SYLVAN INC
EMPLOYMENT CONTINUATION AGREEMENT
<DOCUMENT>
<TYPE>EX-10.46
<SEQUENCE>6
<FILENAME>j9708301exv10w46.txt
<DESCRIPTION>EMPLOYMENT CONTINUATION AGREEMENT
<TEXT>
<PAGE>


                                                                   Exhibit 10.46


                        EMPLOYMENT CONTINUATION AGREEMENT


THIS AGREEMENT between Sylvan Inc., a Nevada corporation (the "Company"), and
Gary D. Walker (the "Executive"), dated as of this 24th day of September, 2002.

                              W I T N E S S E T H:

WHEREAS, the Company believes that, in the event it is confronted with a
situation that could result in a change in ownership or control of the Company,
continuity of management will be essential to its ability to evaluate and
respond to such situation in the best interests of shareholders;

WHEREAS, the Company desires to assure itself of the Executive's services during
the period in which it is confronting such a situation, and to provide the
Executive with certain financial assurances to enable the Executive to perform
the responsibilities of the position without undue distraction and to exercise
judgment without bias due to personal circumstances;

WHEREAS, to achieve these objectives, the Company and the Executive desire to
enter into an agreement providing the Company and the Executive with certain
rights and obligations upon the occurrence of a Change of Control or Potential
Change of Control (as defined in Section 2);

NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, and intending to be legally bound, it is hereby agreed by and between
the Company and the Executive as follows:

1.       OPERATION OF AGREEMENT.

         (a)      EFFECTIVE DATE. The effective date of this Agreement shall be
                  the date on which a Change of Control occurs (the "Effective
                  Date"), provided that, except as provided in Section 1(b), if
                  the Executive is not employed by the Company or an Affiliate
                  on the Effective Date, this Agreement shall be void and
                  without effect.

         (b)      TERMINATION OF EMPLOYMENT FOLLOWING A POTENTIAL CHANGE OF
                  CONTROL. Notwithstanding Section 1(a), if (i) the Executive's
                  employment is terminated by the Company or an Affiliate
                  without Cause (as defined in Section 6[c]) or by the Executive
                  with Good Reason (as defined in Section 6[d]) after the
                  occurrence of a Potential Change of Control and prior to the
                  occurrence of a Change of Control and (ii) a Change of Control
                  that arises out of such Potential Change of Control occurs
                  within 24 months of such termination, the Executive shall be
                  deemed, solely for purposes of determining the Executive's
                  rights under this Agreement, to have remained employed until
                  the Effective Date and to have been terminated by the Company
                  without Cause immediately after this Agreement becomes
                  effective.





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2.       DEFINITIONS.

         (a)      CHANGE OF CONTROL. For the purposes of this Agreement, a
                  "Change of Control" shall mean:

                  (i)      the acquisition by any individual, entity or group
                           (within the meaning of Section 13[d][3] or 14[d][2]
                           of the Securities Exchange Act of 1934, as amended
                           [the "Exchange Act"] or any successor rule thereto)
                           (a "Person") of beneficial ownership (within the
                           meaning of Rule 13d-3 promulgated under the Exchange
                           Act or any successor rule thereto) of securities or
                           interests of the Company entitling such Person to 51%
                           or more of the combined voting power of the then
                           outstanding voting securities of the Company entitled
                           to vote generally in the election of directors of
                           such company (the "Voting Power"); provided, however,
                           that for purposes of this subsection (i), the
                           following acquisitions shall not constitute or cause
                           a Change in Control: (A) any acquisition directly
                           from the Company following which the members of the
                           Board continue to be comprised of at least 62% of
                           Continuing Directors, (B) any acquisition by the
                           Company, or (C) any acquisition of beneficial
                           ownership of securities of the Company by any
                           employee benefit plan (or related trust) sponsored or
                           maintained by the Company or by any Affiliate; or

                  (ii)     completion of a tender offer to acquire securities of
                           the Company entitling the holders thereof to 51% or
                           more of the Voting Power of the Company, excepting
                           any acquisitions specified in subsection (i), above,
                           that do not constitute a Change of Control; or

