Draft Report to the California State Legislature

§ 7.22 Form: Revenue Sharing Agreement

This agreement entered into by and among Purchaser Corporation, a New York corporation ("Purchaser"), and ABC Selling Corporation, a California corporation (the "Company"), and the individuals listed on Exhibit A hereto (collectively referred to as the "Sellers") as of the date set forth below.

Simultaneously with the execution of this Agreement, Sellers are selling to Purchaser all of the issued and outstanding shares (the "Shares") of the stock of the ABC Selling Corporation in accordance with a Stock Purchase Agreement of even date herewith (the "Stock Purchase Agreement") and certain of the Sellers are entering into Employment Agreements with the Company (the "Employment Agreements").

In connection with such transactions, Purchaser has obtained the exclusive rights to an operational software system (the "Software") and certain of Sellers shall be responsible for continued developments and enhancements to such Software.

In consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties agree as follows:

1. Initial Term

During the period commencing on and ending on (the "Initial Term"), subject to the provisions of Section 3 hereof, Purchaser shall pay or cause the Company to pay to Sellers an amount (the "Initial Term Payment") equal to percent of all billings by Purchaser or the Company during the Initial Term for the licensing and custom modification of the Software at the rate of not less than $ per month for each individual personal computer license of the Software. In the event that such billings are not collected by Purchaser or the Company, Purchaser or the Company shall be entitled to a credit against future payments to Sellers in an amount equal to percent of all uncollected billings.

2. Extended Term

During the period commencing on and ending on (the "Extended Term"), Purchaser shall pay or cause the Company to pay to Sellers an amount (the "Extended Term Payment") equal to percent of all billings by Purchaser or the Company during the Extended Term for the licensing and custom modification of the Software at the rate of not less than $ per month for each individual personal computer license of the Software. In the event that such billings are not collected by Purchaser or the Company, Purchaser or the Company shall be entitled to a credit against future payments to Sellers in an amount equal to percent of all uncollected billings.

3. Expense Credit

During the Initial Term Purchaser shall pay the Company $ per month to cover the monthly expenses of the Company specified in Exhibit B hereto, and Sellers agree that such amounts ("Expense Credit") shall constitute a credit against Initial Term Payments. The amount, if any, by which Initial Term Payments for each of each quarter of the Initial Term exceed $ shall be paid within fifteen (15) days after the end of each quarter on the basis of billings for the Software by Purchaser or the Company during the preceding quarter. Each such payment shall be accompanied by a statement as to the calculation of such payment. Expense Credits shall be cumulative and, to the extent unused in any quarter, shall be applied against amounts due Sellers in subsequent quarters.

4. Payment Terms

Extended Term Payments shall be paid within fifteen (15) days after the end of each month during the Extended Term on the basis of billings for the Software by Purchaser or the Company during the preceding month. Each such payment shall be accompanied by a statement as to the calculation of such payment.

5. Right to Audit

Upon Sellers' request and prior written notice, given at any time within ninety (90) days after the end of each twelve (12) month period during the Initial Term and the Extended Term, Purchaser shall make its and the Company's pertinent records available to its regular auditors or to other auditors selected by Sellers and reasonably acceptable to Purchaser for examination, at the sole cost and expense of the Sellers, at the business premises of Purchaser or the Company during ordinary business hours for the purpose of verifying Purchaser's or the Company's quarterly and monthly statements. The report of such auditors shall be accepted as final by Purchaser, the Company and the Sellers.

6. Distribution to Sellers

All payments to Sellers shall be made to, and all statements in connection therewith shall be delivered to, as agent for the Sellers (the "Agent"). The Agent shall be responsible for distributing all funds paid by Purchaser or the Company to the Sellers as the Agent and the Sellers shall determine, and neither Purchaser nor the Company shall have any responsibility therefor.

7. General

7.1 Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of New York, and the parties hereto consent to the jurisdiction of any New York federal or state court for all purposes in connection with this Agreement.

7.2 Counterparts

This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together shall constitute but one and the same instrument.

7.3 Entire Agreement

This Agreement, including all Exhibits attached, constitutes the entire understanding among the parties with respect to the subject matter hereof, superseding all negotiations, prior discussions and preliminary agreements made prior to the date hereof. This Agreement may be amended only in writing executed by all parties hereto.

7.4 Successors

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, personal representatives, successors and assigns.

7.5 Severability

If any section, subsection or provision of this Agreement, or the application of such section, subsection or provision, is held invalid, the remainder of this Agreement and the application of such section, subsection, or provision to persons or circumstances other than those to which it is held invalid shall not be affected thereby.

7.6 Waiver

Waiver by any of the parties of any term, provision or condition of this Agreement shall not be construed to be a waiver of any other term, provision or condition, nor shall such waiver be deemed a waiver of a subsequent breach of the same term, provision or condition. Failure or delay by any party to require performance of any provision of this Agreement shall not affect or impair such party's right to require full performance with such provision at any time thereafter.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement.