In this task, you're given a passage that represents a legal contract or clause between multiple parties. Your job is to write questions that ask the basic details corresponding to the legal contracts or clauses. Avoid questions that can be answered correctly without actually understanding the paragraph, and which might have multiple answers. The answer to each question should be unambiguous.

[Q]: ALAMOGORDO FINANCIAL CORPORATION 1,101,643 Shares

COMMON STOCK (Par Value $.0l Per Share)

Subscription Price $10.00 Per Share

AGENCY AGREEMENT

___________ __, 2000

Charles Webb & Company, a Division of Keefe, Bruyette & Woods, Inc. 211 Bradenton Avenue Dublin, Ohio 43017

Ladies and Gentlemen:

Alamogordo Financial Corporation, a federal corporation (the Company), AF Mutual Holding Company (the MHC) and Alamogordo Federal Savings and Loan Association, a federally chartered stock savings and loan association (the Bank) with its deposit accounts insured by the Savings Association Insurance Fund (SAIF) administered by the Federal Deposit Insurance Corporation (FDIC), hereby confirm, jointly and severally, their agreement with Charles Webb & Company, a Division of Keefe, Bruyette & Woods, Inc. (the Agent), as follows:

Section 1. The Offering. In accordance with the Stock Issuance Plan adopted by its Board of Directors (the Plan), the Company will offer and sell up to 1,101,643 shares of its common stock, par value, $.01 per share (the Shares or Common Stock), in a subscription offering (the Subscription Offering) to (1) depositors of the Bank with account balances of $50.00 or more as of September 30, 1998 (Eligible Account Holders), (2) the Employee Stock Ownership Plan of the Bank (the ESOP), (3) depositors of the Bank with account balances of $50.00 or more as of December 31, 1999 (Supplemental Eligible Account Holders), and (4) employees, officers and directors of the Bank. To the extent Shares remain unsold in the Subscription Offering, the Company is offering for sale in a community offering (the Community Offering and when referred to together with the Subscription Offering, the Subscription and Community Offering) the Shares not so subscribed for or ordered in the Subscription Offering to members of the general public, with preference given to natural persons residing in the New Mexico counties of Otero and Lincoln

(Other Subscribers), (all such offerees being referred to in the aggregate as Eligible Offerees). It is anticipated that shares not subscribed for in the Subscription and Community Offering will be offered to certain members of the general public on a best efforts basis through a selected dealers arrangement (the Syndicated Community Offering) (the Subscription Offering, Community Offering and Syndicated Community Offering are collectively referred to as the Offering). It is acknowledged that the purchase of Shares in the Offering is subject to the maximum and minimum purchase limitations as described in the Plan and that the Company and the Bank may reject, in whole or in part, any orders received in the Community Offering or Syndicated Community Offering. The Company will issue the Shares at a purchase price of $10.00 per share (the Purchase Price).

The Company has filed with the Securities and Exchange Commission (the Commission) a registration statement on Form S-1 (File No. 333- ) (the Registration Statement) containing a prospectus relating to the Offering for the registration of the Shares under the Securities Act of 1933 (the 1933 Act), and has filed such amendments thereof and such amended prospectuses as may have been required to the date hereof. The term Registration Statement shall include all exhibits thereto, as amended, including post-effective amendments. The prospectus, as amended, on file with the Commission at the time the Registration Statement initially became effective is hereinafter called the Prospectus, except that if any Prospectus is filed by the Company pursuant to Rule 424(b) or (c) of the rules and regulations of the Commission under the 1933 Act (the 1933 Act Regulations) differing from the prospectus on file at the time the Registration Statement initially becomes effective, the term Prospectus shall refer to the prospectus filed pursuant to Rule 424(b) or (c) from and after the time said prospectus is filed with the Commission.

In accordance with Title 12, Parts 575 and 563b of the Code of Federal Regulations (the MHC Regulations), the Company has filed with the Office of Thrift Supervision (the OTS) an Application on Form MHC-2 with respect to the stock issuance (the MHC Application), including the Prospectus and the Valuation Appraisal Report prepared by RP Financial, LC (the Appraisal) and has filed such amendments thereto as may have been required by the OTS. The MHC Application has been approved by the OTS and the related Prospectus has been authorized for use by the OTS.

Section 2. Retention of Agent; Compensation; Sale and Delivery of the Shares. Subject to the terms and conditions herein set forth, the Company and the Bank have retained the Agent to consult with and to advise the Bank, the MHC and the Company, and to assist the Company, on a best efforts basis, in the distribution of the shares of Common Stock in the Offering. The services that the Agent will provide include, but are not limited to (i) training the employees of the Bank who will perform certain ministerial functions in the Subscription and Community Offering regarding the mechanics and regulatory requirements of the stock offering process, (ii) managing the Stock Information Center by assisting interested stock subscribers and by keeping records of all stock orders and (iii) preparing marketing materials.

2

On the basis of the representations, warranties, and agreements herein contained, but subject to the terms and conditions herein set forth, the Agent accepts such appointment and agrees to consult with and advise the Company, the MHC and the Bank as to the matters set forth in the letter agreement (Letter Agreement), dated November 29, 1999 between the Company and the Agent (a copy of which is attached hereto as Exhibit A). It is acknowledged by the Company, the MHC and the Bank that the Agent shall not be required to take or purchase any Shares or be obligated to take any action which is inconsistent with all applicable laws, regulations, decisions or orders.

The obligations of the Agent pursuant to this Agreement (other than those set forth in Sections 2(d), 8 and 9 hereof) shall terminate upon the completion or termination or abandonment of the Plan by the Company or upon termination of the Offering, but in no event later than the date (the End Date) which is 45 days after the Closing Date (as hereinafter defined). All fees or expenses due to the Agent but unpaid will be payable to the Agent in next day funds at the earlier of the Closing Date (as hereinafter defined) or the End Date. In the event the Offering is extended beyond the End Date, the Company, the MHC, the Bank and the Agent may agree to renew this Agreement under mutually acceptable terms.

In the event the Company is unable to sell a minimum of 708,050 Shares within the period herein provided, this Agreement shall terminate and the Company shall refund to any persons who have subscribed for any of the Shares, the full amount which it may have received from them plus accrued interest as set forth in the Prospectus; and none of the parties to this Agreement shall have any obligation to the other parties hereunder, except as set forth in this Section 2 and in Sections 6, 8 and 9 hereof.

In the event the Offering is terminated, the Agent shall be reimbursed for its actual accountable out-of-pocket expenses.

If all conditions precedent to the consummation of the Offering, including, without limitation, the sale of all Shares required by the Plan to be sold, are satisfied, the Company agrees to issue, or have issued, the Shares sold in the Offering and to release for delivery certificates for such Shares on the Closing Date (as hereinafter defined) against payment to the Company by any means authorized by the Plan; provided, however, that no funds shall be released to the Company until the conditions specified in Section 7 hereof shall have been complied with to the reasonable satisfaction of the Agent and their counsel. The release of Shares against payment therefor shall be made on a date and at a place acceptable to the Company, the MHC, the Bank and the Agent. Certificates for shares shall be delivered directly to the purchasers in accordance with their directions. The date upon which the Company shall release or deliver the Shares sold in the Offering, in accordance with the terms herein, is called the Closing Date.

The Agent shall receive the following compensation for its services hereunder:

3

(a) A management fee of $25,000, payable in four installments of $6,250 on November 29 and December 29, 1999 and January 29 and February 29, 2000. Should the Offering be terminated for any reason not attributable to the action or inaction of the Agent, the Agent shall have earned and be entitled to be paid fees accruing through the stage at which the termination occurred.

(b) A Success Fee of $75,000.

(c) If any of the shares remain available after the Subscription and Community Offerings, at the request of the Bank, the Agent will seek to form a syndicate of registered broker-dealers to assist in the sale of such Common Stock on a best efforts basis, subject to the terms and conditions set forth in the selected dealers agreement. the Agent will endeavor to distribute the Common Stock among dealers in a fashion which best meets the distribution objectives of the Bank and the Plan. the Agent will be paid a fee not to exceed 5.5% of the aggregate Purchase Price of the Shares sold by them. the Agent will pass onto selected broker-dealers,

who assist in the syndicated community, an amount competitive with gross underwriting discounts changed at such time for comparable amounts of stock sold at a comparable price per share in a similar market environment. Fees with respect to purchases affected with the assistance of a broker/dealer other than the Agent shall be transmitted by the Agent to such broker/dealer. The decision to utilize selected broker-dealers will be made by the Bank upon consultation with the Agent. In the event, with respect to any purchases of Shares, fees are paid pursuant to this subparagraph 2(c), such fees shall be in lieu of, and not in addition to, payment pursuant to subparagraph 2(a) and 2(b).

(d) The Company will bear those expenses of the proposed offering customarily borne by issuers, including, without limitation, regulatory filing fees, Blue Sky, and NASD filing and registration fees; the fees of the Company's accountants, attorneys, appraiser, transfer agent and registrar, printing, mailing and marketing and syndicate expenses associated with the Offering; the fees set forth in Section 2; and fees for Blue Sky legal work. If the Agent incurs expenses on behalf of the Company, the Company will reimburse the Agent for such expenses.

The Agent shall be reimbursed for reasonable out-of-pocket expenses, including costs of travel, meals and lodging, photocopying, telephone, facsimile and couriers. The Agent shall also be reimbursed for its fees of underwriter's counsel (including counsel's out-of-pocket expenses) not to exceed $35,000. The selection of such counsel will be done by the Agent, after consultation with the Bank.

Section 3. Prospectus; Offering. The Shares are to be initially offered in the Offering at the Purchase Price as defined and set forth on the cover page of the Prospectus.

4

Section 4. Representations and Warranties of the Company, the MHC and the Bank. The Company, the MHC and the Bank jointly and severally represent and warrant to and agree with the Agent as follows:

(a) The Registration Statement which was prepared by the Company, the MHC and the Bank and filed with the Commission was declared effective by the Commission on __________ __, 2000. At the time the Registration Statement, including the Prospectus contained therein (including any amendment or supplement), became effective, the Registration Statement contained all statements that were required to be stated therein in accordance with the 1933 Act and the 1933 Act Regulations, complied in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the Registration Statement, including the Prospectus contained therein (including any amendment or supplement thereto), and any information regarding the Company or the MHC or the Bank contained in Sales Information (as such term is defined in Section 8 hereof) authorized by the Company, the MHC or the Bank for use in connection with the Offering, did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and at the time any Rule 424(b) or (c) Prospectus was filed with the Commission and at the Closing Date referred to in Section 2, the Registration Statement, including the Prospectus contained therein (including any amendment or supplement thereto), and any information regarding the Company, the MHC or the Bank contained in Sales Information (as such term is defined in Section 8 hereof) authorized by the Company, the MHC or the Bank for use in connection with the Offering will contain all statements that are required to be stated therein in accordance with the 1933 Act and the 1933 Act Regulations and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this Section 4(a) shall not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Company, the MHC or the Bank by the Agent or its counsel expressly regarding the Agent for use in the Prospectus or statements in or omissions from any Sales Information or information filed pursuant to state securities or blue sky laws or regulations regarding the Agent.

(b) The MHC Application which was prepared by the Company, the MHC and the Bank and filed with the OTS was approved by the OTS on ___________ ___, 2000, and the related Prospectus has been authorized for use by the OTS. At the time of the approval of the MHC Application, including the

5

Prospectus (including any amendment or supplement thereto), by the OTS and at all times subsequent thereto until the Closing Date, the MHC Application, including the Prospectus (including any amendment or supplement thereto), will comply in all material respects with the MHC Regulations, except to the extent waived in writing by the OTS. The MHC Application, including the Prospectus (including any amendment or supplement thereto), does not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this Section 4(b) shall not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Company, the MHC or the Bank by the Agent or its counsel expressly regarding the Agent for use in the Prospectus contained in the MHC Application or statements in or omissions from any sales information.

(c) The Company and the MHC have registered with the OTS as savings and loan holding companies under the Home Owners' Loan Act, as amended (HOLA).

(d) No order has been issued by the OTS or the FDIC (hereinafter any reference to the FDIC shall include the SAIF) preventing or suspending the use of the Prospectus, and no action by or before any such government entity to revoke any approval, authorization or order of effectiveness related to the Offering is, to the best knowledge of the Company, the MHC or the Bank, pending or threatened.

(e) The MHC is and, as of the Closing Date, will continue to be duly organized and validly existing as a federally chartered mutual holding company under the laws of the United States, duly authorized to conduct its business and own its property as described in the Registration Statement and the Prospectus; as of the Closing Date, the MHC will have obtained all licenses, permits and other governmental authorizations required for the conduct of its business except those that individually or in the aggregate would not materially adversely affect the financial condition, earnings, capital, assets or properties of the Company, MHC and Bank taken as a whole; as of the Closing Date, all such licenses, permits and governmental authorizations will be in full force and effect and the MHC will be in compliance therewith in all material respects; as of the Closing Date, the MHC will be duly qualified as a foreign corporation to transact business in each jurisdiction in which the failure to be so qualified in one or more of such jurisdictions would have a material adverse effect on the financial condition, earnings, capital, assets, properties or business of the Company, MHC and Bank considered as one enterprise.

6

(f) The MHC does not own any equity securities or any equity interest in any business enterprise except as described in the Prospectus.

(g) The MHC is not authorized to issue any shares of capital stock.

(h) At the Closing Date, the Plan will have been adopted by the Boards of Directors of the Company, the MHC and the Bank and approved by the members of the Bank, and the offer and sale of the Shares will have been conducted in all material respects in accordance with the Plan, the MHC Regulations, and all other applicable laws, regulations, decisions and orders, including all terms, conditions, requirements and provisions precedent to the Offering imposed upon the Company, the MHC or the Bank by the OTS, the Commission, or any other regulatory authority and in the manner described in the Prospectus. No person has sought to obtain review of the final action of the OTS in approving the Plan or in approving the MHC Application, or any other statute or regulation.

(i) The Bank has been organized and is a validly existing federally chartered savings and loan association in capital stock form of organization, duly authorized to conduct its business and own its property as described in the Registration Statement and the Prospectus; the Bank has obtained all material licenses, permits and other governmental authorizations currently required for the conduct of its business; all such licenses, permits and governmental authorizations are in full force and effect, and the Bank is in all material respects complying with all laws, rules, regulations and orders applicable to the operation of its business; the Bank is existing under the laws of the United States and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which its ownership of property or leasing of property or the conduct of its business requires such qualification, unless the failure to be so qualified in one or more of such jurisdictions would not have a material adverse effect on the condition, financial or otherwise, or the business, operations or income of the Bank. The

Bank does not own equity securities or any equity interest in any other business enterprise except as described in the Prospectus or as would not be material to the operations of the Bank. Upon completion of the sale by the Company of the Shares contemplated by the Prospectus, (i) all of the issued and outstanding capital stock of the Bank will be owned by the Company, (ii) the Company will have no direct subsidiaries other than the Bank, and (iii) the Company will be a majority-owned subsidiary of the MHC. The Offering will have been effected in all material respects in accordance with all applicable statutes, regulations, decisions and orders; and, except with respect to the filing of certain post-sale, post-Offering reports, and documents in compliance with the 1933 Act Regulations, the OTS' resolutions or letters of

7

approval, all terms, conditions, requirements and provisions with respect to the Offering imposed by the Commission, the OTS, and the FDIC, if any, will have been complied with by the Company, the MHC and the Bank in all material respects or appropriate waivers will have been obtained and all material notice and waiting periods will have been satisfied, waived or elapsed.

(j) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the United States with corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus, and at the Closing Date the Company will be qualified to do business as a foreign corporation in each jurisdiction in which the conduct of its business requires such qualification, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the business, operations or income of the Company. The Company has obtained all material licenses, permits and other governmental authorizations currently required for the conduct of its business; all such licenses, permits and governmental authorizations are in full force and effect, and the Company is in all material respects complying with all laws, rules, regulations and orders applicable to the operation of its business.

(k) The Bank is a member of the Federal Home Loan Bank of Dallas (FHLB- Dallas). The deposit accounts of the Bank are insured by the FDIC up to the applicable limits; and no proceedings for the termination or revocation of such insurance are pending or, to the best knowledge of the Company or the Bank, threatened.

(l) The Company, the MHC and the Bank have good and marketable title to all real property and good title to all other assets material to the business of the Company, the MHC and the Bank, taken as a whole, and to those properties and assets described in the Registration Statement and Prospectus as owned by them, free and clear of all liens, charges, encumbrances or restrictions, except such as are described in the Registration Statement and Prospectus, or are not material to the business of the Company, the MHC and the Bank, taken as a whole; and all of the leases and subleases material to the business of the Company, the MHC and the Bank, taken as a whole, under which the Company, the MHC or the Bank hold properties, including those described in the Registration Statement and Prospectus, are in full force and effect.

(m) The Company and the Bank have received an opinion of their special counsel, Luse Lehman Gorman Pomerenk & Schick with respect to the federal income tax consequences of the Offering and the opinions of

8

____________________ with respect to New Mexico income tax consequences of the Offering; all material aspects of the opinions of Luse Lehman Gorman Pomerenk & Schick and _____________________ are accurately summarized in the Registration Statement and will be accurately summarized in the Prospectus; and further represent and warrant that the facts upon which such opinions are based are truthful, accurate and complete.

(n) The Company, the MHC and the Bank have all such power, authority, authorizations, approvals and orders as may be required to enter into this Agreement, to carry out the provisions and conditions hereof and to issue and sell the Shares to be sold by the Company, as provided herein and as described in the Prospectus except approval or confirmation by the OTS of the final appraisal of the Company. The consummation of the Offering, the execution, delivery and performance of this Agreement and the consummation of the transactions herein contemplated have been duly and validly authorized by all necessary corporate action on the part

of the Company, the MHC and the Bank and this Agreement has been validly executed and delivered by the Company, the MHC and the Bank and is the valid, legal and binding agreement of the Company, the MHC and the Bank enforceable in accordance with its terms (except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws relating to or affecting the enforcement of creditors' rights generally or the rights of creditors of savings and loan holding companies, the accounts of whose subsidiaries are insured by the FDIC or by general equity principles regardless of whether such enforceability is considered in a proceeding in equity or at law, and except to the extent if any, that the provisions of Sections 8 and 9 hereof may be unenforceable as against public policy).

(o) The Company, the MHC and the Bank are not in violation of any directive received from the OTS, the FDIC, or any other agency to make any material change in the method of conducting their businesses so as to comply in all material respects with all applicable statutes and regulations (including, without limitation, regulations, decisions, directives and orders of the OTS, and the FDIC) and, except as may be set forth in the Registration Statement and the Prospectus, there is no suit or proceeding or charge or action before or by any court, regulatory authority or governmental agency or body, pending or, to the knowledge of the Company, the MHC or the Bank, threatened, which might materially and adversely affect the Offering, the performance of this Agreement or the consummation of the transactions contemplated in the Plan and as described in the Registration Statement and the Prospectus or which might result in any material adverse change in the condition (financial or otherwise), earnings, capital or properties of the

9

Company, the MHC and the Bank, or which would materially affect their properties and assets.

(p) The financial statements, schedules and notes related thereto which are included in the Prospectus fairly present the consolidated balance sheet, income statement, statement of changes in equity and cash flows of the Bank at the respective dates indicated and for the respective periods covered thereby and comply as to form in all material respects with the applicable accounting requirements of Title 12 of the Code of Federal Regulations and generally accepted accounting principles (including those requiring the recording of certain assets at their current market value). Such financial statements, schedules and notes related thereto have been prepared in accordance with generally accepted accounting principles consistently applied through the periods involved, present fairly in all material respects the information required to be stated therein and are consistent with the most recent financial statements and other reports filed by the Bank with the OTS. The other financial, statistical and pro forma information and related notes included in the Prospectus present fairly the information shown therein on a basis consistent with the audited and unaudited financial statements of the Bank included in the Prospectus, and as to the pro forma adjustments, the adjustments described therein have been properly applied on the basis described therein.

(q) Since the respective dates as of which information is given in the Registration Statement including the Prospectus: (i) there has not been any material adverse change, financial or otherwise, in the condition of the Company, the MHC or the Bank considered as one enterprise, or in the earnings, capital or properties of the Company, the MHC or the Bank, whether or not arising in the ordinary course of business; (ii) there has not been any material increase in the long-term debt of the Bank or in the principal amount of the Bank's assets which are classified by the Bank as substandard, doubtful or loss or in loans past due 90 days or more or real estate acquired by foreclosure, by deed-in-lieu of foreclosure or deemed in-substance foreclosure or any material decrease in retained earnings or total assets of the Bank nor has the Company, the MHC or the Bank issued any securities (other than in connection with the incorporation of the Company) or incurred any liability or obligation for borrowing other than in the ordinary course of business; (iii) there have not been any material transactions entered into by the Company, the MHC or the Bank; (iv) there has not been any material adverse change in the aggregate dollar amount of the Bank's deposits or its consolidated net worth; (v) there has been no material adverse change in the Company's, the MHC's or the Bank's relationship with its insurance carriers, including, without limitation, cancellation or other termination of the Company's, the

10

MHC's or the Bank's fidelity bond or any other type of insurance coverage; (vi) except as disclosed in the Prospectus there has been no material change in management of the Company, the MHC or the Bank, neither of which has any material undisclosed liability of any kind, contingent or otherwise; (vii) the Company, the MHC or the Bank has not sustained any material loss or interference with its respective business or properties from fire, flood, windstorm, earthquake, accident or other calamity, whether or not covered by insurance; (viii) the Company, the MHC or the Bank is not in default in the payment of principal or interest on any outstanding debt obligations; (ix) the capitalization, liabilities, assets, properties and business of the Company, the MHC and the Bank conform in all material respects to the descriptions thereof contained in the Prospectus; and (x) neither the Company, the MHC nor the Bank has any material contingent liabilities, except as set forth in the Prospectus. All documents made available to or delivered or to be made available to or delivered by the Bank, the MHC or the Company or their representatives in connection with the issuance and sale of the Shares, including records of account holders, depositors and other members of the Bank, or in connection with the Agent's exercise of due diligence, except for those documents which were prepared by parties other than the Bank, the MHC, the Company or their representatives, to the best knowledge of the Bank, the MHC and the Company, were on the dates on which they were delivered, or will be on the dates on which they are to be delivered, true, complete and correct in all material respects.

(r) As of the date hereof and as of the Closing Date, neither the Company, the MHC nor the Bank is (i) in violation of its articles of incorporation or charter or bylaws, respectively, or (ii) in default in the performance or observance of any material obligation, agreement, covenant, or condition contained in any material contract, lease, loan agreement, indenture or other instrument to which it is a party or by which it or any of its property may be bound; the consummation of the Offering, the execution, delivery and performance of this Agreement and the consummation of the transactions herein contemplated have been duly and validly authorized by all necessary corporate action on the part of the Company, the MHC and the Bank and this Agreement has been validly executed and delivered by the Company, the MHC and the Bank and is a valid, legal and binding Agreement of the Company, the MHC and the Bank enforceable in accordance with its terms, except as the enforceability thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, conservatorship, receivership or other similar laws now or hereafter in effect relating to or affecting the enforcement of creditors' rights generally or the rights of creditors of federal savings institutions, (ii) general equitable principles, (iii) laws relating to the safety and soundness of insured depository institutions, and (iv) applicable

11

law or public policy with respect to the indemnification and/or contribution provisions contained herein, and except that no representation or warranty need be made as to the effect or availability of equitable remedies or injunctive relief (regardless of whether such enforceability is considered in a proceeding in equity or at law). The consummation of the transactions herein contemplated will not: (i) conflict with or constitute a breach of, or default under, or result in the creation of any material lien, charge or encumbrance upon any of the assets of the Company, the MHC or the Bank pursuant to the articles of incorporation of the Company or the charter and bylaws of the Bank and the MHC, or any material contract, lease or other instrument to which the Company, the MHC or the Bank has a beneficial interest, or any applicable law, rule, regulation or order; (ii) violate any authorization, approval, judgement, decree, order, statute, rule or regulation applicable to the Company, the MHC or the Bank, except for such violations which would not have a material adverse effect on the financial condition and results of operations of the Company, the MHC and the Bank on a consolidated basis; or (iii) result in the creation of any material lien, charge or encumbrance upon any property of the Company, the MHC or the Bank.

(s) No default exists, and no event has occurred which with notice or lapse of time, or both, would constitute a default, on the part of the Company, the MHC or the Bank in the due performance and observance of any term, covenant or condition of any indenture, mortgage, deed of trust, note, bank loan or credit agreement or any other instrument or agreement to which the Company, the MHC or the Bank is a party or by which any of them or any of their property is bound or affected, except such defaults which would not have a material adverse affect on the financial condition or results of operations of the Company, the MHC and the Bank on a consolidated basis; such agreements are in full force and effect; and no other party to any such agreements has instituted or, to the best knowledge of the Company, the MHC and the Bank, threatened any action or proceeding wherein the Company, the MHC or the Bank would or might be alleged to be in default

thereunder.

