payment of Wages, Mass. Gen. Laws Ann. ch. 149 §148
	 	
	 	The
  Michigan Elliot-Larsen Civil Rights Act, Mich. Comp. Laws, §§37.2101 through
  37.2804 

  The Michigan Bias Against Handicapped Law, Mich. Comp. Laws Ann., §37.1101 et seq.
  

  The Michigan Equal Pay Law, Mich. Comp. Laws Ann., §§408.381, 408.382 and
  408.392, 408.393, 408.394, 408.395, 408.397 Violation of Equal Pay Law, Mich.
  Comp. Laws Ann. §750.556
	 	
	 	Minnesota
  Human Rights Act, Minnesota Statutes, Sections 363.01-363.15. 

  Minnesota Equal Pay Law, Minnesota Statutes, Sections 181.66-181.71 

  Minnesota Age Discrimination Act, Minnesota Statutes, Section 181.81, et seq.
	 	
	 	Missouri
  Human Rights Law and Related Regulations 

  Missouri Equal Pay Laws
	 	
	 	Montana
  Human Rights Act, Title 49, Chs. 1 through 4 of the

  Montana Code Annotated Montana Persons with Disabilities Employment
  Preference Act, Title 39, Ch. 30, 

  Sections 39-30-101 to 39-30-207 of the Montana Code Annotated
	 	
	 	The
  Nebraska Fair Employment Practice Act, Neb. Rev. Stat. §48.1101 et seq.
  

  The Act Prohibiting Unjust Discrimination in Employment Because of Age, Neb.
  Rev. 

  Stat. §§48-1001 to 48-1010
	 	
	 	The
  Nevada Fair Employment Practice Act, Nev. Rev. Stat. §§613.310 to 613.435 

  The Nevada State Wage and Hour Laws, Nev. Rev. Stat. §608.015 

  The Nevada Equal Pay Law, Nev. Rev. Stat §608.817
	 	
	 	The
  New Hampshire Equal Pay Law, N.H. Rev. Stat. Ann. Ch. 275, §275.36 to 275.4 

  The New Hampshire Law Against Discrimination, N.H. Rev. Stat. Ann. §§354-A:1
  to 354-A:26
	 	
	 	The
  New Jersey Equal Pay Act, N.J. Stat. Ann. Title 34, Ch. 11, §§34:11-56.1 to
  34:11-56.11 

  The New Jersey Law Against Discrimination, N.J. Stat. Ann.§10:5-12 

  The New Jersey Civil Rights Division Rules of Practice, Title 13, Ch. 4,
  §§13.4-1.1 et
  seq. of the New Jersey
  Administrative Code Equal Employment Opportunity, Title 4A, Ch. 7, §§1-1 et seq.
  of the New Jersey Administrative Code
	 	
	 	The
  New York Human Rights Law 

  The New York Minimum Wage Law 

  The Equal Pay Law of New York
	 	
	 	The
  New Mexico Human Rights Act 

  The New Mexico AIDS Testing Law 

  The New Mexico Genetic Information Privacy Act 

  The New Mexico Employee Privacy Act 

  The New Mexico Wage and Hour Laws 

  The New Mexico Occupational Health and Safety Act
	 	
	 	The
  North Carolina Equal Employment Practices Act, N.C. Gen. Stat. §143-422.2 

  The North Carolina Handicapped Persons Protection Act, N.C. Gen. Stat.
  §168A-5(a)
	 	
	 	The
  North Dakota Equal Pay Act, N.D. Cent. Code §§34-06.1-01 1034-06.1-09 

  The North Dakota Human Rights Act, N.D. Cent. Code §14-03.4-03 

  The North Dakota Age Discrimination Act, N.D. Cent. Code §34-01-17 

  The North Dakota Anti-Discrimination Law, N.D. Cent. Code §14-02.4-08
	 	
	 	The
  Ohio Fair Employment Practices Law, Ohio Rev. Code Ann. Title 41 §4112.02 et seq.
  

  The Ohio Equal Pay Law, Ohio Rev. Ann. Code, §4111.17(A) 

  The Ohio Civil Rights Act, Ohio Rev. Code Ann. §§4112.01-4112.99
	 	
	 	The
  Oklahoma Anti-Discrimination Statutes (25 O.S. 1301 et seq.)
  

