Document:

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                                                                   Exhibit 10.41

July 25, 2002

Michael D. Lack
PO Box 9876
Rancho Santa Fe, CA 92067

Dear Mike:

         This will confirm our agreement regarding your termination of
employment with Incyte Genomics, Inc. (the "Company") on January 1, 2003 (the
"Termination Date").

         For purposes of the Amended and Restated Employment Agreement between
you and the Company dated as of November 26, 2002, as amended by agreement
effective as of July 24, 2002 (the "Employment Agreement"), your termination
will be treated as a termination by the Company during the Employment Period for
Good Reason, as such terms are defined in the Employment Agreement. Accordingly,
the Company's obligations to you will be as set forth in Section 3(b) of the
Employment Agreement, as modified and restated herein, and you shall have no
further rights under the Employment Agreement, and the Company shall have no
further obligation to you, except as expressly provided herein.

         As of June 14, 2002, your position as Executive Vice President and
Chief Operating Officer was terminated. However, thereafter, your employment
will continue until the Termination Date, during which period you will be
required to perform services on a part time basis as requested by the Company.
The Company will continue to pay you at the rate of $30,416.66 per month through
August 31, 2002, and at the rate of $1,000 per month from September 1, 2002
through the Termination Date. You will not continue to accrue vacation or other
paid time off during the period from September 1, 2002 through the Termination
Date.

         Upon the Termination Date, you will be entitled to the following:

(1) Within thirty days of your Termination Date, you will be paid a cash lump
sum equal to the sum of (a) your base salary earned through the Termination
Date, to the extent not

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Michael D. Lack
July 25, 2002
Page 2

already paid, plus (b) $103,333.33 (which represents 8/12 of your target bonus
of $155,000 for the fiscal year ended December 31, 2001, under the Company's
management bonus plan) minus the portion of your target bonus for the current
fiscal year paid to you before the Termination Date, plus (c) the amount of your
accrued vacation or other paid time off as of the Termination Date.

(2) Within thirty days of your Termination Date, you will also be paid a cash
lump sum equal to the sum of your annual base salary ($365,000), plus the amount
of your bonus for the fiscal year ending 12/31/01 under the Company's management
bonus plan ($240,289.68), minus the sum of $4,000.

(3) The Company will reimburse you for the cost of disability insurance coverage
obtained by you, at the levels in effect under the Company's plan at the
Termination Date, for eight months following the Termination Date. In addition,
the Company will reimburse you for the cost of continued coverage for you and
your family under COBRA (including medical, prescription, dental, vision) for
eight months following termination of your coverage on the Termination Date,
provided you elect to continue such coverage in accordance with the applicable
procedures. The Company will also continue your employee life and group life
insurance, as in effect on the Termination Date, for eight months following the
Termination Date. The benefits described in this paragraph (3) shall be
secondary to those provided under any other employer provided plans for which
you may become eligible, and shall fulfill the Company's obligation to provide
continued welfare benefits to you and your family following termination of
employment pursuant to the Employment Agreement.

(4) Subject to paragraph (8) below, on the Termination Date, you will become
fully vested in your stock options granted under the Company's 1991 Stock Plan.
As a result, unless earlier exercised, you will have vested options to acquire
412,000 shares of common stock of the Company, which will remain exercisable
through January 1, 2004. You will continue to be subject to any applicable
trading restrictions under Company policy and Federal and state law.

(5) Subject to paragraph (8) below, on the Termination Date, you will become
vested in 40,000 (i.e. 50%) of your restricted stock units granted under the
Company's 1991 Stock Plan. Payment will be made within thirty days of the
Termination Date, in accordance with and subject to the provisions of your
restricted stock unit award (which may result in deferral pending applicable
trading window periods).

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Michael D. Lack
July 25, 2002
Page 3

(6) The Company will provide you with outplacement services for twelve months
following the Termination Date from a provider to be selected by you. A list of
three national outplacement firms is attached as Schedule A hereto for your
reference, although you are not obligated to select from this list.

(7) Your participation in the Company's 401(k) Plan will terminate upon your
termination of employment on the Termination Date. Your benefits under the
401(k) plans will be determined in accordance with the provisions of that plan,
and you will receive further information on those benefits following the
Termination Date.

(8)  Release.

         You agree and acknowledge that (i) the benefits to be provided to you
upon the Termination Date pursuant to paragraphs (4) and (5) of this Agreement
exceed the benefits to which you would otherwise have been entitled under the
Employment Agreement, (ii) such benefits are expressly conditioned upon your
execution of a release, within 21 days following the Termination Date, in the
following form, and (iii) the Company's obligation to provide such benefits
shall not become effective until 7 days after the date of your execution and
delivery of such release (the "Release Effective Date"):