(t) Upon consummation of the Offering, the authorized, issued and outstanding equity capital of the Company will be within the range set forth in the Prospectus under the caption Capitalization, and no Shares have been or will be issued and outstanding prior to the Closing Date (other than Shares held by the MHC); the Shares will have been duly and validly authorized for issuance and, when issued and delivered by the Company pursuant to the Plan against payment of the consideration calculated as set forth in the Plan and in the Prospectus, will be duly and validly issued, fully paid and non-assessable, except for shares purchased by the ESOP with funds

12

borrowed from the Company to the extent payment therefor in cash has not been received by the Company; except to the extent that subscription rights and priorities pursuant thereto exist pursuant to the Plan, no preemptive rights exist with respect to the Shares; and the terms and provisions of the Shares will conform in all material respects to the description thereof contained in the Registration Statement and the Prospectus. To the best knowledge of the Company, the MHC and the Bank, upon the issuance of the Shares, good title to the Shares will be transferred from the Company to the purchasers thereof against payment therefor, subject to such claims as may be asserted against the purchasers thereof by third-party claimants.

(u) No approval of any regulatory or supervisory or other public authority is required in connection with the execution and delivery of this Agreement or the issuance of the Shares, except for the approval of the Commission, the OTS and any necessary qualification, notification, registration or exemption under the securities or blue sky laws of the various states in which the Shares are to be offered, and except as may be required under the rules and regulations of the NASD.

(v) The Accounting & Consulting Group L.L.P. which has certified the consolidated audited financial statements and schedules of the Bank included in the Prospectus, has advised the Company, the MHC and the Bank in writing that they are, with respect to the Company, the MHC and the Bank, independent public accountants within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants and Title 12 of the Code of Federal Regulations and Section 571.2(c)(3).

(w) RP Financial LC, which has prepared the Valuation Appraisal Report as of December ___, 1999 (as amended or supplemented, if so amended or supplemented) (the Appraisal), has advised the Company in writing that it is independent of the Company, the MHC and the Bank within the meaning of the MHC Regulations.

(x) The Company, the MHC and the Bank have timely filed all required federal, state and local tax returns; the Company, the MHC and the Bank have paid all taxes that have become due and payable in respect of such returns, except where permitted to be extended, have made adequate reserves for similar future tax liabilities and no deficiency has been asserted with respect thereto by any taxing authority.

(y) The Bank is in compliance in all material respects with the applicable financial record-keeping and reporting requirements of the Currency and

13

Foreign Transactions Reporting Act of 1970, as amended, and the regulations and rules thereunder.

(z) To the knowledge of the Company, the MHC and the Bank, neither the Company, the MHC, the Bank nor employees of the Company, the MHC or the Bank have made any payment of funds of the MHC, the Company or the Bank as a loan for the purchase of the Shares or made any other payment of funds prohibited by law, and no funds have been set aside to be used for any payment prohibited by law.

(aa) Prior to the Offering, neither the Company, the MHC nor the Bank has: (i) issued any securities within the last 18 months (except for notes to evidence other bank loans and reverse repurchase agreements or other liabilities in the ordinary course of business or as described in the Prospectus, and except for any shares issued in connection with the incorporation of the Company); (ii) had any material dealings within the 12 months prior to the date hereof with any member of the NASD, or any person related to or associated with such member, other than discussions and meetings relating to the proposed Offering and routine purchases and sales of United States government and

agency securities; (iii) entered into a financial or management consulting agreement except as contemplated hereunder; and (iv) engaged any intermediary between the Agent and the Company, the MHC and the Bank in connection with the offering of the Shares, and no person is being compensated in any manner for such service. Appropriate arrangements have been made for placing the funds received from subscriptions for Shares in a special interest-bearing account with the Bank until all Shares are sold and paid for, with provision for refund to the purchasers in the event that the Offering is not completed for whatever reason or for delivery to the Company if all Shares are sold.

(bb) The Company, the MHC and the Bank have not relied upon the Agent or its legal counsel or other advisors for any legal, tax or accounting advice in connection with the Offering.

(cc) The Company is not required to be registered under the Investment Company Act of 1940, as amended.

(dd) Any certificates signed by an officer of the Company, the MHC or the Bank pursuant to the conditions of this Agreement and delivered to the Agent or their counsel that refers to this Agreement shall be deemed to be a representation and warranty by the Company, the MHC or the Bank to the Agent as to the matters covered thereby with the same effect as if such representation and warranty were set forth herein.

14

Section 5. Representations and Warranties of the Agent.

The Agent represents and warrants to the Company, the MHC and the Bank that:

(i) it is a corporation and is validly existing in good standing under the laws of the State of Ohio and licensed to conduct business in the State of Ohio and it has the full power and authority to provide the services to be furnished to the Bank, the MHC and the Company hereunder.

(ii) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of the Agent, and this Agreement has been duly and validly executed and delivered by the Agent and is a legal, valid and binding agreement of the Agent, enforceable in accordance with its terms.

(iii) Each of the Agent and its employees, agents and representatives who shall perform any of the services hereunder shall be duly authorized and empowered, and shall have all licenses, approvals and permits necessary to perform such services.

(iv) The execution and delivery of this Agreement by the Agent, the consummation of the transactions contemplated hereby and compliance with the terms and provisions hereof will not conflict with, or result in a breach of, any of the terms, provisions or conditions of, or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, the articles of incorporation of the Agent or any agreement, indenture or other instrument to which the Agent is a party or by which it or its property is bound.

(v) No approval of any regulatory or supervisory or other public authority is required in connection with the Agent's execution and delivery of this Agreement, except as may have been received.

(vi) There is no suit or proceeding or charge or action before or by any court, regulatory authority or government agency or body or, to the knowledge of the Agent, pending or threatened, which might materially adversely affect the Agent's performance of this Agreement.

Section 5.l Covenants of the Company, the MHC and the Bank. The Company, the MHC and the Bank hereby jointly and severally covenant with the Agent as follows:

(a) The Company will not, at any time after the date the Registration Statement is declared effective, file any amendment or supplement to the Registration Statement without providing the Agent and its counsel an opportunity to

15

review such amendment or supplement or file any amendment or supplement to which amendment or supplement the Agent or its counsel shall reasonably object.

(b) The MHC and Bank will not, at any time after the MHC Application is approved by the OTS, file any amendment or supplement to such

MHC Application without providing the Agent and its counsel an opportunity to review such amendment or supplement or file any amendment or supplement to which amendment or supplement the Agent or its counsel shall reasonably object.

(c) The Company, the MHC and the Bank will use their best efforts to cause any post-effective amendment to the Registration Statement to be declared effective by the Commission and any post-effective amendment to the MHC Application to be approved by the OTS and will immediately upon receipt of any information concerning the events listed below notify the Agent: (i) when the Registration Statement, as amended, has become effective; (ii) when the MHC Application, as amended has been approved by the OTS; (iii) any comments from the Commission, the OTS or any other governmental entity with respect to the Offering or the transactions contemplated by this Agreement; (iv) of the request by the Commission, the OTS or any other governmental entity for any amendment or supplement to the Registration Statement, the MHC Application or for additional information; (v) of the issuance by the Commission, the OTS or any other governmental entity of any order or other action suspending the Offering or the use of the Registration Statement or the Prospectus or any other filing of the Company, the MHC or the Bank under the MHC Regulations, or other applicable law, or the threat of any such action; (vi) the issuance by the Commission, the OTS or any authority of any stop order suspending the effectiveness of the Registration Statement or of the initiation or threat of initiation or threat of any proceedings for that purpose; or (vii) of the occurrence of any event mentioned in paragraph (g) below. The Company, the MHC and the Bank will make every reasonable effort (i) to prevent the issuance by the Commission, the OTS or any state authority of any such order and, if any such order shall at any time be issued, (ii) to obtain the lifting thereof at the earliest possible time.

(d) The Company, the MHC and the Bank will deliver to the Agent and to its counsel two conformed copies of the Registration Statement and the MHC Application, as originally filed and of each amendment or supplement thereto, including all exhibits. Further, the Company, the MHC and the Bank will deliver such additional copies of the foregoing documents to counsel to the Agent as may be required for any NASD and blue sky filings.

16

(e) The Company, the MHC and the Bank will furnish to the Agent, from time to time during the period when the Prospectus (or any later prospectus related to this offering) is required to be delivered under the 1933 Act or the Securities Exchange Act of 1934 (the 1934 Act), such number of copies of such Prospectus (as amended or supplemented) as the Agent may reasonably request for the purposes contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the rules and regulations promulgated under the 1934 Act (the 1934 Act Regulations). The Company authorizes the Agent to use the Prospectus (as amended or supplemented, if amended or supplemented) in any lawful manner contemplated by the Plan in connection with the sale of the Shares by the Agent.

(f) The Company, the MHC and the Bank will comply with any and all material terms, conditions, requirements and provisions with respect to the Offering, and the transactions contemplated thereby, imposed by the Commission, the OTS or the MHC Regulations, and by the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations to be complied with prior to or subsequent to the Closing Date and when the Prospectus is required to be delivered, and during such time period the Company, the MHC and the Bank will comply, at their own expense, with all material requirements imposed upon them by the Commission, the OTS or the MHC Regulations, and by the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, including, without limitation, Rule 10b-5 under the 1934 Act, in each case as from time to time in force, so far as necessary to permit the continuance of sales or dealing in the Common Stock during such period in accordance with the provisions hereof and the Prospectus.

(g) If, at any time during the period when the Prospectus relating to the Shares is required to be delivered, any event relating to or affecting the Company, the MHC or the Bank shall occur, as a result of which it is necessary or appropriate, in the opinion of counsel for the Company, the MHC and the Bank or in the reasonable opinion of the Agent's counsel, to amend or supplement the Registration Statement or Prospectus in order to make the Registration Statement or Prospectus not misleading in light of the circumstances existing at the time the Prospectus is delivered to a purchaser, the Company, the MHC and the Bank will immediately so inform the Agent and prepare and file, at their own expense, with the Commission and the OTS and furnish to the Agent a reasonable number of copies of an amendment or amendments of, or a supplement or supplements to, the Registration Statement or Prospectus (in form and substance reasonably satisfactory to the Agent and its counsel after a reasonable time for review) which will amend or supplement the Registration Statement or

Prospectus so that as amended

17

or supplemented it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time the Prospectus is delivered to a purchaser, not misleading. For the purpose of this Agreement, the Company, the MHC and the Bank each will timely furnish to the Agent such information with respect to itself as the Agent may from time to time reasonably request.

(h) The Company, the MHC and the Bank will take all necessary actions, in cooperating with the Agent, and furnish to whomever the Agent may direct, such information as may be required to qualify or register the Shares for offering and sale by the Company or to exempt such Shares from registration, or to exempt the Company as a broker-dealer and its officers, directors and employees as broker-dealers or agents under the applicable securities or blue sky laws of such jurisdictions in which the Shares are required under the MHC Regulations to be sold or as the Agent and the Company, the MHC and the Bank may reasonably agree upon; provided, however, that the Company shall not be obligated to file any general consent to service of process, to qualify to do business in any jurisdiction in which it is not so qualified, or to register its directors or officers as brokers, dealers, salesmen or agents in any jurisdiction. In each jurisdiction where any of the Shares shall have been qualified or registered as above provided, the Company will make and file such statements and reports in each fiscal period as are or may be required by the laws of such jurisdiction.

(i) The Company, the MHC and the Bank will not sell or issue, contract to sell or otherwise dispose of, for a period of 90 days after the Closing Date, without the Agent's prior written consent, any Common Stock other than the Shares or other than in connection with any plan or arrangement described in the Prospectus, including existing stock benefit plans.

(j) The Company shall register its Common Stock under Section 12(g) of the 1934 Act on or prior to the Closing Date pursuant to the Plan and shall request that such registration be effective prior to or upon completion of the Offering. The Company shall maintain the effectiveness of such registration for not less than three years or such shorter period as may be required by the OTS.

(k) During the period during which the Company's Common Stock is registered under the 1934 Act or for three (3) years from the date hereof, whichever period is greater, the Company will furnish to its shareholders as soon as practicable after the end of each fiscal year an annual report of the Company (including a consolidated balance sheet and statements of consolidated

18

income, shareholders' equity and cash flows of the Company and its subsidiaries as at the end of and for such year, certified by independent public accountants in accordance with Regulation S-X under the 1933 Act and the 1934 Act).

(l) During the period of three years from the date hereof, the Company will furnish to the Agent: (i) as soon as practicable after such information is publicly available, a copy of each report of the Company furnished to or filed with the Commission under the 1934 Act or any national securities exchange or system on which any class of securities of the Company is listed or quoted (including, but not limited to, reports on Forms 10-K, 10-Q and 8-K and all proxy statements and annual reports to stockholders), (ii) a copy of each other non-confidential report of the Company mailed to its stockholders or filed with the Commission, the OTS or any other supervisory or regulatory authority or any national securities exchange or system on which any class of securities of the Company is listed or quoted, each press release and material news items and additional documents and information with respect to the Company, MHC or the Bank as the Agent may reasonably request; and (iii) from time to time, such other nonconfidential information concerning the Company, the MHC or the Bank as the Agent may reasonably request.

(m) The Company, the MHC and the Bank will use the net proceeds from the sale of the Shares in the manner set forth in the Prospectus under the caption Use of Proceeds.

(n) Other than as permitted by the MHC Regulations, the HOLA, the 1933 Act, the 1933 Act Regulations, and the laws of any state in which the Shares are registered or qualified for sale or exempt from registration, neither the Company, the MHC nor the Bank will

distribute any prospectus, offering circular or other offering material in connection with the offer and sale of the Shares.

(o) The Company will use its best efforts to (i) encourage and assist a market maker to establish and maintain a market for the Shares and (ii) list and maintain quotation of the Shares on a national or regional securities exchange or on the Nasdaq Stock Market (Nasdaq) effective on or prior to the Closing Date.

(p) The Bank will maintain appropriate arrangements for depositing all funds received from persons mailing subscriptions for or orders to purchase Shares in the Offering on an interest-bearing basis at the rate described in the Prospectus until the Closing Date and satisfaction of all conditions precedent to the release of the Bank's obligation to refund payments received from

19

persons subscribing for or ordering Shares in the Offering in accordance with the Plan and as described in the Prospectus or until refunds of such funds have been made to the persons entitled thereto or withdrawal authorizations canceled in accordance with the Plan and as described in the Prospectus. The Bank will maintain such records of all funds received to permit the funds of each subscriber to be separately insured by the FDIC (to the maximum extent allowable) and to enable the Bank to make the appropriate refunds of such funds in the event that such refunds are required to be made in accordance with the Plan and as described in the Prospectus.

(q) The Company, the MHC and the Bank will take such actions and furnish such information as are reasonably requested by the Agent in order for the Agent to ensure compliance with the NASD's Interpretation Relating to Free Riding and Withholding.

(r) Neither the Company, the MHC nor the Bank will amend the Plan without notifying the Agent prior thereto.

(s) The Company shall assist the Agent, if necessary, in connection with the allocation of the Shares in the event of an oversubscription and shall provide the Agent with any information necessary to assist the Company in allocating the Shares in such event and such information shall be accurate and reliable in all material respects.

(t) Prior to the Closing Date, the Company, the MHC and the Bank will inform the Agent of any event or circumstances of which it is aware as a result of which the Registration Statement and/or Prospectus, as then amended or supplemented, would contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading.

(u) Subsequent to the date the Registration Statement is declared effective by the Commission and prior to the Closing Date, except as otherwise may be indicated or contemplated therein or set forth in an amendment or supplement thereto, neither the Company, the MHC nor the Bank will have: (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money, except borrowings from the same or similar sources indicated in the Prospectus in the ordinary course of its business, or (ii) entered into any transaction which is material in light of the business and properties of the Company and the Bank, taken as a whole.

(v) The facts and representations provided to Luse Lehman Gorman Pomerenk & Schick by the Bank, the MHC and the Company and upon which Luse

20

Lehman Gorman Pomerenk & Schick will base its opinion under Section 7(c)(1) are and will be truthful, accurate and complete.

Section 6. Payment of Expenses. Whether or not the Offering is completed or the sale of the Shares by the Company is consummated, the Company, the MHC and the Bank jointly and severally agree to pay or reimburse the Agent for the Company, the MHC and the Bank have agreed to reimburse the Agent for its out-of-pocket expenses, and its legal fees (as specified in Section 2) and to indemnify the Agent against certain claims or liabilities, including certain liabilities under the Securities Act, and will contribute to payments the Agent may be required to make in connection with any such claims or liabilities; and the fees set forth under Section 2. In the event the Company is unable to sell a minimum of 708,050 Shares, the Company, the MHC and the Bank shall promptly reimburse the Agent in accordance with Section 2 hereof.

Section 7. Conditions to the Agent's Obligations. The obligations of the Agent hereunder, as to the Shares to be delivered at the Closing Date, are

subject, to the extent not waived in writing by the Agent, to the condition that all representations and warranties of the Company, the MHC and the Bank herein are, at and as of the commencement of the Offering and at and as of the Closing Date, true and correct in all material respects, the condition that the Company, the MHC and the Bank shall have performed all of their obligations hereunder to be performed on or before such dates, and to the following further conditions:

(a) At the Closing Date, the Company, the MHC and the Bank shall have conducted the Offering in all material respects in accordance with the Plan, the MHC Regulations, and all other applicable laws, regulations, decisions and orders, including all terms, conditions, requirements and provisions precedent to the Offering imposed upon them by the OTS.

(b) The Registration Statement shall have been declared effective by the Commission and the MHC Application and MHC Notice shall be approved by the OTS not later than 5:30 p.m. on the date of this Agreement, or with the Agent's consent at a later time and date; and at the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefore initiated or threatened by the Commission or any state authority, and no order or other action suspending the authorization of the Prospectus or the consummation of the Conversion shall have been issued or proceedings therefore initiated or, to the Company's, the MHC's or the Bank's knowledge, threatened by the Commission, the OTS, the FDIC, or any state authority.

(c) At the Closing Date, the Agent shall have received:

21

(1) The favorable opinion, dated as of the Closing Date and addressed to the Agent and for its benefit, of Luse Lehman Gorman Pomerenk & Schick, special counsel for the Company, the MHC and the Bank, in form and substance to the effect that:

(i) The Company has been duly incorporated and is validly existing as a corporation under the laws of the United States.

(ii) The Company has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus.

(iii) The Bank has been organized and is a validly existing federally chartered savings and loan association in capital stock form of organization, authorized to conduct its business and own its property as described in the Registration Statement and the Prospectus. All of the outstanding capital stock of the Bank upon completion of the Offering will be duly authorized and, upon payment therefor, will be validly issued, fully paid and non-assessable and will be owned by the Company, free and clear of any liens, encumbrances, claims or other restrictions.

(iv) The Bank is a member of the FHLB-Dallas. The deposit accounts of the Bank are insured by the FDIC up to the maximum amount allowed under law and no proceedings for the termination or revocation of such insurance are pending or, to such counsel's Actual Knowledge, threatened; to the extent that such information constitutes matters of law and legal conclusions, has been reviewed by such counsel and is accurately described in all material respects.

(v) The MHC has been duly organized and is validly existing as a federally chartered mutual holding company, duly authorized to conduct its business and own its properties as described in the Registration Statement and Prospectus.

(vi) Upon consummation of the Offering, immediately upon completion thereof subject to compliance with all conditions imposed by the OTS under the terms of the OTS' approval order, in an amount as described in the Prospectus, the authorized, issued and outstanding capital stock of the Company will be within the range set forth in the Prospectus under the caption Capitalization, and no shares of Common Stock have been issued prior to the Closing Date; at the time of the Offering, the Shares subscribed for pursuant to the Offering will have been duly and validly authorized for issuance, and when issued and delivered by the Company pursuant to the Plan against payment of the consideration calculated as set forth in the Plan and

22

Prospectus, will be duly and validly issued and fully paid and non-assessable; the issuance of the Shares is not subject to preemptive rights and the terms and provisions of the Shares conform in all material respects to the description thereof

contained in the Prospectus. To such counsel's Actual Knowledge, upon the issuance of the Shares, good title to the Shares will be transferred by the Company to the purchasers thereof against payment therefor, subject to such claims as may be asserted against the purchasers thereof by third-party claimants.

(vii) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary action on the part of the Company, the MHC and the Bank; and this Agreement is a valid and binding obligation of the Company, the MHC and the Bank, enforceable in accordance with its terms, except as the enforceability thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, conservatorship, receivership or other similar laws now or hereafter in effect relating to or affecting the enforcement of creditors' rights generally or the rights of creditors of savings institutions, the deposits of which are insured by the FDIC and their holding companies, (ii) general equitable principles, (iii) laws relating to the safety and soundness of insured depository institutions and their holding companies, and (iv) applicable law or public policy with respect to the indemnification and/or contribution provisions contained herein, including without limitation the provisions of Sections 23A and 23B of the Federal Reserve Act and except that no opinion need be expressed as to the effect or availability of equitable remedies or injunctive relief (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(viii) The MHC Application has been approved by the OTS and the Prospectus has been authorized for use by the OTS, and no action has been taken, and to such counsel's Actual Knowledge none is pending or threatened, to revoke any such authorization or approval.

(ix) The Plan has been duly adopted by the required vote of the directors of the Company, the MHC and the Bank, and based upon the certificate of the inspector of election, by the members of the Bank.

(x) Subject to the satisfaction of the conditions to the OTS' approval of the Offering, no further approval, registration, authorization, consent or other order of any federal regulatory agency is required in connection with the execution and delivery of this Agreement, the issuance of the Shares and the consummation of the Offering, except as may be required under the securities or blue sky laws of various jurisdictions (as to which no opinion need be

23

rendered) and except as may be required under the rules and regulations of the NASD and/or the NYSE (as to which no opinion need be rendered). To such counsel's Actual Knowledge, the Offering has been consummated in all material respects in accordance with MHC Regulations, except that no opinion is rendered with respect to (a) the Registration Statement or Prospectus, which are covered by other clauses of this opinion, (b) the satisfaction of the post-Offering conditions in the OTS Regulations or in the OTS approvals of the MHC Application, (c) the securities or blue sky laws of various jurisdictions, and (d) the rules and regulations of the NASD.

(xi) The Registration Statement is effective under the 1933 Act, and no stop order suspending the effectiveness has been issued under the 1933 Act or proceedings therefor initiated or, to such counsel's Actual Knowledge, threatened by the Commission.

(xii) At the time the MHC Application, including the Prospectus contained therein, was approved by the OTS, the MHC Application, including the Prospectus contained therein, complied as to form in all material respects with the requirements of the MHC Regulations, federal law and all applicable rules and regulations promulgated thereunder (other than the financial statements, the notes thereto, and other tabular, financial, statistical and appraisal data included therein, as to which no opinion need be rendered).

(xiii) At the time that the Registration Statement became effective, (i) the Registration Statement (as amended or supplemented, if so amended or supplemented) (other than the financial statements, the notes thereto, and other tabular, financial, statistical and appraisal data included therein, as to which no opinion need be rendered), complied as to form in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations, and (ii) the Prospectus (other than the financial statements, the notes thereto, and other tabular, financial, statistical and appraisal data included therein, as to which no opinion need be rendered) complied as to form in all material respects with the requirements of the 1933 Act, the 1933 Act Regulations, the MHC Regulations and federal law.

(xiv) The terms and provisions of the Shares of the Company conform, in all material respects, to the description thereof contained in the Registration Statement and Prospectus, and the form of certificate used to evidence the Shares is in due and proper form.

(xv) There are no legal or governmental proceedings pending or threatened which are required to be disclosed in the Registration Statement and Prospectus, other than those disclosed therein, and to such counsel's

24

Actual Knowledge, all pending legal and governmental proceedings to which the Company, the MHC or the Bank is a party or of which any of their property is the subject, which are not described in the Registration Statement and the Prospectus, including ordinary routine litigation incidental to the Company's, the MHC's or the Bank's business, are, considered in the aggregate, not material.

(xvi) To such counsel's Actual Knowledge, there are no material contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be described or referred to in the MHC Application, the Registration Statement or the Prospectus or required to be filed as exhibits thereto other than those described or referred to therein or filed as exhibits thereto in the MHC Application, the Registration Statement or the Prospectus. The description in the MHC Application, the Registration Statement and the Prospectus of such documents and exhibits is accurate in all material respects and fairly presents the information required to be shown.