  The Oklahoma Workers’ Compensation Act (85 O.S. 5 et seq.)
	 	
	 	The
  Oregon Equal Pay Law, Or. Rev. Stat. Title 51, Ch. 652, §652.10 et seq.
  

  The Oregon Safe Employment Act, Or. Rev. Stat. §§659.062 

  The Oregon Fair Employment Practices Act, Or. Rev. Stat. §659.030 

  Oregon Handicap Bias Law, Or. Rev. Stat. §659.400(1), 659(435)(1)
	 	
	 	Pennsylvania
  Human Relations Act, as amended 

  Pennsylvania Wage Payment and Collection Law, as amended 

  Pennsylvania Minimum Wage Act, as amended 

  Pennsylvania Equal Pay Law, as amended
	 	
	 	The
  Rhode Island Equal Pay Law, R.I. Gen. Laws Title 28, Ch. 6, §§28-6-17 through
  28-6-21 

  The Rhode Island Fair Employment Practices Act, R.I. Gen. Laws §28-5 

  The Rhode Island Equal Pay and Comparable Worth Commission, R.I. Gen. Laws
  Title 42, Ch. 124, §1 et seq. 

  The Rhode Island Civil Rights Act, R.I. Gen. Laws Title 42, Ch. 112,
  §§42-112-1 and 42-112-2
	 	
	 	South
  Carolina Human Affairs Law, S.C. Code Sec. 1-13-20 et seq.
  (Supp 1998) 

  South Carolina Wage Payment Act, S.C. Code Sec. 41-10-10 et seq.,
  (Supp 1998) 

  South Carolina Workers’ Compensation Law
	 	
	 	The
  South Dakota Human Relations Act, S.D. Codified Laws §20-13-1 to 20-13-56 

  The South Dakota Equal Pay Law, S.D. Codified Laws §60-12-15 et seq.
  

  The South Dakota Local Fair Employment Practices Legislation, S.D. Codified
  Laws §20-12- 4 to 20-12-9
	 	
	 	The
  Tennessee Anti-Discrimination Act, Tenn. Code Ann. tit. 4, Chap. 21, §101 et seq.
  

  The Tennessee Fair Employment Practices Law, Tenn. Code Ann. §4-21-407(b) 

  The Tennessee Equal Pay Act, Tenn Code. Ann. tit. 50, Chap. 2, §§201-206 

  The Tennessee Handicap Bias Law, Tenn. Code Ann. tit. 8, §8-50-102
	 	
	 	The
  Texas Employment, Discrimination Law, Tex. Lab. Code, tit. 2, Chap. 21
  §21.001 et seq

  The Texas Commission on Human Rights Act, Tex. Lab. Code Ann. §21.101 

  The Texas Communicable Disease Act, Texas Code Ann. ch. 81, Subchapter F. 

  Disability Discrimination, Tex. Hum. Res. Code 121.001 et seq.
  

  The Texas Commission on Human Rights Law, Texas Government Code, Tit. 2, Ch.
  461, Subchapter A-C, §461.001 et seq.
  

  The Texas Equal Pay Act, Texas Gov’t Code Ann., tit. 5, §659.001 

  The Texas Public Employment Discrimination Act, Texas Civ. Prac. and Rem.,
  tit. 5, §106.001 et
  seq. 

  The Texas Human Rights Commission Rules, 40 Tex. Admin. Code, §321.1 et seq.
	 	
	 	The
  Utah Antidiscrimination Act, Utah Code Ann. tit. 34A §101 et seq.
	 	
	 	The
  Vermont Fair Employment Practices Act, Vt. Stat. Ann. tit. 21, §495 et seq.
  

  The Vermont Human Rights Commission, Vt. Stat. Ann. tit. 9
	 	
	 	The
  Virginia Human Rights Act, Va. Code tit. 2.1, Ch. 42, §2.1-714 et seq.
  

  The Virginia Equal Pay Act, Va. Code §40.1-28.6 

  The Virginians with Disabilities Act, Va. Code tit. 51.5, §51.5 et seq.
	 	
	 	The
  Washington Law Against Discrimination in Employment, Wash. Rec. Code
  §49.60.010 et
  seq. 

  The Washington Equal Pay Law, Wash. Rev. Code §49.12.175 

  The Washington Sex Discrimination Law, Wash. Rev. Code Ch. 49.12, §200 

  The Washington Age Discrimination Law, Wash. Rev. Code tit. 49, §49.44.090
	 	
	 	Wis.
  Stat. 110.31, et
  seq.
	 	