                  (iii)    either a successful solicitation subject to Rule
                           14a-11 under the Exchange Act relating to the
                           election or removal of 39% or more of the members of
                           the Board made by any Person other than the Company
                           or less than 62% of the members of the Board shall be
                           Continuing Directors; or

                  (iv)     the occurrence of a merger, consolidation, share
                           exchange, division or sale or other disposition of
                           assets of the Company and, as a result of which, the
                           shareholders of the Company immediately prior to such
                           transaction do not hold, directly or indirectly,
                           immediately following such transaction a majority of
                           the Voting Power (A) in the case of a merger or
                           consolidation, in the surviving or resulting company,
                           (B) in the case of a share exchange, in the acquiring
                           company, or (C) in the case of a division or a sale
                           or other disposition of assets, in each surviving,
                           resulting or acquiring company which, immediately
                           following the transaction, holds more than 30% of the
                           consolidated assets of the Company immediately prior
                           to the transaction; or

                  (v)      any other transaction or series of transactions that
                           the Board, in its sole discretion, determines is a
                           Change of Control with respect to the Employee.

         (b)      BOARD. For purposes of this Agreement, "Board" shall mean the
                  Board of Directors of the Company.

         (c)      POTENTIAL CHANGE OF CONTROL. For the purposes of this
                  Agreement, a Potential Change of Control shall be deemed to
                  have occurred if:

                  (i)      a Person commences a tender offer (with adequate
                           financing) for securities representing at least 51%
                           of the Voting Power of the Company's securities or
                           announces or otherwise makes known a bona fide intent
                           to commence such a tender offer, excepting any offers
                           that, if completed, would result in an acquisition
                           not constituting a Change of Control; or


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                  (ii)     the Company enters into an agreement the consummation
                           of which would constitute a Change of Control; or

                  (iii)    there is commenced a solicitation of proxies for the
                           election of directors of the Company by anyone other
                           than the Company which solicitation, if successful,
                           would effect a Change of Control.

         (d)      CONTINUING DIRECTORS. For purposes of this Agreement,
                  "Continuing Directors" shall mean a director of the Company
                  who either (i) was a director of the Company immediately prior
                  to the Effective Date or (ii) is an individual whose election,
                  or nomination for election, as a director of the Company was
                  approved by a vote of at least two-thirds of the directors
                  then still in office who were Continuing Directors (other than
                  an individual whose initial assumption of office is in
                  connection with an actual or threatened election contest
                  relating to the election of directors of the Company which
                  would be subject to Rule 14a-11 under the Exchange Act).

         (e)      AFFILIATE. For purposes of this Agreement, "Affiliate" or
                  "Affiliates" shall mean any company or business which, by
                  reason of stock ownership or otherwise, is controlled,
                  directly or indirectly, by the Company.

3.       EMPLOYMENT PERIOD. Commencing on the Effective Date and subject to
         Section 6 of this Agreement, the Company agrees to continue the
         Executive in its or an Affiliate's employ, and the Executive agrees to
         remain in the employ of the Company or the Affiliate.

4.       POSITION AND DUTIES.

         (a)      NO REDUCTION IN POSITION. Commencing on the Effective Date,
                  the Executive's position (including titles), authority,
                  responsibilities and status shall be at least commensurate
                  with those held, exercised and assigned immediately prior to
                  the Effective Date. It is understood that, for purposes of
                  this Agreement, such position, authority, responsibilities and
                  status shall not be regarded as not commensurate merely by
                  virtue of the fact that a successor shall have acquired all or
                  substantially all of the business and/or assets of the Company
                  as contemplated by Section 10(b) of this Agreement. Unless the
                  Executive willingly elects otherwise, the Executive's services
                  shall be performed at the location where the Executive was
                  employed immediately preceding the Effective Date or any
                  office or location within 50 miles from such location.

         (b)      BUSINESS TIME. Commencing on the Effective Date, the Executive
                  agrees to devote full attention during normal business hours
                  to the business and affairs of the Company and to use his best
                  efforts to perform faithfully and efficiently the
                  responsibilities assigned to the Executive hereunder, to the
                  extent necessary to discharge such responsibilities, except
                  for (i) time spent in managing personal, financial and legal
                  affairs and serving on corporate, civic or charitable boards
                  or committees, in each case only if and to the extent not
                  substantially interfering with the performance of such
                  responsibilities, and (ii) periods of vacation and sick leave
                  to which the Executive is entitled.