(xvii) To such counsel's Actual Knowledge, the Company, the MHC and the Bank have conducted the Offering, in all material respects, in accordance with all applicable requirements of the Plan and applicable federal law, except that no opinion is rendered with respect to (a) the MHC Application, the Registration Statement or Prospectus, which are covered by other clauses of this opinion, (b) the satisfaction of the post-Offering conditions in the OTS Regulations or in the OTS approval of the MHC Application, (c) the securities or blue sky laws of various jurisdictions, and (d) the rules and regulations of the NASD. The Plan complies in all material respects with all applicable federal laws, rules, regulations, decisions and orders including, but not limited to, the MHC Regulations; no order has been issued by the OTS, the Commission, the FDIC, or any state authority to suspend the Offering or the use of the Prospectus, and no action for such purposes has been instituted or, to such counsel's Actual Knowledge, threatened by the OTS, the Commission, the FDIC, or any state authority and no person has sought to obtain regulatory or judicial review of the final action of the OTS, approving the Plan, the MHC Application or the Prospectus.

(xviii) To such counsel's Actual Knowledge, the Company, the MHC and the Bank have obtained all material licenses, permits and other governmental authorizations currently required for the conduct of their businesses and all such licenses, permits and other governmental authorizations are in full force and effect, and the Company, the MHC and the Bank are in all material respects complying therewith, except where the failure to have such licenses, permits and other governmental authorizations or the failure to be in compliance therewith would not have a material adverse effect on the

25

business or operations of the Bank, the MHC and the Company, taken as a whole.

(xix) To such counsel's Actual Knowledge, neither the Company, the MHC nor the Bank is in violation of its articles of incorporation and bylaws or its Charter and bylaws, as appropriate or, to such counsel's Actual Knowledge, in default or violation of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party or by which it or its property may be bound, except for such defaults or violations which would not have a material adverse impact on the financial condition or results of operations of the Company, the MHC and the Bank on a consolidated basis; to such counsel's Actual Knowledge, the execution and delivery of this Agreement, the occurrence of the obligations herein set forth and the consummation of the transactions contemplated herein will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company, the MHC or the Bank pursuant to any material contract, indenture,

mortgage, loan agreement, note, lease or other instrument to which the Company, the MHC or the Bank is a party or by which any of them may be bound, or to which any of the property or assets of the Company, the MHC or the Bank are subject; and, such action will not result in any violation of the provisions of the certificate of incorporation or bylaws of the Company or the Charter or bylaws of the MHC or the Bank or, to such counsel's Actual Knowledge, result in any violation of any applicable federal law, act, regulation (except that no opinion with respect to the securities and blue sky laws of various jurisdictions or the rules or regulations of the NASD need be rendered) or order or court order, writ, injunction or decree.

(xx) The Company's articles of incorporation and bylaws comply in all material respects with the regulations of the OTS. The Bank's and MHC's charter and bylaws comply in all material respects with the rules and regulations of the OTS.

(xxi) To such counsel's Actual Knowledge, neither the Company, the MHC nor the Bank is in violation of any directive from the OTS or the FDIC to make any material change in the method of conducting its respective business.

(xxii) The information in the Prospectus under the captions Regulation, The Stock Offering, Restrictions on Acquisition of the Alamogordo Financial and Alamogordo Federal and Description of Capital Stock of the Alamogordo Financial, to the extent that such information constitutes

26

matters of law, summaries of legal matters, documents or proceedings, or legal conclusions, has been reviewed by such counsel and is correct in all material respects. The discussion of statutes or regulations described or referred to in the Prospectus are accurate summaries and fairly present the information required to be shown. The information in the Prospectus relating to the tax consequences of the stock offering has been reviewed by such counsel and fairly describes the opinions rendered by Luse Lehman Gorman Pomerenk & Schick and _____________________ to the Company, the MHC and the Bank with respect to such matters.

(xxiii) The Company and the MHC have been duly registered and are in good standing as savings and loan holding companies under the HOLA.

(xxiv) In addition, such counsel shall state that during the preparation of the MHC Application, the Registration Statement and the Prospectus, they participated in conferences with certain officers of, the independent public and internal accountants for, and other representatives of the Company, the MHC and the Bank, at which conferences the contents of the MHC Application, the Registration Statement and the Prospectus and related matters were discussed and, while such counsel have not confirmed the accuracy or completeness of or otherwise verified the information contained in the MHC Application, the Registration Statement or the Prospectus, and do not assume any responsibility for such information, based upon such conferences and a review of documents deemed relevant for the purpose of rendering their view (relying as to materiality as to factual matters on certificates of officers and other factual representations by the Company, the MHC and the Bank), nothing has come to their attention that would lead them to believe that the MHC Application, the Registration Statement, the Prospectus, or any amendment or supplement thereto (other than the financial statements, the notes thereto, and other tabular, financial, statistical and appraisal data included therein as to which no view need be rendered) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

In giving such opinion, such counsel may rely as to all matters of fact on certificates of officers or directors of the Company, the MHC and the Bank and certificates of public officials. The opinion of Luse Lehman Gorman Pomerenk & Schick shall be governed by the Legal Opinion Accord (Accord) of the American Bar Association Section of Business Law (1991). The term Actual Knowledge as used herein shall have the meaning set forth in the Accord. For purposes of such opinion, no proceedings shall be deemed to be pending, no order or stop order shall be deemed to be issued, and no action shall be deemed to be instituted unless, in each case, a director or executive officer of the Company, the MHC or the Bank shall have received a copy of such

27

proceedings, order, stop order or action. In addition, such opinion may be limited to present statutes, regulations and judicial interpretations and to

facts as they presently exist; in rendering such opinion, such counsel need assume no obligation to revise or supplement it should the present laws be changed by legislative or regulatory action, judicial decision or otherwise; and such counsel need express no view, opinion or belief with respect to whether any proposed or pending legislation, if enacted, or any proposed or pending regulations or policy statements issued by any regulatory agency, whether or not promulgated pursuant to any such legislation, would affect the validity of the Offering or any aspect thereof. Such counsel may assume that any agreement is the valid and binding obligation of any parties to such agreement other than the Company, the MHC or the Bank.

The favorable opinion, dated as of the Closing Date and addressed to the Agent and for their benefit, of the Bank's local counsel, in form and substance to the effect that, to the best of such counsel's knowledge, (i) the Company, the MHC and the Bank have good and marketable title to all properties and assets which are material to the business of the Company, the MHC and the Bank and to those properties and assets described in the Registration Statement and Prospectus, as owned by them, free and clear of all liens, charges, encumbrances or restrictions, except such as are described in the Registration Statement and Prospectus, or are not material in relation to the business of the Company, the MHC and the Bank considered as one enterprise; (ii) all of the leases and subleases material to the business of the Company, the MHC and the Bank under which the Company, the MHC and the Bank hold properties, as described in the Registration Statement and Prospectus, are in full force and effect; and (iii) the Bank is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which its ownership of property or leasing of property or the conduct of its business requires such qualification, unless the failure to be so qualified in one or more of such jurisdictions would not have a material adverse effect on the condition, financial or otherwise, or the business, operations or income of the Bank.

(d) At the Closing Date, the Agent shall have received the favorable opinion, dated as of the Closing Date, of Silver, Freedman & Taff, L.L.P., the Agent's counsel, with respect to such matters as the Agent may reasonably require. Such opinion may rely upon the opinions of counsel to the Company, the MHC and the Bank, and as to matters of fact, upon certificates of officers and directors of the Company, the MHC and the Bank delivered pursuant hereto or as such counsel shall reasonably request.

(e) At the Closing Date, the Agent shall receive a certificate of the Chief Executive Officer and the Principal Financial and/or Accounting Officer of the Company, the MHC and the Bank in form and substance reasonably satisfactory to the Agent's Counsel, dated as of such Closing Date, to the effect that: (i) they have carefully reviewed the Prospectus and, in their opinion, at the time the Prospectus became authorized for final use, the Prospectus did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; (ii) since

28

the date the Prospectus became authorized for final use, no event has occurred which should have been set forth in an amendment or supplement to the Prospectus which has not been so set forth, including specifically, but without limitation, any material adverse change in the condition, financial or otherwise, or in the earnings, capital, properties or business of the Company, the MHC or the Bank, and the conditions set forth in this Section 7 have been satisfied; (iii) since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has been no material adverse change in the condition, financial or otherwise, or in the earnings, capital or properties of the Company, the MHC or the Bank, independently, or of the Company, the MHC and the Bank, considered as one enterprise, whether or not arising in the ordinary course of business; (iv) the representations and warranties in Section 4 are true and correct with the same force and effect as though expressly made at and as of the Closing Date; (v) the Company, MHC and the Bank have complied in all material respects with all agreements and satisfied all conditions on their part to be performed or satisfied at or prior to the Closing Date and will comply in all material respects with all obligations to be satisfied by them after the Offering; (vi) no stop order suspending the effectiveness of the Registration Statement has been initiated or, to the best knowledge of the Company, the MHC or the Bank, threatened by the Commission or any state authority; (vii) no order suspending the Offering or the effectiveness of the Prospectus has been issued and no proceedings for that purpose are pending or, to the best knowledge of the Company, the MHC or the Bank, threatened by the OTS, the Commission, the FDIC, or any state authority; and (viii) to the best knowledge of the Company, the MHC or the Bank, no person has sought to obtain review of the final action of the OTS approving the Plan.

(f) Prior to and at the Closing Date: (i) in the reasonable opinion of the Agent, there shall have been no material adverse change in the condition, financial or otherwise, or in the earnings or business of the Company, the MHC or the Bank independently, or of the Company, the MHC and the Bank, considered as one enterprise,

from that as of the latest dates as of which such condition is set forth in the Prospectus other than transactions referred to or contemplated therein; (ii) the Company, the MHC or the Bank shall not have received from the OTS or the FDIC any direction (oral or written) to make any material change in the method of conducting their business with which it has not complied (which direction, if any, shall have been disclosed to the Agent) or which materially and adversely would affect the business, operations or financial condition or income of the Company, the MHC and the Bank taken as a whole; (iii) the Company, the MHC and the Bank shall not have been in default (nor shall an event have occurred which, with notice or lapse of time or both, would constitute a default) under any provision of

29

any agreement or instrument relating to any outstanding indebtedness; (iv) no action, suit or proceeding, at law or in equity or before or by any federal or state commission, board or other administrative agency, shall be pending or, to the knowledge of the Company, the MHC or the Bank, threatened against the Company, the MHC or the Bank or affecting any of their properties wherein an unfavorable decision, ruling or finding would materially and adversely affect the business, operations, financial condition or income of the Company, the MHC and the Bank taken as a whole; and (v) the Shares have been qualified or registered for offering and sale or exempted therefrom under the securities or blue sky laws of the jurisdictions as the Agent shall have reasonably requested and as agreed to by the Company, the MHC and the Bank.

(g) Concurrently with the execution of this Agreement, the Agent shall receive a letter from The Accounting & Consulting Group L.L.P. dated as of the date of the Prospectus and addressed to the Agent: (i) confirming that The Accounting & Consulting Group L.L.P. is a firm of independent public accounts within the meaning of Rule 101 of the Code of Professional Ethics of the American Institute of Certified Public Accountants and applicable regulations of the OTS and stating in effect that in its opinion the consolidated financial statements, schedules and related notes of the Bank as of September 30, 1999 and 1998 and for each of the three years in the period ended September 30, 1998, as are included in the Prospectus and covered by their opinion included therein, comply as to form in all material respects with the applicable accounting requirements and related published rules and regulations of the OTS and the 1933 Act; (ii) stating in effect that, on the basis of certain agreed upon procedures (but not an audit in accordance with generally accepted auditing standards) consisting of a reading of the latest available unaudited interim consolidated financial statements of the Bank prepared by the Bank, a reading of the minutes of the meetings of the Board of Directors and members of the Bank and consultations with officers of the Bank responsible for financial and accounting matters, nothing came to their attention which caused them to believe that: (A) the unaudited financial statements included in the Prospectus are not in conformity with the 1933 Act, applicable accounting requirements of the OTS and generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included in the Prospectus; or (b) during the period from the date of the latest unaudited consolidated financial statements included in the Prospectus to a specified date not more than three business days prior to the date of the Prospectus, except as has been described in the Prospectus, there was any increase in borrowings, other than normal deposit fluctuations, by the Bank; or (c) there was any decrease in the consolidated net assets of the Bank at the date of such letter as compared with amounts

30

shown in the latest unaudited consolidated statement of condition included in the Prospectus; and (iii) stating that, in addition to the audit referred to in their opinion included in the Prospectus and the performance of the procedures referred to in clause (ii) of this subsection (f), they have compared with the general accounting records of the Bank, which are subject to the internal controls of the Bank, the accounting system and other data prepared by the Bank, directly from such accounting records, to the extent specified in such letter, such amounts and/or percentages set forth in the Prospectus as the Agent may reasonably request; and they have reported on the results of such comparisons.

(h) At the Closing Date, the Agent shall receive a letter dated the Closing Date, addressed to the Agent, confirming the statements made by The Accounting & Consulting Group L.L.P. in the letter delivered by it pursuant to subsection (f) of this Section 7, the specified date referred to in clause (ii) of subsection (f)

thereof to be a date specified in such letter, which shall not be more than three business days prior to the Closing Date.

(i) At the Closing Date, the Agent shall receive a letter from RP Financial LC, dated the date thereof and addressed to counsel for the Agent (i) confirming that said firm is independent of the Company, the MHC and the Bank and is experienced and expert in the area of corporate appraisals within the meaning of Title 12 of the Code of Federal Regulations, Section 563b.7(f)(1)(i), (ii) stating in effect that the Appraisal prepared by such firm complies in all material respects with the applicable requirements of Title 12 of the Code of Federal Regulations, and (iii) further stating that their opinion of the aggregate pro forma market value of the Company, the MHC and the Bank expressed in their Appraisal dated as of December __, 1999, and most recently updated, remains in effect.

(j) The Company, the MHC and the Bank shall not have sustained since the date of the latest financial statements included in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Registration Statement and Prospectus and since the respective dates as of which information is given in the Registration Statement and Prospectus, there shall not have been any change in the long- term debt of the Company, the MHC or the Bank other than debt incurred in relation to the purchase of Shares by the Bank's Eligible Plans, or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company or the Bank, otherwise than as set forth or

31

contemplated in the Registration Statement and Prospectus, the effect of which, in any such case described above, is in the Agent's reasonable judgment sufficiently material and adverse as to make it impracticable or inadvisable to proceed with the Subscription Offering or the delivery of the Shares on the terms and in the manner contemplated in the Prospectus.

(k) At or prior to the Closing Date, the Agent shall receive: (i) a copy of the letters from the OTS approving the MHC Application and authorizing the use of the Prospectus; (ii) a copy of the order from the Commission declaring the Registration Statement effective; (iii) certificate of good standing from the OTS evidencing the good standing of the Company; (iv) a certificate from the FDIC evidencing the Bank's insurance of accounts; (v) a certificate of the FHLB-Dallas evidencing the Bank's membership thereof; (vi) a certificate from the OTS evidencing the Company's and the MHC's standing as registered savings and loan holding companies; (vii) a copy of the Bank's federal stock charter; and (viii) a copy of the Company's federal charter; and (viii) a copy of the MHC's federal charter.

(l) Subsequent to the date hereof, there shall not have occurred any of the following: (i) a suspension or limitation in trading in securities generally on the New York Stock Exchange or in the over-the-counter market, or quotations halted generally on the Nasdaq, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required by either of such exchanges or the NASD or by order of the Commission or any other governmental authority; (ii) a general moratorium on the operations of commercial banks, federal savings institutions or a general moratorium on the withdrawal of deposits from commercial banks or federal savings institutions declared by federal authorities; (iii) the engagement by the United States in hostilities which have resulted in the declaration, on or after the date hereof, of a national emergency or war; or (iv) a material decline in the price of equity or debt securities if the effect of such a declaration or decline, in the Agent's reasonable judgement, makes it impracticable or inadvisable to proceed with the Offering or the delivery of the shares on the terms and in the manner contemplated in the Registration Statement and the Prospectus.

(m) At or prior to the Closing Date, counsel to the Agent shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the sale of the Shares as herein contemplated and related proceedings or in order to evidence the occurrence or completeness of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company, the MHC or the Bank in connection with the Offering and the sale

32

of the Shares as herein contemplated shall be satisfactory in form and substance to the Agent and its counsel.

Section 8. Indemnification.

(a) The Company, the MHC and the Bank jointly and severally agree to indemnify and hold harmless the Agent, its respective officers and directors, employees and agents, and each person, if any, who controls the Agent within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and all loss, liability, claim, damage or expense whatsoever (including but not limited to settlement expenses), joint or several, that the Agent or any of them may suffer or to which the Agent and any such persons may become subject under all applicable federal or state laws or otherwise, and to promptly reimburse the Agent and any such persons upon written demand for any expense (including reasonable fees and disbursements of counsel) incurred by the Agent or any of them in connection with investigating, preparing or defending any actions, proceedings or claims (whether commenced or threatened) to the extent such losses, claims, damages, liabilities or actions: (i) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment or supplement thereto), preliminary or final Prospectus (or any amendment or supplement thereto), the MHC Application (or any amendment or supplement thereto), or any instrument or document executed by the Company, the MHC or the Bank or based upon written information supplied by the Company, the MHC or the Bank filed in any state or jurisdiction to register or qualify any or all of the Shares or to claim an exemption therefrom, or provided to any state or jurisdiction to exempt the Company as a broker-dealer or its officers, directors and employees as broker-dealers or agent, under the securities laws thereof (collectively, the Blue Sky Application), or any document, advertisement, oral statement or communication (Sales Information) prepared, made or executed by or on behalf of the Company, the MHC or the Bank with their consent or based upon written or oral information furnished by or on behalf of the Company, the MHC or the Bank, whether or not filed in any jurisdiction, in order to qualify or register the Shares or to claim an exemption therefrom under the securities laws thereof; (ii) arise out of or are based upon the omission or alleged omission to state in any of the foregoing documents or information, a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or (iii) arise from any theory of liability whatsoever relating to or arising from or based upon the Registration Statement (or any amendment or supplement thereto), preliminary or final Prospectus (or any amendment or supplement thereto), the MHC Application

33

(or any amendment or supplement thereto), any Blue Sky Application or Sales Information or other documentation distributed in connection with the Offering; provided, however, that no indemnification is required under this paragraph (a) to the extent such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue material statement or alleged untrue material statement in, or material omission or alleged material omission from, the Registration Statement (or any amendment or supplement thereto), preliminary or final Prospectus (or any amendment or supplement thereto), the MHC Application (or any amendment or supplement thereto), any Blue Sky Application or Sales Information made in reliance upon and in conformity with information furnished in writing to the Company, the MHC or the Bank by the Agent or its counsel regarding the Agent provided, that it is agreed and understood that the only information furnished in writing to the Company, the MHC or the Bank by the Agent regarding the Agent is set forth in the Prospectus; and, provided further, that such indemnification shall be to the extent permitted by the Commissioner, the OTS, the FDIC and the Board of Governors of the Federal Reserve. The indemnification provided for in this paragraph (a) shall not be applicable with respect to any loss, liability, claim, damage, or expense whatsoever if it is determined by final judgment of a court having jurisdiction over the matter that such loss, liability, claim, damage or expense was primarily a result of the Agent's willful misconduct or gross negligence.

(b) The Agent agrees to indemnify and hold harmless the Company, the MHC and the Bank, their directors and officers and each person, if any, who controls the Company, the MHC or the Bank within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all loss, liability, claim, damage or expense whatsoever (including but not limited to settlement expenses), joint or several, which they, or any of them, may suffer or to which they, or any of them may become subject under all applicable federal and state laws or otherwise, and to promptly reimburse the Company, the MHC, the Bank, and any such persons upon written demand for any expenses (including

reasonable fees and disbursements of counsel) incurred by them, or any of them, in connection with investigating, preparing or defending any actions, proceedings or claims (whether commenced or threatened) to the extent such losses, claims, damages, liabilities or actions: (i) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment or supplement thereto), the MHC Application (or any amendment or supplement thereto), the preliminary or final Prospectus (or any amendment or supplement thereto), any Blue Sky Application or Sales Information, (ii) are based upon the omission or alleged omission to state in any of the foregoing documents a material fact required to be stated therein

34

or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (iii) arise from any theory of liability whatsoever relating to or arising from or based upon the Registration Statement (or any amendment or supplement thereto), preliminary or final Prospectus (or any amendment or supplement thereto), the MHC Application (or any amendment or supplement thereto),or any Blue Sky Application or Sales Information or other documentation distributed in connection with the Offering; provided, however, that the Agent's obligations under this Section 8(b) shall exist only if and only to the extent (i) that such untrue statement or alleged untrue statement was made in, or such material fact or alleged material fact was omitted from, the Registration Statement (or any amendment or supplement thereto), the preliminary or final Prospectus (or any amendment or supplement thereto), the MHC Application (or any amendment or supplement thereto), or any Blue Sky Application or Sales Information in reliance upon and in conformity with information furnished in writing to the Company, the MHC or the Bank by the Agent or its counsel regarding the Agent, provided, that it is agreed and understood that the only information furnished in writing to the Company, the MHC or the Bank by the Agent regarding the Agent is set forth in the Prospectus. The indemnification provided for in this Section 8 (b) shall not be applicable with respect to any loss, liability, claim, damage, or expense whatsoever if it is determined by final judgment of a court having jurisdiction over the matter that such loss, liability, claim, damage or expense was primarily a result of the Company's, the MHC's or the Bank's willful misconduct or gross negligence.

(c) Each indemnified party shall give prompt written notice to each indemnifying party of any action, proceeding, claim (whether commenced or threatened), or suit instituted against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve it from any liability which it may have on account of this Section 8 or otherwise. An indemnifying party may participate at its own expense in the defense of such action. In addition, if it so elects within a reasonable time after receipt of such notice, an indemnifying party, jointly with any other indemnifying parties receiving such notice, may assume defense of such action with counsel chosen by it and approved by the indemnified parties that are defendants in such action, unless such indemnified parties reasonably object to such assumption on the ground that there may be legal defenses available to them that are different from or in addition to those available to such indemnifying party. If an indemnifying party assumes the defense of such action, the indemnifying parties shall not be liable for any fees and expenses of counsel for the indemnified parties incurred thereafter in connection with such action, proceeding or claim, other than reasonable costs

35

of investigation. In no event shall the indemnifying parties be liable for the fees and expenses of more than one separate firm of attorneys (and any special counsel that said firm may retain) for each indemnified party in connection with any one action, proceeding or claim or separate but similar or related actions, proceedings or claims in the same jurisdiction arising out of the same general allegations or circumstances.

(d) The agreements contained in this Section 8 and in Section 9 hereof and the representations and warranties of the Company, the MHC and the Bank set forth in this Agreement shall remain operative and in full force and effect regardless of: (i) any investigation made by or on behalf of agent or their officers, directors or controlling persons, agent or employees or by or on behalf of the Company, the MHC or the Bank or any officers, directors or controlling persons, agent or employees of the Company, the MHC or the Bank; (ii) delivery of and payment hereunder for the Shares; or (iii) any termination of this

Agreement.

Section 9. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in Section 8 is due in accordance with its terms but is for any reason held by a court to be unavailable from the Company, the MHC, the Bank or the Agent, the Company, the MHC, the Bank and the Agent shall contribute to the aggregate losses, claims, damages and liabilities (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding of any claims asserted, but after deducting any contribution received by the Company, the MHC, the Bank or the Agent from persons other than the other party thereto, who may also be liable for contribution) in such proportion so that the Agent is responsible for that portion represented by the percentage that the fees paid to the Agent pursuant to Section 2 of this Agreement (not including expenses) bears to the gross proceeds received by the Company from the sale of the Shares in the Offering, and the Company, the MHC and the Bank shall be responsible for the balance. If, however, the allocation provided above is not permitted by applicable law or if the indemnified party failed to give the notice required under Section 8 above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative fault of the Company, the MHC and the Bank on the one hand and the Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions, proceedings or claims in respect thereto), but also the relative benefits received by the Company, the MHC and the Bank on the one hand and the Agent on the other from the Offering (before deducting expenses). The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the MHC and/or the Bank on the one hand or the Agent on the other and the parties' relative intent, good faith, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the MHC, the Bank and the Agent agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro-rata allocation or by any other

36

method of allocation which does not take into account the equitable considerations referred to above in this Section 9. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions, proceedings or claims in respect thereof) referred to above in this Section 9 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action, proceeding or claim. It is expressly agreed that the Agent shall not be liable for any loss, liability, claim, damage or expense or be required to contribute any amount which in the aggregate exceeds the amount paid (excluding reimbursable expenses) to the Agent under this Agreement. It is understood that the above stated limitation on the Agent's liability is essential to the Agent and that the Agent would not have entered into this Agreement if such limitation had not been agreed to by the parties to this Agreement. No person found guilty of any fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not found guilty of such fraudulent misrepresentation. The obligations of the Company, the MHC and the Bank under this Section 9 and under Section 8 shall be in addition to any liability which the Company and the Bank may otherwise have. For purposes of this Section 9, each of the Agent's, the Company's, the MHC or the Bank's officers and directors and each person, if any, who controls the Agent or the Company or the MHC or the Bank within the meaning of the 1933 Act and the 1934 Act shall have the same rights to contribution as the Agent, the Company, the MHC or the Bank. Any party entitled to contribution, promptly after receipt of notice of commencement of any action, suit, claim or proceeding against such party in respect of which a claim for contribution may be made against another party under this Section 9, will notify such party from whom contribution may be sought, but the omission to so notify such party shall not relieve the party from whom contribution may be sought from any other obligation it may have hereunder or otherwise than under this Section 9.

Section 10. Survival of Agreements, Representations and Indemnities. The respective indemnities of the Company, the MHC, the Bank and the Agent and the representations and warranties and other statements of the Company, the MHC, the Bank and the Agent set forth in or made pursuant to this Agreement shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of the Agent, the Company, the MHC, the Bank or any controlling person referred to in Section 8 hereof, and shall survive the issuance of the Shares, and any successor or assign of the Agent, the Company, the MHC, the Bank, and any such controlling person shall be entitled to the benefit of the respective agreements, indemnities, warranties and representations.

Section 11. Termination. The Agent may terminate this Agreement by giving the notice indicated below in this Section 11 at any time after this Agreement becomes effective as follows:

(a) In the event the Company fails to sell the required minimum number of the Shares by _________, 2000, and in accordance with the provisions of the Plan or as required by the MHC Regulations, and applicable law, this Agreement shall terminate upon refund by the Company to each person who has subscribed for or ordered any of the Shares the full amount which it may

37

have received from such person, together with interest as provided in the Prospectus, and no party to this Agreement shall have any obligation to the other hereunder, except for payment by the Company, the MHC and/or the Bank as set forth in Sections 2(a), 6, 8 and 9 hereof.

(b) If any of the conditions specified in Section 7 shall not have been fulfilled when and as required by this Agreement unless waived in writing, or by the Closing Date, this Agreement and all of the Agent's obligations hereunder may be cancelled by the Agent by notifying the Company, the MHC and the Bank of such cancellation in writing or by telegram at any time at or prior to the Closing Date, and any such cancellation shall be without liability of any party to any other party except as otherwise provided in Sections 2(a), 6, 8 and 9 hereof.

(c) If the Agent elects to terminate this Agreement as provided in this Section, the Company, the MHC and the Bank shall be notified promptly by telephone or telegram, confirmed by letter.

The Company, the MHC and the Bank may terminate this Agreement in the event the Agent is in material breach of the representations and warranties or covenants contained in Section 5 and such breach has not been cured after the Company, the MHC and the Bank have provided the Agent with notice of such breach.

This Agreement may also be terminated by mutual written consent of the parties hereto.

Section 12. Notices. All communications hereunder, except as herein otherwise specifically provided, shall be mailed in writing and if sent to the Agent shall be mailed, delivered or telegraphed and confirmed to Charles Webb & Company, a Division of Keefe, Bruyette & Woods, Inc., 211 Bradenton, Dublin, Ohio 43017-3514, Attention: Patricia A. McJoynt, Executive Vice President (with a copy to Silver, Freedman & Taff, L.L.P., Attention: Martin L. Meyrowitz, P.C.) and, if sent to the Company, the MHC and the Bank, shall be mailed, delivered or telegraphed and confirmed to the Company, the MHC and the Bank at 500 10th Street, Alamogordo, New Mexico 88310-0690, Attention: Miles Ledgewood, President (with a copy to Luse Lehman Gorman Pomerenk & Schick, Attention: Eric Luse).

Section 13. Parties. The Company, the MHC and the Bank shall be entitled to act and rely on any request, notice, consent, waiver or agreement purportedly given on behalf of the Agent when the same shall have been given by the undersigned. The Agent shall be entitled to act and rely on any request, notice, consent, waiver or agreement purportedly given on behalf of the Company, the MHC or the Bank, when the same shall have been given by the undersigned or any other officer of the Company, the MHC or the Bank. This Agreement shall inure solely to the benefit of, and shall be binding upon, the Agent, the Company, the MHC, the Bank, and their respective successors and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy

38

or claim under or in respect of or by virtue of this Agreement or any provision herein contained. It is understood and agreed that this Agreement is the exclusive agreement among the parties hereto, and supersedes any prior agreement among the parties and may not be varied except in writing signed by all the parties.

Section 14. Closing. The closing for the sale of the Shares shall take place on the Closing Date at such location as mutually agreed upon by the Agent and the Company, the MHC and the Bank. At the closing, the Company, the MHC and the Bank shall deliver to the Agent in next day funds the commissions, fees and expenses due and owing to the Agent as set forth in Sections 2 and 6 hereof and the opinions and certificates required hereby and other documents deemed reasonably necessary by the Agent shall be executed and delivered to effect the sale of the Shares as contemplated hereby and pursuant to the terms of the Prospectus.

Section 15. Partial Invalidity. In the event that any term, provision or covenant herein or the application thereof to any circumstance or situation shall be invalid or unenforceable, in whole or in part, the remainder hereof and the application of said term, provision or covenant to any other circumstances or situation shall not be affected thereby, and each term, provision or covenant herein shall be valid and enforceable to the full extent permitted by law.

Section 16. Construction. This Agreement shall be construed in accordance with the laws of the State of Kansas.

Section 17. Counterparts. This Agreement may be executed in separate counterparts, each of which so executed and delivered shall be an original, but all of which together shall constitute but one and the same instrument.

If the foregoing correctly sets forth the arrangement among the Company, the MHC, the Bank and the Agent, please indicate acceptance thereof in

the space provided below for that purpose, whereupon this letter and the Agent's acceptance shall constitute a binding agreement.

Section 18. Entire Agreement. This Agreement, including schedules and exhibits hereto, which are integral parts hereof and incorporated as though set forth in full, constitutes the entire agreement between the parties pertaining to the subject matter hereof superseding any and all prior or contemporaneous oral or prior written agreements, proposals, letters of intent and understandings, and cannot be modified, changed, waived or terminated except by a writing which expressly states that it is an amendment, modification or waiver, refers to this Agreement and is signed by the party

39

to be charged. No course of conduct or dealing shall be construed to modify, amend or otherwise affect any of the provisions hereof.

Very truly yours,

ALAMOGORDO FINANCIAL ALAMOGORDO FEDERAL SAVINGS AND CORPORATION LOAN ASSOCIATION

By Its Authorized By Its Authorized Representative: Representative:

- ---------------------------- --------------------------------- Miles Ledgerwood Miles Ledgerwood Chairman Chairman

AF MUTUAL HOLDING COMPANY

By Its Authorized Representative:

- ---------------------------- Miles Ledgerwood Chairman

Accepted as of the date first above written

Charles Webb & Company, a Division Keefe, Bruyette & Woods, Inc.

By Its Authorized Representative:

- ----------------------------- Patricia A. McJoynt Executive Vice President

40
[A]: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?

[Q]: Exhibit 10.6

OPERATIONS AND MAINTENANCE AGREEMENT

Between

Pinon Gathering Company, LLC

And

SandRidge Midstream, Inc.

TABLE OF CONTENTS

i

PAGE ARTICLE I DEFINITIONS 1 ARTICLE II ENGAGEMENT OF OPERATOR 6 2.1 Engagement 6 2.2 Independent Contractor 6 2.3 Owner Cooperation 6 ARTICLE III TERM; RESIGNATION OR REMOVAL OF OPERATOR 7 3.1 Term 7 3.2 Owner Default 7 3.3 Operator Default 7 3.4 Cooperation with Owner or Successor Operator 8 3.5 Effect of Termination 8 3.6 No Breach 8 ARTICLE IV DUTIES AS OPERATOR 9 4.1 Duties as Operator 9 4.1.1 Operation and Maintenance of the Gathering System 9 4.1.2 Purchase of Material and Supplies 9 4.1.3 Personnel 9 4.1.4 Payment of Operating Expenses 9 4.1.5 Proposed Operating Expense Budget 10 4.1.6 Capital Projects 10 4.1.7 Emergencies 11 4.1.8 Reporting By Operator 11 4.1.9 Commercial Activities 12 4.1.10 Regulatory Affairs 12 4.1.11 Devotion of Time 12 4.2 Standard of Care 12 4.3 Limitation of Authority 13 4.3.1 Binding Owner 13 4.3.2 Asset Sales 13 4.3.3 Material Alteration of Owner's Business 13 4.3.4 Debt 13 ARTICLE V COST REIMBURSEMENT 13 5.1 Responsibility for Costs and Expenses 13 5.2 Procedure 13

TABLE OF CONTENTS

ii

PAGE 5.2.1 Invoicing and Payment 13 5.2.2 Disputes 14 5.3 Setoff 14 ARTICLE VI ACCOUNTING; REPORTS; RECORDS 14 6.1 Accounting Methods 14 6.2 Financial Statements 14 6.3 Accounting and Taxation 15 6.3.1 Maintenance of Accounts 15 6.3.2 Preparation of Tax Returns 15 6.3.3 Owner to Supply Information 16 6.4 Banking 16 6.5 Independent Audits 16 6.6 Credit Inquiries 17 ARTICLE VII FORCE MAJEURE 18 7.1 Procedure 18 7.2 Strikes 18 ARTICLE VIII INSURANCE AND INDEMNIFICATION 18 8.1 Operator Insurance 18 8.2 Contractors 19 8.3 Notice of Claims 20 8.4 Mutual Release and Indemnification 20 8.4.1 Owner's Indemnification 20 8.4.2 Operator's Indemnification 20 ARTICLE IX GENERAL PROVISIONS 21 9.1 Notices 21 9.2 Rights 21 9.3 Applicable Laws 22 9.4 Rules of Construction 22 9.5 Governing Law 22 9.6 Dispute Resolution 22 9.6.1 Negotiation 22 9.6.2 Jurisdiction and Venue 22 9.6.3 Jury Waiver 23 9.6.4 Costs and Expenses 23 9.7 Limitation of Liability 23

TABLE OF CONTENTS

EXHIBITS:

EXHIBIT A DUTIES AND RESPONSIBILITIES OF OPERATOR

EXHIBIT B FORM OF MONTHLY OPERATING AND FINANCIAL REPORT

iii

PAGE 9.8 Entirety of Agreement, Amendments 23 9.9 Waivers 24 9.10 Exhibits 24 9.11 Headings 24 9.12 Assignment 24 9.13 Rights and Remedies 24 9.14 Counterparts 24 9.15 No Third Party Beneficiary 24 9.16 Further Assurances 25

OPERATIONS AND MAINTENANCE AGREEMENT

This OPERATIONS AND MAINTENANCE AGREEMENT dated June 30, 2009 (the Effective Date), is made and entered into by and between Pinon Gathering Company, LLC, a Delaware limited liability company (Owner), with offices at 333 Clay Street, Suite 4150, Houston, Texas 77002, and SandRidge Midstream, Inc., a Texas corporation (Operator), with offices at 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma 73102.

RECITALS

A. Pursuant to that certain Membership Interest Purchase Agreement between Operator and TCW Pecos Midstream, L.L.C., a Texas limited liability company (TCW Pecos Midstream) dated as of even date herewith (the Membership Interest Purchase Agreement), TCW Pecos Midstream has purchased from Operator all issued and outstanding membership interests in Owner, which owns the Gathering System (as hereinafter defined).

B. Owner wishes to retain Operator to maintain and operate the Gathering System and advance the commercial interests of Owner through the negotiation and execution of agreements relative to the commercial offerings provided by Owner, as well as administering the business and regulatory affairs of Owner relating to the Gathering System, all in accordance with the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, Operator and Owner hereby agree as follows:

ARTICLE I DEFINITIONS

Except as otherwise defined in this Article I, capitalized terms used in this Agreement shall have the meanings assigned to them in the Gathering Agreement.

Adjustment Claims shall have the meaning set forth in Section 6.5.

Affiliate means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person through one or more intermediaries or otherwise. For the purposes of this definition, control means, where used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Securities or interests, by contract or otherwise, and the terms controlling and controlled have correlative meanings.

Agreement means this Operations and Maintenance Agreement (including all exhibits), as amended from time to time in accordance with the terms hereof.

Audit Costs shall have the meaning set forth in Section 6.5.

Business Day means any calendar day, other than a Saturday or Sunday, on which commercial banks in Dallas, Texas are open for business.

Calendar Year means the time period from January 1 through December 31 of the same calendar year.

Capital Project means any capital expenditure to repair, maintain, construct, expand, or modify the Gathering System.

Capital Project Proposal shall have the meaning set forth in Section 4.1.6.

Claim means any lawsuit, claim, proceeding, investigation, review, audit or other cause of action of any kind.

Company Conveyance means that certain Assignment of Membership Interests dated as of June 30, 2009, between Operator and TCW Pecos Midstream, together with all amendments, modifications or waivers thereto.

Confidentiality and Disclosure Agreement means that certain Confidentiality and Disclosure Agreement dated as of June 30, 2009, between SandRidge Energy, Inc., TCW Asset Management Company, and Pinon Gathering Company, LLC, together with all amendments, modifications or waivers thereto.

Constituent of Concern means any substance defined as a hazardous substance, hazardous waste, hazardous material, toxic substance, solid waste, pollutant or contaminant by an Environmental Law.

Dedicated Gas shall have the meaning ascribed to such term in the Gathering Agreement.

Effective Date shall have the meaning set forth in the preamble to this Agreement.

Emergency means a sudden or unexpected event that causes, or risks causing, imminent material damage to the Gathering System, death or injury to any Person, or material damage to property or the environment.

Emergency Work shall have the meaning set forth in Section 4.1.7.

Enterprise Gathering Agreement means that certain Gas Gathering Agreement dated as of June 26, 2009, between Enterprise Products Operating, LLC and Operator, together with all amendments, modifications or waivers thereto.

Environmental Law means all applicable Laws and Environmental Permits of any Governmental Authority relating to the environment, natural resources, or the protection thereof, including, without limitation: (a) all requirements pertaining to liability for reporting, management, licensing, permitting, investigation, and remediation of emissions, discharges, releases, or threatened releases of a Constituent of Concern; and (b) CERCLA, the Hazardous Materials Transportation Act, 49 U.S.C. 5101 et seq. the Federal Clean Water Act, the Federal

2

Clean Air Act, the Federal Solid Waste Disposal Act (which includes the Resource Conservation and Recovery Act), the Federal Toxic Substances Control Act, and the Federal Insecticide, Fungicide and Rodenticide Act, the Oil Pollution Act of 1990, 33 U.S.C. 2701 et seq., and the Safe Drinking Water Act, 42 U.S.C. 300f et seq. and any applicable Law relating to health, safety, the environment, natural resources or the protection thereof, each as amended from time to time, including any regulations promulgated pursuant thereto, and any state or local counterparts.

Environmental Permits all permits, licenses, registrations, authorizations, certificates and approvals, and any other similar items, of Governmental Authorities required by Environmental Laws and necessary for or held in connection with the ownership and/or operation the Gathering System or any of the transactions contemplated hereby.

Force Majeure means any cause or causes not reasonably within the control of the Party claiming suspension and which, by the exercise of reasonable diligence, such Party is unable to prevent or overcome, including, without limitation, acts of God, acts, omissions to act, and/or delays in action of federal, state, or local government or any agency thereof, strikes, lockouts, work stoppages, or other industrial disturbances, acts of a public enemy, sabotage, wars, blockades, insurrections, riots, acts of terror, epidemics, landslides, lightning, earthquakes, fires, storms, storm warnings, floods, washouts, extreme cold or freezing weather, arrests and restraints of governments and people, civil or criminal disturbances, interruptions by governmental or court orders, present and future valid orders of any regulatory body having jurisdiction, explosions, mechanical failures, breakage, or accident to equipment installations, machinery, compressors, or lines of pipe, and associated repairs, freezing of wells or lines of pipe, partial or entire failure of wells, pipes, facilities, or equipment, electric power unavailability or shortages, failure of pipelines or carriers to transport, partial or entire failure or refusal of operators of upstream or downstream pipelines or facilities to receive gas, governmental regulations, and inability to obtain or timely obtain, or obtain at a reasonable cost, after exercise of reasonable diligence, pipe, materials, equipment, rights-of- way, servitudes, governmental approvals, or labor, including those necessary for the facilities provided for in this Agreement.

GAAP means generally accepted accounting principles, consistently applied.

Gathering Agreement means that certain Gas Gathering Agreement dated as of even date herewith by and between SandRidge Exploration and Production, LLC, as Shipper, and Owner, as Gatherer, as amended, restated or otherwise modified from time to time.

Gathering System shall have the meaning ascribed to such term in the Gathering Agreement.

Governmental Authority means any federal, state, municipal, local or similar governmental authority, regulatory or administrative agency, court or arbitral body with jurisdiction over the Parties, this Agreement, any of the transactions contemplated hereby or the Gathering System.

Guaranty Agreements means, collectively, that certain (a) Guaranty Agreement dated as of June 30, 2009, by SandRidge Energy, Inc. in favor of TCW Pecos Midstream, (b) Guaranty

3

Agreement dated as of June 30, 2009, by SandRidge Energy, Inc. in favor of Owner, (c) Guaranty Agreement dated as of June 30, 2009, by SandRidge Exploration and Production, LLC in favor of Owner, and (d) Guaranty Agreement dated as of June 30, 2009, by Operator in favor of Owner, in each case, together with all amendments, modifications or waivers thereto.

Intercompany Conveyance means that certain Assignment, Bill of Sale and Conveyance dated as of June 30, 2009, between Operator and Owner, together with all amendments, modifications or waivers thereto.

Law means any statute, writ, law, common law, rule, regulation, ordinance, order, judgment, injunction, award, determination or decree of a Governmental Authority, or any requirement under the common law.

LLC Agreement means that certain Amended and Restated Limited Liability Company Agreement of Pinon Gathering Company, LLC, together with all amendments, modifications or waivers thereto.

Liability Claim means a Claim arising out of the administration, operation, or maintenance of the Gathering System, or arising out of or incidental to the activities carried on or work performed or required by this Agreement.

Loss means any loss, cost, expense, liability, damage, sanction, judgment, lien, fine, or penalty, including reasonable attorney's and consultant's fees and expenses, incurred, suffered or paid by, or resulting to, the applicable indemnified Persons on account of (i) injuries (including death) to any Person or damage to or destruction of any property, sustained or alleged to have been sustained in connection with or arising out of the matters for which the indemnifying Party has indemnified the applicable indemnified Persons, (ii) any failure of any representation or warranty made by Operator in this Agreement to be true and correct when made, or (iii) the breach of any covenant or agreement made or to be performed by the indemnifying Party pursuant to this Agreement.

Material Overpayment shall have the meaning set forth in Section 6.5.

Membership Interest Purchase Agreement shall have the meaning set forth in the first recital of this Agreement.

Operator shall have the meaning set forth in the preamble to this Agreement.

Operator Change of Control means the occurrence of an event where upon (i) at least seventy-five percent (75%) of the equity interests in Operator and (ii) at least seventy-five percent (75%) of the monthly volumes of Dedicated Gas projected to be produced during the period extending from the date of calculation to the estimated date of the Trigger Event shall cease to be owned, directly or indirectly, by the same Person.

Operator Indemnified Parties means, collectively, Operator, its successors and permitted assigns, and their respective Affiliates, shareholders, members, partners, officers, directors, employees, and agents.

4

Operator Parties means, collectively, Operator, Operator's Affiliates, and their respective successors and assigns; Operator Party means any such Person individually.

Owner shall have the meaning set forth in the preamble to this Agreement.

Owner Indemnified Parties means, collectively, Owner, its successors and permitted assigns, and their respective Affiliates, shareholders, members, partners, officers, directors, employees, and agents.

Owner Operating Expense Account means the bank account designed by Owner as its operating expense account.

Owner Revenue Account means the bank account designed by Owner as its revenue account.

Party means either Owner or Operator, as applicable, and Parties means both Owner and Operator.

Person means an individual, a corporation, a partnership, a limited partnership, a limited liability company, an association, a joint venture, a trust, an unincorporated organization, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

Preventing Factors shall have the meaning set forth in Section 6.3.1.

Proposed Operating Expense Budget means, with respect to each period, the Proposed Operating Expense Budget established pursuant to the Gathering Agreement for such period.

Shipper shall have the meaning set forth in the Gathering Agreement.

Subject Gathering Agreements means, collectively, the Gathering Agreement, the Enterprise Gathering Agreement and any gathering agreements entered into in accordance with Section 4.1.9.

Tax or Taxes means any (i) federal, state, provincial, county, local or foreign taxes, charges, fees, levies or other assessments, including all sales and use, goods and services, ad valorem, transfer, gains, profits, excise, franchise, real and personal property, gross receipt, value added, capital stock, production, business and occupation, disability, employment, payroll, license, estimated, stamp, custom duties, severance, unemployment, social security, Medicare, alternative minimum or withholding taxes or charges imposed by any Governmental Authority, and including any interest and penalties (civil or criminal) on or additions to any such taxes, but expressly excluding any income tax or tax based on income, such as, without limitation, the franchise tax set forth in V.T.C.A. Tax Code Section 171.0001 et. seq., as the same may be amended or recodified from time to time, and (ii) liability for items in (i) of any other Person by contract, operation of Law (including Treasury Regulation 1.1502-6) or otherwise.

5

Tax Returns means any return, report, election, declaration, statement, notice, information return, schedule, or other document (including any related or supporting information) filed or required to be filed with any Governmental Authority in connection with the determination, assessment, collection or administration of any Taxes or any income tax or tax based on income, such as, without limitation, the franchise tax set forth in V.T.C.A. Tax Code Section 171.0001 et. seq., as the same may be amended or recodified from time to time, or the administration of any laws, regulations or administrative requirements relating to any Taxes or any amendment thereof.

Transaction Documents means, collectively, this Agreement, the Gathering Agreement, the Membership Interest Purchase Agreement, the Intercompany Conveyance, the Company Conveyance, the Guaranty Agreements, the Confidentiality and Disclosure Agreement and the LLC Agreement.

Trigger Event shall have the meaning ascribed to such term in the Gathering Agreement.

Voting Securities means, as it relates to a Person, securities of any class of such Person entitling the holders thereof to vote in the election of, or to appoint, members of the board of directors or other similar governing body of the Person; provided that if such Person is a limited partnership, Voting Securities of such Person shall be the general partner interest in such Person.

ARTICLE II ENGAGEMENT OF OPERATOR

2.1 Engagement.

Owner hereby appoints and retains Operator to manage, operate, and maintain the Gathering System and to administer the business and regulatory affairs of Owner relating to the Gathering System in accordance with the terms and conditions set forth herein, and Operator hereby accepts such appointment.

2.2 Independent Contractor.

The Parties expressly understand and agree that Operator is acting and shall perform and execute the provisions of this Agreement as an independent contractor unrelated to Owner or any Owner Affiliate, and the work performed by Operator hereunder shall be subject to Owner's general right of inspection and approval. Nothing in this Agreement is intended to create a relationship, expressed or implied, of employer- employee or principal-agent between Owner and Operator or between Owner and any individual employed or provided to work hereunder by Operator.

2.3 Owner Cooperation.

Owner shall cooperate with Operator and provide Operator with such information as Operator may reasonably request from time to time in connection with the performance of Operator's duties hereunder.

6

ARTICLE III TERM; RESIGNATION OR REMOVAL OF OPERATOR

3.1 Term.

This Agreement shall commence on the Effective Date and, unless terminated earlier pursuant to Section 3.2 or 3.3 of this Agreement, shall continue until the twentieth (20th) anniversary of the Effective Date; provided, however, (i) Operator shall have the right to terminate this Agreement at any time upon no less than 120 days prior written notice to Owner, if Operator provides a substitute operator acceptable to Owner, as determined in its reasonable discretion, who (A) has experience operating similar assets, (B) has the ability to provide at least the same quality of service as Operator, (C) has the financial ability to perform the obligations hereunder, and (D) is ready, willing and able to execute an operation and maintenance agreement substantially similar to this Agreement and acceptable to Owner, as determined in its reasonable discretion, and (ii) Owner shall have the right to terminate this Agreement at any time upon no less than 120 days prior written notice to Operator.

3.2 Owner Default.

Operator may terminate this Agreement at any time upon the occurrence of any of the following:

If any of the above occurs and Operator elects to terminate this Agreement, then Operator may give a written notice of termination to Owner, which termination shall be effective on the date specified by Operator in such notice, provided that such termination date shall be within 60 days of the date such notice is delivered to Owner. Operator's notice of breach to Owner under Section 3.2(b) or (c) shall state with particularity the breach alleged by Operator. To the extent Owner disputes the basis for Operator's notice of breach, then the matter shall be addressed under Section 9.6. Nothing in this Section 3.2 shall be construed to limit or preclude any remedy Operator may have at law or in equity with respect to any material breach by Owner.

3.3 Operator Default.

Owner may terminate this Agreement at any time upon the occurrence of any of the following:

7

(a) the dissolution or bankruptcy of Owner;

(b) Owner fails to pay when due any amount due and payable hereunder, including, without limitation, any interest, fees, reimbursements or indemnifications, and such failure shall continue for a period of 15 days after the due date thereof; or

(c) other than as set forth in clause (b) above, Owner breaches or fails to observe or perform any material term, condition, or obligation contained in this Agreement and fails to correct, or fails to diligently pursue correction of, such breach within 60 days after receipt of written notice from Operator of any such breach.

(a) the dissolution or bankruptcy of Operator;

If any of the above occurs and Owner elects to terminate this Agreement, then Owner may give a written notice of termination to Operator, which termination shall be effective on the date specified by Owner in the notice, provided that such termination date shall be within 60 days of the date the notice is delivered to Operator. Owner's notice of breach to Operator under Section 3.3(c) or (d) shall state with particularity the breach alleged by Owner. To the extent Operator disputes the basis for Owner's notice of breach, then the matter shall be addressed under Section 9.6. Nothing in this Section 3.3 shall be construed to limit or preclude any remedy Owner may have at law or in equity with respect to any material breach by Operator.

3.4 Cooperation with Owner or Successor Operator.

Upon the termination of this Agreement, Operator shall cooperate in the transition of operations to Owner or a successor operator and upon Owner's request, will promptly deliver all books and records and other property (including, without limitation, intellectual property) of Owner to Owner or the successor operator, as applicable.

3.5 Effect of Termination.

Any termination of this Agreement pursuant to this Article III will release Operator from, and Owner agrees to indemnify Operator against any liability accruing or accrued hereunder after the effective date of termination, except with respect to the obligations and liabilities of Operator that survive termination. Termination of this Agreement shall not relieve the Parties from any liability or obligation accruing or accrued prior to the date of such termination or deprive a Party not in breach (other than a breach which occurs because such Party is rightfully withholding performance in response to a breach by the other Party) of its right to any remedy otherwise available to such Party.

3.6 No Breach.

No violation of any of the terms or conditions of this Agreement shall be deemed a breach of this Agreement by Owner if and to the extent such violation or failure results, directly or indirectly, from a breach of the Gathering Agreement by Shipper.

8

(b) an Operator Change of Control;

(c) Operator fails to pay when due any amount due and payable hereunder, including, without limitation, any interest, fees, reimbursements or indemnifications, and such failure shall continue for a period of 15 days after the due date thereof; or

(d) other than as set forth in clause (c) above, Operator breaches or fails to observe or perform any material term, condition, or obligation contained in this Agreement and fails to correct, or fails to diligently pursue correction of, such breach within 60 days after receipt of written notice from Owner of any such breach.

ARTICLE IV DUTIES AS OPERATOR

4.1 Duties as Operator.

Operator shall be responsible for (1) administering the regulatory, business, and financial affairs of Owner; (2) maintaining the financial and product accounting records of Owner; (3) preparing and distributing financial statements; (4) complying with any and all instructions it receives from Owner with respect to the operation and maintenance of the Gathering System, provided that such instructions are consistent with applicable Laws; (5) performing the requirements and obligations of Owner set forth in the Subject Gathering Agreements; and (6) taking any actions necessary to avoid any exercise of remedies by any shipper under any Subject Gathering Agreement.

4.1.1 Operation and Maintenance of the Gathering System.

4.1.1.1 Operation of the Gathering System. Operator shall manage and operate the Gathering System, supervise the operation and maintenance of the Gathering System and the construction and future modifications to the Gathering System, negotiate agreements in Owner's name with third parties related to the operation of Owner's business (provided that (i) Owner shall have the right to approve or disapprove any such agreements, and (ii) if approved, except as provided in Section 4.1.2, Owner, and not Operator, shall execute all such agreements), comply with any instructions it receives from Owner with respect to the operation and maintenance of the Gathering System, provided that such instructions are consistent with applicable Laws, and perform all other services and functions related thereto, including, but not limited to, those services and functions listed on Exhibit A, subject to the limits, requirements, and restrictions otherwise set forth in this Agreement.

4.1.1.2 Maintenance Authority. Subject to the terms, conditions and limitations set forth in this Agreement, Owner hereby authorizes and empowers Operator, and Operator agrees, in the name of and on behalf of Owner, to do and perform any and all acts reasonably necessary for the prudent operation and maintenance of the Gathering System.

4.1.1.3 Operator Recommendations. In the event that Operator makes a good-faith recommendation in writing regarding an operational issue to Owner, and Owner does not, for any reason whatsoever, approve such recommendation, then Operator shall not be liable and Owner hereby releases and shall indemnify, defend and hold Operator harmless from and against any Claim or Loss that arises from, or is attributable to, the failure to implement such recommendation.

4.1.1.4 Compliance With Owner Instructions. Notwithstanding anything to the contrary in this Agreement, in the event that Owner instructs Operator to take any action or refrain from taking any action in connection with the operation or maintenance of the Gathering System and Operator in good faith

9

disagrees with Owner because, among other reasons, it is not consistent with prudent operating standards, then Operator shall notify Owner of such disagreement in writing, and Owner hereby releases and shall indemnify, defend and hold Operator harmless from and against any Claim or Loss that arises from, or is attributable to, Operator's compliance with Owner's instructions.

4.1.1.5 Environmental Laws. Operator shall comply in all respects with all Environmental Laws and all Environmental Permits.

4.1.2 Purchase of Services, Materials and Supplies. Except as otherwise provided below and subject to the limitations herein, Operator shall, on Owner's behalf and as its agent, purchase or cause to be purchased necessary services, materials and supplies and incur such expenses and enter into such commitments as may be necessary to operate and maintain the Gathering System, including, but not limited to, (i) contracts for the maintenance, repair and replacement of the Gathering System and, if requested by Owner, constructions of additions to the Gathering System; and (ii) contracts for power, fuel, other utilities, and communication facilities as may be necessary in connection with proper operation and maintenance of the Gathering System and for providing adjustments and replacements thereto.

4.1.3 Personnel. Except as otherwise provided below and subject to the limitations herein, Operator, in its reasonable judgment, shall employ such personnel, with Operator or an Affiliate as their employer, as it may deem necessary to operate and maintain the Gathering System and to provide adjustments and replacements thereto and to perform its other obligations hereunder. In addition to Operator's or Operator's Affiliates' employees who are either full-time or part-time dedicated to operating and maintaining the Gathering System, Operator may: (i) utilize from time to time its other employees or the employees of Operator's Affiliates in services in connection therewith at a usual and customary rate of compensation; and/or (ii) engage the services of third-party contractors in the performance of such functions.

4.1.4 Payment of Operating Expenses. Operator shall promptly pay all costs and expenses incurred in operating and maintaining the Gathering System as they become due, and Owner shall reimburse Operator for such costs and expenses in accordance with, and to the extent provided in, Section 5.1.

4.1.5 Proposed Operating Expense Budget. Operator shall (i) administer and otherwise comply with the budget process set forth in Section 6.6 of the Gathering Agreement and (ii) operate and maintain the Gathering System in compliance with the Proposed Operating Expense Budget established for the Gathering System; provided, however, if Owner instructs Operator to perform any services outside of the scope of the services contemplated in the Proposed Operating Expense Budget, then Owner shall reimburse Operator for the costs and expenses associated therewith.

4.1.6 Capital Projects. Operator may propose an unbudgeted Capital Project at any time by giving notice to Owner. The notice (the Capital Project Proposal) must specifically describe the proposed Capital Project and shall include the following:

10

(1) a good-faith estimate of the total cost of engineering, construction, operation, and maintenance of the proposed Capital Project, and preliminary engineering designs and plans, and

(2) general requirements or provisions for the Capital Project, including construction of the Capital Project and insurance coverage.

Owner shall approve or reject the proposed Capital Project set forth in the applicable Capital Project Proposal within 30 days from the date of receipt of the same, such approval not to be unreasonably withheld, conditioned or delayed. If Owner approves the applicable Capital Project, then Operator shall have the right and authority with respect to the approved Capital Project to make expenditures, or enter into contracts to incur expenditures, without further authorization by Owner, up to the cost approved by Owner with respect to the applicable Capital Project.

4.1.7 Emergencies. Notwithstanding any provision of this Agreement, in the event of an Emergency, Operator shall proceed with maintenance or repair work or with any other action when necessary to minimize damage and to end the Emergency (Emergency Work), without regard to the limits set forth in this Article IV. Operator shall, as soon as reasonably practicable, notify Owner of the existence or occurrence of the Emergency, setting forth the nature of the emergency, the corrective action taken or proposed to be taken, and the actual or estimated cost of such corrective action. Emergency Work shall include only such work as is necessary to immediately address the Emergency and does not include any work necessary to restore the Gathering System or improve the Gathering System in order to permit continued operations.

4.1.8 Reporting By Operator. Operator shall (by either (i) submitting written reports or (ii) providing Owner with access to Operator's internet website containing the relevant information, at Operator's discretion) provide to Owner the following reports, based on the best data available at the time of preparation and subject to revision based on acquisition of more accurate data:

(1) a daily report of the prior day's 24 hour volume of natural gas throughput on the Gathering System;

(2) as soon as available, and in any event within 30 days after the end of each calendar month, a report of environmental, health, or safety incidents that are material or potentially material, including year-to-date data, for such month;

(3) as soon as available, and in any event within 30 days after the end of each calendar month, a report concerning any government agency inspections, inquiries, citations, or other actions for such month;

(4) as soon as available, and in any event within 30 days after the end of each calendar month, an operational report on major repairs and other operational details materially affecting the operations of the Gathering System during such month;

11

(5) promptly after the sending thereof, all notices and information sent to Shipper (as defined in the Gathering Agreement) under the Gathering Agreement or to any other shipper under any gathering agreement;

(6) as soon as available, and in any event within 30 days after the end of each calendar month, a monthly operating and financial report which shall be substantially in the form of Exhibit B and shall include such information as reasonably requested by Owner;

(7) as soon as available, and in any event within 30 days after the end of each Calendar Year, a certificate from the president or chief executive officer of Operator stating that no event or condition exists or has occurred that violates, results in a breach of, or constitutes a default on the part of any Operator Party under, any of the terms, conditions or provisions of any Transaction Document; and

(8) such other information regarding the Gathering System or the operation and maintenance of the Gathering System as Owner may from time to time reasonably request.

4.1.9 Commercial Activities. Operator shall negotiate on behalf of Owner all agreements for gathering services provided by Owner; provided that (i) Owner shall have the right to approve or disapprove any such agreements, and (ii) if approved, Owner, and not Operator, shall execute all such agreements. When Operator receives payments or remittances from customers of Owner, Operator shall deposit and promptly forward all such payments or remittances to Owner. Operator shall make no allowances or adjustments in accounts, unless given specific advance authorization by Owner.

4.1.10 Regulatory Affairs. Operator shall be responsible for preparing and submitting all regulatory filings pertaining to the Gathering System required by any Governmental Authority.

4.1.11 Devotion of Time. The employees of Operator designated to perform the functions under this Agreement shall devote such time to Owner's business as necessary to accomplish the responsibilities of Operator as set forth in this Article IV. Owner recognizes that the employees of Operator shall not be obligated to devote full time to Owner's business and that such employees of Operator may act on behalf of Operator or its Affiliates in activities not associated with this Agreement.

4.2 Standard of Care.

Operator shall perform its duties and obligations hereunder and its responsibilities as Operator of the Gathering System, (i) in a good and workmanlike manner, (ii) in conformity with the good practices in the natural gas gathering industry, (iii) in accordance with all valid and applicable Laws, including, without limitation, all Environmental Laws and Environmental Permits, (iv) in accordance with the Subject Gathering Agreements, and (v) in accordance with the Proposed Operating Expense Budget.

12

4.3 Limitation of Authority.

Notwithstanding anything in this Agreement, Operator shall seek prior approval of Owner prior to taking the following actions:

4.3.1 Binding Owner. Endorsing the name of Owner on any contract, commercial paper, or instruments of any nature or otherwise creating any obligation binding upon Owner except as expressly permitted under this Agreement.

4.3.2 Asset Sales. Acquiring or disposing of any assets of Owner in a single transaction or in a series of related transactions, with a fair market value exceeding $100,000, provided, however that Operator is expressly permitted to terminate leases or other contracts in respect of rental equipment regardless of value.

4.3.3 Material Alteration of Owner's Business. Altering Owner's business in a material manner.

4.3.4 Debt. Incurring any indebtedness on behalf of Owner, except for trade credit incurred by Operator in the ordinary course of business or within its expenditure authority set forth in this Agreement.

ARTICLE V COST REIMBURSEMENT

5.1 Responsibility for Costs and Expenses.

Owner shall reimburse Operator for all costs and expenses incurred by Operator relating to the operation and maintenance of the Gathering System incurred in accordance with the terms hereof.

5.2 Procedure.

5.2.1 Invoicing and Payment. Operator shall invoice Owner, monthly, for all costs and expenses incurred hereunder during the immediately preceding month and, without duplication, in any prior month. Owner shall pay all such amounts prior to the later of (a) 50 days after the end of the month in which the expenses were incurred or (b) 10 days after the date of receipt of each invoice. Invoices received after 1:00 pm local time will be deemed received on the next Business Day. If the day on which any payment is due is not a Business Day, then the relevant payment shall be due upon the immediately succeeding Business Day. Any amounts which remain due and owing after the due date shall bear interest at the lower of the prime rate as published in the Money Rates section of The Wall Street Journal plus two percent (2%) per annum and the maximum lawful rate of interest, compounded daily from the date such payment is due until such payment is made. Notwithstanding anything herein to the contrary, any indemnification payments required to be made by a Party hereunder shall be made to the indemnified Party upon receipt by the indemnifying Party of written demand therefor from the indemnified Party.

13

5.2.2 Disputes. If a good faith dispute arises as to the amount payable under any invoice issued by Operator, Owner shall pay the amount not in dispute on or before the due date, and if Owner elects to withhold any portion of a payment which otherwise would be due if not for such dispute, Owner shall provide Operator a written notice of such dispute on or before the date such payment is due setting forth, in reasonable detail, its reasons for withholding the disputed amount. If it is subsequently determined, whether by mutual agreement of the Parties or otherwise, that Owner is required to pay all or any portion of the disputed and withheld amounts, then in addition to paying such amounts, Owner shall pay interest accrued on such amounts (including amounts withheld) at the default interest rate described in Section 5.2.1 from the original due date until paid in full.

5.3 Setoff.

5.3.1 All payments required to be made hereunder by Operator shall be (i) absolute and unconditional, (ii) calculated without reference to any netting, set-off, counterclaim or other right which Operator may have against Owner, including, without limitation, any right to set-off against any amounts owed by Owner under this Agreement or any other Transaction Document, and (iii) made free and clear of and without any deduction for or on account of any such netting, set-off or counterclaim.

5.3.2 Owner is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to net, set-off and apply any payments owing to Owner against any and all of the obligations of any Operator Party under this Agreement or any other Transaction Document. Owner agrees to promptly notify Operator after any such netting, set-off or application is made; provided that the failure to give such notice shall not affect the validity of such netting, set-off or application.

ARTICLE VI ACCOUNTING; REPORTS; RECORDS

6.1 Accounting Methods.

Operator shall keep proper and complete records and books of account, which shall fully and accurately reflect all transactions and other matters relative to Owner's business as are usually entered into records and books of account, and the same shall be supported by purchase orders, invoices, payrolls or other customary or necessary records pertaining thereto. Owner's financial books and records shall be kept in accordance with GAAP and shall be maintained on an accrual basis, and Owner shall provide Operator with the applicable income tax provisions. The costs of any audit of Owner's books or records shall be borne by Owner.

6.2 Financial Statements.

Operator shall deliver to Owner the financial statements of Owner prepared, in each case, in accordance with GAAP (and subject, where applicable, to normal year-end adjustments) as follows:

14

(a) promptly upon availability, and in any event within 30 days after the end of each

6.3 Accounting and Taxation.

6.3.1 Maintenance of Accounts. Operator shall perform Owner's Tax and financial accounting with respect to the Gathering System, except to the extent that Operator is prohibited or prevented from doing so by Law, or by the administrative practice of any taxing office, or by the fact that to do so requires information that is in the possession of Owner, but not of Operator and that Owner cannot legally furnish to Operator (all of which are herein called Preventing Factors).

6.3.2 Preparation of Tax Returns.

6.3.2.1 Income Tax Returns. Unless otherwise instructed by Owner, Operator shall, on behalf of Owner, (i) provide all the necessary financial and other data for a tax preparer (appointed by Owner) to prepare all Tax Returns for taxes measured or based on income required to be filed by Owner in connection with its ownership and operation of the Gathering System no later than 75 days prior to the filing date for the relevant Tax Return (taking into account all valid extensions approved by Owner prior to filing), (ii) cooperate with Owner and its accountants in their preparation of such Tax Returns and review all modifications to such Tax Returns indicated by Owner, and (iii) help facilitate completion of such Tax Returns by no later than 45 days prior to the filing date for the relevant Tax Return.

6.3.2.2 Other Tax Returns. Unless otherwise instructed by Owner, Operator shall, on behalf of Owner, (i) prepare and file all Tax Returns and all

15

month, (i) an unaudited balance sheet as of the end of such month; and (ii) an unaudited statement of income or loss for the interim period through such month end;

(b) promptly upon availability, and in any event within 45 days after the end of each of the first three quarterly periods of each fiscal year, Owner's balance sheet as of the end of such quarterly period and statements of Owner's earnings and cash flows for the period from the beginning of the then current fiscal year to the end of such quarterly period; and

(c) promptly upon availability and in any event within 90 days after the end of each fiscal year, complete financial statements of Owner, together with all notes thereto, prepared in reasonable detail in accordance with GAAP, together with an unqualified opinion, based on an audit using generally accepted auditing standards, by an independent certified public accounting firm selected by Owner, stating that such financial statements have been so prepared. These financial statements shall contain a balance sheet as of the end of such fiscal year and statements of earnings, of cash flows, and of changes in Owner's equity for such fiscal year, each setting forth in comparative form the corresponding figures for the preceding fiscal year. Owner shall engage an auditor for this purpose no later than 45 days after the end of each fiscal year.

other regulatory or state filings required to be filed by Owner in connection with its ownership and operation of the Gathering System other than those Tax Returns described in Section 6.3.2.1 no later than the filing date for the relevant Tax Return or other filing (taking into account all valid extensions approved by Owner prior to filing).

6.3.3 Owner to Supply Information. Upon the request of Operator, Owner shall (except to the extent it is prohibited by Law from doing so) promptly (i) furnish Operator with any information needed by Operator in order to carry out its obligations under Section 6.3, (ii) cooperate with Operator in minimizing Taxes and (iii) execute such agency, power-of-attorney or other similar documents reasonably required by Operator in order to carry out its duties under this Section 6.3. If, at any time, Operator determines that because of one or more Preventing Factors it cannot perform its obligations under Section 6.3, then Operator shall notify Owner in writing, specifying the Preventing Factors concerned and the Taxes and the Governmental Authorities to which such Preventing Factors apply. Any incremental Tax or penalty resulting from Owner's failure to comply with this Section 6.3.3 shall be the responsibility of Owner.

6.4 Banking.

6.4.1 Except as provided in Section 6.4.2, all revenues and other funds of Owner shall be deposited in its name in the Owner Revenue Account. Withdrawals from the Owner Revenue Account will be made only by Owner or Persons designated by Owner from time to time. Operator shall have view only access to the Owner Revenue Account. Owner will provide the Operator with copies of reconciled bank statements on a monthly basis, for accounting and audit purposes.

6.4.2 All Operations Fees (as defined in the Gathering Agreement) shall be deposited in the name of Owner in the Owner Operating Expense Account. Withdrawals from the Owner Operating Expense Account will be made only by Owner, Operator or other Persons designated by Owner from time to time.

6.4.3 Notwithstanding the foregoing, all funds of Owner will be used solely for the business of Owner. All interest and other benefits pertaining to the Owner Revenue Account and the Owner Operating Expense Account belong to Owner. At no time may Operator commingle the funds in the Owner Revenue Account, the Owner Operating Expense Account or any other bank account of Owner with Operator's funds or the funds of any other Person, nor may such funds be subject to liens or Claims of any kind in favor of Operator or its creditors.

6.5 Independent Audits.

Upon reasonable prior written notice to Operator, Owner shall have the right during normal business hours to audit or examine all books and records of Operator to the extent they relate to Operator's performance hereunder as well as the relevant books of account of Operator's contractors, relating to the performance of Operator's obligations under this Agreement. Operator shall cooperate with Owner's auditors by (i) making the applicable books

16

and records available for inspection by Owner's auditors, and (ii) making such copies of books and records as may be reasonably requested by such auditors. In no event shall Owner's audits unreasonably interfere with Operator's operations. Owner will be responsible for all costs of any such audit; provided that if, in any audit, Owner discovers overpayments by Owner of at least $250,000 in the aggregate (Material Overpayment), Operator will reimburse Owner for such Material Overpayment and all reasonable costs incurred by Owner in connection with such audit (Audit Costs). Owner shall have up until two years after the close of a Calendar Year in which to make an audit of Operator's records for such Calendar Year. Except for any bill or statement with respect to which an Adjustment Claim is made within the two-year audit period, the bills and statements rendered for the Calendar Year prior to such two-year audit period shall be conclusively established as correct. An Adjustment Claim shall mean a written claim by Owner to Operator requesting a refund or other financial adjustment in respect of any overpayment by Owner (including in the case of a Material Overpayment, all Audit Costs) and setting forth in reasonable detail the basis for such claim. Operator shall, within 10 days of receipt of an Adjustment Claim, provide Owner with the requested refund or other financial adjustment; provided that if Operator shall dispute in good faith some or all of the amounts set forth in such Adjustment Claim, Operator may elect to withhold any disputed amounts, pending resolution of the dispute. If the Parties shall fail to resolve their dispute with respect to the remaining Adjustment Claim amount within 15 Business Days, Owner may, at its sole option, refer such dispute for resolution in accordance with the terms of Section 9.6. Unless otherwise resolved by the Parties, any bill or statement that is the subject of an Adjustment Claim shall be conclusively established as correct if dispute resolution procedures have not been initiated under Section 9.6 of this Agreement within 180 days of the submission of an Adjustment Claim. Any and all information pertaining to Operator and its business that is disclosed to Owner or discovered by Owner in connection with any audit hereunder shall be subject to the Confidentiality and Disclosure Agreement without regard to whether it has been designated as such and Owner shall be subject to the same restrictions and standard of care set forth therein with respect to Operator's confidential information.

6.6 Credit Inquiries.

If a customer, vendor, or other Person requests financial information concerning Owner, Operator may provide such customer, vendor, or Person a certificate or affidavit, on behalf of Owner, to the effect that Owner owns the Gathering System, free and clear of any mortgage or other liens or encumbrances except for (1) encumbrances consisting of zoning or planning restrictions, servitudes, permits, and other restrictions or limitations on the use of immovable property that do not materially detract from the value of, or impair the use of, the Gathering System by Owner in the operation of its business, (2) liens arising by operation of law in the ordinary course of business and in an aggregate amount that is not material in relation to the value of the Gathering System, (3) liens for current taxes, assessments, or governmental charges or levies, and (4) such other liens or encumbrances, if any, of which Operator has actual knowledge at the time.

17

ARTICLE VII FORCE MAJEURE

7.1 Procedure.

If either Party is rendered unable, wholly or in part, by Force Majeure to carry out its obligations under this Agreement, other than the obligation to indemnify and to make payments then or thereafter due hereunder, upon such Party giving notice and full particulars of such Force Majeure in writing to the other Party as soon as reasonably possible after the occurrence of the cause relied on, then the obligations of the Party giving such notice, so far as they are affected by such Force Majeure, will be suspended during the continuance of any inability so caused but for no longer period, and such cause must as far as possible be remedied with all reasonable and diligent dispatch by the Party claiming such in order to put itself in a position to carry out its obligations under this Agreement. Such notifying Party must also provide notice of the date of termination of such Force Majeure event. A Force Majeure event affecting the performance by either Party shall not relieve it of liability in the event of its negligence, where such negligence was a cause of the Force Majeure event, or in the event of its failure to use commercially reasonable efforts to remedy the situation and remove the cause with all reasonable dispatch.

7.2 Strikes.

It is understood and agreed that the settlement of strikes or lockouts is entirely within the discretion of the Party directly involved in the strike or lockout, and that the above requirement that any Force Majeure must be remedied with all reasonable dispatch will not require the settlement of strikes or lockouts by acceding to the demands of the opposing party when such course is inadvisable in the discretion of the Party having the difficulty.