	 	The
  West Virginia Human Rights Act, W.Va. Code Ann. §§5-11-1 through 5-11-20 

  The West Virginia Equal Pay Law, W.Va. Code Ch. 21, Art. 3, §19
	 	
	 	The
  Wyoming Fair Employment Practices Act, Wyo. Stat. tit. 27, Ch. 9, §101-108
  The Wyoming Equal Pay Law, Wyo. Stat. tit. 27, Ch. 4, §301-304Prepared by MerrillDirect

ELEVENTH AMENDMENT TO CREDIT AGREEMENT

AND LOAN DOCUMENTS

             THIS
ELEVENTH AMENDMENT TO CREDIT AGREEMENT AND LOAN DOCUMENTS dated as of May 18,
2001 (this “Amendment”), is among Alternative Resources Corporation, a
Delaware corporation (“Borrower”), the undersigned Lenders and
American National Bank and Trust Company of Chicago, as Agent (“Agent”)
and as a Lender.  Unless otherwise
defined herein, capitalized terms used herein shall have the meanings ascribed
to them in the Credit Agreement (as hereinafter defined).

W I T N E S S E T H:

             WHEREAS,
the Borrower, the Agent and the Lenders entered into that certain Credit
Agreement dated as of November 7, 1997, as amended by that certain Tenth
Amendment to Credit Agreement dated as of May 4, 2001 by and among Borrower,
Agent and Lenders, and certain mesne amendments thereof (as so amended
and as the same may hereafter be amended, modified, restated or otherwise
supplemented from time to time, the “Credit Agreement”);

             WHEREAS,
a Default has occurred and is continuing under the Credit Agreement as a result
of Borrower’s failure to comply with its Minimum EBITDA covenant set forth in
Section 6.24 of the Credit Agreement for the measurement period ended April 30,
2001 (the “Existing Default”); and

             WHEREAS,
the Borrower, Agent and the Lenders wish to make certain amendments to the
Credit Agreement;

             NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, the Recitals set forth above (which are incorporated herein by this
reference thereto) and for other good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, each of the undersigned
agrees as follows:

1.          Certain Amendments to Credit Agreement.  The parties hereto desire to amend the
Credit Agreement in order to, among other things, (i) extend the Facility
Termination Date such that the Loans shall mature on June 30, 2001, (ii)
convert a portion of the outstanding Loan balance into a term loan, (iii) reset
certain financial performance covenants, (iv) waive the Existing Default, and
(v) reduce the Aggregate Commitment, with concurrent adjustment to each
Lender’s pro rata share of the Loans. 
Accordingly, the parties agree, subject to the terms and conditions set forth
herein, to amend the Credit Agreement as set forth below.

(a)         Article
I of the Credit Agreement is hereby amended by deleting the defined terms
indicated below in their entirety and substituting the definitions set forth
below in lieu thereof, such that such defined terms as so amended shall now
read as follows:

“Aggregate Commitment”
means $45,000,000, as reduced from time to time pursuant to the terms hereof.

“Facility Termination
Date” means June 30, 2001 or any earlier date on which the Aggregate Commitment
is reduced to zero or otherwise terminated pursuant to the terms hereof.

“Permitted Overadvance”
means, $2,200,000 for the period commencing as of the Eleventh Amendment
Effective Date through June 29, 2001, $1,700,000 on June 30, 2001.

“Loan” means all
Advances, Revolving Loans, the Term Loan and any other amount disbursed
pursuant to and in accordance with the terms of the Credit Agreement

“Notes” means,
collectively, the Term Notes and the promissory notes heretofore issued by
Borrower in connection with the Credit Agreement, and “Note” refers to any one
of the foregoing individually.

(b)        Article
I of the Credit Agreement is hereby further amended by amending the definition
of Eligible Accounts Receivable by deleting the word “and” at the end of clause
15, deleting the period at the end of clause 16 and substituting a semicolon
and the word “and” therefor, and adding the following clause 17 to the end
thereof:

“(17)
such Account Receivable is not reported as deferred revenue by Borrower on its
financial statements.”