                   "In consideration of the additional benefits to be provided
         to Michael D. Lack (the "Executive") pursuant to paragraphs (4) and (5)
         of the letter agreement between Executive and Incyte Genomics, Inc.
         (the "Company") dated as of July 25, 2002 (the "Agreement"), the
         sufficiency of which Executive acknowledges, Executive, on behalf of
         himself, his family members and his and their heirs and successors,
         assigns, attorneys and agents, hereby releases and forever discharges
         the Company, as well as its officers, attorneys, directors, employees,
         stockholders and agents, and their successors and assigns, and its
         employee pension benefit or welfare benefit plans and current and
         former trustees and administrators of such plans (collectively "Company
         Releasees") from any and all claims, contracts, liabilities, damages,
         expenses and causes of action, whether in law or in equity, known or
         unknown, which may have existed or which may now exist from the
         beginning of time to the Release Effective Date against one or more of
         the Company Releasees (collectively "Executive Claims"), to the extent
         such Executive Claims relate in any way directly or indirectly, in
         whole or in part to: the termination of Executive's position as
         Executive Vice President and Chief Operating Officer pursuant to the
         Agreement, the fact that Executive is or was an employee, officer,
         stockholder or agent of the Company; any services performed

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Michael D. Lack
July 25, 2002
Page 4

         by Executive for the Company; Executive's employment or non-employment
         by the Company; any alleged harassment or disparagement suffered by
         Executive during his employment at the Company; any status, term or
         condition of such employment; any physical or mental harm or distress
         arising from such termination, employment or non-employment; any claims
         based upon federal, state or local laws prohibiting employment
         discrimination, including but not limited to claims of discrimination
         under the Fair Employment and Housing Act, Title VII of the 1964 Civil
         Rights Act, the Civil Rights Act of 1991, the Americans with
         Disabilities Act of 1990, the Rehabilitation Act of 1973, the Family
         and Medical Leave Act of 1993, or the Employee Retirement Income
         Security Act of 1974; breach of contract or any other legal basis. This
         release also includes release of any claims for age discrimination
         under the Age Discrimination in Employment Act, as amended ("ADEA").
         The ADEA requires that Executive be advised to consult with an attorney
         before Executive waives any claim under the ADEA. In addition, the ADEA
         provides Executive with at least 21 days to decide whether to waive
         claims under the ADEA and seven days after Executive signs this release
         to revoke that waiver.

                  Executive understands that various federal, state and local
         laws prohibit age, sex, national origin, race and other forms of
         employment discrimination and that these laws are enforced through the
         U.S. Equal Employment Opportunity Commission, and similar state and
         local agencies. Executive understands that if he believed that his
         treatment by the Company had violated any of these laws, he could
         consult with these agencies and file a charge with them. Instead,
         Executive has voluntarily decided to accept the Company's offer in the
         Agreement and to waive and release any and all claims he may have under
         such laws.

                  Nothing under in this release shall affect the Company's
         obligations under the Agreement, the Amended and Restated Employment
         Agreement between the parties effective as of November 26, 2001 (as
         modified by and restated in the Agreement), the Confidential
         Information Agreement between the parties, or the stock option and
         restricted stock unit agreements between the parties.

                  Executive expressly waives and relinquishes any and all rights
         that such party may have under Section 1542 of the California Civil
         Code, which reads as follows:

                  A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
                  DOES NOT KNOW OR SUSPECT TO EXIST IN HIS

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Michael D. Lack
July 25, 2002
Page 5

                  FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
                  HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
                  DEBTOR."

                          _____________________________

         All of your benefits will be subject to applicable withholding taxes.

         In addition, as provided in Section 7(d) of the Employment Agreement,
your termination of employment shall have no effect on the continuing operation
of Section 7 of that agreement.

Please confirm your agreement with the foregoing by signing and dating the
enclosed duplicate copy of this letter and returning it to me.

                                    Sincerely,

                                   /s/ Paul A. Friedman
                                  ---------------------
                                  Paul A. Friedman
                                  (Name)
                                  Chief Executive Officer
                                  (Title)

ACCEPTED AND AGREED:

/s/ Michael D. Lack
------------------------------------
          Michael D. Lack<PAGE>

                                                                    Exhibit 10.7

                      -----------------------------------
                                CREDIT AGREEMENT
                      -----------------------------------

BY AND BETWEEN:

The Parties of the first part:

  1.  "WAFABANK", a Moroccan societe anonyme (public corporation), with
      capital of MAD 602,430,000.00 and corporate offices at 163 avenue Hassan
      II, Casablanca, acting through its Branch in Brussels, 13A, boulevard du
      Jardin Botanique, formed on January 30, 1987 under an authorization of the
      Banking Commission dated April 16, 1987, registered in the Brussels
      Register of Commerce under No. 487.961 and with the V.A.T. under No.
      430.269.135, the bylaws of which, originally published in the Annexes du
      Moniteur Belge on January 30, 1987 under No. 870130-198, were amended for
      the last time on June 1, 1999 and published in the Annexes du Moniteur
      Belge No. 990601-302;

      represented for the purposes herein by:

  2.  "DEUTSCHE BANK" (formerly Credit Lyonnais Belgium), a Belgian societe
      anonyme (public corporation), with corporate offices at 9, Lange
      Gasthuisstraat, 2000 Antwerp (Antwerp Register of Commerce No. 36.922),
      formed pursuant to legal instrument recorded by Antoine Cols, Notary, in
      Antwerp on December 31, 1934 and published in the Annexes du Moniteur
      Belge on January 14 and 15, 1935 under No. 489, the bylaws of which have
      been successively amended, most recently in accordance with minutes
      recorded by Johan Kiebooms, Notary, in Antwerp on February 11, 1999, filed
      on February 12, 1999 with the Clerk of the Commercial Court, and published
      on February 23, 1999 in the Annexes du Moniteur Belge;

      represented for the purposes herein by:

  3.  "COMMERZBANK AG", a German company, with corporate offices in Frankfurt am
      Main, Federal Republic of Germany, acting through its Brussels Branch, 87,
      boulevard Louis Schmidt, 1040 Brussels, and registered in the Brussels
      Register of Commerce under No. 400.243;

      represented for the purposes herein by:

                                                                               1

<PAGE>

  4.  "CBC Banque", a societe anonyme (public corporation), with corporate
      offices at Grand Place 5, 1000 Brussels, registered in the Brussels
      Register of Commerce under No. 278.041 and subject to value added tax
      under No. 403.211.380; formed under the name "Credit General de Belgique"
      pursuant to the terms of a legal instrument recorded by Theodore Taymans
      and Jean-Pierre Jacobs, Notaries in Brussels, on the Ninth day of January
      in the year Nineteen Hundred and Fifty-Eight, and published in the Annexes
      du Moniteur Belge on the Thirty-First day of January, in the year Nineteen
      Hundred and Fifty-Eight under No. 2106 and on the Ninth day of February in
      the year Nineteen Hundred and Fifty-Eight under No. 2755bis, and the
      bylaws of which were last amended pursuant to a legal instrument recorded
      by Benedikt van der Vorst, Notary of Ixelles, Eric Spruyt and Hans
      Berquin, Notaries of Brussels, with the assistance of Jan Van Bael, Notary
      of Antwerp, and Luc Talloen, Notary of Leuven, on the third of June in the
      year Nineteen Hundred and Ninety-Eight, published in the Annexes du
      Moniteur Belge of June 25, 1998 under No. 980265-283, said instrument
      amending the corporate name of Credit General S.A. de Banque to CBC
      Banque;

      Acting through its corporate headquarters in Brussels and represented for
the purposes herein by:

  5.  "FORTIS BANQUE", a societe anonyme (public corporation), formed on
      December 5, 1934 in accordance with a legal instrument published in the
      Annexes du Moniteur Belge of December 14 under No. 15.109, the bylaws of
      which were last amended in accordance with a legal instrument dated June
      23, 1999 and published in the Annexes du Moniteur Belge on July 21, 1999
      under No. 990721-1 and 3, with corporate offices at 3 Montagne du Parc,
      1000 Brussels, registered in the Brussels Register of Commerce under No.
      76034 and registered with the V.A.T. authority under No. BE 403.199.702,
      assuming the rights and obligations of the societe anonyme C.G.E.R- Banque
      pursuant to a merger by consolidation on June 23, 1999, in accordance with
      instruments recorded and notarized by Bernard Willocx and Gilberte Raucq
      in Brussels and published in the Annexes du Moniteur Belge on July 21,
      1999 under No. 930721-1 and 3, which company did itself assume the rights
      and obligations of the societe anonyme. Societe Nationale de Credit a
      l'Industrie , following the merger by consolidation on October 29, 1997,
      pursuant to a legal instrument recorded by Gilberte Raucq, Notary, in
      Brussels and published in the Annexes du Moniteur Belge on November 25,
      1997 under No. 971125-62;

  represented for the purposes herein by:

   And referred to collectively hereinafter as the "Banks";

And the Party of the second part:

MECAR S.A., formed under the name "SA NEW MECAR", in accordance with a legal
instrument recorded on August 18, 1999 by Jean-Philippe Lagae, Notary of
Brussels, and published in the Annexes du Moniteur Belge on August 31, 1999
under No. 990831-371, having its corporate headquarters at rue Grinfaux, 50,
7181 Seneffe (Petit-Roeulx-Lez-Nivelles), registered in the Charleroi Register
of Commerce under No. 196469 and with the V.A.T. under No. 466.712.134. S.A. NEW
MECAR became S.A. MECAR in accordance with a legal instrument recorded by Notary
Lagae, on August 18, 1999 and published in the Annexes du Moniteur Belge on
August 31, 1999 under No. 990831-372;

represented for the purposes herein by:

                                                                               2

<PAGE>

referred to hereinafter as the "Borrower";

The purpose of this agreement is to define the new terms and conditions of the
previous agreements, notably the agreements of January 14, 1998, June 21, 1999,
February 9, 2000 and November 26, 2001.

The withdrawal of BNP-PARIBAS from the Bank pool and the participation in this
pool of FORTIS BANQUE is hereby noted.