ARTICLE VIII INSURANCE AND INDEMNIFICATION

8.1 Operator Insurance.

8.1.1 Operator, with respect to Operator's activities provided for under this Agreement, shall maintain the following insurance coverage with responsible insurance carriers and/or through a program of self-insurance:

18

(a) Workers' Compensation. Operator shall maintain statutory worker's compensation insurance, covering all of its and its Affiliates' employees and statutory employees, in accordance with the benefits afforded by the statutory Worker's Compensation Acts applicable to the state, territory, or district of hire, supervision, or place of accident. In addition, Operator shall maintain employer's liability insurance with a limit of not less than one million dollars ($1,000,000) each accident, one million dollars ($1,000,000) disease each employee, and one million dollars ($1,000,000) disease policy limit. Where not prohibited by law, Operator shall waive its right of subrogation against Owner.

(b) Commercial General Liability Insurance. Operator shall maintain Commercial General Liability Insurance covering its operations under this Agreement

including, without limitation, bodily injury, death, property damage, independent contractors, products/completed operations, contractual, and personal injury liability, with a limit of not less than one million dollars ($1,000,000) per occurrence and two million dollars ($2,000,000) in the annual aggregate.

8.1.2 To the extent of the liabilities assumed by Operator in this Agreement, Operator shall name Owner Indemnified Parties as additional insured on all insurance policies, except Workers' Compensation. The Owner Indemnified Parties' additional insured status will not limit the application of insurance protection as required by this Agreement which arises out of the Operator's indemnity obligations. These policies shall provide primary coverage for claims in which Operator has agreed to hold harmless and/or to indemnify the Owner Indemnified Parties. No other insurance clause may be invoked by any insurer. This coverage shall apply whether or not the indemnification is valid. Operator shall have its insurer(s) waive its right of subrogation against Owner Indemnified Parties on all insurance carried. Unless expressly stated to the contrary elsewhere in this Agreement or prohibited by applicable law or legal statute, Operator's indemnification obligations under this Agreement shall not be limited by amount or in scope to coverage provided by insurance which is required under this Agreement.

8.1.3 Upon request, Operator agrees to furnish to Owner certificates of insurance or other evidence satisfactory to Owner to demonstrate that the required insurance has been procured and is in force. The certificate shall accurately reflect the required insurance coverages and shall provide that in the event of modification, expiration, cancellation or material change in a policy affecting the certificate holder, thirty days prior written notice shall be given to the certificate holder. Operator waives all rights against Owner for recovery of damages to the extent such damages are covered by the insurance maintained in accordance with this Section 8.1.

8.2 Contractors.

Operator shall attempt to obtain reasonable indemnification and insurance protection from contractors performing services for Owner to protect Owner and Operator. Operator shall require each of its contractors to carry insurance coverage substantially equivalent to the insurance required of Operator above, and to include provisions for its contractors to name Owner and Operator as additional insureds, with the exception of Workers' Compensation Insurance, and state that such policies will be primary to and non-contributory with any other insurance maintained by Operator and Owner. With respect to Workers' Compensation

19

(c) Commercial Automobile Insurance. Operator shall maintain Commercial Automobile Insurance coverage, including, without limitation, bodily injury and property damage for owned, hired, rented, and non-owned automotive equipment with a limit of not less than one million dollars ($1,000,000) per accident.

(d) Umbrella Liability Insurance. Operator shall maintain Umbrella Liability Insurance coverage covering in excess of (a), (b), and (c) above, excluding Worker's Compensation, in the amount of ten million dollars ($10,000,000).

Insurance, the applicable contractor shall be required to cause its insurers to wave all rights of recovery or subrogation against Owner and Operator, where not prohibited by law.

8.3 Notice of Claims.

In the event that Operator receives notice, either in writing or orally, of an asserted or threatened Liability Claim against Operator or Owner, Operator shall provide Owner within 10 days of receipt of such Liability Claim a copy of any demand letter, petition, or similar documentation of the Liability Claim.

8.4 Mutual Release and Indemnification.

8.4.1 Owner's Indemnification. SUBJECT TO THE TERMS OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, SECTION 9.7 OF THIS AGREEMENT, OWNER SHALL INDEMNIFY, DEFEND, AND HOLD HARMLESS THE OPERATOR INDEMNIFIED PARTIES FROM AND AGAINST ALL CLAIMS AND LOSSES ARISING OUT OF OR RELATING TO (I) ALLEGATIONS OF DEATH OR BODILY INJURY OR DAMAGE TO PROPERTY, TO THE EXTENT ARISING OUT OF OR RESULTING FROM THE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF OWNER, ITS AFFILIATES OR ITS OR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, OR CONTRACTORS IN CONNECTION WITH THIS AGREEMENT OR THE PERFORMANCE HEREOF; PROVIDED THAT OWNER SHALL NOT BE REQUIRED TO INDEMNIFY THE OPERATOR INDEMNIFIED PARTIES AGAINST SUCH CLAIMS AND LOSSES TO THE EXTENT SUCH CLAIMS AND LOSSES ARE ATTRIBUTABLE TO THE ACTS OR OMISSIONS OF ANY OPERATOR INDEMNIFIED PARTIES, (II) ANY BREACH OF THIS AGREEMENT BY OWNER, AND (III) ANY AGREEMENTS RELATING TO THE GATHERING SYSTEM BETWEEN OWNER AND THIRD PARTIES NOT AFFILIATED WITH THE OPERATOR PARTIES. THE DUTY TO INDEMNIFY, DEFEND AND HOLD HARMLESS UNDER THIS SECTION 8.4.1 SHALL CONTINUE IN FULL FORCE AND EFFECT, NOTWITHSTANDING THE EXPIRATION OR EARLY TERMINATION OF THIS AGREEMENT, WITH RESPECT TO ANY CLAIMS OR LOSSES BASED ON FACTS OR CONDITIONS THAT OCCURRED PRIOR TO SUCH EXPIRATION OR TERMINATION.

8.4.2 Operator's Indemnification. SUBJECT TO THE TERMS OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, SECTION 9.7 OF THIS AGREEMENT, OPERATOR SHALL INDEMNIFY, DEFEND, AND HOLD HARMLESS THE OWNER INDEMNIFIED PARTIES FROM AND AGAINST ALL CLAIMS AND LOSSES ARISING OUT OF OR RELATING TO (I) ALLEGATIONS OF DEATH OR BODILY INJURY OR DAMAGE TO PROPERTY, TO THE EXTENT ARISING OUT OF OR RESULTING FROM THE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF OPERATOR, ITS AFFILIATES OR ITS OR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, OR CONTRACTORS IN CONNECTION WITH THIS AGREEMENT OR THE PERFORMANCE HEREOF; PROVIDED THAT OPERATOR SHALL NOT BE REQUIRED TO INDEMNIFY THE OWNER INDEMNIFIED PARTIES AGAINST SUCH CLAIMS OR LOSSES TO THE EXTENT SUCH CLAIMS OR LOSSES ARE ATTRIBUTABLE TO THE ACTS OR OMISSIONS OF ANY OWNER INDEMNIFIED PARTY, AND (II) ANY BREACH OF THIS AGREEMENT BY OPERATOR. THE DUTY TO INDEMNIFY, DEFEND AND HOLD HARMLESS UNDER THIS SECTION 8.4.2 SHALL CONTINUE IN FULL FORCE AND EFFECT, NOTWITHSTANDING THE EXPIRATION OR EARLY TERMINATION OF THIS AGREEMENT, WITH RESPECT TO ANY CLAIMS OR LOSSES BASED ON FACTS OR CONDITIONS THAT OCCURRED PRIOR TO SUCH EXPIRATION OR TERMINATION.

20

ARTICLE IX GENERAL PROVISIONS

9.1 Notices.

Except as specifically provided otherwise herein, any notice, claim, or other communication provided for in this Agreement or any notice that either Party may desire to give to the other shall be in writing and shall be: (i) sent by facsimile transmission; (ii) delivered by hand; (iii) sent by United States mail with all postage fully prepaid; or (iv) delivered by courier with charges paid in accordance with the customary arrangements established by such courier, in each of the foregoing cases addressed to the Party at the following addresses:

or at such other address as either Party may at any time designate by giving written notice to the other Party. Such notices, invoices, allocation statements, claims, or other communications shall be deemed received as follows: (i) if delivered personally, upon delivery; (ii) if sent by United States mail, whether by express mail, registered mail, certified mail or regular mail, the notice shall be deemed to have been received on the day receipt is refused or is confirmed orally or in writing by the receiving Party; (iii) if sent by a courier service, upon delivery; or (iv) if sent by facsimile, the Business Day following the day on which it was transmitted and confirmed by transmission report or such earlier time as confirmed orally or in writing by the receiving Party.

9.2 Rights.

The failure of either Party to exercise any right granted hereunder shall not impair nor be deemed a waiver of that Party's privilege of exercising that right at any subsequent time or times.

21

To Owner: Pinon Gathering Company, LLC c/o TCW Asset Management Company 333 Clay Street, Suite 4150 Houston, Texas 77002 Attention: Clay Taylor Fax Number: 713.615.7460 with a copy to: TCW Asset Management Company 865 South Figueroa Street, Suite 1800 Los Angeles, California 90017 Attention: R. Blair Thomas Fax Number: 213.244.0604 To Operator: SandRidge Midstream, Inc. 123 Robert S. Kerr Avenue Oklahoma City, Oklahoma 73102-6406 Attention: Midstream Manager of Administration Fax Number: 405.429.5990

9.3 Applicable Laws.

This Agreement is subject to all valid present and future laws, regulations, rules, and orders of governmental authorities now or hereafter having jurisdiction over the Parties, this Agreement, any of the transactions contemplated hereby or the Gathering System.

9.4 Rules of Construction.

In construing this Agreement, the following principles shall be followed:

9.4.1 no consideration shall be given to the fact or presumption that one Party had a greater or lesser hand in drafting this Agreement;

9.4.2 examples shall not be construed to limit, expressly or by implication, the matter they illustrate;

9.4.3 the word includes and its syntactical variants mean includes, but is not limited to and corresponding syntactical variant expressions; and

9.4.4 the plural shall be deemed to include the singular and vice versa, as applicable.

9.5 Governing Law.

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Texas, without regard to choice of law principles that would require the application of the laws of any other jurisdiction.

9.6 Dispute Resolution.

9.6.1 Negotiation. Prior to submitting any dispute for resolution by a court, a Party shall provide written notice to the other of the occurrence of such dispute. If the Parties have failed to resolve the dispute within 15 Business Days after such notice was given, the Parties shall seek to resolve the dispute by negotiation between senior management personnel of each Party. Such personnel shall endeavor to meet and attempt to amicably resolve the dispute. If the Parties are unable to resolve the dispute for any reason within 30 Business Days after the original notice of dispute was given, then either Party shall be entitled to pursue any remedies available at law or in equity; provided, however, this Section 9.6.1 shall not limit a Party's right to initiate litigation prior to the expiration of the time periods set forth herein of such limitations would prevent a Party from filing a lawsuit or claim within the applicable period for filing lawsuits (e.g. statutes of limitation, prescription, etc.).

9.6.2 Jurisdiction and Venue.

9.6.2.1 Each Party agrees that the appropriate, exclusive and convenient forum for any disputes between any of the Parties arising out of this Agreement or the transactions contemplated hereby shall be in any state or federal court in

22

Houston or Dallas, Texas, and each of the Parties irrevocably submits to the jurisdiction of such courts solely in respect of any legal proceeding arising out of or related to this Agreement or the transactions contemplated hereby. The Parties further agree that the Parties shall not bring suit with respect to any disputes arising out of this Agreement or the transactions contemplated hereby in any court or jurisdiction other than the above specified courts.

9.6.2.2 Each Party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any court referred to in paragraph (a) above. Each of the Parties hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

9.6.3 Jury Waiver. THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT THEY MAY LEGALLY AND EFFECTIVELY DO SO, THE RIGHT TO A JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

9.6.4 Costs and Expenses. The prevailing Party in any litigation pertaining to any dispute hereunder shall be entitled to recover its reasonable costs, expenses, and attorney's fees in connection with such litigation.

9.7 Limitation of Liability.

NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES SUFFERED BY SUCH PARTY RESULTING FROM OR ARISING OUT OF THIS AGREEMENT OR THE BREACH THEREOF OR UNDER ANY OTHER THEORY OF LIABILITY, WHETHER TORT, NEGLIGENCE, STRICT LIABILITY, BREACH OF CONTRACT, WARRANTY, INDEMNITY, OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, LOSS OF USE, INCREASED COST OF OPERATIONS, LOSS OF PROFIT OR REVENUE, OR BUSINESS INTERRUPTIONS. IN FURTHERANCE OF THE FOREGOING, EACH PARTY RELEASES THE OTHER PARTY AND WAIVES ANY RIGHT OF RECOVERY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES SUFFERED BY SUCH PARTY REGARDLESS OF WHETHER ANY SUCH DAMAGES ARE CAUSED BY THE OTHER PARTY'S NEGLIGENCE (AND REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE, JOINT, CONCURRENT, ACTIVE, PASSIVE, OR GROSS NEGLIGENCE), FAULT, OR LIABILITY WITHOUT FAULT.

9.8 Entirety of Agreement, Amendments.

This Agreement, including, without limitation, all exhibits hereto, and the other Transaction Documents integrate the entire understanding between the Parties with respect to the subject matter covered and supersede all prior understandings, drafts, discussions, or statements,

23

whether oral or in writing, expressed or implied, dealing with the same subject matter. This Agreement may not be amended or modified in any manner except by a written document signed by the Parties that expressly amends this Agreement.

9.9 Waivers.

No waiver by either Party of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless expressly provided. No waiver shall be effective unless made in writing and signed by the Party to be charged with such waiver.

9.10 Exhibits.

Exhibits A and B are made a part of this Agreement and incorporated herein by this reference.

9.11 Headings.

The headings and captions in this Agreement have been inserted for convenience of reference only and shall not define or limit any of the terms and provisions hereof.

9.12 Rights and Remedies.

Except as otherwise provided in this Agreement, each Party reserves to itself all rights, counterclaims, other remedies, and defenses to which such Party is or may be entitled arising from or out of this Agreement or as otherwise provided by law.

9.13 Assignment.

Operator shall not make any assignment of all or any part of this Agreement or any of the rights or obligations hereunder unless there first shall have been obtained the written consent thereto of Owner, which consent shall not be unreasonably withheld, conditioned, or delayed. Owner shall not make any assignment of all or any part of this Agreement or any of the rights or obligations hereunder except in connection with the sale or conveyance of all or any part of the Gathering System. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Parties. Any attempted assignment of this Agreement in violation of this Section 9.13 shall be null and void.

9.14 Counterparts.

This Agreement may be executed in one or more counterparts (including by facsimile), each of which shall be deemed an original, and all of which shall be deemed one and the same Agreement.

9.15 No Third Party Beneficiary.

Except for parties indemnified hereunder, this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns, and shall not inure to the benefit of

24

any other Person whomsoever or whatsoever, it being the intention of the Parties that no third Person shall be deemed a third-party beneficiary of this Agreement.

9.16 Further Assurances.

Each Party shall take such acts and execute and deliver such documents as may be reasonably required to effectuate the purposes of this Agreement.

IN WITNESS WHEREOF, authorized representatives of the Parties have executed this Agreement to be effective on the Effective Date.

25

OPERATOR: SANDRIDGE MIDSTREAM, INC.

By: /s/ Richard J. Gognat Richard J. Gognat Senior Vice President OWNER: PINON GATHERING COMPANY, LLC

By: TCW Asset Management Company, its Manager: By: /s/ Clayton R. Taylor Clayton R. Taylor Vice President By: /s/ Kurt A. Talbot Kurt A. Talbot Managing Director
[A]: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?

[Q]: EXHIBIT 10.47

MANIFEST SYSTEM SERVICES AND CO-BRANDING AGREEMENT --------------------------------------------------

This Manifest System Services and Co-Branding Agreement (Agreement) is --------- made and entered into as of April 27, 1999 (the Effective Date), by and -------------- between iShip.com, Inc., a Washington corporation (the Company), and Mail ------- Boxes Etc. USA, Inc., a California corporation (MBE). ---

RECITALS --------

A. The Company has developed an Internet-based shipping system.

B. MBE wishes to have the Company provide an Internet-based service based on the Company's Internet-based shipping system and the MBE retail manifest system to the MBE Centers (as defined below) for use in manifesting and shipping customer packages, all subject to the terms and conditions set forth in this Agreement.

C. The Company and MBE desire to engage in certain co-branding activities on the Internet so as to allow customers of MBE Centers to use the Company's Internet-based shipping system in a convenient manner and to list the MBE Centers as drop-off locations and retail shipping centers.

D. In connection with the services to be provided hereunder, the Company desires to issue to MBE a warrant to purchase up to One million three hundred thirty three thousand three hundred thirty three (1,333,333) shares (as determined pursuant to the terms of the Warrant) of Series B Preferred Stock of the Company substantially in the form attached hereto as Exhibit A (the --------- Warrant). ------- AGREEMENT ---------

1. Definitions. -----------

The following terms are defined for the purposes of this Agreement as follows:

(a) Acceptance shall mean MBE's acknowledgment pursuant to Section 2 ---------- below that (i) access to the Service has been granted, and (ii) the Service functions in accordance with the Specifications.

(b) Authorized Equipment shall mean the particular type of computer -------------------- equipment and the specifications thereof set forth in Exhibit B attached hereto --------- on which the Service is intended to be accessed and used by the MBE Centers.

(c) Brand Features means each party's respective trademarks, trade names, -------------- service marks, service names and distinct brand elements that appear from time to time in each party's properties, ventures and services worldwide and are protected under U.S. copyright law or as to which each party has established trademarks or trade dress rights and any modifications to the foregoing that may be created during the term of this Agreement.

(d) Brand Guidelines means the guidelines, if any, for use of the Brand ---------------- Features, which may be prescribed by each party from time to time during the term of this Agreement.

(e) Bounty Customer shall mean any Company Internet Customer or Third --------------- Party/Company Customer.

(f) Company Internet Customer shall have the meaning set forth on Exhibit ------------------------- ------- C attached hereto. -

(g) Company Site shall mean the web site or sites of the Company on the ------------ Internet, one of which is currently located at www.iship.com. -------------

(h) Company Technology shall mean the Internet-based manifest system of

Source: STAMPS.COM INC, 10-Q, 11/14/2000

------------------ the Company that allows users to, among other things, compare various shipping services, print shipping labels and/or track shipments using the Internet.

(i) Confidential Information shall mean the Service Documentation, the ------------------------ Specifications and any information disclosed by one party to the other pursuant to this Agreement that is in written, graphic, machine readable or other tangible form and is marked Confidential, Proprietary or in some other manner to indicate its confidential nature, including but not limited to information related to the respective parties' business, products, proposed new products, customers or related information. Confidential Information may also include oral information disclosed by one party to the other pursuant to this Agreement, provided that such information is designated as confidential at the time of disclosure and is reduced to writing by the disclosing party within a reasonable time (not to exceed thirty (30) days) after its oral disclosure, and such writing is marked in a manner to indicate its confidential nature and delivered to the receiving party.

(j) eBay Customer shall have the meaning set forth on Exhibit C. ------------- ---------

(k) In-Center Customer shall have the meaning set forth on Exhibit C. ------------------ ---------

(l) Intellectual Property Rights means all rights in and to trade ---------------------------- secrets, patents, copyrights, trademarks, know-how, as well as moral rights and similar rights of any type under the laws of any governmental authority, domestic or foreign, including rights in and to all applications and registrations relating to any of the foregoing.

(m) Link means a URL hidden behind a formatting option that may take the ---- form of a colored item of text (such as a URL description), logo or image, and which allows a user to automatically move to or between web pages or web sites.

(n) Listings shall mean the listing of the names, addresses, pricing and -------- other identifying information of each MBE Center which is a party to a Subscription Agreement (as defined in Section 3(b) [Service]).

(o) Manifest means the exclusive MBE retail manifest system to be -------- developed by the parties hereto in accordance with the Specifications.

-2-

(p) MBE Center shall mean each franchise of MBE operating a franchise ---------- retail outlet within the United States which enters into a Subscription Agreement.

(q) MBE-Generated Customer shall mean any In-Center Customer, Remote ---------------------- Self-Service Customer or MBE Internet Customer.

(r) MBE Internet Customer shall have the meaning set forth on Exhibit C. --------------------- ---------

(s) MBE Sites shall mean the web sites operated by MBE on the Internet --------- during the term of this Agreement, including but not limited to the websites currently located at www.mbe.com and www.mbeonline.com.

(t) Remote Self-Service Customer shall have the meaning set forth on ---------------------------- Exhibit C. ---------

(u) Specifications shall mean the specifications for the Manifest set -------------- forth on Exhibit D, as updated from time to time during the term of this --------- Agreement in accordance with the terms of this Agreement.

(v) Stations shall mean the retail manifest shipping stations within each -------- MBE Center and the remote off-site manifest shipping stations, in each case within the United States, of any MBE Center utilizing Authorized Equipment.

(w) Service shall mean the combination of the Company Technology and the ------- Manifest.

(x) Service Documentation shall mean all manuals, instructions or other ---------------------

Source: STAMPS.COM INC, 10-Q, 11/14/2000

information provided by the Company to MBE or MBE Centers which directly relate to the functionality and operation of the Service.

(y) Third Party/Company Customer shall have the meaning set forth on ---------------------------- Exhibit C. ---------

(z) Third Party/MBE Customer shall have the meaning set forth on ------------------------ Exhibit C. ---------

(aa) Update shall mean any and all bug fixes, error corrections, and ------ maintenance updates of the Service.

2. Development, Delivery and Acceptance. ------------------------------------

(a) Development License. Each party hereby grants to the other party a ------------------- [***]* (except as provided in Section 18(b) [Assignment](Assignment)), [***]* (with no --- --- right to sublicense except as set forth below) under all of its Intellectual Property Rights to use, reproduce, modify, and create derivative works of each party's preexisting Intellectual Property Rights solely as is reasonably and actually necessary to complete the development of the Service. Each party may grant sublicenses to contractors or subcontractors it engages to work on the Service, provided

---------- * Confidential treatment has been requested for the bracketed portion. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

-3-

that any such subcontractor has entered into an enforceable agreement reasonably acceptable to the other party relating to the assignment of Intellectual Property Rights.

(b) Delivery. The Company shall use its commercially reasonable best -------- efforts to complete the design of the Manifest and the Service in a timely and professional manner consistent with commercial software industry standards on or before August 1, 1999 and deliver the URL and the access codes or passwords necessary to use the Service to MBE and each subscribing MBE Center on or before September 1, 1999. MBE and MBE Centers shall provide any assistance reasonably requested by the Company in connection with completing such design and effecting such delivery. The parties shall cooperate to implement a beta roll-out of the Service in approximately 100 Designated Locations of MBE Centers selected by mutual agreement of the Company and MBE on or before September 1, 1999, and thereafter shall mutually agree on a plan to make the Service available to all MBE Centers by no later than October 1, 1999.

(c) Inspection. Following the completion of the beta roll-out and testing ---------- of the Service, MBE shall have a period of twenty (20) business days to undertake inspection and testing of the Manifest to determine conformance with applicable Specifications. The Company shall provide any assistance reasonably requested by MBE in assessing such conformance. If MBE finds that any part of the Manifest does not conform with the applicable Specifications, MBE shall, within the inspection period, notify the Company and provide a detailed written description of such nonconformance. Following confirmation by the Company of such nonconformance, the Company will alter the Manifest within a reasonable time to correct such nonconformance.

(d) Acceptance. Upon verification by MBE that the Manifest conform with the ---------- Specifications in all material respects, or if MBE fails to notify the Company within the twenty (20) business day inspection period, the Service shall be deemed Accepted. MBE's sole remedy for correction of problems after Acceptance shall be under the Warranties set forth in Section 11.

3. Provision of Service. --------------------

(a) Scope of Agreement. Any Service Documentation provided to MBE and/or ------------------ MBE Centers by the Company shall be subject to all terms and conditions of this Agreement. All use of and access to the Service by MBE and all MBE Centers shall also be subject to all terms and conditions of this Agreement.

(b) Service. The Company will operate the Service at its network operating -------

Source: STAMPS.COM INC, 10-Q, 11/14/2000

center. The Company shall bear all costs associated with the network operating center, including without limitation hardware and software, networking equipment and bandwidth charges, redundant storage and/or mirroring across multiple geographic locations, and maintenance; provided, however, that Company and MBE -------- ------- shall each pay one-half of the costs and expenses associated with transmitting information and data from the servers maintained or used by the Company to the VSAT network hub, including hardware and backhaul circuits. The Company will make the Service available to MBE Centers via one or more secure Internet sites. Each MBE Center approved by MBE that wishes to participate in the Service shall enter into a Subscription Agreement with the Company in a form to be mutually agreed upon by the parties, which form

-4-

shall include appropriate obligations of the MBE Centers as set forth in this Agreement (the Subscription Agreement). MBE agrees to use its commercially ---------------------- reasonable best efforts to facilitate the execution of a Subscription Agreement by each participating MBE Center within a reasonable amount of time after the Effective Date. The Company hereby grants the MBE Centers a [***]* under all of --- Company's Intellectual Property Rights solely to access and use the Service in accordance with the terms and conditions of this Agreement and the Subscription Agreement.