(c)         Article
I of the Credit Agreement is hereby further amended by adding the following new
defined terms thereto in their appropriate alphabetic order:

“Eleventh
Amendment Effective Date” means the date on which all conditions precedent to
the effectiveness of that certain Eleventh Amendment to Credit Agreement and
Loan Documents dated as of May 18, 2001 are either fully satisfied or waived in
accordance with the terms thereof.

“Tax
Refunds” means the Federal and state income tax refunds of Borrower in the
aggregate amount of approximately $4,300,000 relating to Borrower’s revised
1998 and 2000 income tax returns, as more particularly described in that
certain letter from Borrower’s accountants, KPMG, dated as of  March 26, 2001 and addressed to Fleet
Capital.

“Term
Loan” means that certain term loan in the original principal amount of
$3,500,000, evidenced by the Term Notes and the proceeds of which represent
Revolving Loans converted pursuant to that certain Eleventh Amendment to Credit
Agreement and Loan Documents dated as of May 18, 2001 by and among Borrower,
Agent and Lenders.

(d)        Section
6.24.4 of the Credit Agreement shall be amended in its entirety and as so
amended shall read as follows:

             “6.24.4 Cumulative Consolidated
EBITDA.  The Borrower will have
Consolidated EBITDA for the periods commencing May 1, 2001 and ending each of
the dates specified below in an amount not less than that specified below for
such period:

	For the period
  commencing

  5/1/01 and ending:	Consolidated
  EBITDA

  shall not be less than:	 
	

	

	 
	May 31, 2001	$	550,000	 
	June 30, 2001	$	1,100,000	"

(e)         Section
6.16 of the Credit Agreement shall be amended in its entirety and as so amended
shall read as follows:

             “6.16 Cumulative Capital
Expenditures.  The Borrower will
not, nor will it permit any Subsidiary to, expend or commit to expend, on a
cumulative basis for Capital Expenditures in an aggregate amount for Borrower
and its Subsidiaries in excess of:

	For the period
  commencing

  5/1/01 and ending:	Capital Expenditures

  shall not exceed	 
	

	

	 
	May 31, 2001	$	200,000	 
	June 30, 2001	$	375,000	"

2.          Conversion
of Loans into Term Loan. 
Borrower acknowledges that as of 5:00 p.m. (Chicago time) on May 17,
2001 the outstanding principal balance of the Loans was $39,527,534.84.  Borrower desires to convert a portion of the
Loans into a term loan governed by the terms and provisions of the Credit
Agreement, secured by the Collateral Documents and guaranteed by the
Guaranties.  Therefore the parties
hereto agree as follows:

             An
amount equal to $3,500,000 of the Loans is hereby converted into a term loan,
governed by the terms and provisions of the Credit Agreement and evidenced by
certain Term Notes of even date herewith (collectively, the “Term Notes”
and each individually a “Term Note”) made by Borrower payable to
each Lender (in accordance with their respective pro rata interests) in the
aggregate original principal amount of $3,500,000.  The Term Loan shall constitute a Loan for all purposes under the
Credit Agreement.  The proceeds of the
Term Loan represent Advances or Revolving Loans heretofore disbursed under the
Credit Agreement and do not constitute a novation of such Revolving Loans.  Borrower agrees and acknowledges that as of
the date hereof, after giving effect to this Amendment, the Term Loan is fully
funded and the outstanding principal balance thereof equals $3,500,000.

             The
Term Loan shall bear interest in accordance with the terms of the Credit
Agreement.   The outstanding principal
balance of the Term Loan shall be payable in full, together with accrued and
unpaid interest thereon on the Facility Termination Date.  At any time, Borrower may prepay the Term
Loan, in whole or in part, without premium or penalty.  Prepayments of Term Loan shall be applied
first to the payment of unpaid interest accrued thereon and then to the
reduction of the outstanding principal balance thereof.  Any amounts of the Term Loan that are repaid
may not be reborrowed.

3.          Tax Refunds.  Borrower has informed Agent and Lenders that it expects to
receive the Tax Refunds and hereby agrees and reaffirms that Agent has a lien
on and security interest in the Tax Refunds pursuant to the terms and
provisions of the Collateral Documents. 
Notwithstanding the foregoing and without limiting, prejudicing,
qualifying or otherwise modifying the terms of the Collateral Documents,
Borrower hereby assigns all of its rights, title and interest to the Tax
Refunds to Agent on behalf of the Lenders and grants to Agent a lien upon and
security interest in the Tax Refunds. 
In furtherance of the foregoing, Borrower hereby agrees as follows:

(a)         Borrower shall file its 1998 and 2000
Federal and state income tax returns and/or amendments as soon as practicable
but in no event later than June 30, 2001 and shall take all reasonable steps
and actions to expedite the processing and obtaining of the Tax Refunds.  Borrower shall provide Agent with certified
copies of such returns and any associated filings, amendments, documents or
correspondence relating thereto.