Now, therefore, it has been agreed as follows:

    Article 1: Creditors:   The Banks, without joint liability

    Article 2: Borrower:    S.A. MECAR

    Article 3: Amount of the credit line:   EUR 49,400,000.00

    Article 4: Bank Percentages

A.  In the form of bank guarantees with pledged deposits: EUR 26,800,000
    distributed as follows:

        -   WAFABANK:           EUR 5,000,000
        -   DEUTSCHE BANK:      EUR 5,450,000
        -   COMMERZBANK:        EUR 5,450,000
        -   CBC BANQUE:         EUR 5,450,000
        -   FORTIS BANQUE:      EUR 5,450,000

B.  In the form of bank guarantees without pledged deposits: EUR 10,000,000
    distributed as follows:

        -   DEUTSCHE Bank:      EUR 2,500.000
        -   Commerzbank:        EUR 2,500,000
        -   CBC-Banque:         EUR 2,500,000
        -   FORTIS Banque:      EUR 2,500,000

C.  In the form of current account advances and/or straight loans and/or letters
    of credit: EUR 3,600,000 distributed as follows:

        -   DEUTSCHE Bank:      EUR 900,000
        -   Commerzbank:        EUR 900,000
        -   CBC-Banque:         EUR 900,000
        -   FORTIS Banque:      EUR 900,000

D.  In the form of advances intended for the payment of installments of
    estimated corporate taxes: EUR 9,000,000 distributed as follows:

        -   WAFABANK:           EUR 1,800,000
        -   DEUTSCHE Bank:      EUR 1,800,000
        -   Commerzbank:        EUR 1,800,000
        -   CBC-Banque:         EUR 1,800,000
        -   FORTIS Banque:      EUR 1,800,000

                                                                               3

<PAGE>

    Article 5: Operations of the Bank Pool

    The interbank agreement signed on this date shall govern the relations among
    the banks with respect to this credit line.

    The Banks have designated CBC-Banque as Pool Coordinator.

    Article 6: Purpose

    The credit line, in its current forms, is intended to cover the Borrower's
    financial needs arising from the execution of its corporate purpose.

    Article 7: Accounts

    This credit line operates in one or more accounts (current or non-current)
    with each of the Banks. These accounts are only the elements of the sole and
    indivisible "credit account" which the Borrower has with each Bank.
    Therefore, each Bank may make transfers from one element of the "credit
    account" to another on its books, merge the accounts and offset the debit
    balances in some accounts with the credit balances of other accounts. When
    the transfer requires conversion of foreign currencies, the conversion rate
    shall be determined by the Banks.

    These accounts are governed at each of the Banks by the Bank's general
    conditions governing this type of account, with which the Borrower hereby
    expressly stipulates that it is familiar.

    All sums due may be recorded in an account as of the due date.

    Article 8: Forms of use

    The credit line may be used in all forms and under all conditions stipulated
    to or to be stipulated to by the parties, without resulting in novation.
    Until otherwise established, the credit line may be used in the forms and
    under the conditions defined hereinafter:

    A. EUR 26,800,000.00 in the form of bank guarantees issued with pledged
    deposits and EUR 10,000,000.00 in the form of bank guarantees without
    pledged deposits.

    The EUR 10,000,000.00 line shall be used only after the limit on the EUR
    26,800,000.00 line of credit has been reached.

    The issue of bank guarantees and all terms thereof, as well as any
    extensions of such guarantees, shall be subject, on a case by case basis, to
    the prior agreement of the Banks, without prejudice to the limits set by
    each Bank based on the current and future commitments of the Borrower
    resulting from agreements other than this agreement. Their use in the form
    of bank guarantees shall be recorded in the books of the Pool Coordinator.

    B. EUR 3,600,000 in the form of advances on current accounts and/or straight
    loans and/or letters of credit and EUR 9,000,000 in the form of an advance
    intended for the payment of installments of estimated corporate taxes.
    In addition to being governed by this agreement, these credit lines shall be
    governed by specific agreements to be established by each of the banks
    concerned within the Bank Pool. Their use shall be recorded in the books of
    the Lending Banks.

    The parties reserve the right to agree on new forms of use.

    In the event of termination pursuant to Article 17 (immediate payment), the
    credit account with each of the Banks shall be closed on the effective date
    of the termination.

    The existence and the amount of the claim of each of the Banks, as well as
    the position of the Borrower's "credit account" with each Bank, are verified
    by the account statement or by any other

                                                                               4

<PAGE>

    accounting document prepared by the Banks; said documents shall constitute
    sufficient proof, without requiring presentation of any other instrument,
    whether recorded by notary or not, to be presented.

    Article 9: Compliance with legal and regulatory provisions

    The Borrower undertakes to comply with the regulations of the competent
    monetary authorities, in particular the Institut Belgo-Luxembourgeois du
    Change (IBLC) and to provide the Banks with any document or proof required
    by said authorities.

    The Borrower shall ensure, at any time, that it is performing its activities
    in strict compliance with the current and future regulations governing the
    import, export and transit of arms, munitions, military materiel and related
    technologies.

    Article 10: Terms and conditions of the lines that may be used in the form
    of bank guarantees

    a) Terms and conditions

       The Banks shall establish, to the order and on behalf of the Borrower,
       guarantees to return advances and performance guarantees, in EURO or in
       currencies, under the Borrower's entire and exclusive responsibility. The
       issuance of these guarantees shall be governed by the General Conditions
       governing the issuance of guarantees.