(c) Authorized Equipment. Each MBE Center shall be responsible for -------------------- obtaining, installing and maintaining the Authorized Equipment at its sole cost and expense. The Subscription Agreement shall provide that an MBE Center that accesses or uses the Service on any hardware or other equipment, or in conjunction with any software, that does not constitute Authorized Equipment does so as its own risk, and the Company shall not be liable for any failure of the Service on hardware or other equipment, or in conjunction with any software, that does not constitute Authorized Equipment.

(d) Exclusivity -----------

(i) The Company shall not enter into any agreement or arrangement, including without limitation any sale, license, service agreement, co-branding agreement, co-marketing agreement or linking agreement with any provider of manifesting or shipping services through non-carrier retail shipping locations; provided, however, that:

(A) the Company may provide listings of carrier drop-boxes or carrier-owned counter drop-off locations specific to a particular carrier (including, without limitation, locations within retail establishments) on the Company Site, provided that such listings do not include retail shipping locations, including UPS authorized shipping outlets, FedEx authorized shipping centers and other commercial mail receiving agencies; and

(B) the Company may enter into any such agreement or arrangement so long as MBE is given advance written notice of such agreement or arrangement and such agreement or arrangement prohibits the use of the Manifest or any Company Technology to manifest or ship packages for retail customers and provided further that Company terminates service to any such entity that uses the Manifest or any Company Technology to serve retail customers.

(ii) MBE shall not enter into any agreement or arrangement with any provider of an online or Internet-based manifest system other than the Company.

(iii) The Company may, at its option, terminate the exclusivity provisions set forth in this Section 3(d) [Exclusivity] upon the occurrence of any of the following events: (A) MBE

---------- * Confidential treatment has been requested for the bracketed portion. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

-5-

and all MBE Centers together fail to ship at least [***]* packages --- manifested by the Service in any period of three (3) full months commencing on the earlier of (x) March 1, 2000, and (y) the use of the Service to manifest packages by at least [***]* MBE Centers (other than any such --- failure which is directly caused by an event of force majeure (as set forth in Section 18(e) [Force Majeure] or by the failure of the Service to operate in accordance with the Specifications or by the Company's breach of any of its obligations hereunder), or (B) MBE ceases to own at least [***]* shares of

Source: STAMPS.COM INC, 10-Q, 11/14/2000

--- common stock of the Company (calculated on an as-converted basis and as adjusted for any stock split, stock dividend, recapitalization or similar transaction).

(iv) Beginning 18 months after the Effective Date, MBE may, at its option, terminate the exclusivity provisions set forth in this Section 3(d) [Exclusivity] if (A) MBE and all MBE Centers together fail to ship at least [***]* --- packages manifested by the Service in any three (3) full month period ending 18 months after the Effective Date and (B) such failure to meet the volume requirements set forth above is related to the unsatisfactory performance of the Service as evidenced by written communications from a commercially significant number of MBE Centers.

4. Support; Training. -----------------

(a) Updates and Service Revisions. The Company will make Updates to the ----------------------------- Service in accordance with the requirements set forth in the Specifications at no charge for the entire term of this Agreement. Without limiting the foregoing, the Service shall be updated from time to time during the term of this Agreement to include accurate and current (i) Listings and (ii) pricing and service descriptions for each carrier supported by the Manifest, in each case as soon as reasonably practicable following the receipt by the Company of such Listings, pricing and service descriptions. As reasonably necessary, the Company shall update the Specifications to reflect such Updates and shall provide a copy of same to MBE at least once per calendar quarter. If the Company develops additional Intellectual Property Rights that are made available without development charge to other customers of the Company, the Company will also make such Intellectual Property Rights available to MBE without development charge.

(b) MBE Center Support. MBE shall have the right to designate in writing up ------------------ to five (5) second-level support personnel individuals and alternates to such individuals as contact persons (the Contact Persons) (although the parties may --------------- mutually agree to increase such number of Contact Persons to ensure adequate support exists for the MBE Centers) Such Contact Persons shall interface with the MBE Centers with respect to matters relating to the Service and may transmit request assistance and descriptions of problems encountered with the Service to the Company via electronic mail, fax, or overnight mail. The Company will provide telephone support to the Contact Persons at a level and in such a manner as the parties mutually agree to be adequate. The Company shall use reasonable efforts to provide the Contact Persons with answers and solutions to problems encountered by MBE or the MBE Center in the course of MBE's or MBE Centers' normal and proper use of the Service in accordance with the terms and

---------- * Confidential treatment has been requested for the bracketed portion. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

-6-

conditions of this Agreement. Only the Contact Persons may contact the Company in connection with matters relating to technical support, and the Company shall have no obligation to answer questions or assist MBE or MBE Centers' personnel other than the Contact Persons. The Company shall provide a reasonable amount of training and training materials to the Contact Persons to provide the Contact Persons with information concerning the Service and to assist the Contact Persons in providing support to the MBE Centers and other personnel of MBE. MBE shall take reasonable steps to ensure that MBE Centers and personnel of MBE other than the Contact Persons do not contact the Company directly with respect to issues relating to support of the Service. The Company shall take reasonable steps to provide adequate industry standard support of all Internet users of the Company Site and other sites using the Company Technology. MBE and MBE Centers may refer all support questions relating directly to the Company Site or the Company Technology to the Company in accordance with the foregoing.

5. Records; Audits. ---------------

The Company shall maintain complete and accurate records of the number of packages shipped by the MBE Centers using the Service and all payments due or accrued to the Company by MBE Centers hereunder. MBE shall, at any time during the term of this Agreement, be entitled to audit all such records upon ten (10) days written notice to the Company, in order to confirm the accuracy of such records and conformance with the terms and conditions of this Agreement; provided, however, that no more than one (1) such audit may be conducted in any -------- ------- ninety (90)-day period. Any such audit shall be performed at MBE's expense during the Company's normal business hours; provided, however, that in the event -------- ------- that such audit reveals any non-compliance with any term of this Agreement by the Company, the Company shall bear the cost of such audit.

Source: STAMPS.COM INC, 10-Q, 11/14/2000

6. Additional Development. ----------------------

(a) Request for Proposal. From time to time, MBE may request additional -------------------- custom software or other custom development to be provided by the Company under this Agreement. If MBE has a requirement for a specific enhancement or modification of the Service, MBE will identify to the Company in writing a summary of such requirement (the Request for Proposal). Such Request for -------------------- Proposal will provide a description sufficient to enable the Company to determine the general demand for and its plans, if any, to develop the same or similar enhancements or modifications.

(b) Terms and Conditions. If the Company decides that it has the technical -------------------- ability to fulfill the Request for Proposal, then the Company will respond to MBE within forty-five (45) days of receiving the Request for Proposal, stating the terms and conditions upon which the Company would be able to undertake such development, including, but not limited to, changes to the Specifications, custom development charges, and a proposed delivery schedule.

(c) Development and Billing Rates. The Company shall perform such ----------------------------- development in accordance with the highest professional standards. The cost of such development shall be the Company's standard billing rates then in effect (in addition to reimbursement of any expenses, in accordance with the Company's standard practices), which shall be paid by MBE within thirty (30) days of receipt of an invoice therfor. No additional fees or bounties shall be owed or

-7-

payable in connection with such development, unless such development results in a revenue-generating feature or functionality of the Service which is outside of the scope of the Specifications, in which case the parties shall negotiate in good faith to mutually agree upon a reasonable fee mechanism therefor and/or reimbursement of development expenses. Upon completion of such additional development, the Company shall update the Specifications to reflect such additional development and shall provide a copy of same to MBE.

(d) Credit. MBE shall receive a credit applicable to such billing rates ------ (but not to reimbursement of expenses) for any development performed by the Company under this Section 6 equal to [***]* of the total fees paid by MBE and --- all MBE Centers, which credit shall be reflected on a monthly statement by the Company to MBE. Any such credit must be used within twelve (12) months of receipt of payment by the Company.

7. Ownership. ---------

(a) General. The Company will have full and exclusive right, title and ------- ownership interest in and to the Service and the Specifications and the Intellectual Property Rights therein. The Company is, and shall be, the sole owner of all inventions, discoveries and/or enhancements relating to the Service and the Specifications, including all copies, translations, compilations, partial copies, derivative works and updated works, whether partial or complete and whether or not merged into other program materials and whether in written or unwritten form. Except as authorized by this Agreement (including MBE's right to use the Specifications as set forth in Section 15(d)(iv) [Effect of Termination]) or as otherwise agreed in writing, MBE and MBE Centers may not, directly, or through any person or entity, in any form or manner, copy, distribute, reproduce, incorporate, use or allow access to the Service or the Specifications, or modify, prepare derivative works of, decompile, reverse engineer, disassemble or otherwise attempt to derive source code or object code from the Service or the Specifications.

(b) Proprietary Notices. MBE will ensure that all copies of Service ------------------- Documentation made in accordance with this Agreement will incorporate copyright and other proprietary notices in the same manner that the Company incorporates such notices in the Service or in any manner reasonably requested by the Company, and MBE agree not to delete or modify any such notices incorporated in the Service Documentation in any respect. MBE will also permit the Company to enter any of MBE's premises during regular business hours to inspect the use of the Service in any reasonable manner. The Subscription Agreement shall provide that MBE Centers will comply with the terms of this Section 7(b) [Proprietary Notices].

(c) List of Trademarks. Each party (the Granting Party) hereby grants the ------------------ -------------- other party (the Using Party) a limited license to use its Brand Features in ----------- connection with the marketing, distribution, provision of access to, and support of the Service. The Using Party agrees that such Brand Features are the exclusive property of the Granting Party and that all usage of such marks and any goodwill established by the use of such marks shall inure to the benefit of

Source: STAMPS.COM INC, 10-Q, 11/14/2000

the Granting Party and that this Agreement does not confer any goodwill or other

---------- * Confidential treatment has been requested for the bracketed portion. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

-8-

interests in such marks on the Using Party The Using Party will comply with the Granting Party's Brand Guidelines. The Using Party shall provide to the Granting Party examples of any use of the Brand Features of the Granting Party prior to use. The Using Party shall modify or discontinue such use if requested by the Granting Party. Neither party shall adopt or attempt to register any trademark, trade name, or service mark which is confusingly similar to the other party's Brand Features such as Ship Mailboxes (and the like).

(d) Customer Information. The Company and MBE shall jointly own (without -------------------- duty to account) all customer lists and related customer data gathered through the use of the Service by customers of MBE and MBE Centers (Customer Data). ------------- During the term of this Agreement, neither party shall provide any Customer Data to any third party (other than MBE Centers or an affiliate of MBE or the Company) without the prior written consent of the other party The Company shall initially provide the Customer Data to MBE in acceptable electronic format as soon as practicable following the reasonable request of MBE, and, once MBE (at its sole cost and expense) has implemented an appropriate means to warehouse the Customer Data, the parties shall take reasonable steps to transfer all existing Customer Data to MBE and implement a system whereby the Customer Data is automatically downloaded and provided to MBE on a periodic basis. The Company agrees to retain the Customer Data in accordance with the Company's own data retention policies, and in any case for no less than 13 months from the creation of such Customer Data. The Company, MBE, affiliates of the Company and MBE, and the MBE Centers may each use the Customer Data for marketing and other purposes in accordance with a mutually agreed upon privacy policy and in accordance with any mutually agreed upon privacy policy displayed to customers in connection with the Service. Notwithstanding the foregoing, the Company agrees not to use any Customer Data to solicit any MBE-Generated Customers with respect to any services offered by the Company; provided, however, that the Company may use Customer Data to solicit such customers who have a shipping account with a carrier or with respect to services not offered by MBE and the MBE Centers. Notwithstanding the foregoing, MBE agrees not to use any Customer Data in any manner which would reasonably be expected to eliminate any Bounty Package payment to the Company hereunder.

(e) Reserved Rights. Without limitation of the foregoing, each party --------------- reserves all rights other than those expressly granted in this Agreement, and no licenses are granted except as expressly set forth herein.

(f) Notices. Each party agrees to display mutually agreeable trademark and ------- copyright notices or legends of the other party when using such other party's Brand Features. Each party shall in advance submit to the other party the proposed placement of such notices or legends (including, without limitation, the place and manner of incorporation into electronic media or transmissions), and such other party shall have the right, acting reasonably, to approve the same.

8. Payments; Taxes. ---------------

(a) Basic Fee. In consideration for the Service provided hereunder, for --------- each package shipped utilizing the Service (other than a package which is shipped first class by the U.S. Postal

-9-

Service), the Company shall be entitled to receive the amount of [***]* (the --- Basic Fee). MBE agrees to use its commercially reasonable efforts to execute --------- agreements, or to facilitate the execution of agreements among the appropriate parties, so that such Basic Fee is paid to the Company directly from the carrier which ships such package no later than fifteen (15) days following the end of the month in which such package was shipped. If MBE is unable, despite its commercially reasonable efforts, to facilitate the execution of such an agreement with one or more carriers, the Basic Fee shall be paid by each MBE Center directly pursuant to the terms of the Subscription Agreement.

(b) Bounty Fee. In further consideration for the Service and the other ---------- obligations of the Company hereunder, for each package shipped by or through an MBE Center by a Bounty Customer who pays the shipping rates charged by such MBE

Source: STAMPS.COM INC, 10-Q, 11/14/2000

Center, (Bounty Package), the Company shall be entitled to receive the -------------- following amounts (the Bounty Fee) from each such MBE Center, for Bounty ---------- Packages shipped during each calendar month:

(i) in the event that less than [***]* Bounty Packages shall have --- been shipped by the MBE Centers during the twelve (12) full months prior to the shipping of such Bounty Package (or, if such information is not yet available for the month prior to the month in which such Bounty Package is shipped, the most recent twelve (12) full months for which such information is available) (the Measurement Period), the amount of [***]* per Bounty Package shipped via ------------------ --- air transportation and the amount of [***]* per Bounty Package shipped via --- ground transportation;

(ii) in the event that at least [***]* but less than [***]* Bounty --- --- Packages have been shipped by the MBE Centers during the Measurement Period, the amount of [***]* per Bounty Package shipped via air transportation and the --- amount of [***]* per Bounty Package shipped via ground transportation; ---

(iii) in the event that at least [***]* but less than [***]* Bounty --- --- Packages shall have been shipped by the MBE Centers during the Measurement Period, the amount of [***]* per Bounty Package shipped via air transportation --- and the amount of [***]* per Bounty Package shipped via ground transportation; --- and

(iv) in the event that at least [***]* Bounty Packages shall have been --- shipped by the MBE Centers during the Measurement Period, the amount of [***]* --- per Bounty Package shipped via air transportation and the amount of [***]* per --- Bounty Package shipped via ground transportation.

(c) eBay Fee. In further consideration for the Service and the other -------- obligations of the Company hereunder, for each package shipped by or through an MBE Center by an eBay Customer (eBay Package), the Company shall be entitled ------------ to receive the following amounts from such MBE Center for eBay Packages shipped during each calendar month, in each case

---------- * Confidential treatment has been requested for the bracketed portion. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

-10-

after deduction of the lesser of (x) [***]* and (y) the amount paid or to be --- paid by such eBay Customer directly to the Company with respect to the shipment of such package (the eBay Fee): --------

(i) in the event that at least [***]* but less than [***]* eBay --- --- Packages have been shipped by MBE and the MBE Centers during the Measurement Period, the amount of [***]* per eBay Package shipped via air transportation and --- the amount of [***]* per eBay Package shipped via ground transportation; ---

(ii) in the event that at least [***]* but less than [***]* eBay --- --- Packages shall have been shipped by the MBE Centers during the Measurement Period, the amount of [***]* per eBay Package shipped via air transportation and --- the amount of [***]* per eBay Package shipped via ground transportation; and ---

(iii) in the event that at least [***]* eBay Packages shall have been --- shipped by the MBE Centers during the Measurement Period, the amount of [***]* --- per eBay Package shipped via air transportation and the amount of [***]* per --- eBay Package shipped via ground transportation.

Source: STAMPS.COM INC, 10-Q, 11/14/2000

(d) Payment Cycle. The Company shall bill and collect all amounts due to ------------- the MBE Centers for Bounty Packages and eBay Packages from each Bounty Customer or eBay Customer, as the case may be, by processing credit card transactions over the Internet. The Company shall pay such amounts, less the relevant Bounty Fee or eBay Fee then in effect, to MBE on the next business day or as soon as reasonably practicable (but in any event within one week) following the shipment date of each package, and MBE agrees to distribute such amounts to the MBE Centers. At the Company's option, Bounty Customers or eBay Customers may also be entitled to pay directly for the shipment of such Bounty Package or eBay Package at MBE Centers, and the Company shall be entitled to deduct the relevant Bounty Fee or eBay Fee then in effect from any payments due to such MBE Center for shipment of Bounty Packages, eBay Packages or otherwise.

(e) Right of Offset. In the event of any default in payment by an MBE --------------- Center under this Section 8 which continues uncured for a period of thirty (30) days, in addition to any rights or remedies which the Company may have at law or equity or pursuant to this Agreement, the Company shall have the right (but not the obligation) to (i) terminate providing the Service to such MBE Center and (ii) offset any amounts owed to the Company by such MBE Center from any payments owed to such MBE Center by the Company.

(f) Taxes. MBE shall pay or reimburse the Company for all taxes, duties and ----- assessments imposed on MBE or the Company in connection with the license or use of the Service by MBE under this Agreement, including without limitation all sales, use, excise and other taxes and duties, excluding only taxes based upon the Company's net income. MBE shall

---------- * Confidential treatment has been requested for the bracketed portion. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

-11-

hold the Company harmless from all claims and liability arising from MBE's failure to report or pay any such taxes, duties and assessments.

(g) [***]* ---

(h) Independent MBE Centers. Notwithstanding any other provision of this ----------------------- Agreement, Company acknowledges and agrees that each participating MBE Center is an independently owned and operated franchise and that MBE is not responsible for any debts or acts or omissions of its franchisees. Each use by an MBE Center of the Service shall be pursuant to the terms and conditions of a Subscription Agreement and each participating MBE Center shall be responsible for paying to Company any charges incurred. Company further acknowledges that each participating MBE Center may choose to make the Service (or some portion thereof) available to customers of MBE Centers.

9. Co-Marketing Obligations. ------------------------

(a) Listings. MBE shall supply and regularly update the Listings, and the -------- Company shall include the Listings in the Company Site and shall use commercially reasonable best efforts to include such Listings on other third party web sites utilizing the Company Technology.

(b) Mutual Links. During the term of this Agreement, each party will ensure ------------ that the relevant pages in each party's website will include Links to the other party's site(s). Without limiting the foregoing, and within the first three (3) months following the Effective Date, the Company shall assist MBE at no additional charge in developing a series of Links between the MBE Site and the Company Site. The purpose of such Links shall be to allow MBE Internet Customers to access certain agreed-upon features provided by the Company Site. At a minimum, such functionality shall be equivalent to that provided by the Company Site to public Internet users. As mutually agreed upon by the parties, the parties may place advertising banners promoting their products and services on appropriate pages of the other party's website.

(c) Marketing and Public Relations. So long as such activities are in ------------------------------ compliance with MBE Brand Guidelines then in effect (i) the Company shall display the logo of MBE on the Company Site and identify MBE as the exclusive retail shipping partner of the Company, (ii) to the extent reasonably practicable, the Company shall include the logo of MBE on every carrier or shipping label generated pursuant to this Agreement and (iii) the parties agree to use reasonable efforts to cooperate to develop a co-branded Company/MBE logo to display on Internet-generated shipping labels generated pursuant to this Agreement.

Source: STAMPS.COM INC, 10-Q, 11/14/2000

10. Confidential Information. ------------------------

(a) Limited Access. MBE and MBE Centers agree not to provide or otherwise -------------- make available any Service Documentation or other Confidential Information of the Company to any person other than employees, consultants, contractors or agents of MBE and MBE Centers with a

---------- * Confidential treatment has been requested for the bracketed portion. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

-12-

need to use such Service Documentation or Confidential Information in accordance with the terms of this Agreement.

(b) Confidentiality. Each party shall treat as confidential all --------------- Confidential Information of the other party, shall not use such Confidential Information except as set forth in this Agreement, and shall use reasonable efforts not to disclose such Confidential Information to any third party. Without limiting the foregoing, each of the parties shall use at least the same degree of care which it uses to prevent the disclosure of its own confidential information of like importance to prevent the disclosure of Confidential Information disclosed to it by the other party under this Agreement. Each party shall promptly notify the other party of any actual or suspected misuse or unauthorized disclosure of the other party's Confidential Information.

(c) Exceptions. Each party agrees not to disclose or otherwise make such ---------- Confidential Information available to third parties without the other party's prior written consent except to the extent that the Confidential Information (i) was in the public domain at the time it was disclosed or has entered the public domain through no fault of such party, (ii) was known to such party, without restriction, at the time of disclosure, as demonstrated by files in existence at the time of disclosure, (iii) is disclosed with the prior written approval of the other party, (iv) was independently developed by such party without any use of Confidential Information, (v) became known to such party, without restriction, from a source other than the other party without breach of this Agreement by such party and otherwise not in violation of the other party's rights, (vi) is required to be disclosed under securities laws or (vii) is disclosed pursuant to the order or requirement of a court, administrative agency, or other governmental body; provided, however, that such party shall use -------- ------- all reasonable efforts to provide prompt, written, and sufficient advance notice thereof to the other party to enable the other party to seek a protective order or otherwise prevent or restrict such disclosure. Each party agrees that to take appropriate action by instruction, agreement, or otherwise with its employees, agents and representatives to satisfy such party's obligations under this Agreement with respect to use, copying, modification, protection and security of Confidential Information.

(d) Return of Confidential Information. Upon expiration or termination of ---------------------------------- this Agreement, each party shall return all Confidential Information received from the other party.

(e) Confidentiality of Agreement. Each party shall be entitled to disclose ---------------------------- the existence of this Agreement, but agrees that the terms and conditions of this Agreement shall be treated as Confidential Information and shall not be disclosed to any third party; provided, however, that each party may disclose -------- ------- the terms and conditions of this Agreement; (i) as required by any court or other governmental body; (ii) as otherwise required by law, (iii) to legal counsel of the parties; (iv) in confidence, to accountants, banks, and financing sources and their advisors; (v) in connection with the enforcement of this Agreement or rights under this Agreement; or (vi) in confidence, in connection with an actual or proposed merger, acquisition, or similar transaction.

11. Representations, Warranties and Covenants. -----------------------------------------

(a) Warranty. Company represents and warrants that during the term of this -------- Agreement the Service shall confirm to its specifications and the Specifications in all material

-13-

respects, provided that the Service is properly used in accordance with the terms of this Agreement and the Subscription Agreement, and shall not contain a higher number of, or more serious errors, than would be expected by a reasonable

Source: STAMPS.COM INC, 10-Q, 11/14/2000

commercial user of a service similar to the Service.

(b) Outages. After Acceptance and during the term of this Agreement, ------- Company will use its best efforts to make the Service available to the MBE Centers from 4 a.m. to 9 p.m. PST every day. Scheduled maintenance which may result in an interruption to the Service shall be performed outside of these hours. Each party shall provide the other party with reasonable and prompt notification of all known failures of the Service to be operational during these hours (Outages). The Company shall make qualified personnel available to MBE personnel by telephone, e-mail or pager (response within twenty (20) minutes) for the reporting of Outages at no additional charge. Company will then use its best efforts to resolve the Outage as soon as possible. Within six months of the Effective Date, the Company and MBE will jointly develop a disaster recovery plan outlining plans to respond to Outages.

(c) No Conflicts. The Company is not currently subject and throughout the ------------ term will not be subject to any obligations or disabilities that will or might prevent or interfere with fully keeping and performing all of the agreements, covenants and conditions to be kept or performed hereunder, and the Company has not made nor will make any agreement, commitment, grant or assignment, and will not do, or omit to do, any act or thing that could or might interfere or impair the complete enjoyment of the rights granted and the Services to be provided hereunder.

(d) Originality. The Company represents and warrants that it currently has ----------- and throughout the term will have full title to and ownership of (or licenses to) the Service and all Intellectual Property Rights embodied in or used in connection therewith, free and clear of liens, claims and encumbrances, and that it has full power and authority to grant the rights provided herein.

(e) Year 2000. Company represents, warrants and covenants that the Service --------- includes design, performance and functionality such that the Service will not generate any invalid and/or incorrect date-related results when used during any year prior to, during or after the calendar year 2000.

(f) Remedies. The Company's sole and exclusive liability and MBE's sole and -------- exclusive remedy for breach of the representations and warranties set forth in this Section 11 shall be, at the Company's election, to either (i) use its best efforts to make the Service perform in accordance with the Specifications in all material respects as soon as reasonably practicable, or (ii) return the Fees paid by MBE and MBE Centers for the Service in which case MBE would have the right to either terminate the entire Agreement or the portions of the Agreement affected by breach of the representation and warranties. In the event that the Company elects (i) of this sub-section in accordance with the terms and conditions set forth herein and is unable to make the Service perform in accordance with the Specifications in all material respects within twenty one (21) days after such election, MBE may then elect to continue to proceed under (i) or MBE may elect to proceed under (ii) of this sub-section.

-14-

(g) Disclaimer. EXCEPT FOR THE EXPRESS WARRANTIES STATED ABOVE, NEITHER ---------- PARTY MAKES ANY PROMISES, REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, WITH RESPECT TO THE SYSTEM OR THE MANIFEST, INCLUDING ITS CONDITION, ITS CONFORMITY TO ANY REPRESENTATION OR DESCRIPTION, OR THE EXISTENCE OF ANY LATENT OR PATENT DEFECTS, AND EACH PARTY SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS.

12. Indemnity for Patent or Copyright Infringement. ----------------------------------------------

(a) Indemnity. The Company will defend, at its expense, any action brought --------- against MBE and its directors, officers, employees, agents, affiliates, successors, assigns or franchisees (Indemnitees) based upon a claim that the Service used properly in accordance with the terms of this Agreement and the Subscription Agreement infringes a U.S. patent or copyright or misappropriates a trade secret under U.S. law (a Claim). The Company further agrees to pay all damages and costs (including reasonable attorneys' fee and expert witness fees) incurred by any Indemnitee in connection with such Claim. The Company shall have sole control of any such action or settlement negotiations. Without the consent of MBE, which shall not be unreasonably withheld, the Company shall not settle any such Claim in a manner that (i) imposes damages or costs on any Indemnitee not covered by the Company hereunder or (b) imposes any injunctive or other non-monetary relief on any Indemnitee. MBE shall notify the Company promptly in writing of each such Claim and gives the Company all authority, information and assistance, at the Company's expense, reasonably necessary to settle or defend such claim.

(b) Remedy Options. If the Service becomes, or in the opinion of the

Source: STAMPS.COM INC, 10-Q, 11/14/2000

-------------- Company may become, the subject of a claim of infringement of any U.S. patent or copyright, the Company shall notify MBE, and the Company may, at its option: (i) procure for MBE and MBE Centers the right to use the Service free of any liability or (ii) replace or modify the Service to make it non-infringing.

(c) Sole and Exclusive Liability. THIS SECTION 12 SETS FORTH THE SOLE AND ---------------------------- EXCLUSIVE LIABILITY OF THE COMPANY FOR INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS.

(d) Exclusions from Indemnification. The Company assumes no liability, and ------------------------------- shall have no obligation to defend or pay any amounts to any Indemnitee hereunder for (i) any method or process in which the Service may be used by MBE or any MBE Center which is not set forth in the Specifications, (ii) any improper use of the Service by an Indemnitee or (iii) the combination, operation or use of the Service with non-Company software or data, if such infringement could have been avoided but for the combination, operation or use of the Service with such programs or data.

13. Indemnification. ---------------

(a) Indemnification by the Company. The Company, at its own expense, will ------------------------------ indemnify, defend and hold harmless MBE, and its employees, franchisees, representatives and

-15-

agents, against any claim, suit, action, or other proceeding brought against MBE or such party, to the extent that such claim, suit, action or other proceeding is based on or arises from.

(i) any misrepresentation or breach or representation or warranty of the Company contained herein; or

(ii) any breach of any covenant or agreement to be performed by the Company hereunder.

The Company will pay all costs, damages, and expenses, including, but not limited to, reasonable attorneys' fees and costs awarded against or otherwise incurred by MBE in connection with or arising from any such claim, suit, action or proceeding attributable to any such claim.

(b) Indemnification by MBE. MBE, at its own expense, will indemnify, defend ---------------------- and hold harmless the Company, and its employees, representatives and agents, against any claim, suit, action, or other proceeding brought against the Company or such party, to the extent that such claim, suit, action or other proceeding is based on or arises from:

(i) any misrepresentation or breach of representation or warranty of MBE contained herein; or

(ii) any breach of any covenant or agreement to be performed by MBE hereunder.

MBE will pay all costs, damages, and expenses, including, but not limited to, reasonable attorneys' fees and costs awarded against or otherwise incurred by the Company in connection with or arising from any such claim, suit, action or proceeding attributable to any such claim.

(c) Procedures. Each party's obligation to indemnify the other hereunder ---------- shall be conditioned upon (i) the indemnified party providing the indemnifying party with prompt notice of any claim that could lead to a claim for indemnification, (ii) the indemnified party permitting the indemnifying party to assume and control the defense of such action, with counsel chosen by the indemnifying party (who shall be reasonably acceptable to the indemnified party) and (iii) the indemnified party not entering into any settlement or compromise of any such claim without the indemnifying party's prior written consent, which shall not be unreasonably withheld or delayed.

-16-

14. Limitation of Liability. Notwithstanding anything to the contrary in ----------------------- this Agreement, in no event shall either party's liability under any provision of this Agreement or otherwise arising out of or related to this Agreement (other than payments due or accrued under Section 8, exceed the amounts paid by MBE and the MBE Centers to the Company pursuant to this Agreement. The parties further agree that NEITHER PARTY WILL BE LIABLE FOR ANY LOST PROFITS, FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES OR FOR ANY CLAIM OR DEMAND AGAINST A PARTY BY ANY OTHER PARTY. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR

Source: STAMPS.COM INC, 10-Q, 11/14/2000

CONSEQUENTIAL, INCIDENTAL, SPECIAL, INDIRECT, OR EXEMPLARY DAMAGES ARISING OUT OF THIS AGREEMENT, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND UNDER ANY CAUSE OF ACTION, INCLUDING NEGLIGENCE. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.

15. Term and Termination. --------------------

(a) Term and Renewal Option. The initial term of this Agreement shall ----------------------- commence on the Effective Date and end on the fifth anniversary of the Effective Date. MBE shall have the right to elect by written notice to the Company at any time between two (2) and six (6) months prior to the end of such initial term or any subsequent Renewal Period (as defined below), to notify the Company that MBE elects to seek to extend such term for additional two (2)-year periods (each a Renewal Period) In the event of such election, MBE and the Company shall have -------------- a period of sixty (60) days in which to negotiate commercially reasonable Basic Fees, Bounty Fees and eBay Fees (and other applicable fees) (Fee Schedule) ------------ under which the Company would be willing to renew this Agreement for such Renewal Period. If the parties are unable to reach agreement during such sixty (60) day period, either party may request that the Fee Schedule be submitted to arbitration pursuant to Section 18(m) [Arbitration]. If MBE notifies the Company of its intent to so renew prior to the end of such initial term or such Renewal Period, the term of this Agreement shall automatically be extended for the Renewal Period and, other than the Fee Schedule, all of the terms and conditions of this Agreement shall remain in full force and effect.

(b) Termination. -----------

(i) Either party may, at its option, terminate this Agreement upon notice to the other party if (A) the other party materially fails to comply with any of the material terms and conditions of this Agreement and (B) if such default has not been cured within thirty (30) days (forty five (45) days if required by the nature of the breach) after written notice to the other party or, if such breach is not curable within thirty (30) days (forty five (45) days if required by the nature of the breach), reasonable efforts and progress are not being made to cure such breach.

(ii) This Agreement shall terminate, without notice, (A) upon the institution by or against either party of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of such party's debts, (B) upon either party's making an assignment for the benefit of creditors, or (C) upon either party's dissolution or ceasing to do business.

-17-

(c) Termination Period. ------------------

(i) If this Agreement is terminated or expires in accordance with this Section 15 (other than termination by the Company in the event of an uncured material breach by MBE), then MBE shall have a period of up to twenty-four (24) months from and after the date of such termination, to make arrangements with respect to the conversion of the Service to a non-Company manifest system (the Termination Period). The date when the Service shall have ------------------ been converted to a non-Company manifest system shall hereinafter be referred to as the Termination Completion Date and shall be the effective date of -------------------------- termination of this Agreement, in such event. During the Termination Period each party will continue to perform its obligations hereunder, and MBE and MBE Centers will continue to pay any applicable fees and payments hereunder to the Company. MBE shall keep the Company informed as reasonably necessary with respect to such conversion. MBE also shall give the Company written notice of the estimated Termination Completion Date promptly after a reasonably definitive projected Termination Completion Date is known by MBE, and shall give written notice to the Company promptly after any change in such estimated Termination Completion Date.

(ii) During the Termination Period, the Company will give reasonable cooperation and support to MBE to assure an orderly and efficient transition and, without limiting the generality of the foregoing, at MBE's expense, the Company shall be obligated to provide MBE with data reasonably necessary for MBE to convert or implement the non-Company systems, procedures and practices.

(d) Effect of Termination. ----------------------

(i) Sections 1, 7, 10, 13, 14, 15, 16 and 18, as well as any payments accrued prior to termination of this Agreement, shall survive any termination or expiration of this Agreement.

(ii) Within thirty (30) days after the Termination Completion Date,

Source: STAMPS.COM INC, 10-Q, 11/14/2000

each party shall, at its own expense, destroy or return to the Company and make no further use of, any property, materials or other items of the other party and shall certify, in writing that it has done so

(iii) Nothing contained herein shall limit any other remedies that either party may have for the default of the other party under this Agreement nor relieve either party of any of their obligations incurred prior to termination of this Agreement.

(iv) During the Termination Period and thereafter, and notwithstanding any other provision of this Agreement, MBE will be free to use its own personnel, and/or engage or contract with any third party to use the Specifications to design, develop and market an Internet-based manifest system similar to the Manifest (including products that contain functionality similar to the Service and which have a look and feel similar or identical to the Manifest), in each case solely for the benefit of MBE and the MBE Centers and international franchisees or licensees of MBE. MBE shall not use the object code or source code of the Manifest in the course of such development. Subject to MBE's compliance with the provisions of this subsection (iv), the Company shall not

-18-

assert any claim against MBE under the Company's Intellectual Property Rights in the Specifications or the Manifest in connection with such development, other than for use of the Company's trademarks, trade names, service marks and service names. Neither party shall have the right to retain or use the specific software implementation of the Manifest developed by the parties hereunder; provided, however, that the Company may retain one (1) copy of the software implementation of the Manifest solely for archival and evidentiary purposes.

16. Publicity. Upon execution of this Agreement, the parties will jointly --------- prepare a mutually acceptable description of their business relationship as contemplated by this Agreement which may be used by either party in press releases and other marketing materials from time to time during the term of this Agreement. Additional press releases or publicity materials shall be approved by each party in writing prior to release.

17. Warrant. On the Effective Date, the Company shall issue the Warrant to ------- MBE, upon the terms and subject to the conditions set forth therein.

18. Miscellaneous. -------------

(a) Amendments and Waivers. Any term of this Agreement may be amended or ---------------------- waived only with the written consent of the parties or their respective successors and assigns. Any amendment or waiver effected in accordance with this Section 18(a) [Amendments and Waivers] shall be binding upon the parties and their respective successors and assigns.

(b) Assignment. Each party shall have the right to assign its rights, ---------- obligations and privileges hereunder to an assignee in connection with any merger, acquisition or sale of all or substantially all of the business to which this Agreement relates. Each MBE Center shall have the right to assign its rights and obligations and privileges under a Subscription Agreement in connection with any merger, acquisition or sale of all or substantially all of such MBE Center's assets. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

(c) Entire Agreement. This Agreement is the product of both of the parties ---------------- hereto, and constitutes the entire agreement between such parties pertaining to the subject matter hereof, and merges all prior negotiations and drafts of the parties with regard to the transactions contemplated herein. Any and all other written or oral agreements existing between the parties hereto regarding such transactions are expressly canceled.

(d) Independent Contractor. Neither party shall, for any purpose, be deemed ---------------------- to be an agent of the other party and the relationship between the parties shall only be that of independent contractors. Neither party shall have any right or authority to assume or create any obligations or to make any representations or warranties on behalf of any other party, whether express or implied, or to bind the other party in any respect whatsoever.

-19-

Source: STAMPS.COM INC, 10-Q, 11/14/2000

(e) Force Majeure. In the event that either party is prevented from ------------- performing or is unable to perform any of its obligations under this Agreement (other than a payment obligation) due to any Act of God, fire, casualty, flood, earthquake, war, strike, lockout, epidemic, destruction of production facilities, riot, insurrection, material unavailability, or any other cause beyond the reasonable control of the party invoking this section, and if such party shall have used its best efforts to mitigate its effects, such party shall give prompt written notice to the other party, its performance shall be excused, and the time for the performance shall be extended for the period of delay or inability to perform due to such occurrences. If a force majeure event causes the Company to allocate limited resources among all of its customers, [***]*. --- The Company shall resume operation of the Service as soon as reasonably practicable upon conclusion of any force majeure event. Notwithstanding the foregoing, if such party is not able to perform within sixty (60) days after the event giving rise to the excuse of force majeure, the other party may terminate the Agreement.

(f) Governing Law. This Agreement and all acts and transactions pursuant ------------- hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.

(g) Severability. If one or more provisions of this Agreement are held to ------------ be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith, in order to maintain the economic position enjoyed by each party as close as possible to that under the provision rendered unenforceable. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

(h) Waiver. The waiver of any particular breach or default or any delay in ------ exercising any rights shall not constitute a waiver of any subsequent breach or default.

(i) Notices. Any notice required or permitted by this Agreement shall be in ------- writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, or forty-eight (48) hours after being deposited in the regular mail as certified or registered mail (airmail if sent internationally) with postage prepaid, if such notice is addressed to the party to be notified at such party's address or facsimile number as set forth below, or as subsequently modified by written notice.

---------- * Confidential treatment has been requested for the bracketed portion. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

-20-

If to the Company: iShip.com, Inc. 2515 - 140th Ave. NE Suite E-110 Attn: President Bellevue, WA 98005 Facsimile Number: 425/602-5025

With a Copy To: Craig E. Sherman Venture Law Group 4750 Carillon Point Kirkland, WA 98033 Facsimile Number: 425/739-8750

If to MBE: Mail Boxes Etc. USA, Inc. 6060 Cornerstone Court West San Diego, CA 92121 Attn: Thomas K. Herskowitz Facsimile Number: 619/546-7499

(j) Headings. The headings of the several sections of this Agreement are -------- intended for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

(k) Counterparts. This Agreement may be executed in counterparts, each of ------------ which shall be deemed an original and all of which together shall constitute one instrument.

(l) Advice of Legal Counsel. Each party acknowledges and represents that,

Source: STAMPS.COM INC, 10-Q, 11/14/2000

----------------------- in executing this Agreement, it has had the opportunity to seek advice as to its legal rights from legal counsel and that the person signing on its behalf has read and understood all of the terms and provisions of this Agreement. This Agreement shall not be construed against any party by reason of the drafting or preparation thereof.

(m) Arbitration. -----------

(i) Every claim or dispute arising out of or relating to the negotiation, performance or non-performance of this Agreement shall be determined by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (AAA), or as otherwise agreed by the parties. The place of arbitration shall be San Diego, California.

(ii) In the event of any such claim or dispute, the parties shall first attempt to resolve the matter through good faith, informal negotiations, including non-binding mediation. In the event that the parties are unable to resolve the dispute, either party hereto may demand arbitration by written notice to the other party and to the AAA in San Diego. The parties shall mutually agree on one arbitrator. If the parties cannot so agree, the single arbitrator shall be selected by the AAA. The costs of arbitration are to be shared equally by the parties. Each party shall be responsible for its own costs and attorneys' fees.

-21-

(iii) The arbitrator shall not have any power to alter, modify or change any of the terms of this Agreement or to grant any remedy which is either inconsistent with or prohibited by the terms of this Agreement, or not available in a court of law. The arbitrator shall not have the authority to commit errors of law or errors of legal reasoning. In addition, the arbitrator shall have no power or authority to award punitive, consequential or incidental damages.

(iv) The arbitrator shall, within thirty (30) days after the matter has finally been submitted to him or her, render a written decision making specific findings of fact and setting forth the reasons for the decision which shall be consistent with the terms of this Agreement. The parties intend that this agreement to arbitrate be valid, binding, enforceable, and irrevocable. The terms of this Section shall survive the termination or expiration of this Agreement. Judgement on any award of the arbitrator shall be binding and may be entered in any court having jurisdiction thereof.

[Signature page follows]

-22-

The parties have executed this Agreement as of the date first set forth above.

COMPANY: LICENSEE:

ISHIP.COM, INC. MAILBOXES ETC. USA, INC.

/s/ Stephen M. Teglovic /s/ Charles Lynn Lowder --------------------------------------- ---------------------------------------- (Signature) (Signature)

Stephen M. Teglovic Charles Lynn Lowder --------------------------------------- ---------------------------------------- (Print Name) (Print Name)

CEO/Pres Executive Vice President/General Counsel --------------------------------------- ---------------------------------------- (Title) (Title)

SIGNATURE PAGE TO MANIFEST SYSTEM LICENSE AND CO-BRANDING AGREEMENT

EXHIBIT A

FORM OF WARRANT

EXHIBIT B

Source: STAMPS.COM INC, 10-Q, 11/14/2000

AUTHORIZED EQUIPMENT: ---------------------

A PC reasonably adequate to access and use the Service for manifesting and shipping packages, with the following minimum specifications:

. a reasonably adequate scale and a label printer . An internet/network connection of at least 256k bits/sec . Processor: P5-233 . Ports: 2 Com ports, 1 Parallel port . RM: 64 Megs . HDD: 1.2 GB . Video. 4 MB . OS: Win 98/OSR2 . Browser: IE 5 SP1

EXHIBIT C POTENTIAL CUSTOMERS

======================================================================================================================= TYPE DEFINITION ---------------------------------------------------------------------------------------------------------------------- I A customer physically present in the retail store-front or remote off-site locations of MBE Centers for a In-Center Customer transaction in which they do not utilize an LMS or MBEX (as such terms are defined below). ---------------------------------------------------------------------------------------------------------------------- A customer utilizing a self-service lobby manifest II system in a MBE Center (LMS) or a self-service --- Remote Self-Service Customer MBE-branded remote manifest system (MBEX) for a ---- transaction. ---------------------------------------------------------------------------------------------------------------------- A customer shipping a PLD-compliant and ramp-ready III A package* through a MBE Center that is manifested MBE Internet Customer through the MBE Sites. ---------------------------------------------------------------------------------------------------------------------- A customer shipping a PLD-compliant and ramp-ready III B package through a MBE Center, which package is Company Internet Customer manifested through the Company site. ---------------------------------------------------------------------------------------------------------------------- A customer shipping a PLD-compliant and ramp-ready package through a MBE Center, which package is III C (1) manifested through the Internet web site of a third Third Party/MBE Customer party that is con-branded or otherwise affiliated with MBE. ---------------------------------------------------------------------------------------------------------------------- A customer shipping a PLD-compliant and ramp-ready package through a MBE Center, which package is III C (2) manifested through the Internet web site of a third Third Party/Company Customer party that is co-branded or otherwise affiliated with the Company or the Service. ---------------------------------------------------------------------------------------------------------------------- A customer shipping a PLD-compliant and ramp-ready package through a MBE Center, which package is III C (3) manifested through an Internet web site operated by eBay Customer eBay Incorporated or in connection with an auction or sale conducted on such web site. ---------------------------------------------------------------------------------------------------------------------- IV A customer that utilizes the Service and/or the Company Customer Company's products and services other than in connection with a MBE Center. ----------------------------------------------------------------------------------------------------------------------

---------- * PLD-compliant and ramp-ready shall mean compliance with the electronic data requirements of each carrier supported by the Service.

EXHIBIT D

SYSTEM SPECIFICATIONS

The Service will enable MBE and MBE Centers to process packages for domestic shipment, weigh these packages, and create shipping labels. The Service will export data to a given MBE Center's Point-of-Sale (POS) station, and will support ARS/BIN packages, consignee billing, freight insurance, MBE proprietary or designated transit declared value, and customer address book access. All carrier rating information will be maintained by the Company from its central database management system (DBMS). MBE Centers will be allowed to create or

Source: STAMPS.COM INC, 10-Q, 11/14/2000

modify their own mark-ups for shipping, and, at its expense, the Company will update and/or adjust its pricing information for each MBE Center for each carrier to reflect such modifications. This Exhibit D may be modified from time to time by mutual agreement of the parties.

The maximum amount of information downloaded from the Company's server to the counter manifest station will be 15 kilobytes or less per package processed.

The following carriers and services will be supported:

UPS ---

Domestic: -------- Ground Three Day Select Second Day Air Second Day Air AM, Next Day Air Saver Next Day Air Next Day Air Early AM

International: ------------- Canada Standard Worldwide Expedited (including Canada/Mexico as set forth in the Specifications) Worldwide Express (including Canada/Mexico as set forth in the Specifications)

FedEx -----

Domestic: -------- Express Saver 2 Day Standard Overnight Priority Overnight First Overnight

International: ------------- International Economy International Priority

USPS ----

Domestic: -------- Parcel Post Priority Mail Express Mail First Class

International: ------------- Parcel Post Air Parcel Post Surface Small Parcel Air Small Parcel Surface Express Mail Global Priority Mail

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

The Service will include the following features, the more detailed functionality of which will be agreed to from time to time by the parties as the Service is developed:

1. Table of Contents 2. Table of Illustrations 3. Introduction 3.1. Purpose 3.2. Scope 3.3. Introduction 4. Implementation 4.1 Organization 4.1.1. Opening the Counter Manifest System 4.1.2. Main Screen Organization 4.1.3. Menu Structure 4.2. General Functionality 4.2.1. Keyboard & Mouse Behavior 4.2.2. Sortable List Boxes

Source: STAMPS.COM INC, 10-Q, 11/14/2000

4.2.3. Find Package/Transaction Dialogs 4.2.4. Find Manifest Dialogs 4.2.5. Find Dialog Search Behavior 4.3. Process Menu 4.3.1. Process Package 4.3.2. Find Package 4.3.3. Find Customer 4.3.4. Customer Address Dialog 4.3.5. Recipient Address Dialog

4.3.6. Address Book Dialog 4.3.7. City/State/Postal Verification Dialog 4.3.8. Region Locator Dialog 4.3.9. Transaction Complete Dialog 4.3.10. Point of Sale (POS) Export Records 4.3.11. Enter ARS/BIN Package 4.3.12. Process Consignee Billed 4.3.13. Freight Insurance 4.3.14. Reprint Last label 4.3.15. Reprint label 4.3.16. Edit Transaction 4.3.17. Void Transaction 4.3.18. Recall Voided Transaction 4.4. Estimate 4.4.1. Price a Package 4.4.2. Create Estimate 4.4.3. Edit Estimate 4.4.4. Delete Estimate 4.5. Manifest 4.5.1. Perform End of Day 4.5.2. Track a Package 4.5.3. View Manifests 4.5.4. View Transaction 4.5.5. Reprint Manifest 4.6. Reports 4.6.1. Manifest Reports 4.6.2. Rate Reports 4.6.3. Management Reports 4.7. Administration 4.7.1. Preferences 4.7.2. Center Information 4.7.3. Taxable Items 4.7.4. Scales and Printers 4.7.5. Modify Rates Dialog 4.7.6. Modify Rates for Zone Based Services 4.7.7. Modify Rates for Weight Based/Single Zone Services 4.7.8. Modify FedEx Service Option Rates Dialog 4.7.9. Modify UPS Service Option Rates Dialog 4.7.10. Modify USPS Service Option Rates Dialog 4.7.11. Copy Rates 4.7.12. Alternate Insurance Rates 4.8. About 4.8.1. Rate Effective Dates 4.8.2. Version 5. Services and Services Options 5.1. Services

5.1.1. UPS 5.1.2. FedEx 5.1.3. USPS 5.2 Service Options 5.2.1. Declared Value 5.2.2. Delivery Notification 5.2.3. Proof of Delivery 5.2.4. COD 5.2.5. Call Tag 5.2.6. Earliest Delivery Time 5.2.7. Deliver Without Signature 5.2.8. Certified Mail

Source: STAMPS.COM INC, 10-Q, 11/14/2000
[A]:
Highlight the parts (if any) of this contract related to Cap On Liability that should be reviewed by a lawyer. Details: Does the contract include a cap on liability upon the breach of a party's obligation? This includes time limitation for the counterparty to bring claims or maximum amount for recovery.