(b)        Borrower shall direct the Internal Revenue
Service, on IRS Form 8888 or any successor form thereto, to deposit that
portion of the Tax Refunds representing Federal income tax refunds, directly to
an account designated and controlled by Agent. 
Borrower shall not, thereafter amend, modify or rescind such direction
to the Internal Revenue Service. 
Borrower hereby directs and authorizes Agent to apply the Tax Refunds,
as and when received by Agent, to the immediate reduction of the then
outstanding principal balance of the Term Loan and upon payment of the Term
Loan in full (together with all unpaid and accrued interest thereon), to the
repayment of the other Obligations as provided in the Credit Agreement and in
permanent reduction of the Aggregate Commitment.

(c)         Borrower agrees to execute such other
documents, instruments or agreements and to take such other actions as Agent
may reasonably request in order to facilitate and expedite the obtaining and
application of the Tax Refunds as contemplated hereunder.

             Borrower’s
failure to strictly comply with the provisions of this Section 3 shall
constitute an immediate Default under the Credit Agreement.

4.          Additional Representations, Warranties and Covenants.

             (a)
In order to induce Agent and the Lenders to execute and deliver this Amendment,
Borrower hereby represents to the Lenders that as of the date hereof, the
representations and warranties set forth in Article 5 of the Credit Agreement
are and shall be and remain true and correct (except that the representations
contained in Section 5.4 shall be deemed to refer to the most recent financial
statements of the Borrower delivered to the Lenders) and the Borrower is in
compliance with all of the terms and conditions of the Credit Agreement and,
except for the Existing Default, no Unmatured Default or Default has occurred
and is continuing under the Credit Agreement or shall result after giving
effect to this Amendment.

             (b)
Borrower and each Guarantor by its execution of the Reaffirmation and Consent
attached hereto represents and warrants to Agent and Lenders that the
execution, delivery and performance of this Amendment has been duly authorized
by all requisite corporate action on the part of each such Person and that this
Amendment has been duly executed and delivered by each such Person.

             (c)
Borrower agrees to retain or continue to engage Alex Brown (or another
financial advisor or investment banker of national repute) to advise Borrower
with respect to its operations, its strategic plans and management, enhancing
its capital structure, refinancing the Obligations and/or selling all or any
portion of Borrower’s business and/or assets. 
Borrower shall cause such financial advisor to issue periodic progress
reports to Agent and the Lenders (unless already provided by Borrower) as and
when requested by Agent and Lenders and will authorize Agent to contact said
financial advisors and discuss any matter within the scope of its
engagement.  Additionally, Borrower will
continue to diligently pursue a refinancing of its Obligations hereunder and
will keep the Agent apprised of any meaningful progress in connection
therewith. Borrower agrees to participate in conference calls (absent a
Default, not more frequently than bimonthly) with the Agent and the Lenders
(with the participation of the financial advisors, if requested by Agent) in
which the Borrower and its financial advisors if requested, gives status
reports on the Borrower’s operating performance and strategic plans as
aforesaid.  This clause 4(c) replaces,
amends and supersedes Section 6.32 of the Credit Agreement.

             (d)
Borrower shall authorize and permit Agent to conduct field audits of Borrower’s
accounts receivable as and when requested by Agent or the Required Lenders and
shall cooperate with Agent as reasonably requested, in the performance of such
audits.

             (e)
Borrower shall provide Agent with a monthly report in reasonable detail,
indicating the openings or closings of any branch offices of Borrower that
occurred the preceding month.

             (f)
Within ten Business Day of the date hereof, Borrower shall execute and deliver
such Term Notes and Revolving Notes to Borrower and Lenders as they may request
in order to replace the existing Notes issued pursuant to the Credit
Agreement.  Agent and Lenders shall
deliver to Borrower the original Notes upon receipt of the foregoing
replacement notes.