       Any request for the issuance of bank guarantees shall be subject to the
       prior written approval of the Banks.

    b) Chronology

       The Borrower undertakes to comply with the following chronology, contract
       by contract:

       -  receipt by the Pool Coordinator of the written request to issue a
          guarantee;
       -  request for approval from the Banks;
       -  receipt by the Banks of export credit letters;
       -  receipt by the Banks of a copy of the specific OND policy, possibly a
          definitive  undertaking subject to the condition
          precedent that export licenses are obtained;
       -  receipt of export licenses;
       -  issue of the guarantees;
       -  receipt and freezing of the pledge advances in accordance with the
          terms and conditions  stipulated in Articles 8 and 18A.

    The banks agree that the performance guarantees shall be issued before
    export licenses are obtained.

    This chronology may be modified with the prior written consent of the Banks.

                                                                               5

<PAGE>

    c) Commission and fees

       The issuance of guarantees shall result in the payment of a commission of
       1.25% per year, payable quarterly in advance, and every quarter started
       requiring full payment. It shall be calculated on the amount guaranteed
       at the beginning of the quarter and shall be due until the full and
       definitive discharge of the Banks' commitments.

       Moreover, the Borrower shall be responsible for commissions claimed by
       the Banks' correspondents, the final issuers of the guarantees.

       All other fees (telex, port, etc.) and costs incurred by the Banks in
       issuing the guarantees shall also be paid by the Borrower. The Borrower
       shall also be responsible for fees claims by the Banks' correspondents.

    Article 11: Terms and conditions for computing interest and commissions

    The debt interest and commissions shall be calculated on the basis of the
    actual number of days elapsed and a debt rate established on the basis of a
    commercial 360-day year (365 days for the pound sterling), except where
    otherwise stipulated herein.

    Article 12: Commissions on bank guarantees

    For each guarantee that the Banks agree to issue, two commissions of 1%
    shall be recorded.

    The first commission is due upon issuance by the Banks and shall be payable
    in one payment no later than the receipt of the first installment payment.

    The second commission is due on a prorated basis as the Borrower's receipts
    for its deliveries are received. However, for simplification purposes and
    until otherwise established, this second commission shall be deducted when
    the receipts for the last delivery of each contract are received.

    The Bank that has issued the guarantee on behalf of the Banks in the Bank
    Pool which have agreed to participate shall collect the Bank Pool's
    commissions from the Borrower, which so agrees, and shall repay to each of
    the other participating Banks the percentage to which it is entitled.

    Article 13: Charging the sums due to the "credit account" of each Bank

    The amount due on the Banks' claim results from the debit balance of the
    "credit account" on the day of the statement. At any time, even after this
    statement, the accounts may be debited for the amount that the Borrower owes
    or will owe all the Banks under this credit line.

    Article 14: Payments / Fees

    a) The Borrower hereby declares that it waives the benefit of Articles 1253,
       1255, and 1256 of the Civil Code and, therefore, grants the Banks the
       right to charge payments received, from any source, against the portion
       of the debt which the Banks intend to discharge.

                                                                               6

<PAGE>

    b) Any payment due on a date other than a bank business day must be made on
       the preceding bank business day.

       For the purpose of this agreement, a bank business day is a day when the
       Banks and the Clearing Chamber are open in Brussels (or, with respect to
       currencies, a day when the banks are operating simultaneously in
       Brussels, London and in the country of the currency).

    c) All costs, taxes, stamp taxes, recording fees, attorneys' fees,
       notification fees, renewal fees, discharge fees and, generally, all costs
       deemed necessary to create the securities or liquidate said securities or
       for the forced execution of the Borrower's obligations shall be paid by
       the Borrower.

       This is also true for all other sums due by the Borrower, for any reason,
       such as, for example, insurance premiums, if they have been advanced by
       the Banks.

    d) The Borrower shall be liable for the additional amount of EUR 12,500.00
       to CBC Banque for its participation in the costs to establish this
       agreement and the related agreements; this sum shall be payable at the
       time this agreement is signed.

    Article 15: Commitments

    The Borrower makes the following commitments as of the date of this
    agreement and until the payment in full of all sums due to the Banks
    hereunder:

    a) The Borrower shall allow persons delegated by the Banks to review on site
       the originals of the contracts that are the origin of the guarantees
       issued or to be issued, referred to hereinafter as the "export
       contracts".

    b) The Borrower shall act to ensure the receipt of all authorizations and
       approvals, the filing of all declarations, and the performance of all
       formalities that may be required with respect to Borrower after the date
       of this agreement in order to ensure its complete performance under this
       agreement.

    c) Upon receipt, the Borrower shall provide to the Banks the export licenses
       for the export contracts. It shall do the same with respect to license
       renewals.

    d) It shall provide the Banks, as soon as they are issued, with the OND
       policies described in Article 18 A 3 hereinafter; moreover, any review by
       the Banks of an export contract for which it is seeking financing shall
       be subject to the production of an OND commitment for said contract.

    e) Borrower shall ensure the legality of the transactions financed by this
       credit line with respect to Belgian, international or foreign
       legislation.

    f) Within 15 days after publication, the Borrower and its parent company
       shall remit to the Banks a copy of their annual report, including balance
       sheet, statement of income and notes as certified by the auditors.

    g) The quarterly positions of the Borrower must be presented to the Banks
       within 30 days after they are established; the Borrower shall also
       present quarterly a statement of the progress of the export contracts and
       the latest provisional statement of the results for the year in progress.