5.       COMPENSATION.

         (a)      BASE SALARY. Commencing on the Effective Date, the Executive
                  shall receive a base salary at a monthly rate of $16,667, or,
                  if higher, the monthly salary paid to the Executive by the
                  Company and its Affiliates immediately prior to the Effective
                  Date. The base salary may be increased (but not decreased) at
                  any time and from time to time by action of the Board of the
                  Company or any committee thereof or any individual having
                  authority to take such action in accordance with the Company's
                  regular practices. The Executive's base salary, as it may be



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                  increased from time to time, shall hereafter be referred to as
                  "Base Salary." Neither the Base Salary nor any increase in
                  Base Salary after the Effective Date shall serve to limit or
                  reduce any other obligation of the Company hereunder.

         (b)      ANNUAL BONUS. Commencing on the Effective Date, in addition to
                  the Base Salary, for each fiscal year of the Company ending
                  after the Effective Date and for each partial fiscal year
                  ending after the Effective Date, the Executive shall be
                  afforded the opportunity to receive an annual bonus or partial
                  bonus, as applicable, on terms and conditions substantially no
                  less favorable, in the aggregate, to the Executive (taking
                  into account reasonable changes in the Company's goals and
                  objectives and the consequences of the Change of Control upon
                  the Company's goals, objectives and performance measures) than
                  the annual bonus opportunity that had been made available to
                  the Executive for the fiscal year ended immediately prior to
                  the Effective Date (the "Annual Bonus Opportunity"). Any
                  amount payable in respect of the Annual Bonus Opportunity
                  shall be paid as soon as practicable following the year for
                  which the amount (or prorated portion) is earned or awarded,
                  unless electively deferred by the Executive pursuant to any
                  deferral programs or arrangements that the Company may make
                  available to the Executive.

         (c)      LONG-TERM INCENTIVE COMPENSATION PROGRAMS. Commencing on the
                  Effective Date and to the extent that such programs and plans
                  exist subsequent to the Effective Date, the Executive shall
                  participate in all long-term incentive compensation programs
                  for key executives, including stock option plans, at a level
                  that is commensurate with the Executive's opportunity to
                  participate in such plans of the Company immediately prior to
                  the Effective Date, or, if more favorable to the Executive, at
                  the level made available to the Executive or other similarly
                  situated officers at any time thereafter.

         (d)      BENEFIT PLANS. Commencing on the Effective Date and to the
                  extent that such plans and programs exist subsequent to the
                  Effective Date, the Executive shall be entitled to participate
                  in or be covered under all retirement, target benefit annuity,
                  medical, disability, group life, and group accidental death
                  and dismemberment insurance plans and programs of the Company
                  and its Affiliates at a level that is commensurate with the
                  Executive's participation in such plans immediately prior to
                  the Effective Date, or, if more favorable to the Executive, at
                  the level made available to the Executive or other similarly
                  situated officers at any time thereafter. All payments by the
                  Company or an Affiliate hereunder excepting payments for
                  Accrued Obligations (as defined in Section 7[a]) shall be
                  taken into account (to the extent permitted by, and consistent
                  with, law and the terms of the applicable plan document) in
                  determining the amount of contributions to be made by or on
                  behalf of the Executive under any tax-qualified defined
                  contribution plan of the Company or an Affiliate.

         (e)      VACATION AND FRINGE BENEFITS. Commencing on the Effective Date
                  and to the extent that such programs exist subsequent to the
                  Effective Date, the Executive shall be entitled to paid
                  vacation and fringe benefits at a level that is commensurate
                  with the paid vacation and fringe benefits available to the
                  Executive immediately prior to the Effective Date, or, if more
                  favorable to the Executive, at the level made available from
                  time to time to the Executive or other similarly situated
                  officers at any time thereafter.

         (f)      SUCCESS BONUS. Provided that either (i) the Executive
                  continues his employment with the Company or an Affiliate
                  during the Retention Period and remains employed by the
                  Company or an Affiliate on the last day of the Retention
                  Period, (ii) the Executive's employment is involuntarily
                  terminated by the Company or the Affiliate during the
                  Retention Period for reasons other than for death, disability,
                  retirement under any retirement plan of the Company or an
                  Affiliate, or Cause, as defined in Section 6(c), or (iii) the
                  Executive's employment is voluntarily terminated by the
                  Executive during the Retention Period for Good Reason, as
                  defined in Section 6(d), then the Company shall pay the
                  Executive a success bonus


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                  in an amount equal to $50,000. The success bonus shall be paid
                  in a lump sum to the Executive as soon as practicable
                  following the earlier of the events set forth in clause (i),
                  (ii) or (iii) of the foregoing sentence, but in no event later
                  than the first regular pay period following the last day of
                  the Retention Period of the Company or the Affiliate employing
                  the Executive. Nothing herein shall entitle the Executive to
                  payment of any success bonus if the Executive's employment is
                  terminated during the Retention Period by reason of death,
                  disability, retirement under any retirement plan or voluntary
                  termination (other than for Good Reason) or for Cause.

                  The success bonus to be provided to the Executive under this
                  Section 5(f) shall be in addition to, and not in lieu of,
                  continuation of the Executive's Base Salary, participation in
                  the Company's or an Affiliate's health, life, disability and
                  other employee benefit plans, programs and arrangements, in
                  accordance with the terms of such plans, programs and
                  arrangements, and other perquisites of employment, as provided
                  to him at the beginning of the Retention Period or as the same
                  may be increased thereafter.

                  For purposes of this Agreement, the Retention Period shall
                  mean the period:

                  (i)      beginning on the date on which a Potential Change of
                           Control occurs; and

                  (ii)     ending on the date on which a Change of Control
                           occurs.

6.       TERMINATION.

         (a)      DEATH, DISABILITY OR RETIREMENT. Subject to the provisions of
                  Section 1 hereof, this Agreement shall terminate automatically
                  upon the Executive's death, termination due to permanent and
                  total disability ("Disability") within the meaning of section
                  22(e)(3) of the Internal Revenue Code of 1986, as amended (the
                  "Code"), or successor provision, or voluntary retirement under
                  any of the Company's retirement plans as in effect from time
                  to time.

         (b)      VOLUNTARY TERMINATION. Notwithstanding anything in this
                  Agreement to the contrary, following a Change of Control the
                  Executive may, upon not less than 30 days' written notice to
                  the Company, voluntarily terminate employment for any reason
                  (including early retirement under the terms of any of the
                  Company's retirement plans as in effect from time to time),
                  provided that any termination by the Executive pursuant to
                  Section 6(d) on account of Good Reason (as defined therein)
                  shall not be treated as a voluntary termination under this
                  Section 6(b).

         (c)      CAUSE. The Company or an Affiliate may terminate the
                  Executive's employment for Cause. For purposes of this
                  Agreement, "Cause" means (i) the Executive's conviction of, or
                  plea of NOLO CONTENDERE to, a felony; (ii) an act or acts of
                  dishonesty or gross misconduct on the Executive's part which
                  result or are intended to result in material damage to the
                  Company's business or reputation; or (iii) the willful and
                  continued failure by Executive to substantially perform the
                  required duties with the Company (other than any such failure
                  resulting from Executive's incapacity due to physical or
                  mental illness or Disability or any actual or anticipated
                  failure after the termination by Executive for Good Reason as
                  defined in Section 6(d), below) after a written demand for
                  substantial performance is delivered to the Executive by the
                  Company, which demand specifically identifies the manner in
                  which the Company believes that the Executive has not
                  substantially performed the required duties.

         (d)      GOOD REASON. Following the occurrence of a Change of Control
                  or Potential Change of Control, the Executive may terminate
                  employment for Good Reason. For purposes of this Agreement,
                  "Good Reason" means the occurrence of any of the following,
                  without the express


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                  written consent of the Executive, after the occurrence of a
                  Change of Control or Potential Change of Control:

                  (i)      (A) the assignment to the Executive of any duties
                           inconsistent in any material adverse respect with the
                           Executive's position, authority, responsibilities or
                           status as contemplated by Section 4 of this
                           Agreement, or (B) any other material adverse change
                           in such position, responsibilities, authority or
                           status, or any removal of the Executive from or any
                           failure to re-elect the Executive to any position,
                           except in connection with the termination of the
                           Executive's employment due to Cause, Disability,
                           retirement, death or voluntary termination for
                           reasons other than those set forth in this Section
                           6(d);

                  (ii)     any failure by the Company to comply with any of the
                           provisions of Section 5 of this Agreement, other than
                           an insubstantial or inadvertent failure remedied by
                           the Company promptly after receipt of notice thereof
                           given by the Executive;

                  (iii)    any purported termination of the employment of the
                           Executive by the Company or an Affiliate which is not
                           due to the Executive's Disability, death, retirement,
                           for Cause in accordance with Section 6(c) or
                           voluntary termination for reasons other than those
                           set forth in this Section 6(d);

                  (iv)     the Company's or an Affiliate's requiring the
                           Executive to be based at any office or location more
                           than 50 miles from that location at which the
                           Executive performed services specified under the
                           provisions of Section 4 immediately prior to the
                           Change of Control, or the Company's or an Affiliate's
                           requiring the Executive to travel on business to a
                           substantially greater extent than required
                           immediately prior to the Effective Date; or

                  (v)      any failure by the Company to obtain the assumption
                           and agreement to perform this Agreement by a
                           successor as contemplated by Section 10(b).

                  In no event shall the mere occurrence of a Change of Control,
                  absent any further impact on the Executive, be deemed to
                  constitute Good Reason.

         (e)      NOTICE OF TERMINATION. For purposes of this Agreement, a
                  "Notice of Termination" means a written notice given, in the
                  case of a termination for Cause, within 30 days of the
                  Company's having actual knowledge of the events giving rise to
                  such termination, and in the case of a termination for Good
                  Reason, within 180 days of the Executive's having actual
                  knowledge of the events giving rise to such termination, and
                  which (i) indicates the specific termination provision in this
                  Agreement relied upon, (ii) sets forth in reasonable detail
                  the facts and circumstances claimed to provide a basis for
                  termination of the Executive's employment under the provision
                  so indicated, and (iii) if the termination date is other than
                  the date of receipt of such notice, specifies the termination
                  date (which date shall be not more than 15 days after the
                  giving of such notice). The failure by the Executive to set
                  forth in the Notice of Termination any fact or circumstance
                  which contributes to a showing of Good Reason shall not waive
                  any right of the Executive hereunder or preclude the Executive
                  from asserting such fact or circumstance in enforcing the
                  Executive's rights hereunder.

         (f)      DATE OF TERMINATION. For the purpose of this Agreement, the
                  term "Date of Termination" means (i) in the case of a
                  termination for which a Notice of Termination is required, the
                  date of receipt of such Notice of Termination or, if later,
                  the date specified therein, as the case may be, and (ii) in
                  all other cases, the actual date on which the Executive's
                  employment terminates on or after the Effective Date.


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7.       OBLIGATIONS OF THE COMPANY UPON TERMINATION.

         (a)      DEATH OR DISABILITY. If the Executive's employment is
                  terminated on or after the Effective Date by reason of the
                  Executive's death or Disability, this Agreement shall
                  terminate without further obligations to the Executive or the
                  Executive's legal representatives under this Agreement other
                  than those obligations accrued hereunder at the Date of
                  Termination, and the Company shall pay to the Executive (or
                  the Executive's beneficiary or estate) (i) the Executive's
                  full Base Salary through the Date of Termination (the "Earned
                  Salary"), (ii) any vested amounts or benefits owed to the
                  Executive under the Company's otherwise applicable employee
                  benefit plans and programs, including any compensation
                  previously deferred by the Executive (together with any
                  accrued earnings thereon) and not yet paid by the Company and
                  any accrued vacation pay not yet paid by the Company (the
                  "Accrued Obligations"), and (iii) any other benefits payable
                  due to the Executive's death or Disability under the Company's
                  plans, policies or programs (the "Additional Benefits").

                  Any Earned Salary shall be paid in cash in a single lump sum
                  as soon as practicable, but in no event more than 30 days (or
                  at such earlier date required by law), following the Date of
                  Termination. Accrued Obligations and Additional Benefits shall
                  be paid in accordance with the terms of the applicable plan,
                  program or arrangement.

         (b)      CAUSE AND VOLUNTARY TERMINATION. If, on or after the Effective
                  Date, the Executive's employment shall be terminated for Cause
                  or voluntarily terminated by the Executive (other than on
                  account of Good Reason following a Change of Control), the
                  Company shall pay the Executive (i) the Earned Salary in cash
                  in a single lump sum as soon as practicable, but in no event
                  more than 30 days (or at such earlier date required by law),
                  following the Date of Termination, and (ii) the Accrued
                  Obligations in accordance with the terms of the applicable
                  plan, program or arrangement.

         (c)      TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE AND
                  TERMINATION BY THE EXECUTIVE FOR GOOD REASON.

                  (i)      LUMP SUM PAYMENTS. If, on or after the Effective
                           Date, the Company terminates the Executive's
                           employment other than for Cause, or the Executive
                           terminates employment for Good Reason, the Company
                           shall pay to the Executive the following amounts:

                           (A)      the Executive's Earned Salary;

                           (B)      a cash amount (the "Severance Amount") equal
                                    to two times the Executive's annual Base
                                    Salary; and

                           (C)      the Accrued Obligations.

                           The Earned Salary and one-half of the Severance
                           Amount shall be paid in cash in a single lump sum as
                           soon as practicable, but in no event more than 30
                           days (or at such earlier date required by law),
                           following the Date of Termination. The remaining
                           one-half of the Severance Amount shall be paid in
                           cash in four semi-annual installments commencing on
                           the first business day of the seventh month following
                           the Date of Termination. The Accrued Obligations
                           shall be paid in accordance with the terms of the
                           applicable plan, program or arrangement.

                  (ii)     CONTINUATION OF BENEFITS. If, on or after the
                           Effective Date, the Company terminates the
                           Executive's employment other than for Cause, or the
                           Executive terminates employment for Good Reason, the
                           Executive (and, to the extent applicable, the



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                           Executive's dependents) shall be entitled, after the
                           Date of Termination until the earlier of (A) the
                           twelve month anniversary of the Date of Termination
                           (the "End Date") and (B) the date the Executive
                           becomes eligible for comparable benefits under a
                           similar plan, policy or program of a subsequent
                           employer, to continue participation in all of the
                           employee and executive welfare and fringe benefit
                           plans of the Company or of the Affiliate employing
                           the Executive (the "Benefit Plans"). To the extent
                           any such benefits cannot be provided under the terms
                           of the applicable plan, policy or program, the
                           Company shall provide a comparable benefit under
                           another plan or from the Company's general assets.
                           The Executive's participation in the Benefit Plans
                           will be on the same terms and conditions that would
                           have applied had the Executive continued to be
                           employed by the Company or the Affiliate through the
                           End Date.

         (d)      TAX GROSS-UP AMOUNT. In the event that any amount or benefit
                  paid or distributed to the Executive pursuant to this
                  Agreement, taken together with any amounts or benefits
                  otherwise paid or distributed to the Executive by the Company
                  or any affiliated company (collectively, the "Covered
                  Payments"), would be an excess parachute payment" as defined
                  in Section 280G of the Code and would thereby subject the
                  Executive to the tax (the "Excise Tax") imposed under Section
                  4999 of the Code (or any similar tax that may hereafter be
                  imposed), then the Company will reimburse the Executive in an
                  amount equal to the "Tax Gross-Up Amount" (as defined in the
                  next sentence). The Tax Gross-Up Amount means an amount equal
                  to the sum of the Excise Tax, any other similar federal tax
                  and the amount of any other additional federal tax, including
                  any additional income tax, arising as a result of any payment
                  pursuant to this Section 7(d), which sum may be due and
                  payable by the Executive or withheld by the Company
                  (collectively, the "Total Taxes") so that the Executive
                  receives actual payments or benefits, after payment or
                  withholding, in an amount no less than that which would have
                  been received by him or her if no obligation for Total Taxes
                  had arisen.

8.       LEGAL FEES AND EXPENSES. If the Executive asserts any claim in any
         contest (whether initiated by the Executive or by the Company) as to
         the validity, enforceability or interpretation of any provision of this
         Agreement and if the Executive is the prevailing party in such contest,
         the Company shall pay the Executive's costs (or cause such costs to be
         paid) in so asserting, including, without limitation, reasonable
         attorneys' fees and expenses, as determined by the arbitrators selected
         pursuant to Section 11(b) hereof to resolve such contest.

9.       CONFIDENTIAL INFORMATION; COMPANY PROPERTY; NON-COMPETE. For and in
         consideration of the salary and benefits to be provided by the Company
         hereunder, the Executive agrees that:

         (a)      CONFIDENTIAL INFORMATION. The Executive shall hold in a
                  fiduciary capacity for the benefit of the Company all secret
                  or confidential information, knowledge or data relating to the
                  Company or any of its Affiliates, and their respective
                  businesses, (i) obtained by the Executive during the
                  Executive's employment by the Company or any Affiliate and
                  (ii) not otherwise public knowledge (other than by reason of
                  an unauthorized act by the Executive). After termination of
                  the Executive's employment with the Company, the Executive
                  shall not, without the prior written consent of the Company,
                  unless compelled pursuant to an order of a court or other body
                  having jurisdiction over such matter, communicate or divulge
                  any such information, knowledge or data to anyone other than
                  the Company and those designated by it.

         (b)      COMPANY PROPERTY. Except as expressly provided herein,
                  promptly following the Executive's termination of employment,
                  the Executive shall return to the Company all property of the
                  Company and all copies thereof in the Executive's possession
                  or under the Executive's control.



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         (c)      NON-COMPETE.

                  (i)      Commencing on the Effective Date and continuing for
                           two years after the Effective Date, the Executive
                           shall not engage directly or indirectly in any
                           competing business.

                  (ii)     Commencing on the Effective Date and continuing for
                           two years after the Effective Date, the Executive
                           shall not, directly or indirectly, (A) use any
                           information obtained in the course of the Executive's
                           employment by the Company or an Affiliate for the
                           purpose of notifying individuals of the termination
                           of such employment, or of the Executive's willingness
                           to provide services after such termination, (B)
                           otherwise solicit any person who is, or at any time
                           during the term of the Executive's employment by the
                           Company or an Affiliate was, a customer of the
                           Company or an Affiliate, or (C) solicit or induce, or
                           attempt to solicit or induce, any employee of the
                           Company or an Affiliate to terminate such employment
                           for any reason whatsoever or hire any employee of the
                           Company or an Affiliate.

                  (iii)    The Executive may request from the Company a waiver
                           of the application to the Executive of all or parts
                           of Sections 9(c)(i) and (ii), above, and the Company
                           shall not unreasonably deny such a request.

         (d)      INJUNCTIVE RELIEF AND OTHER REMEDIES WITH RESPECT TO
                  COVENANTS. The Executive acknowledges and agrees that the
                  covenants and obligations of the Executive with respect to
                  confidentiality and Company property relate to special, unique
                  and extraordinary matters and that a violation of any of the
                  terms of such covenants and obligations will cause the Company
                  irreparable injury for which adequate remedies are not
                  available at law. Therefore, the Executive agrees that the
                  Company shall (i) be entitled to an injunction, restraining
                  order or such other equitable relief (without the requirement
                  to post bond) restraining Executive from committing any
                  violation of the covenants and obligations contained in this
                  Section 9 and (ii) have no further obligation to make any
                  payments to the Executive hereunder following any finding by a
                  court or an arbitrator that the Executive has engaged in a
                  material violation of the covenants and obligations contained
                  in this Section 9. These remedies are cumulative and are in
                  addition to any other rights and remedies the Company may have
                  at law or in equity. In no event shall an asserted violation
                  of the provisions of this Section 9 constitute a basis for
                  deferring or withholding any amounts otherwise payable to the
                  Executive under this Agreement.

10.      SUCCESSORS.

         (a)      This Agreement is personal to the Executive and, without the
                  prior written consent of the Company, shall not be assignable
                  by the Executive. This Agreement shall inure to the benefit of
                  and be enforceable by the Executive's legal representatives,
                  including by will or the laws of descent and distribution.

         (b)      This Agreement shall inure to the benefit of and be binding
                  upon the Company and its successors. The Company shall require
                  any successor to all or substantially all of the business
                  and/or assets of the Company, whether direct or indirect, by
                  purchase, merger, consolidation, acquisition of stock, or
                  otherwise, by an agreement in form and substance satisfactory
                  to the Executive, expressly to assume and agree to perform
                  this Agreement in the same manner and to the same extent as
                  the Company would be required to perform if no such succession
                  had taken place.



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11.      MISCELLANEOUS.

         (a)      APPLICABLE LAW. This Agreement shall be governed by and
                  construed in accordance with the laws of the Commonwealth of
                  Pennsylvania, applied without reference to principles of
                  conflict of laws.

         (b)      ARBITRATION. Any dispute or controversy arising under or in
                  connection with this Agreement shall be resolved by binding
                  arbitration. The arbitration shall be held in the City of
                  Pittsburgh, Commonwealth of Pennsylvania, and except to the
                  extent that it is inconsistent with this Agreement, shall be
                  conducted in accordance with the Expedited Employment
                  Arbitration Rules of the American Arbitration Association then
                  in effect at the time of the arbitration, and otherwise in
                  accordance with principles which would be applied by a court
                  of law or equity. The arbitrator shall be acceptable to both
                  the Company and the Executive. If the parties cannot agree on
                  an acceptable arbitrator, the dispute shall be heard by a
                  panel of three arbitrators, one appointed by each of the
                  parties and the third appointed by the other two arbitrators.

         (c)      AMENDMENTS. This Agreement may not be amended or modified
                  otherwise than by a written agreement executed by the parties
                  hereto or their respective successors and legal
                  representatives.

         (d)      ENTIRE AGREEMENT. Excepting any plans, agreements or
                  arrangements specifically referred to in this Agreement, this
                  Agreement constitutes the entire agreement between the parties
                  hereto with respect to the matters referred to herein.

         (e)      TAX WITHHOLDING. The Company shall withhold from any amounts
                  payable under this Agreement such federal, state, foreign, or
                  local taxes or levies as shall be required to be withheld
                  pursuant to any applicable law or regulation.

         (f)      SEVERABILITY. In the event that one or more of the provisions
                  of this Agreement shall become invalid, illegal or
                  unenforceable in any respect, the validity, legality and
                  enforceability of the remaining provisions contained herein
                  shall not be affected thereby.

         (g)      EFFECT OF AGREEMENT ON RIGHTS OF EXECUTIVE. The Executive and
                  the Company acknowledge that, except as may otherwise be
                  provided under any other written agreement between the
                  Executive and the Company, the employment of the Executive is
                  "at will" and, prior to the Effective Date, the Executive's
                  employment may be terminated by the Executive or by the
                  Company or an Affiliate, in which case the Executive shall
                  have no further rights under this Agreement except in
                  circumstances relating to a Potential Change of Control as
                  provided for herein.

         (h)      WAIVER. Waiver by any party hereto of any breach or default by
                  the other party of any of the terms of this Agreement shall
                  not operate as a waiver of any other breach or default,
                  whether similar to or different from the breach or default
                  waived.

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

         (j)      CAPTIONS. The captions of this Agreement are not part of the
                  provisions hereof and shall have no force or effect.




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IN WITNESS WHEREOF, the Executive has hereunder set his hand and the Company has
caused this Agreement to be executed in its name on its behalf all as of the day
and year first above written.


                                          SYLVAN INC.


                                              By:  /s/ VIRGIL JURGENSMEYER
                                              Chairman, Compensation Committee


                                          EXECUTIVE


                                              /s/ GARY D. WALKER
                                              Gary D. Walker





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