5.          Release.

             In
consideration for the agreement of the Agent and the Lenders to this Amendment,
Borrower hereby releases and forever discharges Agent, each Lender, each of
their parent corporations, affiliated corporations, subsidiary corporations,
predecessor corporations and successor corporations, and the past and present
officers, directors, agents, assigns, subrogees, servants, employees, financial
advisors and attorneys of each of them from any and all claims, actions, causes
of action, choses in action and suits of every kind and nature whatsoever,
whether at law or in equity, under any facts or legal theory that Borrower ever
had, now has, or hereafter can, shall or may have, in any way related to,
arising out of or based upon this Agreement, the Credit Agreement or any Loan
Document, except for any such claims arising out of Agent’s or any Lender’s
future willful breach of this Agreement.

6.          Reaffirmation of Liens and Security Interests.

             The
other Loan Documents, including specifically but without limitation each of the
Collateral Documents, are each hereby amended to secure the Obligations as
evidenced by the Credit Agreement and the other Loan Documents, each as amended
hereby.

7.          Waiver of Existing Default.  Effective as of the Eleventh Amendment
Effective Date, in reliance upon the representations and warranties of Borrower
set forth in the Credit Agreement and in this Amendment, Agent and Lenders
hereby waive the Existing Default.  The
foregoing is a limited, one time waiver and the execution and delivery of this
Amendment does not constitute a waiver by Agent or any Lender of any other
Default or Unmatured Default now or hereafter existing, or any other term or
provision of the Loan Documents.  This
Waiver does not (i) constitute a waiver of any term or provision of the Loan
Documents, except as expressly set forth above, or (ii) except as expressly
provided herein with respect to the Existing Default, constitute a waiver by
Lender of any of its other rights or remedies under the Loan Documents (all
such rights and remedies being expressly reserved), or (iii) establish a custom
or a course of dealing or conduct between Agent, any Lender and Borrower.

8.          Conditions Precedent.  This effectiveness of this Amendment shall
be subject to the satisfaction of all of the following conditions precedent or
concurrent (unless waived by Agent in writing):

             (a)
Certain Documents.  Borrower shall have
delivered to Agent all of the following, each duly executed and dated as of the
date hereof and in form and substance acceptable to Agent:

(1)         Amendment.  Fully and duly executed counterparts of this Amendment in
sufficient quantities to provide each party with an original of such
counterpart, together with such other agreements, documents and instruments as
reasonably required by Agent, duly executed by the respective parties thereto.

(2)         [Intentionally Omitted].

(3)         Resolutions and Corporate
Documents.  A copy, duly certified by
the secretary or an assistant secretary of Borrower, of (i) resolutions of
Borrower's Board of Directors authorizing or ratifying the execution and
delivery of this Amendment and authorizing the borrowings under the Credit
Agreement as amended hereby, (ii) all documents evidencing other necessary
corporate action, and (iii) all approvals or consents, if any, with respect to
this Amendment.

(4)         Incumbency Certificate.  If requested by Agent, a certificate of the
secretary or an assistant secretary of Borrower certifying the names of
Borrower's officers authorized to sign this Amendment and all other documents
or certificates to be delivered hereunder, together with the true signatures of
such officers.

(5)         Additional Documents/Actions.  Such other documents as the Agent may
reasonably require and all proceedings taken in connection with the
transactions contemplated by this Amendment, and all documents, instruments and
other legal matters incident thereto shall be satisfactory to Agent and its
legal counsel.

             (b)        No Default.  After giving effect to this Amendment and the waivers contained
herein, no Unmatured Default or Default shall have occurred and be continuing
or will result from the execution and delivery of, or the performance by
Borrower of any of its obligations under this Amendment.

             (c)         Guarantors Consent.  The Guarantors shall have consented hereto
in the Consent and Reaffirmation attached hereto for such purpose below.

             (d)        Fees.  Concurrently with the execution and delivery
of this Amendment, Borrower shall have paid to Agent for the ratable benefit of
the Lenders a non-refundable extension fee in the amount of $56,250.00
representing 0.00125% of the Aggregate Commitment as amended hereby (the “Extension
and Modification Fee”).  The
Extension and Modification Fee shall be fully earned upon execution of this
Amendment by the parties hereto.

9.          Miscellaneous.

             (a)         This Amendment shall become effective
upon the execution and delivery hereof to the Agent by the Borrower and the
Lenders and the satisfaction of the conditions precedent set forth in Section 8
hereof.

             (b)         Except as specifically amended herein,
the Credit Agreement shall continue in full force and effect in accordance with
its original terms.  Reference to this
specific Amendment need not be made in any note, document, letter, certificate,
the Credit Agreement itself, any Guaranty, any Collateral Documents, the Notes,
any other Loan Document or any communication issued or made pursuant to or with
respect to the Credit Agreement, any reference in any of such to the Credit
Agreement being sufficient to refer to the same as amended hereby.

             (c)         The Borrower agrees to pay on demand
(i) all costs and expenses of or incurred by the Agent in connection with the
negotiation, preparation, execution and delivery of this Amendment, including
the reasonable fees and expenses of Katten Muchin Zavis, counsel for the Agent,
such payment to be made no later than 30 days following receipt of an invoice
showing in reasonable detail and description the amounts therefor and (ii) the
reasonable fees and expenses of Policano & Manzo, LLC no later than 10 days
following receipt of an invoice showing in reasonable detail and description
the amounts therefor.

             (d)         This Amendment may be executed in any
number of counterparts, and by the different parties on different counterparts,
all of which taken together shall constitute one and the same agreement.  Any of the parties hereto may execute this
Amendment by signing any such counterpart and each of such counterparts shall
for all purposes be deemed to be an original. 
This Amendment shall be governed by the internal laws of the State of
Illinois.

 

[remainder of
this page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, this Eleventh
Amendment to Credit Agreement and Loan Documents has been duly executed by each
of the undersigned as of the day and year first set forth above.

	 	ALTERNATIVE
  RESOURCES CORPORATION, a Delaware 
	 	corporation
	 	 
	 	By:
	 	

	 	Name:
	 	

	 	Its:
	 	

	 	 
	 	AMERICAN
  NATIONAL BANK AND TRUST
	 	COMPANY
  OF CHICAGO, as Agent and
	 	individually
  as a Lender
	 	 
	 	By:
	 	

	 	Name:
	 	

	 	Its:
	 	

	 	 
	 	MELLON
  BANK, N.A., as a Lender
	 	 
	 	 
	 	By:
	 	

	 	Name:
	 	

	 	Its:
	 	

	 	 
	 	HARRIS
  TRUST AND SAVINGS BANK, as a Lender
	 	 
	 	 
	 	By:
	 	

	 	Name:
	 	

	 	Its:
	 	

	 	 
	 	FLEET
  NATIONAL BANK, as a Lender
	 	 
	 	 
	 	By:
	 	

	 	Name:
	 	

	 	Its:
	 	

	 	 
	 	NATIONAL
  CITY BANK, as a Lender
	 	 
	 	By:
	 	

	 	Name:
	 	

	 	Its:
	 	

 

GUARANTORS’ REAFFIRMATION AND
CONSENT

             The
Undersigned have each heretofore executed and delivered to the Agent (defined
below) and the Lenders a Guaranty in connection with the obligations and
liabilities of Alternative Resources Corporation, a Delaware corporation
(“Borrower”) arising in connection with that certain Credit Agreement by and
among American National Bank and Trust Company of Chicago, as agent (“Agent”),
and as the other Lenders a party thereto. 
Each of the Undersigned hereby acknowledges that it has received and has
read the Eleventh Amendment to Credit Agreement and Loan Documents dated as of
May 18, 2001, consents thereto and to the transactions contemplated thereunder
and confirms that its Guaranty and all of the Undersigned’s obligations
thereunder remain in full force and effect in accordance with its terms.

 

	 	ARC
  SOLUTIONS, INC. 
(formerly known as CGI Systems, Inc.)
	 	 
	 	By:
	 	

	 	Name:
	 	

	 	Its:
	 	

	 	 
	 	ARC
  SERVICE, INC.
	 	 
	 	 
	 	By:
	 	

	 	Name:
	 	

	 	Its:
	 	

	 	 
	 	WRITERS,
  INC.
	 	 
	 	 
	 	By:
	 	

	 	Name:
	 	

	 	Its:
	 	

	 	 
	 	ARC
  MIDHOLDING, INC.
	 	(formerly
  known as CGI Corp.)
	 	 
	 	By:
	 	

	 	Name:
	 	

	 	Its:

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