                                                                               7

<PAGE>

    h) Borrower shall reply, promptly and specifically, to any request for
       information made by the Banks which could affect the execution of this
       agreement.

       It shall also allow the Banks to exercise any and all means of monitoring
       and control, at their expense (except in the event Borrowers fails in the
       obligations defined in the first paragraph of this point "h", in which
       case, the fees shall be paid by the Borrower).

    i) The Borrower shall inform the Banks of any circumstance and any act as
       defined in Article 17 (immediate payment) hereinafter, including all
       documents related to bylaw changes.

    j) As of this date, the Borrower shall not secure any loan, debt, guaranty
       or any commitment that constitutes a debt, by mortgage, lien, pledge,
       assignment or claim or any other security interest, or by authorization
       or undertaking to create a security interest of this type on all or part
       of its current and future assets, without the prior written agreement of
       the Banks. In such cases, the Banks shall have the right to demand that
       the Borrower provide the Banks with the same securities to guarantee this
       credit line, in the same proportion and with the same rank.

    k) The Borrower undertakes, as long as this credit line is utilized in its
       current forms, to consult the Banks at the time of any request for credit
       not described in this agreement. If the Banks' conditions are at least as
       favorable as those offered by the competition, the Borrower undertakes to
       give the Banks priority in extending it such additional credit.

    l) Each Bank shall receive from the Borrower a portion of the financial
       service in proportion to the percentage of its participation in this
       credit line.

    m) The Borrower undertakes, by signing this agreement, to maintain its
       equity capital (Items 10/15 - 20 - 21 - 50) at a minimum amount of EUR
       40,000,000.00 and its working capital (Items 10/15 + 16 + 17 - 20/28) at
       a minimum amount of EUR 30,000,000.00.

    n) The Borrower is prohibited from granting advances to companies that are
       part of the ALLIED RESEARCH CORPORATION Inc. group.

    o) The Borrower undertakes to advise the Banks of any material deterioration
       in the position of its parent company which could negatively impact its
       financial position.

    p) The Borrower undertakes to transfer all its proceeds to its accounts with
       the Banks.

    q) The Borrower undertakes to pledge in favor of the Banks, at their first
       request, the claims resulting from the delivery of letters of credit
       issued in its favor under the export contracts.

    Article 16: Merger

    In the event the Borrower is acquired by another company, in the event of
    merger by the formation of a new company, or in the event of consolidation
    of another company, the credit agreement shall continue with the new entity,
    except in a case governed by Article 17 (immediate payment) hereinafter.

    Article 17: Immediate payment

    The Banks have the option to suspend, close or terminate the credit line, in
    whole or in part, and to require the immediate repayment of all or part of
    their claim, without advance or formal notice:

                                                                               8

<PAGE>

    a) in all cases of early repayment determined now or in the future by law;

    b) in the event the Borrower fails to meet any obligations arising under law
       or this agreement, or in the event the company ALLIED RESEARCH
       CORPORATION Inc fails to meet the terms of its commitment as defined in
       Article 18 ss. B4 hereinafter;

    c) in the event it appears that the Borrower has deliberately or negligently
       provided inaccurate or incomplete information;

    d) in the event that a commercial bill, check or other commercial paper
       bearing Borrower's signature is protested;

    e) in the event the Borrowers ceases its business or activities;

    f) in the event of non-payment of preferred creditors by the Borrower;

    g) in the event of bankruptcy, cessation of payment, petition for
       composition, suspension or accelerated repayment of credit made by other
       lenders, or any similar event that reveals financial difficulties or
       would result in late payments;

    h) in the event of formal notice to pay, seizure, action to establish title,
       eviction or any de facto or de jure issue related to real or personal
       property that is part of the Borrower's assets;

    i) in the event of sale, contribution, donation, assignment, destruction, or
       substantial reduction in the value of the assets pledged or mortgaged in
       favor of the Banks;

    j) in the event of loss of a security interest created for the benefit of
       the Banks;

    k) in the event the assets pledge or mortgage in favor of the Banks to
       secure the credit are not sufficiently insured against fire and theft,
       and in the event of termination, cancellation or suspension of the
       insurance;

    l) in the event the Borrower creates a personal surety or real security
       interest in favor of a third party, without the prior authorization of
       the Banks;

    m) in the event that an analysis of the Borrower's accounting reveals that
       substantial losses have been suffered which threaten the Borrower's
       financial position and solvency, or if a comparison of the balance sheets
       and/or accounting audits performed by, or on the order of, the Banks,
       reveals that its equity capital and/or working capital are less than the
       amount set forth in Article 15 m or have decreased by more than
       one-fourth from one year to the next;

    n) in the event of assignment or seizure of the rents, indemnities,
       subsidies, bank accounts or any claim belonging to Borrower;

                                                                               9

<PAGE>

    o) if the following circumstances occur with respect to the Borrower:
       dissolution, liquidation, change in legal form, merger, consolidation,
       spin-off;

    p) in the event the Borrower does not meet its obligations under the law and
       regulations, particularly with respect to corporate law, accounting law,
       and the law governing the performance of its operations;

    q) in the event one of the early repayment clauses of cited above is
       triggered with respect to the companies holding more than 50% of the
       capital of the Borrower or with respect to the companies in which the
       Borrower holds more than 50%;

    r) in the case that any event occurs that would make all or part of
       Borrower's business illegal under Belgian, foreign and international law;

    s) in the event of Borrower's failure to fulfill its obligations under other
       agreements with the Banks or with some of the Banks;

    t) in the event of failure by the Borrower to meet its obligations under
       agreements other than those described in "s" above, a failure that could
       mean, in the opinion of the Banks, that the Borrower is no longer in a
       position to meet its current and future obligations arising from this
       agreement.

    Article 18: Securities

    All Borrower's commitments remain secured by the securities currently
    constituted and detailed under point A and shall be secured by the
    additional securities to be created as described under point B.

                                                                              10

<PAGE>

    A. Existing securities:

    1. Pledge of the current and future claims which the Borrower owns or shall
    own to CBC Banque for its accounts No. 192-2096600-84 and its sub-accounts
    in accordance with a private agreement dated February 9, 2000. It is noted,
    with respect to the credit line defined in point A of Article 4, that:

    .  the minimum amount pledged is set at 40% of the amount of the guarantees
       issued by the Banks and not yet released;

    .  the minimum amount pledged may never, however, be less than the
       outstanding amount of the performance guarantees.

    This account shall bear interest at the borrowing rate of CBC-Banque in the
    relevant currency for the amounts and term to be agreed on, minus 0.25% per
    year.

    2. Pledge of the Borrower's business assets as follows:

    BEF 517,000,000 in principal and BEF 25,850,000 in costs in favor of Banque
    Indosuez Belgium (currently KBC), Banque Nationale de Paris, Monte Paschi
    Belgio, S.N.C.I. (currently Fortis Banque) and Wafabank by instrument dated
    2/9/2000 recorded in Charleroi V on June 27, 2000, volume 52, folio 79, case
    13, roll 4, and recorded in the 1/st/ Mortgage Registry of Charleroi on
    November 28, 2000 volume 6337-17.

    BEF 168,868,000 in principal and 16,887,000 in costs in favor of CERA
    Investment Bank (currently KBC), Banque Nationale de Paris, Monte Paschi
    Belgio, S.N.C.I. (currently Fortis Banque) and Wafabank by instrument dated
    2/9/2000, recorded in Charleroi V on June 27, 2000, volume 52, folio 79,
    case 13, roll 4, and recorded in the 1/st/ Mortgage Registry of Charleroi on
    November 28, 2000, volume 6337-18.

    BEF 407,974,000 in principal and 21,000,000 in costs in favor of CERA
    Investment Bank (currently KBC), Banque Nationale de Paris, Monte Paschi
    Belgio, CGER Banque (currently Fortis Banque), Wafabank, Credit Lyonnais
    Belgium (currently Deutsche Bank) and Commerzbank AG by instrument dated
    2/9/2000, recorded in Charleroi V on June 27, 2000, volume 52, folio 79,
    case 13, roll 4, and recorded in the 1/st/ Mortgage Registry of Charleroi on
    November 28, 2000, volume 6337-19.

    BEF 100,000,000.00 in principal plus 3 years of interest and costs in favor
    of CBC-Banque by instrument dated 2/9/2000, recorded in Brussels, the 6/th/
    Bureau, on 2/21/2000, volume 268, folio 9, case 20, and recorded in the
    1/st/ Mortgage Registry of Charleroi on 2/22/2000, volume 6229-21.

    BEF 100,000,000 in principal plus 3 years of interest and costs in favor of
    CBC-Banque by instrument dated 9/12/2000, recorded in Brussels, the 6/th/
    Bureau, on 9/12/2000, volume 269, folio 72, case 23, and recorded in the 1st
    Mortgage Registry of Charleroi on 9/19/2000, volume 6311-24.

    EUR 2,370,155.00 in principal plus 3 years of interest and costs in favor of
    CBC-Banque, Commerzbank, Deutsche Bank and Wafabank, by instrument dated
    11/26/2001, recorded in Brussels, 6/th/ Bureau, on 11/27/2001, volume 271,
    folio 91, case 5 and recorded in the 1/st/ Mortgage Registry of Charleroi on
    December 4, 2001, volume 43-I-04/12/2001 nr 15219.

                                                                              11

<PAGE>

    The liens listed above continue with equal rank for:

    -  EUR 5,000,000.00 in favor of WAFABANK
    -  EUR 5,600,000.00 in favor of Deutsche Bank
    -  EUR 5,600,000.00 in favor of Commerzbank
    -  EUR 5,600,000.00 in favor of CBC Banque

    and are without effect on the rest.

    3. Assignment of the OND policy

    The Borrower has assigned as security in favor of the Banks its claims
    against OND resulting from the benefit of the insurance policies subscribed
    with OND in the framework of the transactions financed by this credit line
    and covering, in particular, the risks of termination, non-payment and
    arbitrary seizure of the bank guarantees due to the insolvency of the public
    debtor and the public guarantor and political risks; any change made in the
    global expanded policy No. 93.655 shall be subject to the prior agreement of
    the Banks.

    B. New securities to be created

    1. Extension to FORTIS-Banque of the benefit of the private agreement dated
       February 9, 2000 concerning the pledge of the current and future claims
       held or to be held by the Borrower against CBC Banque for its account No.
       192-2096600-84 and sub-accounts.

    2. Pledge of the business assets for EUR 15,000,000.00 in principal plus 3
       years interest and costs to:

         -  Deutsche Bank for EUR 2.350,000.00 in principal
         -  Commerzbank for EUR 2.350,000.00 in principal
         -  CBC-Banque for EUR 2.350,000.00 in principal
         -  FORTIS Banque for EUR 7,950,000.00 in principal

    These security interests are recorded with equal priority with the existing
    liens described in subparagraph A point 2 for a total of EUR 21,800,000.00.

    3. Extension to FORTIS Banque of the assignment of the benefits of OND
       policy nr 93.655 described in subparagraph A point 3.

    4. Signature by ALLIED RESEARCH Corporation Inc of a letter of commitment
       following the model attached hereto plus the documents authenticating the
       signatures.

    5. Mortgage in the amount in principal of EUR 12,600,000.00 to be recorded
       on all of the Borrower's property located in Petit-Roeulx-Lez-Nivelles
       and Marche-en-Famenne and more fully described in the legal instrument
       incorporating the Borrower and recorded by Mr. Lagae, Notary, on August
       18, 1999.
       These assets are free and clear of encumbrances, with the exception of
       the following liens in favor of FORTIS Banque:

         - BEF 30,000,000 recorded June 20, 1991 in the Mortgage Registry of
           Marche, volume 1618-25
         - BEF 190,000,000 recorded March 27, 1986 in the second Mortgage
           Registry of Charleroi, volume 3741-25.

         This security shall be recorded in favor of:

                                                                              12

<PAGE>

         - WAFABANK for EUR 1,800,000.00
         - Deutsche Bank for EUR 2,700,000.00
         - Commerzbank for EUR 2,700,000.00
         - CBC Banque for EUR 2,700,000.00
         - FORTIS Banque for EUR 2,700,000.00

    6. The irrevocable commitment of FORTIS Banque, by its signature hereto, not
       to grant assignment of claims on the outstanding amounts of the credits
       guaranteed by the mortgages of March 27, 1986 and June 20, 1991 cited
       hereinabove, the outstanding amounts of which are, on this date, as
       follows:

         - Bank guarantee of EUR 123,946.76 (BEF 5,000,000) deposited in favor
           of the VAT authority and related to the mortgage recorded on June 20,
           1991.
         - Balance remaining due on a term loan, for which 2 payments of EUR
           470,997.70 (BEF 19,000,000) remain due on January 15 of the years
           2003 and 2004.

    7. The undertaking from BNP-Paribas not to assert the liens created in its
       favor on the Borrower's business assets and the Borrower's undertaking
       not to seek or accept assignment of claims with said bank.

    Upon the creation of the new securities described hereinabove, the Banks
    shall discharge the surety of SA ARC Europe as well as the pledge of the
    shares representing the capital of the companies VSK SA and SEDACHIM SA.

    Article 19: Distribution of the proceeds from the liquidation of the
    security interests of the Banks

    The proceeds from the liquidation of the security interests of the Banks
    shall be distributed in accordance with the terms and conditions of the
    interbank agreement signed on this date.

    Article 20: Property insurance

    The personal and real property that shall be pledged or mortgaged in favor
    of the Banks must be insured for a sufficient amount by a leading company
    approved by the Banks against the risks of fire, storm, water damage,
    lightning, explosions, broken glass and civil liability.

    If not, the Banks shall have the option of subscribing to such insurance
    themselves and charging the premiums paid therefor to the Borrower, without
    any assumption of liability by the Banks.

    The Borrower shall remit to the "Pool Coordinator" an amendment by which the
    company undertakes to amend, terminate, cause invalidation or, generally, to
    terminate the insurance only with prior notice of fifteen days sent to the
    "Pool Coordinator".

    The Borrower shall obtain the Banks' agreement on the terms and conditions
    for the payment of any claims.

                                                                              13

<PAGE>

    Article 21: Transfer of the credit

    The Banks shall have the option to assign or transfer, at any time, with the
    prior written consent of the Borrower, all or part of this credit to one or
    more third parties as it shall determine, maintaining the same conditions
    and sureties.

    Article 22: Law and jurisdiction

This agreement shall be governed by Belgian law. The Brussels courts shall have
exclusive jurisdiction to settle disputes arising from this agreement.

Executed in Brussels on [date]                   2002 in 6 originals.

Borrower                                                      Wafabank

CBC Banque                                                    Commerzbank

Deutsche Bank                                                 Fortis Banque

                                                                              14

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