In this task, you're given a passage that represents a legal contract or clause between multiple parties, followed by a question that needs to be answered. Based on the paragraph, you must write unambiguous answers to the questions and your answer must refer a specific phrase from the paragraph. If multiple answers seem to exist, write the answer that is the most plausible.

Ex Input:
Exhibit 10.4

FORM OF TRANSFER AND SERVICING AGREEMENT

among

VERIZON OWNER TRUST 2020-A, as Issuer,

VERIZON ABS LLC, as Depositor

and

CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS, as Servicer, Marketing Agent and Custodian

Dated as of January 29, 2020

Source: VERIZON ABS LLC, 8-K, 1/23/2020





TABLE OF CONTENTS

ARTICLE I USAGE AND DEFINITIONS 1 Section 1.1 Usage and Definitions 1

ARTICLE II TRANSFER AND ACQUISITION OF DEPOSITOR TRANSFERRED PROPERTY; REPRESENTATIONS AND WARRANTIES

Section 2.1 Transfers of Depositor Transferred Property 1 Section 2.2 Acknowledgement of Further Assignments 3 Section 2.3 Savings Clause 3 Section 2.4 Representations and Warranties About Depositor Transferred Property. 3 Section 2.5 Originators' Reacquisition and Servicer's Acquisition of Receivables for Breach of Representations 5

Section 2.6 Originators' Reacquisition or Servicer's Acquisition of Bankruptcy Surrendered Receivables 6

ARTICLE III SERVICING OF RECEIVABLES 7 Section 3.1 Engagement 7 Section 3.2 Servicing of Receivables. 7 Section 3.3 Servicer's Acquisition of Receivables 9 Section 3.4 Sale of Written-Off Receivables 10 Section 3.5 Servicer Reports and Compliance Statements 11 Section 3.6 Review of Servicer's Records 12 Section 3.7 Servicer's Authorized and Responsible Persons 13 Section 3.8 Servicer's Fees 13 Section 3.9 Servicer's Expenses 13 Section 3.10 Custodian. 13 Section 3.11 Marketing Agent 14 Section 3.12 Termination of Upgrade Programs; Credits Related to Upgrade Programs 15 Section 3.13 Notices to Obligors 16

ARTICLE IV ACCOUNTS, COLLECTIONS AND APPLICATION OF FUNDS 16 Section 4.1 Bank Accounts 16 Section 4.2 Investment of Funds in Bank Accounts 18 Section 4.3 Deposits and Payments 19 Section 4.4 Reserve Account; Negative Carry Account; Acquisition Account 21 Section 4.5 Direction to Indenture Trustee for Distributions 22

ARTICLE V DEPOSITOR 23 Section 5.1 Depositor's Representations and Warranties 23 Section 5.2 Liability of Depositor 24 Section 5.3 Merger, Consolidation, Succession or Assignment 25 Section 5.4 Depositor May Own Notes 25 Section 5.5 Depositor's Authorized and Responsible Persons 25 Section 5.6 Company Existence 25 Section 5.7 No Division 25

ARTICLE VI SERVICER AND MARKETING AGENT 25 Section 6.1 Servicer's and Marketing Agent's Representations and Warranties 25 Section 6.2 Liability of Servicer and Marketing Agent 29 Section 6.3 Indemnities of Servicer and the Marketing Agent 29

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Section 6.4 Delegation and Contracting 31 Section 6.5 Servicer May Own Notes 31 Section 6.6 Annual Statement as to Compliance 31 Section 6.7 Assessment of Compliance and Accountants' Attestation 31

ARTICLE VII SERVICER RESIGNATION AND TERMINATION; SUCCESSOR SERVICER 32 Section 7.1 No Resignation 32 Section 7.2 Servicer Termination Events 33 Section 7.3 Continue to Perform 34 Section 7.4 Successor Servicer 35 Section 7.5 Transition of Servicing 36 Section 7.6 Merger, Consolidation, Succession or Assignment 37

ARTICLE VIII TERMINATION 37 Section 8.1 Optional Acquisition of Receivables; Clean-Up Redemption of Notes 37 Section 8.2 Optional Redemption of Notes 38 Section 8.3 Termination 39

ARTICLE IX OTHER AGREEMENTS 39 Section 9.1 Financing Statements 39 Section 9.2 No Transfer or Lien by Depositor 40 Section 9.3 Expenses 40 Section 9.4 Receivables Information 40 Section 9.5 No Petition 40 Section 9.6 Limited Recourse 40 Section 9.7 Limitation of Liability 41 Section 9.8 Tax Treatment of Notes 41 Section 9.9 Regulation RR Risk Retention 41 Section 9.10 Cap Collateral Account 41

ARTICLE X MISCELLANEOUS 42 Section 10.1 Amendments 42 Section 10.2 Assignment; Benefit of Agreement; Third-Party Beneficiary 44 Section 10.3 Notices 44 Section 10.4 Agent for Service 45 Section 10.5 GOVERNING LAW 45 Section 10.6 Submission to Jurisdiction 45 Section 10.7 WAIVER OF JURY TRIAL 46 Section 10.8 No Waiver; Remedies 46 Section 10.9 Severability 46 Section 10.10 Headings 46 Section 10.11 Counterparts 46 Section 10.12 Limitation of Rights of the Cap Counterparty 46 Section 10.13 Intent of the Parties; Reasonableness 46

ARTICLE XI ASSET REPRESENTATIONS REVIEW; DISPUTE RESOLUTION 47 Section 11.1 Asset Representations Review 47 Section 11.2 Dispute Resolution 47

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Schedule A Schedule of Initial Receivables SA-1 Schedule B Notice Addresses SB-1 Appendix A Usage and Definitions AA-1 Exhibit A Custodian's Security Requirements EA-1 Exhibit B Form of Annual Certification EB-1

Source: VERIZON ABS LLC, 8-K, 1/23/2020





TRANSFER AND SERVICING AGREEMENT, dated as of January 29, 2020 (this Agreement), among VERIZON OWNER TRUST 2020-A, a Delaware statutory trust, as issuer (the Issuer), VERIZON ABS LLC, a Delaware limited liability company, as depositor (the Depositor), and Cellco Partnership d/b/a Verizon Wireless, a Delaware general partnership (Cellco), as servicer (in such capacity, the Servicer), as marketing agent (in such capacity, the Marketing Agent) and as custodian (in such capacity, the Custodian).

BACKGROUND

In the normal course of their businesses, Cellco and the other Originators originate device payment plan agreements for various wireless devices. In addition, the Master Trust holds certain device payment plan agreements originated by Cellco and certain other Originators.

In connection with a securitization transaction sponsored by Cellco in which the Issuer will issue Notes secured by a pool of Receivables consisting of device payment plan agreements, certain of the Originators and/or the Master Trust have transferred a pool of Receivables and related property, and any of the Originators and/or the Master Trust may from time to time transfer additional pools of Receivables and related property to the Depositor, who will transfer them to the Issuer. The Issuer will engage the Servicer to service the Receivables.

The parties agree as follows:

ARTICLE I USAGE AND DEFINITIONS

Section 1.1 Usage and Definitions. Capitalized terms used but not defined in this Agreement are defined in Appendix A. Appendix A also contains usage rules that apply to this Agreement. Appendix A is incorporated by reference into this Agreement.

ARTICLE II TRANSFER AND ACQUISITION OF DEPOSITOR TRANSFERRED PROPERTY; REPRESENTATIONS AND WARRANTIES

Section 2.1 Transfers of Depositor Transferred Property.

(a) Transfer and Absolute Assignment of Initial Receivables. In consideration of the Issuer's delivery to the Depositor of the Notes, the Class A Certificate and the Class B Certificate, effective on the Closing Date, the Depositor transfers and absolutely assigns to the Issuer, without recourse (other than the Depositor's obligations under this Agreement), all of the Depositor's right, title and interest, whether now owned or later acquired, in the Initial Receivables and the other related Depositor Transferred Property. The Depositor certifies that the Credit Enhancement Test and the Pool Composition Tests are satisfied for the transfer and assignment of the Initial Receivables and the other related Depositor Transferred Property on the Closing Date.

(b) Transfers and Absolute Assignments of Additional Receivables. Subject to the satisfaction of the conditions in Section 2.1(d), effective on each Acquisition Date, in consideration of the Issuer's distribution to the Depositor of the (i) Additional Receivables Cash

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Transfer Amount for the Additional Receivables to be transferred to the Issuer on that Acquisition Date and (ii) an increase in the Class B Certificate Principal Balance in an amount equal to the excess, if any, of the Additional Receivables Transfer Amount over the Additional Receivables Cash Transfer Amount for such Additional Receivables, the Depositor will transfer and absolutely assign to the Issuer, without recourse (other than the Depositor's obligations under this Agreement), all of the Depositor's right, title and interest, whether then owned or later acquired, in the Additional Receivables and the other related Depositor Transferred Property.

(c) No Assumption of Obligations. These transfers and absolute assignments do not, and are not intended to, include any obligation of the Depositor or any Originator to the Obligors or any other Person relating to the Receivables and the other Depositor Transferred Property, and the Issuer does not assume any of these obligations.

(d) Conditions for Transfers of Additional Receivables. The transfer and assignment of the Additional Receivables and the other related Depositor Transferred Property on each Acquisition Date will be subject to the satisfaction of the following conditions on or before such Acquisition Date:

(i) Transfer Notice. At least two (2) Business Days before the applicable Acquisition Date, the Administrator shall deliver to the Issuer and the Indenture Trustee a Transfer Notice for the Additional Receivables to be transferred and absolutely assigned on that Acquisition Date, which will specify the Additional Receivables Transfer Amount and attach or include therewith the Schedule of Receivables;

(ii) Satisfaction of Tests. After giving effect to the transfer and assignment of the Additional Receivables by the Depositor to the Issuer, (A) the Credit Enhancement Test is satisfied and (B) the Receivables, in the aggregate, owned by the Issuer, excluding any Temporarily Excluded Receivables, satisfy each of the Pool Composition Tests under Section 3.5(b); and

(iii) Depositor's Certifications. The Depositor certifies that:

(A) as of such Acquisition Date, (1) the Depositor is Solvent and will not become insolvent as a result of the transfer and assignment of the Additional Receivables on the Acquisition Date, (2) the Depositor does not intend to incur or believe that it would incur debts that would be beyond the Depositor's ability to pay as they matured and (3) the transfer and assignment of the Additional Receivables is not made by the Depositor with actual intent to hinder, delay or defraud any Person;

(B) each of the representations and warranties made by the Depositor under Sections 2.4(a) and 2.4(b), in each case, solely with respect to the related Additional Receivables, will be true and correct as of the Acquisition Date; and

(C) all conditions to the transfer and assignment of the related Additional Receivables by the Originators to the Depositor under

2

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Section 2.1(d) of the Originator Receivables Transfer Agreement and by the Master Trust to the Depositor under Section 2.1(d) of the Master Trust Receivables Transfer Agreement, as applicable, have been satisfied.

The delivery by the Administrator, on behalf of the Depositor, of the Transfer Notice will be considered a certification by the Depositor that the conditions set forth in this Section 2.1(d) have been satisfied or will be satisfied on the Acquisition Date.

Section 2.2 Acknowledgement of Further Assignments. The Depositor acknowledges that, under the Indenture, the Issuer will assign and pledge the Depositor Transferred Property and related property and rights to the Indenture Trustee for the benefit of the Secured Parties.

Section 2.3 Savings Clause. The Depositor and the Issuer intend that each transfer and assignment under this Agreement be an absolute transfer and assignment of the Depositor Transferred Property, conveying good title to the Depositor Transferred Property free and clear of any Lien, other than Permitted Liens, from the Depositor to the Issuer. The Depositor and the Issuer intend that the Depositor Transferred Property not be a part of the Depositor's estate if there is a bankruptcy or insolvency of the Depositor. If, despite the intent of the Depositor and the Issuer, a transfer and assignment of Depositor Transferred Property under this Agreement is determined to be a pledge for a financing or is determined not to be an absolute transfer and assignment, the Depositor Grants to the Issuer a security interest in the Depositor's right, title and interest in the Depositor Transferred Property to secure a loan in an amount equal to all amounts payable by the Depositor under this Agreement, all amounts payable as principal of or interest on the Notes, all amounts payable as Servicing Fees under this Agreement and all other amounts payable by the Issuer under the Transaction Documents. In that case, this Agreement will be a security agreement under Law and the Issuer will have the rights and remedies of a secured party and creditor under the UCC.

Section 2.4 Representations and Warranties About Depositor Transferred Property.

(a) Representations and Warranties About Pool of Receivables. The Depositor makes the following representations and warranties about the pool of Receivables on which the Issuer is relying in acquiring the Depositor Transferred Property. The representations and warranties are made as of the Closing Date (for the Initial Receivables) and as of each Acquisition Date (for the related Additional Receivables) and will survive the transfer and absolute assignment of the Depositor Transferred Property by the Depositor to the Issuer under this Agreement and the pledge of the Depositor Transferred Property by the Issuer to the Indenture Trustee under the Indenture.

(i) Valid Transfer and Assignment. This Agreement evidences a valid transfer and absolute assignment of the Depositor Transferred Property from the Depositor to the Issuer, enforceable against creditors of, purchasers from and transferees and absolute assignees of the Depositor.

(ii) Good Title to Depositor Transferred Property. Immediately before the transfer and absolute assignment under this Agreement, the Depositor has good title to

3

Source: VERIZON ABS LLC, 8-K, 1/23/2020





the Depositor Transferred Property free and clear of any Lien, other than Permitted Liens, and, immediately after the transfer and absolute assignment under this Agreement, the Issuer will have good title to the Depositor Transferred Property, free and clear of any Lien, other than Permitted Liens.

(iii) Security Interest in Depositor Transferred Property.

(A) This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Depositor Transferred Property in favor of the Issuer, which is prior to any Lien, other than Permitted Liens, and is enforceable against all creditors of, purchasers from and transferees and absolute assignees of the Depositor.

(B) All filings (including UCC filings) necessary in any jurisdiction to give the Depositor a first priority, validly perfected ownership and security interest in the Originator Transferred Property and the Master Trust Transferred Property, to give the Issuer a first priority, validly perfected ownership and security interest in the Depositor Transferred Property and to give the Indenture Trustee a first priority perfected security interest in the Collateral, will be made within ten (10) days after the Closing Date or the related Acquisition Date, as applicable.

(C) All financing statements filed or to be filed against the Depositor in favor of the Issuer describing the Depositor Transferred Property transferred under this Agreement will contain a statement to the following effect: A purchase, absolute assignment or transfer of or security interest in any collateral described in this financing statement will violate the rights of the Secured Party/Assignee.

(D) The Depositor has not authorized the filing of and is not aware of any financing statements against the Depositor that include a description of collateral covering any Depositor Transferred Property other than the financing statements relating to the security interest Granted to the Depositor under the Receivables Transfer Agreements, by the Depositor to the Issuer under this Agreement or by the Issuer to the Indenture Trustee under the Indenture, or that has been terminated.

(b) Representations and Warranties About Security Interest. If the transfer and absolute assignment of the Depositor Transferred Property under this Agreement is determined to be a pledge relating to a financing or is determined not to be a transfer and absolute assignment, the Depositor makes the following representations and warranties on which the Issuer is relying in acquiring the Depositor Transferred Property, which representations and warranties are made as of the Closing Date or as of the related Acquisition Date, as applicable,

4

Source: VERIZON ABS LLC, 8-K, 1/23/2020





will survive termination of this Agreement and may not be waived by the Issuer or the Indenture Trustee:

(i) Valid Security Interest. This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Depositor Transferred Property in favor of the Issuer, which is prior to all other Liens, other than Permitted Liens, and is enforceable against creditors of, purchasers from and transferees and absolute assignees of the Depositor.

(ii) Type. Each Receivable is (A) if the Receivable is not secured by the related Device, an account or payment intangible, or (B) if the Receivable is secured by the related Device, chattel paper, in each case, within the meaning of the applicable UCC.

(iii) Good Title. Immediately before the transfer and absolute assignment under this Agreement, the Depositor owns and has good title to the Depositor Transferred Property free and clear of all Liens, other than Permitted Liens. The Depositor has received all consents and approvals required by the terms of the Depositor Transferred Property to Grant to the Issuer its right, title and interest in the Depositor Transferred Property, except to the extent the requirement for consent or approval is extinguished under the applicable UCC.

(iv) Filing Financing Statements. The Depositor has caused, or will cause within ten (10) days after the Closing Date, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable Law to perfect the security interest Granted in the Depositor Transferred Property to the Issuer under this Agreement. All financing statements filed or to be filed against the Depositor in favor of the Issuer under this Agreement describing the Depositor Transferred Property will contain a statement to the following effect: A purchase, absolute assignment or transfer of or grant of a security interest in any collateral described in this financing statement will violate the rights of the Secured Parties.

(v) No Other Transfer, Grant or Financing Statement. Other than the security interest Granted to the Issuer under this Agreement, the Depositor has not transferred or Granted a security interest in any of the Depositor Transferred Property. The Depositor has not authorized the filing of and is not aware of any financing statements against the Depositor that include a description of collateral covering any of the Depositor Transferred Property, other than financing statements relating to the security interest Granted to the Issuer. The Depositor is not aware of any judgment or tax Lien filings against it.

Section 2.5 Originators' Reacquisition and Servicer's Acquisition of Receivables for Breach of Representations.

(a) Representations and Warranties from Receivables Transfer Agreements. Each Originator and the Servicer, severally has made, as of the Closing Date, and each Originator or the Servicer, as applicable, severally will make, as of each Acquisition Date, the Eligibility

5

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Representation about the Receivables transferred and absolutely assigned by such Originator or the Master Trust, respectively, on that date, and has consented to the transfer by the Depositor to the Issuer of the Depositor's rights to such Eligibility Representation. The Issuer is relying on each applicable Originator's or the Servicer's Eligibility Representation in acquiring the Receivables, which Eligibility Representation will survive the transfer and absolute assignment of the Receivables by the Depositor to the Issuer under this Agreement and the pledge of the Receivables to the Indenture Trustee under the Indenture.

(b) Reacquisition or Acquisition. Under Section 2.1(a), the Depositor has transferred and absolutely assigned to the Issuer the Depositor's rights under the Receivables Transfer Agreements, including the right to require (i) an Originator to reacquire any Receivables transferred and absolutely assigned by it under the Originator Receivables Transfer Agreement or (ii) the Servicer to acquire any Receivable transferred and absolutely assigned by the Master Trust under the Master Trust Receivables Transfer Agreement, in each case, for which such party has made the Eligibility Representation if, in each case, there is a breach of such Eligibility Representation, such breach is not cured and such breach results in a material adverse effect on the Issuer. If any Originator or the Servicer breaches the Eligibility Representation made by it with respect to any Receivable transferred by such Originator or the Master Trust, respectively, to the Depositor, such breach is not cured and such breach has a material adverse effect on the Issuer, then the Depositor will enforce such Originator's or the Servicer's obligation, as applicable, to reacquire or acquire, respectively, any such Receivable transferred and absolutely assigned by it to the Depositor for which the Eligibility Representation was breached pursuant to Section 3.4 of the applicable Receivables Transfer Agreement.

(c) Reacquisition or Acquisition Sole Remedy. The sole remedy of the Depositor, the Issuer or the Indenture Trustee for a breach of any Eligibility Representation is to require the related Originator or the Servicer, as applicable, to reacquire or acquire, respectively, the Receivable under Section 3.4 of the applicable Receivables Transfer Agreement.

Section 2.6 Originators' Reacquisition or Servicer's Acquisition of Bankruptcy Surrendered Receivables.

(a) Reacquisition or Acquisition. Under Section 2.1(a), the Depositor has transferred and absolutely assigned to the Issuer the Depositor's rights under the Receivables Transfer Agreements, including the right to require (i) an Originator to reacquire any Receivables transferred and absolutely assigned by it under the Originator Receivables Transfer Agreement or (ii) the Servicer to acquire any Receivable transferred and absolutely assigned by the Master Trust under the Master Trust Receivables Transfer Agreement, in each case, when such Receivable becomes a Bankruptcy Surrendered Receivable. If any Receivable becomes a Bankruptcy Surrendered Receivable, the Depositor will enforce such Originator's or the Servicer's obligation, as applicable, to reacquire or acquire, respectively, any such Receivable transferred and absolutely assigned by it to the Depositor pursuant to Section 4.6 or 4.7, respectively, of the applicable Receivables Transfer Agreement.

(b) Reacquisition or Acquisition Sole Remedy. If a Receivable becomes a Bankruptcy Surrendered Receivable, the sole remedy of the Depositor, the Issuer or the Indenture Trustee is to require the related Originator or the Servicer, as applicable, to reacquire

6

Source: VERIZON ABS LLC, 8-K, 1/23/2020





or acquire, respectively, the Bankruptcy Surrendered Receivable under Section 4.6 or 4.7, respectively, of the applicable Receivables Transfer Agreement.

ARTICLE III SERVICING OF RECEIVABLES

Section 3.1 Engagement. The Issuer engages Cellco as the Servicer of the Receivables for the Issuer and the Indenture Trustee, and Cellco accepts this engagement.

Section 3.2 Servicing of Receivables.

(a) General Servicing Obligations. The Servicer will manage, service, administer and collect on the Receivables with reasonable care using that degree of skill and attention that the Servicer exercises for all comparable device payment plan agreement receivables that it services for itself or others according to the Servicing Procedures. Without limiting the generality of the foregoing, the Servicer's obligations will include:

(i) collecting and applying all payments made on, or credits applied to, the Receivables and any other amounts received related to the Depositor Transferred Property;

(ii) investigating delinquencies;

(iii) sending invoices and notices and responding to inquiries of Obligors;

(iv) processing requests for extensions, modifications and adjustments;

(v) administering payoffs, prepayments, defaults and delinquencies;

(vi) maintaining accurate and complete accounts and receivables systems for servicing the Receivables;

(vii) providing to the Custodian copies, or access to, any documents that modify or supplement information in the Receivable Files; and

(viii) preparing and providing Monthly Investor Reports and any other periodic reports required to be prepared by the Servicer under this Agreement or any other Transaction Document.

(b) Collection of Payments; Extensions and Amendments. The Servicer shall take, or cause to be taken, all actions necessary or advisable to collect each Receivable in accordance with this Agreement and the Servicing Procedures using commercially reasonable care and diligence and in any event, with no less care or diligence than the Servicer exercises in collecting other similar receivables or obligations owed to it and its Affiliates. All payments remitted by an Obligor to the Servicer in respect of a Receivable, any release of a security deposit, and any application of a Credit granted to a customer by Verizon Wireless (other than applications of payments and credits granted to an Obligor under a Receivable in respect of cancellations, prepayments, invoicing errors or in connection with an Upgrade Offer as described under Section

7

Source: VERIZON ABS LLC, 8-K, 1/23/2020





3.12(b)) will be applied to the related account by the Servicer based on invoice aging, so that such amounts are applied to the oldest invoiced balances first, then the second oldest invoiced balances, etc., and finally to current billing amounts, in each case, in the order described below:

• late fees;

• service and all other charges, including, but not limited to, insurance premium payments and purchases (including accessories) billed to the account, other than amounts due under any device payment plan agreement, including any Receivable; and

• any amounts related to any device payment plan agreements, including Receivables, which, in the case of multiple device payment plan agreements related to a single account, will be applied in the order in which such device payment plan agreements were originated with the most recent device payment plan agreement being paid last.

Notwithstanding anything to the contrary in any other Transaction Document, the process for application of payments remitted by an Obligor to the Servicer in respect of a Receivable, releases of security deposits, and applications of Credits granted to an Obligor under a Receivable by Verizon Wireless (other than those credits granted to an Obligor in respect of an Upgrade Offer as described under Section 3.12(b)) described in the bullet points above may be changed at any time in the sole discretion of the Servicer, as long as any change in such application of any such amounts applicable to the Receivables (i) is also applicable to any device payment plan agreements that the Servicer services for itself and others and (ii) so long as Cellco is the Servicer, does not have a material adverse effect on the Noteholders. In addition, the Servicer may waive late payment charges or other fees that may be collected in the ordinary course of servicing a Receivable. The Servicer may grant extensions, refunds, rebates or adjustments on any Receivable or amend any Receivable according to the Servicing Procedures. However, if the Servicer (i) grants payment extensions resulting in the final payment date of the Receivable being later than the Collection Period immediately preceding the Final Maturity Date for the latest maturing Class of Notes, (ii) cancels a Receivable or reduces or waives (including with respect to any Upgrade Offer) the remaining Principal Balance under a Receivable or any portion thereof and/or as a result, the monthly payments due thereunder, or (iii) modifies, supplements, amends or revises a Receivable to grant the Obligor under such Receivable a contractual right to upgrade the related Device, it will acquire the affected Receivable solely as described under Section 3.3, unless it is required to take the action by Law. In addition, if the Marketing Agent or the Servicer (x) applies a payment or grants a credit to an Obligor with respect to cancellations, prepayments or invoicing errors the Servicer may apply such credits either directly to the applicable device payment plan agreement or in accordance with its customary payment application procedures set forth above and (y) applies a payment or grants a credit to an Obligor under a Receivable in connection with an Upgrade Offer as set forth in Section 3.12(b), the Servicer will apply such credits directly to the applicable device payment plan agreement and will not apply such credits in accordance with its customary payment application procedures set forth above.

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





(c) Maintenance of Security Interests in the Receivables. The Servicer will maintain perfection of the security interest of the Issuer and the Indenture Trustee in each Receivable.

(d) No Impairment. The Servicer will not impair in any material respect the rights of the Issuer or the Noteholders in any Receivable except as permitted by this Agreement.

(e) Assignment for Enforcement. Effective as of the related Cutoff Date, the Receivables are assigned to the Servicer solely for the purpose of permitting the Servicer to perform its servicing and administrative obligations under this Agreement, including the start or pursuit of or participation in a legal proceeding to enforce its rights or remedies with respect to a Receivable or such other Proceeding otherwise related to a Receivable. If in a legal proceeding it is held that the Servicer may not enforce its rights or remedies with respect to a Receivable on the grounds that it is not a real party in interest or a holder entitled to enforce rights or remedies with respect to the Receivable, the Issuer will, at the Servicer's expense and direction, assign the Receivable to the Servicer solely for that purpose or take steps to enforce its rights and remedies with respect to the Receivable, including bringing suit in the names of the Indenture Trustee, the Noteholders and the Issuer.

(f) Powers of Attorney. The Issuer appoints the Servicer as the Issuer's attorney-in-fact, with full power of substitution to exercise all rights of the Issuer for the servicing and administration of the Receivables. This power of attorney, and all authority given, under this Section 3.2(f) is revocable and is given solely to facilitate the performance of the Servicer's obligations under this Agreement and may only be used by the Servicer consistent with this Agreement. On request of the Servicer, the Issuer will furnish the Servicer with written powers of attorney and other documents to enable the Servicer to perform its obligations under this Agreement.

(g) Release Documents. The Servicer is authorized to execute and deliver, on behalf of itself, the Issuer, the Indenture Trustee and the Noteholders any documents of satisfaction, cancellation, partial or full release or discharge, and other comparable documents, for the Receivables.

(h) Enforcement of Receivables Under an Upgrade Offer. If an Obligor accepts an Upgrade Offer with respect to a Receivable but fails to satisfy the required terms and conditions related to such Upgrade Offer, the Servicer agrees to (i) not waive any amounts due by such Obligor under the related Receivable and pursue its Servicing Procedures against such Obligor in respect of the related Receivable until all amounts due under the related Receivable are received and (ii) enforce, on behalf of the Issuer, any rights and obligations under the related Receivable.

Section 3.3 Servicer's Acquisition of Receivables.

(a) Acquisition for Servicer Modifications. If extensions, modifications, amendments, cancellations or waivers of Receivables or any terms thereof are made that would require such Receivables to be acquired under Section 3.2(b), the Servicer will acquire all such Receivables as set forth in Section 3.3(d).

(b) Acquisition for Breach of Servicer's Obligations. If a Responsible Person of the Servicer receives written notice from the Depositor, the Issuer, the Owner Trustee or the

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





Indenture Trustee of a breach of the Servicer's obligations in Section 3.2(c) or (d), and the Servicer fails to correct such failure or impairment in all material respects by the end of the second month following the month in which the Servicer received such written notice, the Servicer will acquire all Receivables with respect to which such breach was not so cured as set forth in Section 3.3(d).

(c) Acquisition for System Limitation or Inability to Service. If the Servicer, in its sole discretion, determines that as a result of a receivables systems error or receivables systems limitation or for any other reason the Servicer is unable to service a Receivable according to the Servicing Procedures and the terms of this Agreement, the Servicer may acquire the relevant Receivable as set forth in Section 3.3(d).

(d) Acquisition of Receivables; Payment of Acquisition Amount. For any acquisition of a Receivable by the Servicer under this Section 3.3, the Servicer will acquire the Receivable by remitting the related Acquisition Amount on or prior to the second Business Day before the Payment Date related to the Collection Period in which such Receivable was acquired by the Servicer. If Cellco is the Servicer, it may pay any Acquisition Amounts according to Section 4.3(c).

(e) Transfer and Assignment of Acquired Receivables. When the Servicer's payment of the Acquisition Amount for a Receivable is included in Available Funds for a Payment Date, the Issuer will be deemed to have transferred and assigned to the Servicer, effective as of the last day of the Collection Period immediately preceding the related Collection Period, all of the Issuer's right, title and interest in the Receivable and all security and documents relating to the Receivable. The transfer and assignment will not require any action by the Issuer or the Indenture Trustee and will be without recourse, representation or warranty by the Issuer except the representation that the Issuer owns the Receivable free and clear of any Lien, other than Permitted Liens. After the transfer and assignment, the Servicer will mark its receivables systems to indicate that the receivable is no longer a Receivable and may take any action necessary or advisable to transfer the Receivable free from any Lien of the Issuer or the Indenture Trustee.

(f) No Obligation to Investigate. None of the Issuer, the Owner Trustee, the Indenture Trustee (including in its capacity as Successor Servicer hereunder), the Sponsor, the Marketing Agent, the Depositor, the Parent Support Provider, the Administrator or the Servicer will be obligated to investigate whether a breach or other event has occurred that would require the acquisition of any Receivable under this Section 3.3 or whether any Receivables are otherwise required to be acquired under this Section 3.3.

(g) Acquisition is Sole Remedy. The sole remedy of the Issuer, the Indenture Trustee, the Owner Trustee, and the Secured Parties for any extension, modification, amendment, cancellation or waiver of a Receivable or any terms thereof under Section 3.2(b) or a breach of the covenants made by the Servicer in Section 3.2(c) or (d) is the Servicer's acquisition of the Receivables, as described under this Section 3.3.

Section 3.4 Sale of Written-Off Receivables. The Servicer may sell to any third party a Receivable that has been written off. Proceeds of any sale allocable to the Written-Off

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Receivable will be Recoveries. Any Recoveries will be paid to the Servicer as Supplemental Servicing Fees and will not be a part of Available Funds. If the Servicer elects to sell a Written-Off Receivable, the Receivable will be deemed to have been transferred and assigned by the Issuer to the Servicer immediately before the sale by the Servicer. After the sale, the Servicer will mark its receivables systems to indicate that the Written-Off Receivable sold is no longer a Receivable and may take any action necessary or advisable to transfer the receivable free from any Lien of the Issuer or the Indenture Trustee.

Section 3.5 Servicer Reports and Compliance Statements.

(a) Monthly Investor Report.

(i) On or about the 15th day of each month, and in no case later than at least two (2) Business Days before each Payment Date, the Servicer will deliver to the Depositor, the Indenture Trustee, the Owner Trustee, the Note Paying Agent, the Cap Counterparty, the Rating Agencies and the Administrator a servicing report (the Monthly Investor Report) for that Payment Date and the related Collection Period. The Monthly Investor Report will include (i) an Acquisition Date Supplement if the Collection Period includes an Acquisition Date and (ii) a statement as to whether or not a Delinquency Trigger has occurred in respect of the related Collection Period, together with reasonably detailed calculations thereof. A Responsible Person of the Servicer will certify that the information in the Monthly Investor Report is accurate in all material respects. The Monthly Investor Report will also be posted on the Indenture Trustee's password protected website located at https://pivot.usbank.com.

(ii) The Sponsor, in its capacity as Servicer, will include information about the pool of Initial Receivables and the disclosure required by Section 246.4(c)(1)(ii) of the U.S. Credit Risk Retention Rules in the Monthly Investor Report for the first Payment Date, which Monthly Investor Report will also be included in the Distribution Report on Form 10-D filed with the Commission for the related Collection Period.

(iii) The Sponsor, in its capacity as Servicer, will include in the Monthly Investor Report notice of the occurrence of (i) any Benchmark Transition Event and its related Benchmark Replacement Date, (ii) the determination of any Benchmark Replacement, and (iii) the making of any Benchmark Replacement Conforming Changes.

(b) Credit Enhancement and Pool Composition Tests. On or before each Payment Date and each Acquisition Date, the Servicer will determine whether the pool of Receivables to be held by the Issuer as of the related Cutoff Date, including any Additional Receivables to be acquired, satisfies the Credit Enhancement Test and each Pool Composition Test. If the pool of Receivables does not satisfy all of the Pool Composition Tests, the Administrator may identify Receivables in the pool as Temporarily Excluded Receivables so that the remaining Receivables in the pool will satisfy all of the Pool Composition Tests; provided, that the Administrator may only deem Receivables to be Temporarily Excluded Receivables if the Overcollateralization Target Amount is reached as of the close of business on such date of determination, without taking into account the Temporarily Excluded Receivables. In addition, the Principal Balance of any Temporarily Excluded Receivables will be subtracted from the Adjusted Pool Balance for

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purposes of calculating the Credit Enhancement Test. The Servicer will state on the Acquisition Date Supplement for each Collection Period for which there is an Acquisition Date the aggregate Principal Balance of the Receivables deemed Temporarily Excluded Receivables. For the avoidance of doubt, Collections on Temporarily Excluded Receivables (solely during the time that they are Temporarily Excluded Receivables) will not constitute Available Funds and, up to the amount of the Temporarily Excluded Receivables Servicing Fee will be distributed to the Servicer, and any remaining amounts will be deposited into the Certificate Distribution Account for distribution to the Certificateholders in the priority set forth in Section 4.1(b) of the Trust Agreement. The Administrator may, at its sole option, designate Receivables that were deemed Temporarily Excluded Receivables on any prior date to no longer be deemed Temporarily Excluded Receivables as long as after such designation by the Administrator, all of the Pool Composition Tests either will remain satisfied or will not be adversely affected.

(c) Amortization Events. In connection with the preparation of each Monthly Investor Report, the Servicer will review the Amortization Events and determine whether an Amortization Event occurred during the Collection Period immediately preceding the related Collection Period (after giving effect to any acquisition of Additional Receivables during such Collection Period), and the Monthly Investor Report shall indicate whether or not an Amortization Event has occurred.

(d) Remittance Reports. For as long as the Servicer and the Marketing Agent are depositing Collections pursuant to Section 4.3(b)(ii) and depositing any required Upgrade Payments within two (2) Business Days after the identification that all of the terms and conditions related to such Upgrade Offer have been satisfied by the related Obligor, the Servicer will provide a written report (which may be electronically submitted) to the Indenture Trustee and the Note Paying Agent on each such deposit or remittance date setting forth (x) the aggregate dollar amount deposited or remitted into the Collection Account by the Servicer, the Marketing Agent or an Originator on such date, (y) the aggregate dollar amount of Collections deposited by the Servicer on such date and (z) the aggregate number of Upgrade Offers accepted since the deposit or remittance date immediately preceding the related deposit or remittance date, and the aggregate amount of Upgrade Payments remitted by the Marketing Agent or an Originator on such date.

Section 3.6 Review of Servicer's Records. The Servicer will maintain records and documents relating to its performance under this Agreement according to its customary business practices. Upon reasonable request not more than once during any calendar year, and with reasonable notice, the Servicer will give the Issuer, the Depositor, the Parent Support Provider, the Administrator, the Owner Trustee and the Indenture Trustee (or their representatives) access to the records and documents to conduct a review of the Servicer's performance under this Agreement. Any access or review will be conducted by all parties at the same time at the Servicer's offices during its normal business hours at a time reasonably convenient to the Servicer and in a manner that will minimize disruption to its business operations. Any access or review will be subject to the Servicer's security, confidentiality and privacy policies and any regulatory, legal and data protection policies. Notwithstanding the foregoing, the permissive right of the Indenture Trustee to access or review any records of the Servicer shall not be deemed to be an obligation of the Indenture Trustee to do so.

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Section 3.7 Servicer's Authorized and Responsible Persons. On or before the Closing Date, the Servicer will notify the Indenture Trustee and the Owner Trustee and provide a specimen signature of each Person who (a) is authorized to give instructions and directions to the Indenture Trustee and the Owner Trustee on behalf of the Servicer and (b) is a Responsible Person for the Servicer. The Servicer may change such Persons at any time by notifying the Indenture Trustee and the Owner Trustee.

Section 3.8 Servicer's Fees. As compensation for performing its obligations under this Agreement, the Servicer will be paid the Servicing Fee. On each Payment Date, the Issuer will pay the Servicing Fee to the Servicer according to Section 8.2 of the Indenture. In addition, the Servicer may retain any Supplemental Servicing Fees. The Servicer will also receive the Temporarily Excluded Receivables Servicing Fee on each Payment Date, which will be payable solely from Collections on the Temporarily Excluded Receivables, as set forth in Section 3.5(b).

Section 3.9 Servicer's Expenses. Except as otherwise stated in this Agreement, the Servicer will pay all its expenses for servicing the Receivables under this Agreement, including fees and expenses of legal counsel and independent accountants, taxes imposed on the Servicer and expenses to prepare reports, certificates or notices under this Agreement.

Section 3.10 Custodian.

(a) Appointment of Custodian. To reduce administrative costs and facilitate the servicing of the Receivables by the Servicer, the Issuer appoints Cellco, in its capacity as the Servicer, to act as the Custodian of the Receivables for the Issuer and the Indenture Trustee (for the benefit of the Secured Parties), as their interests may appear. Cellco accepts the appointment and agrees to perform the custodial obligations in this Section 3.10.

(b) Custody of Receivable Files. The Custodian will hold and maintain in custody the following documents for each Receivable (the Receivable File) for the benefit of the Issuer and the Indenture Trustee, using reasonable care and according to the Servicing Procedures:

(i) the original Receivable (or an imaged copy of such Receivable) or an authoritative copy of the Receivable, if in electronic form; and

(ii) all other documents, notices and correspondence relating to the Receivable or the Obligor that the Servicer generates in the course of servicing the Receivable.

Except as stated above, any document in a Receivable File may be a photocopy or in electronic format or may be converted to electronic format at any time. The Custodian will hold and maintain the Receivable Files, including any receivables systems on which the Receivable Files are electronically stored, in a manner that will permit the Servicer and the Issuer to comply with this Agreement and the Indenture Trustee to comply with the Indenture.

(c) Delivery of Receivable Files. The Receivable Files are or will be constructively delivered to the Indenture Trustee, as pledgee of the Issuer under the Indenture, and the Custodian confirms to the Issuer and the Indenture Trustee that it has received the Receivable Files for the Initial Receivables and, by its delivery (in its capacity as Servicer) to the Issuer and the Indenture Trustee of an Acquisition Date Supplement, will be deemed to confirm to the

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Issuer and the Indenture Trustee that it has received the Receivable Files for the Additional Receivables. No initial review or any periodic review of the Receivable Files by the Issuer, the Owner Trustee or the Indenture Trustee is required.

(d) Location of Receivable Files. The Custodian will maintain the Receivable Files (or access to any Receivable Files stored in an electronic format) at one of its offices or the offices of one of its custodians in the United States. On request of the Depositor, the Issuer and the Indenture Trustee, the Custodian will provide a list of locations of the Receivable Files.

(e) Access to Receivable Files. The Custodian will give the Servicer access to the Receivable Files and, on request of the Servicer, the Custodian will promptly release any document in the Receivable Files to the Servicer for purposes of servicing the Receivables. The Custodian will give the Depositor, the Issuer and the Indenture Trustee access to the Receivable Files and the receivables systems to conduct a review of the Receivables. Any access or review will be conducted at the Custodian's offices during normal business hours at a time reasonably convenient to the Custodian in a manner that will minimize disruption of its business operations. Any access or review will be subject to the Custodian's legal, regulatory, confidentiality, privacy and data protection policies. Attached hereto as Exhibit A is a copy of the Custodian's security requirements in effect on the date of this Agreement.

(f) Effective Period and Termination. Cellco's appointment as custodian is effective as of the Initial Cutoff Date and will continue until the later of (i) the date on which all obligations of the Issuer have been paid in full and (ii) the date on which such appointment is terminated under this Section 3.10(f). If the Servicer resigns under Section 7.1 or is terminated under Section 7.2, the Servicer's appointment as custodian under this Agreement may be terminated in the same manner as the Servicer may be terminated under Section 7.2. As soon as practicable after any termination of its appointment as custodian and subject to the legal, regulatory, confidentiality, privacy and data protection policies of the Custodian and Cellco, the Custodian will deliver the Receivable Files to the Indenture Trustee or its designee or successor custodian at a place designated by the Indenture Trustee. All reasonable expenses of transferring the Receivable Files to the designee or successor custodian will be paid by the terminated custodian on receipt of an invoice in reasonable detail.

(g) No Agency. Neither the Custodian nor the Servicer shall be deemed to be an agent of the Indenture Trustee, and the Indenture Trustee shall have no liability for the acts or omissions of the Custodian or the Servicer.

Section 3.11 Marketing Agent.

(a) Appointment of Marketing Agent. The Issuer and the Servicer appoint Cellco to act as Marketing Agent for the Receivables. Cellco accepts the appointment and agrees to perform its obligations set forth in this Agreement.

(b) Duties of the Marketing Agent. The Marketing Agent will be required to remit, or to cause the related Originator to remit, to the Collection Account the amounts set forth in Sections 4.3(g), (h) and (i).

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(c) Fees and Expenses of the Marketing Agent. Fees and expenses, if any, of the Marketing Agent will be paid by the Originators, as separately agreed to under the Marketing Agent Agency Agreement.

(d) Covenants of the Marketing Agent. The Marketing Agent will not (i) make any Upgrade Offers that waive any obligations of an Obligor under the related device payment plan agreement, (ii) eliminate the obligation of Verizon Wireless to pay off a device payment plan agreement if an Obligor satisfies the related terms and conditions thereof, or (iii) eliminate or impair any third party beneficiary rights of an assignee under an Upgrade Offer, including the right of such assignee to enforce Verizon Wireless' payment obligation under any Upgrade Offer.

Section 3.12 Termination of Upgrade Programs; Credits Related to Upgrade Programs.

(a) To the extent any Upgrade Offer has not been terminated and an Obligor satisfies all of the terms and conditions of such Upgrade Offer in respect of a Receivable, and (i) the Marketing Agent fails to make, or to cause the related Originator to make, the required Upgrade Payment into the Collection Account as set forth in Section 4.3(g) and (ii) the Parent Support Provider fails to make any required Upgrade Payments as set forth in Section 1 of the Parent Support Agreement, the Servicer and the Marketing Agent shall terminate all Upgrade Offers within ten (10) Business Days after the date the Parent Support Provider received notice from the Indenture Trustee that an Upgrade Payment was due under Section 1 of the Parent Support Agreement.

(b) If the Marketing Agent, the relevant Originator and the Parent Support Provider fail to make such Upgrade Payments with respect to an Upgrade Offer, (i) the Servicer shall deliver the notice to Obligors pursuant to Section 3.13 with respect to such Obligors' recoupment rights against Verizon Wireless, and (ii) notwithstanding any failure to deliver such notice, (x) if Cellco is still the Servicer, the Servicer shall give a monthly credit to the Obligor against amounts owing with respect to the new device payment plan agreement resulting from the Upgrade Offer, in an amount equal to the amount due that month under the original device payment plan agreement that is a Receivable, or (y) if Cellco is no longer the Servicer, Cellco, (1) if required, shall give such monthly credit to the Obligor only if Cellco has received notice from the Servicer that the Obligor has paid the amount due in the prior month under the original device payment plan agreement that is a Receivable, and (2) shall cooperate with any Successor Servicer to properly bill and credit such Obligor's account with respect to the Receivable and the new device payment plan agreement related to the Upgrade Offer. Any such monthly credit granted to an Obligor shall be applied directly against the monthly payment due on the new device payment plan agreement and will not be applied in accordance with the Servicer's customary payment application procedures pursuant to its Servicing Procedures, if different. For the avoidance of doubt, if during such time as Cellco is no longer the Servicer, an Obligor remits the full amount due under the related new device payment plan agreement, but does not make a payment to the new Servicer for the original device payment plan agreement, a portion of such amount equal to the amount of the monthly credit granted to such Obligor resulting from the Upgrade Offer in respect of the original device payment plan agreement that is a Receivable shall be paid by Cellco to the new Servicer. In such case, to the extent that all other amounts owed on the related account are current, the Servicer will not consider such account or payments

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under the new device payment plan agreement to be Delinquent. In addition, regardless of whether Cellco continues to be the Servicer of any Receivable for which the terms and conditions of an Upgrade Offer (other than the requirement that the Marketing Agent remit, or cause the related Originator to remit, an Upgrade Payment for such Receivable) were satisfied by the related Obligor and for which the Marketing Agent, the related Originator and the Parent Support Provider failed to make the related Upgrade Payment, Cellco shall remit any Collections received on such Receivable to the Collection Account in the time period in which it would have been otherwise obligated to do so.

Section 3.13 Notices to Obligors.

Within ten (10) days following the earlier to occur of (i) a ratings downgrade by each of the Rating Agencies of Verizon to below investment grade, or (ii) a Servicer Termination Event, the Servicer will send a notice to all Obligors indicating (a) that their Receivables have been assigned to the Issuer, and (b)(x) if Cellco has not been removed as Servicer, that the Obligors shall continue to make their payments as they had previously, or (y) if Cellco has been removed as Servicer, the name of the Successor Servicer and any new instructions with respect to their payments. In addition, if the Servicer Termination Event was as a result of the failure of the Marketing Agent to satisfy its obligation to make, or to cause the related Originators to make, required Upgrade Payments pursuant to Section 7.2(a)(i)(y), then Cellco shall also send a notice to (i) all Obligors who have a continuing right to an upgrade, indicating that Cellco has recently failed to make the necessary prepayments with respect to one or more of its customers in connection with an Upgrade Offer, and that if any Obligor chooses to upgrade and Cellco fails to make the related Upgrade Payment with respect to them, such Obligor will still be required to make payments on his or her original device payment plan agreement, but that such Obligor will have a corresponding recoupment right against his or her new device payment plan agreement with Verizon Wireless, and (ii) all Obligors who had initiated upgrades under an Upgrade Offer, indicating that Cellco had failed to make the relevant Upgrade Payment, and stating that such Obligors will continue to have an obligation to make payments on their original device payment plan agreements, but will have a corresponding right of recoupment against their new device payment plan agreements with Verizon Wireless.

ARTICLE IV ACCOUNTS, COLLECTIONS AND APPLICATION OF FUNDS

Section 4.1 Bank Accounts.

(a) Establishment of Bank Accounts. On or before the Closing Date, the Servicer will establish the following segregated accounts or subaccounts at a Qualified Institution (initially the corporate trust department of U.S. Bank National Association), each in the name of U.S. Bank National Association, as Note Paying Agent for the benefit of the Indenture Trustee, as secured party for Verizon Owner Trust 2020-A, to be designated as follows:

(i) Collection Account with account number 272062000;

(ii) Reserve Account with account number 272062001;

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(iii) Acquisition Account, as a subaccount of the Collection Account, with account number 272062002; and

(iv) Negative Carry Account with account number 272062003.

(b) Control of Bank Accounts. Each of the Bank Accounts will be under the control of the Indenture Trustee so long as the Bank Accounts remain subject to the Lien of the Indenture, except that the Servicer may make deposits into and direct the Note Paying Agent to make deposits into or withdrawals from the Bank Accounts according to the Transaction Documents. The Servicer may direct the Note Paying Agent to withdraw from the Collection Account and pay to the Servicer, or as directed by the Servicer, amounts that are not Available Funds for a Collection Period or that were deposited into the Collection Account in error. Following the payment in full of the Notes and the release of the Bank Accounts from the Lien of the Indenture, the Bank Accounts will be under the control of the Issuer.

(c) Benefit of Accounts; Deposits and Withdrawals. The Bank Accounts and all cash, money, securities, investments, financial assets and other property deposited in or credited to them will be held by the Note Paying Agent for the benefit of the Indenture Trustee as secured party for the benefit of the Secured Parties and, after payment in full of the Notes and the release of the Bank Accounts from the Lien of the Indenture, as agent of the Issuer and as part of the Trust Property. All deposits to and withdrawals from the Bank Accounts will be made according to the Transaction Documents.

(d) Maintenance of Accounts. If an institution maintaining the Bank Accounts ceases to be a Qualified Institution, the Servicer will, with the Indenture Trustee's assistance as necessary, move the Bank Accounts to a Qualified Institution within thirty (30) days.

(e) Compliance. Each Bank Account will be subject to the Account Control Agreement. The Servicer will ensure that the Account Control Agreement requires the Qualified Institution maintaining the Bank Accounts to comply with entitlement orders (as defined in Section 8-102 of the UCC) from the Indenture Trustee without further consent of the Issuer, if the Notes are Outstanding, and to act as a securities intermediary according to the UCC.

(f) Agreements With Respect to Accounts. The Servicer, the Issuer, the Indenture Trustee and the Securities Intermediary agree as follows:

(i) each of the Bank Accounts is, and will be maintained as, a securities account (as defined in Section 8-501 of the UCC);

(ii) the Securities Intermediary is acting, and will act as a securities intermediary (as defined in the UCC) with respect to the Bank Accounts;

(iii) this Agreement (together with the Indenture and the Account Control Agreement) is the only agreement entered into among the parties with respect to the Bank Accounts and the parties will not enter into any other agreement related to the Bank Accounts; and

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(iv) at the time this Agreement was entered into and the Bank Accounts were established, the Securities Intermediary has one or more offices in the United States of America that maintains the securities accounts.

Section 4.2 Investment of Funds in Bank Accounts.

(a) Permitted Investments. If (i) no Default or Event of Default has occurred and is continuing and (ii) Cellco is the Servicer, the Servicer may instruct the Indenture Trustee to invest any funds in the Collection Account, the Acquisition Account, the Reserve Account and the Negative Carry Account in Permitted Investments and, if investment instructions are received, the Indenture Trustee will direct the Qualified Institution maintaining the Bank Accounts to invest the funds in the Collection Account, the Acquisition Account, the Reserve Account or the Negative Carry Account, as applicable, in those Permitted Investments; provided, that, if on any Payment Date, the amount on deposit in the Acquisition Account (after giving effect to the acquisition of any Additional Receivables on such date) is greater than 25% of the aggregate Note Balance (after giving effect to any payments made on the Notes on such date), the Servicer shall instruct the Indenture Trustee to invest any amounts in the Acquisition Account in excess of such amount in any Permitted Investments, other than (x) any investments set forth in clauses (b) or (c) of the definition of Permitted Investments that are held by or at the Indenture Trustee or (y) any investments set forth in clause (e) of the definition thereof. If (i) the Servicer fails to give investment instructions for any funds in the Collection Account, the Acquisition Account, the Reserve Account or the Negative Carry Account to the Indenture Trustee by 11:00 a.m. New York time (or other time as may be agreed by the Indenture Trustee) on the Business Day before a Payment Date or (ii) the Qualified Institution receives notice from the Indenture Trustee that a Default or Event of Default has occurred and is continuing, the Qualified Institution will invest and reinvest funds in such Bank Account according to the last investment instructions received, if any. If no prior investment instructions have been received or if the instructed investments are no longer available or permitted, the Indenture Trustee will notify the Servicer and request new investment instructions, and the funds will remain uninvested until new investment instructions are received. The Servicer may direct the Indenture Trustee to consent, vote, waive or take any other action, or not to take any action, on any matters available to the holder of the Permitted Investments. If Cellco is not the Servicer, funds on deposit in the Collection Account, the Acquisition Account, the Reserve Account and the Negative Carry Account will remain uninvested. Notwithstanding anything to the contrary in this Section 4.2(a) or in the Transaction Documents, the Servicer shall not allow amounts held in the Collection Account or the Acquisition Account to be invested unless it is able to maintain records on a daily basis as to the amounts realized from the investment of Collections received on each Originator's Receivables.

(b) Maturity of Investments. For so long as Cellco is the Servicer, any Permitted Investments of funds in the Collection Account and the Reserve Account (or any reinvestments of the Permitted Investments) for a Collection Period must mature, if applicable, and be available no later than the second Business Day before the related Payment Date and any Permitted Investments of funds in the Acquisition Account and the Negative Carry Account (or any reinvestments of the Permitted Investments) for a Collection Period must mature or be available overnight. Any Permitted Investments with a maturity date will be held to their maturity, except

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that such Permitted Investments may be sold or disposed of before their maturity in connection with the sale or liquidation of the Collateral under Section 5.6 of the Indenture.

(c) No Liability for Investments. None of the Depositor, the Servicer, the Indenture Trustee, the Note Paying Agent or the Qualified Institution maintaining any Bank Account will be liable for the selection of Permitted Investments or for investment losses incurred on Permitted Investments (other than in the capacity as obligor, if applicable).

(d) Continuation of Liens in Investments. The Servicer will not direct the Indenture Trustee or the Note Paying Agent to make any investment of funds or to sell any investment held in the Bank Accounts unless the security interest Granted and perfected in the account in favor of the Indenture Trustee will continue to be perfected in the investment or the proceeds of the sale without further action by any Person.

(e) Investment Earnings. Investment earnings (net of losses and investment expenses) on the Collection Account, the Acquisition Account, the Reserve Account and the Negative Carry Account will be deposited into the Certificate Distribution Account for distribution to the Certificateholders in the priority set forth in Section 4.1(b) of the Trust Agreement.

Section 4.3 Deposits and Payments.

(a) Closing Date and Acquisition Date Deposit. On the Closing Date and on each Acquisition Date, the Servicer will deposit into the Collection Account all amounts received and applied as interest or principal on the Initial Receivables or the Additional Receivables, as applicable, during the period from the related Cutoff Date to two (2) Business Days before the Closing Date or Acquisition Date, as applicable.

(b) Deposit of Collections.

(i) If Cellco is the Servicer and (x) Verizon's long-term unsecured debt is rated equal to or higher than Baa2 by Moody's and A by S&P (the Monthly Deposit Required Ratings), (y) Verizon guarantees certain payment obligations of Cellco, as Servicer, as provided in the Parent Support Agreement and (z) no Servicer Termination Event has occurred, the Servicer may deposit Collections into the Collection Account on the second Business Day before each Payment Date.

(ii) For as long as (x) Verizon's long-term unsecured debt is not rated at least the Monthly Deposit Required Ratings, (y) Verizon does not guaranty certain payment obligations of Cellco, as Servicer or (z) a Servicer Termination Event occurs, the Servicer will (1) deposit into the Collection Account all amounts received and applied as interest or principal on the Receivables within two (2) Business Days after identification of receipt of good funds and (2) provide a written report (which may be electronically submitted) to the Indenture Trustee and the Note Paying Agent regarding such deposit set forth in clause (1) above, as required by Section 3.5(d).

(c) Reconciliation of Deposits. If Cellco is the Servicer and for any Payment Date, the sum of (i) Collections for the Collection Period, plus (ii) Acquisition Amounts for the

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Payment Date, exceeds the amounts deposited under Section 4.3(b) for the Collection Period, Cellco will deposit an amount equal to the excess into the Collection Account on the second Business Day before the Payment Date. If, for any Payment Date, the amounts deposited under Section 4.3(b) for the Collection Period exceed the sum of (i) Collections for the Collection Period, plus (ii) Acquisition Amounts for the Payment Date, the Indenture Trustee or the Note Paying Agent will pay to Cellco from Available Funds in the Collection Account an amount equal to the excess within two (2) Business Days after Cellco's direction, but no later than the Payment Date. If requested by the Indenture Trustee, Cellco will provide reasonable supporting details for its calculation of the amounts to be deposited or paid under this Section 4.3(c).

(d) Net Deposits. Cellco may make the deposits and payments required by Section 4.3(b) net of Servicing Fees to be paid to Cellco for the Collection Period and amounts the Servicer is permitted to retain under Section 3.8 and be reimbursed for under Section 3.9. The Servicer will account for all deposits and payments in the Monthly Investor Report as if the amounts were deposited and/or paid separately.

(e) No Segregation. Pending deposit in the Collection Account, the Servicer is not required to segregate Collections from its own funds.

(f) Negative Carry Account Deposits. Any Certificateholder may, at its option, deposit funds into the Negative Carry Account on any date.

(g) Deposit of Upgrade Payments. If any Upgrade Offer has not been terminated and an Obligor satisfies all of the terms and conditions of such Upgrade Offer in respect of a Receivable, the Marketing Agent shall deposit, or shall cause the related Originator to deposit, into the Collection Account the related Upgrade Payment, within two (2) Business Days after the identification that all of the terms and conditions related to such Upgrade Offer have been satisfied by the related Obligor in respect of a Receivable; provided, that if the conditions set forth in Section 4.3(b) (i) are satisfied, the Marketing Agent shall deposit, or shall cause the related Originators to deposit, such amounts into the Collection Account on the second Business Day before the Payment Date related to the Collection Period in which the related Obligor has satisfied all of the terms and conditions (for the avoidance of doubt, other than the required prepayment) related to such Upgrade Offer in respect of a Receivable. The parties acknowledge that the failure of the Marketing Agent to deposit, or to cause the related Originator to deposit, into the Collection Account the related Upgrade Payment or otherwise to pay off the Receivable would constitute a breach by the related Originator of its obligation to the Obligor under the Upgrade Contract and that this breach would adversely affect the value of the Receivables, and give the Obligor a claim in recoupment against the related Originator and a right to offset that claim against the amounts that the Obligor would owe to the related Originator under the new device payment plan agreement (each such agreement, a New Upgrade DPP) entered into by the related Originator (or its agent, on its behalf) pursuant to the Upgrade Contract. The parties hereto intend that the payment by the Marketing Agent or the related Originator of the Upgrade Payment as provided in this Section 4.3(g) shall extinguish such Obligor's claim in recoupment against the related Originator and the Obligor's right to offset the amount of that claim against the amounts that the Obligor would owe under the New Upgrade DPP contemporaneously with such Upgrade Payment by the Marketing Agent or the related Originator. The parties hereto also intend that the payment by the Marketing Agent or the related Originator of the Upgrade

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Payment as provided in Section 2.2.1 of the Marketing Agent Agency Agreement shall extinguish each Obligor's claim in recoupment against the Verizon Originator described in that Section and the Obligor's right to offset the amount of that claim against the amounts that the Obligor would owe under the new device payment plan agreement entered into by such Verizon Originator (or its agent, on its behalf) pursuant to the Upgrade Contract as described in that Section 2.2.1 contemporaneously with such Upgrade Payment by the Marketing Agent or the related Originator.

(h) Deposit of Credit Payments. If an Obligor is granted a Credit and the application of such Credit to the related Obligor's account results in a shortfall in Collections for the related Collection Period, the Marketing Agent shall deposit, or shall cause the related Originator to deposit, into the Collection Account the related Credit Payment within two (2) Business Days after identification that such Credit was applied to an Obligor account; provided, that if the conditions set forth in Section 4.3(b)(i) are satisfied, the Marketing Agent shall deposit, or shall cause the related Originator to deposit, such amounts into the Collection Account on the second Business Day before the Payment Date related to the Collection Period in which such Credit was applied to an Obligor account.

(i) Deposit of Assumption of Liability Payments. If an Originator or the Servicer allows a device payment plan agreement that is a Receivable to be transferred to a new Obligor, the Marketing Agent shall acquire such Receivable and deposit, or cause the related Originator to acquire and deposit, into the Collection Account an amount equal to the applicable Acquisition Amount for the related Receivable on or prior to the second Business Day before the Payment Date related to the Collection Period in which such transfer occurred.

Section 4.4 Reserve Account; Negative Carry Account; Acquisition Account.

(a) Initial Reserve Account Deposit. On the Closing Date, the Depositor will deposit or cause to be deposited the Required Reserve Amount into the Reserve Account from the net proceeds of the sale of the Notes.

(b) Reserve Account Draw Amount. On or before two (2) Business Days before a Payment Date, the Servicer will calculate the Reserve Account Draw Amount for the Payment Date and will direct the Note Paying Agent to withdraw from the Reserve Account and deposit into the Collection Account on or before the Payment Date (x) the Reserve Account Draw Amount and (y) any amount in excess of the Required Reserve Amount for such Payment Date, after giving effect to the withdrawal of the Reserve Account Draw Amount with respect to such Payment Date.

(c) Negative Carry Account Amounts.

(i) To the extent that the Class A Certificateholder, solely at its option, deposits any amounts into the Acquisition Account, pursuant to Section 4.4(d)(i), the Class A Certificateholder will deposit into the Negative Carry Account an amount equal to the Required Negative Carry Amount related to such amount deposited into the Acquisition Account on such date.

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(ii) On or before two (2) Business Days before a Payment Date, the Servicer will calculate the Negative Carry Account Draw Amount for the Payment Date and will instruct the Note Paying Agent to withdraw from the Negative Carry Account and deposit the Negative Carry Account Draw Amount into the Collection Account on or before the Payment Date.

(iii) On each Payment Date, any amounts in the Negative Carry Account in excess of the Required Negative Carry Amount, after giving effect to any acquisition of Receivables on such Payment Date, shall be withdrawn from the Negative Carry Account and deposited into the Certificate Distribution Account, for distribution to the Certificateholders in the priority set forth in Section 4.1(b) of the Trust Agreement.

(iv) On or before the first Payment Date during the Amortization Period, the Servicer will direct the Note Paying Agent to withdraw all funds in the Negative Carry Account and deposit the funds into the Collection Account.

(d) Acquisition Account Amounts.

(i) From time to time, the Class A Certificateholder may, solely at its option, deposit amounts into the Acquisition Account, as set forth in Section 2.5 of the Trust Agreement.

(ii) On or before two (2) Business Days before an Acquisition Date, the Issuer, or the Servicer on its behalf, will direct the Note Paying Agent to withdraw the Additional Receivables Cash Transfer Amount from the Acquisition Account and pay that amount to the Depositor on the Acquisition Date in consideration for the acquisition of Additional Receivables by the Issuer on the Acquisition Date.

(iii) On each Payment Date, any amounts in the Acquisition Account in excess of the Required Acquisition Deposit Amount, after giving effect to any acquisition of Receivables on such Payment Date, shall be withdrawn from the Acquisition Account and deposited into the Certificate Distribution Account, for distribution to the Certificateholders in the priority set forth in Section 4.1(b) of the Trust Agreement.

(iv) On or before the first Payment Date during the Amortization Period, the Servicer will direct the Note Paying Agent to withdraw all funds in the Acquisition Account and deposit the funds into the Collection Account.

(e) Release of Funds. The Indenture Trustee shall, at such time as there are no Notes outstanding, release any remaining portion of the Collection Account from the Lien of the Indenture and release to or to the order of the Issuer or, in the case of the Reserve Account, to the Depositor.

Section 4.5 Direction to Indenture Trustee for Distributions. On or about the 15th day of each month, and in no case later than at least two (2) Business Days before each Payment Date, the Servicer will direct the Indenture Trustee or Note Paying Agent (based on the most recent Monthly Investor Report) to make the withdrawals, deposits, distributions and payments

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required to be made on the Payment Date under Section 8.2 of the Indenture and Section 4.3(c) of this Agreement.

ARTICLE V DEPOSITOR

Section 5.1 Depositor's Representations and Warranties. The Depositor represents and warrants to the Issuer as of the Closing Date and as of each Acquisition Date, on which representations and warranties the Issuer is relying in purchasing the Depositor Transferred Property and which will survive the transfer and assignment of the Depositor Transferred Property by the Depositor to the Issuer under this Agreement and the pledge of the Depositor Transferred Property by the Issuer to the Indenture Trustee under the Indenture:

(a) Organization and Good Standing. The Depositor is a validly existing limited liability company in good standing under the laws of the State of Delaware and has full power and authority to own its properties and conduct its business as presently owned or conducted, and to execute, deliver and perform its obligations under this Agreement and each other Transaction Document to which it is a party.

(b) Due Qualification. The Depositor is duly qualified to do business, is in good standing as a foreign limited liability company (or is exempt from such requirements) and has obtained all necessary licenses and approvals in each jurisdiction in which the conduct of its business requires such qualification, licenses or approvals, except where the failure to so qualify or obtain licenses or approvals would not reasonably be expected to have a Material Adverse Effect.

(c) Due Authorization. The execution, delivery, and performance of this Agreement and each other Transaction Document to which it is a party, have been duly authorized by the Depositor by all necessary limited liability company action on the part of the Depositor.

(d) No Proceedings. There are no actions, suits, investigations or other proceedings pending, or to its knowledge threatened, against the Depositor or any of its properties: (i) asserting the invalidity of this Agreement or any other Transaction Document to which it is a party; (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document to which it is a party; or (iii) seeking any determination or ruling that might have a Material Adverse Effect on the performance by the Depositor of its obligations under, or the validity or enforceability of, this Agreement or any other Transaction Document to which it is a party.

(e) All Consents. All authorizations, consents, orders or approvals of or registrations or declarations with any Governmental Authority required to be obtained, effected or given to it, if any, in connection with the execution and delivery of this Agreement and each other Transaction Document to which it is a party and the performance of the transactions contemplated by this Agreement or any other Transaction Document by the Depositor, in each case, have been duly obtained, effected or given and are in full force and effect, except for those which the failure to obtain would not reasonably be expected to have a Material Adverse Effect.

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(f) Binding Obligation. This Agreement and each other Transaction Document to which it is a party constitutes, when duly executed and delivered by each other party hereto and thereto, a legal, valid and binding obligation of the Depositor, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar Laws affecting creditors' rights generally or by general principles of equity.

(g) No Conflict. The execution and delivery of this Agreement or any other Transaction Document to which it is a party by the Depositor, and the performance by it of the transactions contemplated by the Transaction Documents and the fulfillment of the terms hereof and thereof applicable to the Depositor, (i) do not contravene (A) its limited liability company agreement, (B) any contractual restriction binding on or affecting it or its property, or (C) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, except, in each case of (A), (B) or (C), where such contravention would not reasonably be expected to have a Material Adverse Effect and (ii) do not result in or require the creation of any Adverse Claim upon or with respect to any of its properties.

(h) No Violation. The execution and delivery of this Agreement by the Depositor, the performance by the Depositor of the transactions contemplated by this Agreement or any other Transaction Document to which it is a party and the fulfillment of the terms hereof and thereof applicable to the Depositor will not violate any Law applicable to the Depositor, except where such violation would not reasonably be expected to have a Material Adverse Effect.

Section 5.2 Liability of Depositor.

(a) Liability for Specific Obligations. The Depositor will be liable under this Agreement only for its specific obligations under this Agreement. All other liability is expressly waived and released as a condition of, and consideration for, the execution of this Agreement by the Depositor and the issuance of the Notes. The Depositor will be liable for its willful misconduct, bad faith or gross negligence in performing its obligations under this Agreement.

(b) No Liability of Others. The Depositor's obligations under this Agreement are corporate obligations. No Person will have recourse, directly or indirectly, to any member, manager, officer, director, employee or agent of the Depositor for the Depositor's obligations under this Agreement.

(c) Legal Proceedings. The Depositor will not be required to start, pursue or participate in any legal proceeding that is unrelated to its obligations under this Agreement and that, in its opinion, may result in liability or cause it to pay or risk funds or incur financial liability.

(d) Payment of Taxes. The Depositor will pay all taxes levied or assessed on the Trust Property.

(e) Reliance by Depositor. The Depositor may rely in good faith on the advice of counsel or on any document believed to be genuine and to have been executed by the proper party for any matters under this Agreement.

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Section 5.3 Merger, Consolidation, Succession or Assignment. Any Person (a) into which the Depositor is merged or consolidated, (b) resulting from a merger or consolidation to which the Depositor is a party, (c) succeeding to the Depositor's business or (d) that is an Affiliate of the Depositor to whom the Depositor has assigned this Agreement, will be the successor to the Depositor under this Agreement. Within fifteen (15) Business Days after the merger, consolidation, succession or assignment, such Person will (i) execute an agreement to assume the Depositor's obligations under this Agreement and each Transaction Document to which the Depositor is a party (unless the assumption happens by operation of Law), (ii) deliver to the Issuer, the Owner Trustee and the Indenture Trustee an Officer's Certificate and an Opinion of Counsel each stating that the merger, consolidation, succession or assignment and the assumption agreement comply with this Section 5.3, (iii) deliver to the Issuer, the Owner Trustee and the Indenture Trustee an Opinion of Counsel stating that the security interest in favor of the Issuer in the Depositor Transferred Property and the Indenture Trustee in the Collateral is or will be perfected and (iv) notify the Rating Agencies of the merger, consolidation, succession or assignment.

Section 5.4 Depositor May Own Notes. The Depositor and any Affiliate of the Depositor, in its individual or any other capacity, may become the owner or pledgee of Notes with the same rights as any other Person except as limited in any Transaction Document. Notes owned by or pledged to the Depositor or any Affiliate of the Depositor will have an equal and proportionate benefit under the Transaction Documents, except as limited in any Transaction Document.

Section 5.5 Depositor's Authorized and Responsible Persons. On or before the Closing Date, the Depositor will notify the Indenture Trustee and the Owner Trustee and provide specimen signatures of (i) each Person who is authorized to give instructions and directions to the Indenture Trustee and the Owner Trustee on behalf of the Depositor and (ii) each Person who is a Responsible Person for the Depositor. The Depositor may change such Persons at any time by notifying the Indenture Trustee and the Owner Trustee in writing.

Section 5.6 Company Existence. During the term of this Agreement, the Depositor shall keep in full force and effect its existence, rights and franchises as a limited liability company under the Laws of the jurisdiction of its formation and shall obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of the Transaction Documents and each other instrument or agreement necessary or appropriate to the proper administration of this Agreement and the transactions contemplated hereby.

Section 5.7 No Division. Notwithstanding Section 18- 217 of the Delaware Limited Liability Company Act or the Depositor's limited liability company agreement, for so long as the Notes remain Outstanding, the Depositor shall not divide or enter into a plan of division within the meaning of Section 18- 217 of the Delaware Limited Liability Company Act.

ARTICLE VI SERVICER AND MARKETING AGENT

Section 6.1 Servicer's and Marketing Agent's Representations and Warranties.

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(a) The Servicer represents and warrants to the Issuer as of the Closing Date and as of each Acquisition Date, on which representations and warranties the Issuer is relying in purchasing the Depositor Transferred Property and which will survive the transfer and assignment of the Depositor Transferred Property by the Depositor to the Issuer under this Agreement and the pledge of the Depositor Transferred Property by the Issuer to the Indenture Trustee under the Indenture:

(i) Organization and Good Standing. The Servicer is a validly existing partnership in good standing under the laws of the State of Delaware and has full power and authority to own its properties and conduct its servicing business as presently owned or conducted, and to execute, deliver and perform its obligations under this Agreement and each other Transaction Document to which it is a party.

(ii) Due Qualification. The Servicer is duly qualified to do business, is in good standing as a foreign entity (or is exempt from such requirements) and has obtained all necessary licenses and approvals in each jurisdiction in which the servicing of the Receivables requires such qualification, licenses or approvals, except where the failure to so qualify or obtain licenses or approvals would not reasonably be expected to have a Material Adverse Effect.

(iii) Due Authorization. The execution, delivery, and performance of this Agreement and each other Transaction Document to which it is a party, have been duly authorized by the Servicer by all necessary partnership action on the part of the Servicer.

(iv) No Proceedings. There are no actions, suits, investigations or other proceedings pending, or to its knowledge threatened, against the Servicer or any of its properties: (i) asserting the invalidity of this Agreement or any other Transaction Document to which it is a party; (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document to which it is a party; or (iii) seeking any determination or ruling that might have a Material Adverse Effect on the performance by the Servicer of its obligations under, or the validity or enforceability of, this Agreement or any other Transaction Document to which it is a party.

(v) All Consents. All authorizations, consents, orders or approvals of or registrations or declarations with any Governmental Authority required to be obtained, effected or given to it, if any, in connection with the execution and delivery of this Agreement and each other Transaction Document to which it is a party and the performance of the transactions contemplated by this Agreement or any other Transaction Document by the Servicer, in each case, have been duly obtained, effected or given and are in full force and effect, except for those which the failure to obtain would not reasonably be expected to have a Material Adverse Effect.

(vi) Binding Obligation. This Agreement and each other Transaction Document to which it is a party constitutes, when duly executed and delivered by each other party hereto and thereto, a legal, valid and binding obligation of the Servicer, enforceable against it in accordance with its terms, except as such enforceability may be

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limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar Laws affecting creditors' rights generally or by general principles of equity.

(vii) No Conflict. The execution and delivery of this Agreement or any other Transaction Document to which it is a party by the Servicer, and the performance by it of the transactions contemplated by the Transaction Documents and the fulfillment of the terms hereof and thereof applicable to the Servicer, (i) do not contravene (A) the organizational documents of the Servicer, (B) any contractual restriction binding on or affecting it or its property, or (C) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, except, in each case of (A), (B) or (C), where such contravention would not reasonably be expected to have a Material Adverse Effect and (ii) do not result in or require the creation of any Adverse Claim upon or with respect to any of its properties.

(viii) No Violation. The execution and delivery of this Agreement by the Servicer, the performance by the Servicer of the transactions contemplated by this Agreement or any other Transaction Document to which it is a party and the fulfillment of the terms hereof and thereof applicable to the Servicer will not violate any Law applicable to the Servicer, except where such violation would not reasonably be expected to have a Material Adverse Effect.

(ix) Compliance with Law. It has complied with all Laws applicable to the servicing of the Receivables, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

(x) Servicing Procedures. It has complied in all material respects with the Servicing Procedures with respect to the Receivables.

(b) The Marketing Agent represents and warrants to the Issuer as of the Closing Date and as of each Acquisition Date, on which representations and warranties the Issuer is relying in purchasing the Depositor Transferred Property and which will survive the transfer and assignment of the Depositor Transferred Property by the Depositor to the Issuer under this Agreement and the pledge of the Depositor Transferred Property by the Issuer to the Indenture Trustee under the Indenture:

(i) Organization and Good Standing. The Marketing Agent is a validly existing partnership in good standing under the laws of the State of Delaware and has full power and authority to own its properties and conduct its business as presently owned or conducted, and to execute, deliver and perform its obligations under this Agreement and each other Transaction Document to which it is a party.

(ii) Due Qualification. The Marketing Agent is duly qualified to do business, is in good standing as a foreign entity (or is exempt from such requirements) and has obtained all necessary licenses and approvals in each jurisdiction in which the conduct of its business requires such qualification, licenses or approvals, except where the failure to

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so qualify or obtain licenses or approvals would not reasonably be expected to have a Material Adverse Effect.

(iii) Due Authorization. The execution, delivery, and performance of this Agreement and each other Transaction Document to which it is a party, have been duly authorized by the Marketing Agent by all necessary partnership action on the part of the Marketing Agent.

(iv) No Proceedings. There are no actions, suits, investigations or other proceedings pending, or to its knowledge threatened, against the Marketing Agent or any of its properties: (i) asserting the invalidity of this Agreement or any other Transaction Document to which it is a party; (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document to which it is a party; or (iii) seeking any determination or ruling that might have a Material Adverse Effect on the performance by the Marketing Agent of its obligations under, or the validity or enforceability of, this Agreement or any other Transaction Document to which it is a party.

(v) All Consents. All authorizations, consents, orders or approvals of or registrations or declarations with any Governmental Authority required to be obtained, effected or given to it, if any, in connection with the execution and delivery of this Agreement and each other Transaction Document to which it is a party and the performance of the transactions contemplated by this Agreement or any other Transaction Document by the Marketing Agent, in each case, have been duly obtained, effected or given and are in full force and effect, except for those which the failure to obtain would not reasonably be expected to have a Material Adverse Effect.

(vi) Binding Obligation. This Agreement and each other Transaction Document to which it is a party constitutes, when duly executed and delivered by each other party hereto and thereto, a legal, valid and binding obligation of the Marketing Agent, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar Laws affecting creditors' rights generally or by general principles of equity.

(vii) No Conflict. The execution and delivery of this Agreement or any other Transaction Document to which it is a party by the Marketing Agent, and the performance by it of the transactions contemplated by the Transaction Documents and the fulfillment of the terms hereof and thereof applicable to the Marketing Agent, (i) do not contravene (A) the organizational documents of the Marketing Agent, (B) any contractual restriction binding on or affecting it or its property, or (C) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, except, in each case of (A), (B) or (C), where such contravention would not reasonably be expected to have a Material Adverse Effect and (ii) do not result in or require the creation of any Adverse Claim upon or with respect to any of its properties.

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(viii) No Violation. The execution and delivery of this Agreement by the Marketing Agent, the performance by the Marketing Agent of the transactions contemplated by this Agreement or any other Transaction Document to which it is a party and the fulfillment of the terms hereof and thereof applicable to the Marketing Agent will not violate any Law applicable to the Marketing Agent, except where such violation would not reasonably be expected to have a Material Adverse Effect.

Section 6.2 Liability of Servicer and Marketing Agent.

(a) Liability for Specific Obligations. Each of the Servicer and the Marketing Agent, severally and not jointly, will be liable under this Agreement only for its specific obligations under this Agreement. All other liability is expressly waived and released as a condition of, and consideration for, the execution of this Agreement by the Servicer or the Marketing Agent, as applicable. Each of the Servicer and the Marketing Agent, severally and not jointly, will be liable only for its own willful misconduct, bad faith or gross negligence in performing its obligations under this Agreement.

(b) No Liability of Others. Each of the Servicer's and the Marketing Agent's obligations under this Agreement are corporate obligations. No Person will have recourse, directly or indirectly, to any member, manager, officer, director, employee or agent of the Servicer for the Servicer's obligations or the Marketing Agent for the Marketing Agent's obligations, as applicable, under this Agreement.

(c) Legal Proceedings. The Servicer will not be required to start, pursue or participate in any legal proceeding that is not incidental or related to its obligations to service the Receivables under this Agreement and that in its opinion may result in liability or cause it to pay or risk funds or incur financial liability. The Servicer may in its sole discretion start or pursue any legal proceeding to protect the interests of the Noteholders or the Depositor under the Transaction Documents. The Servicer will be responsible for the fees and expenses of legal counsel and any liability resulting from the legal proceeding.

(d) Force Majeure. Neither the Servicer nor the Marketing Agent will be responsible or liable for any failure or delay in performing its obligations under this Agreement caused by, directly or indirectly, forces beyond its control, including strikes, work stoppages, acts of war, terrorism, civil or military disturbances, fire, flood, earthquakes, storms, hurricanes or other natural disasters or failures of mechanical, electronic or communication systems; provided, however that this provision shall not limit the right to remove the Servicer for a Servicer Termination Event as provided in Section 7.2(a), other than with respect to the extension of the grace periods as provided in Section 7.2(a). Each of the Servicer and the Marketing Agent, as applicable, will use commercially reasonable efforts to resume performance as soon as practicable in the circumstances.

(e) Reliance by Servicer and Marketing Agent. Each of the Servicer and the Marketing Agent may rely in good faith on the advice of counsel or on any document believed to be genuine and to have been executed by the proper party for any matters under this Agreement.

Section 6.3 Indemnities of Servicer and the Marketing Agent.

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(a) Indemnification.

(i) The Servicer will indemnify the Issuer, the Owner Trustee and the Indenture Trustee (including in its capacity as Note Paying Agent), and their officers, directors, employees and agents (each, an Indemnified Person) for all fees, expenses, losses, claims, actions, suits, damages and liabilities (including reasonable legal fees and expenses) resulting from the Servicer's (including in its capacity as Custodian) willful misconduct, bad faith or gross negligence in performing its obligations under the Transaction Documents (including such amounts incurred by such parties in defending themselves against any loss, damage or liability and any fees and expenses incurred in connection with any proceedings brought by the Indemnified Person to enforce the Servicer's indemnification or other obligations under this Agreement).

(ii) The Marketing Agent will indemnify the Indemnified Persons for all fees, expenses, losses, claims, actions, suits, damages and liabilities (including reasonable legal fees and expenses) resulting from the Marketing Agent's willful misconduct, bad faith or gross negligence in performing its obligations under the Transaction Documents (including such amounts incurred by such parties in defending themselves against any loss, damage or liability and any fees and expenses incurred in connection with any proceedings brought by the Indemnified Person to enforce the Marketing Agent's indemnification or other obligations under this Agreement).

(b) Proceedings. If an Indemnified Person receives notice of a Proceeding against it, the Indemnified Person will, if a claim for indemnity will be made against the Servicer or the Marketing Agent, as applicable, under this Section 6.3, promptly notify the Servicer or the Marketing Agent, as applicable, of the Proceeding; provided, that the failure to give such notice shall not affect the right of an Indemnified Person to indemnification hereunder to the extent that such failure does not prejudice the rights of the Servicer, the Marketing Agent or the Indemnified Person in such Proceeding. The Servicer or the Marketing Agent, as applicable, may participate in and assume the defense and settlement of a Proceeding at its expense. If the Servicer or the Marketing Agent, as applicable, notifies the Indemnified Person of its intention to assume the defense of the Proceeding, the Servicer or the Marketing Agent, as applicable, will assume such defense with counsel reasonably satisfactory to the Indemnified Person, and in a manner reasonably satisfactory to the Indemnified Person, and the Servicer or the Marketing Agent, as applicable, and will not be liable for fees and expenses of separate counsel to the Indemnified Person unless there is a conflict between the interests of the Servicer or the Marketing Agent, as applicable, and the Indemnified Person. If there is a conflict or if the parties cannot reasonably agree as to the selection of counsel, the Servicer or the Marketing Agent, as applicable, will pay the reasonable fees and expenses of separate counsel to the Indemnified Person. No settlement of the Proceeding in which a claim is brought against the Servicer or the Marketing Agent may be settled in the name of, on behalf of, or in any manner in which the Servicer or the Marketing Agent, as applicable, is understood to acknowledge the validity of any claim without the approval of the Servicer or the Marketing Agent, respectively, and the Indemnified Person, which approvals will not be unreasonably withheld.

(c) Survival of Obligations. Each of the Servicer's and the Marketing Agent's obligations under this Section 6.3, for the period it was the Servicer or the Marketing Agent,

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respectively, will survive the Servicer's or the Marketing Agent's, as applicable, resignation or termination, the termination of this Agreement, the resignation or removal of the Owner Trustee or the Indenture Trustee and the termination of the Issuer.

(d) Repayment. If the Servicer or the Marketing Agent makes a payment to an Indemnified Person under this Section 6.3 and the Indemnified Person later collects from others any amounts for which the payment was made, the Indemnified Person will promptly repay those amounts to the Servicer or the Marketing Agent, as applicable.

Section 6.4 Delegation and Contracting. If Cellco is not the Servicer or the Custodian, the Servicer or the Custodian, as applicable, may not delegate to any Person its obligations under this Agreement without the consent of the Issuer. However, no notice or consent will be required for any delegation if Cellco is the Servicer or the Custodian. No notice or consent will be required for any delegation by the Marketing Agent of its obligations under this Agreement. Any of the Servicer, the Custodian or the Marketing Agent may contract with other Persons to perform its obligations under this Agreement. No delegation or contracting will relieve the Servicer, the Custodian or the Marketing Agent, as applicable, of its responsibilities, and the Servicer, the Custodian or the Marketing Agent, respectively, will remain responsible for those obligations. Each of the Servicer, the Custodian and the Marketing Agent will be responsible for the fees of its delegates and contractors, as applicable.

Section 6.5 Servicer May Own Notes. The Servicer and any Affiliate of the Servicer, may, in its individual or any other capacity, become the owner or pledgee of Notes with the same rights as it would have if it were not the Servicer or an Affiliate of the Servicer, except as otherwise stated in any Transaction Document.

Section 6.6 Annual Statement as to Compliance. Within ninety (90) days after the end of each fiscal year for which a report on Form 10-K is required to be filed with the Commission by or on behalf of the Issuer (commencing with the fiscal year ended December 31, 2020), the Servicer will deliver an Officer's Certificate to the Administrator, the Depositor, the Owner Trustee and the Indenture Trustee to the effect that (A) a review of the Servicer's activities during the prior fiscal year (or since the Closing Date in the case of the first such Officer's Certificate) and of its performance under this Agreement has been made under the supervision of the officer executing such Officer's Certificate and (B) to the best of his or her knowledge, based on the review, the Servicer has fulfilled in all material respects its obligations under this Agreement, or, if there has been a failure to fulfill any such obligation in any material respect, specifying each such failure known to such officer and the nature and status of the failure.

Section 6.7 Assessment of Compliance and Accountants' Attestation.

(a) Within ninety (90) days after the end of each fiscal year for which a report on Form 10-K is required to be filed with the Commission by or on behalf of the Issuer (commencing with the fiscal year ended December 31, 2020), the Servicer will:

(i) deliver to the Issuer, the Depositor, the Administrator, the Owner Trustee, the Indenture Trustee and the Rating Agencies a report regarding the Servicer's assessment of compliance with the Servicing Criteria during the immediately preceding

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calendar year, including disclosure of any material instance of non-compliance identified by the Servicer, as required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB. Such report shall be addressed to the Issuer and signed by an authorized officer of the Servicer, and shall address each of the Servicing Criteria applicable to the Servicer;

(ii) deliver to the Issuer, the Depositor, the Administrator, the Owner Trustee, the Indenture Trustee and the Rating Agencies a report of a registered public accounting firm reasonably acceptable to the Issuer and the Administrator that attests to, and reports on, the assessment of compliance made by the Servicer and delivered pursuant to the preceding paragraph. This attestation shall be delivered in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S‑X under the Securities Act and the Exchange Act;

(iii) cause each Subservicer and each Subcontractor, if any, determined by the Servicer to be participating in the servicing function within the meaning of Item 1122 of Regulation AB, to deliver to the Issuer, the Depositor, the Administrator, the Owner Trustee and the Indenture Trustee an assessment of compliance and accountants' attestation as and when provided in paragraphs (i) and (ii) of this Section; and

(iv) if requested by the Administrator, acting on behalf of the Issuer, deliver to the Issuer, the Depositor and the Administrator and any other Person that will be responsible for signing the certification (a Sarbanes Certification) required by Rules 13a-14(d) and 15d- 14(d) under the Exchange Act (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) on behalf of an asset-backed issuer with respect to a securitization transaction a certification in the form attached hereto as Exhibit B.

The Servicer acknowledges that the parties identified in clause (a)(iv) above may rely on the certification provided by the Servicer pursuant to such clause in signing a Sarbanes Certification and filing such with the Commission. The Administrator, acting on behalf of the Issuer, will not request delivery of a certification under clause (a)(iv) above unless the Depositor is required under the Exchange Act to file an annual report on Form 10‑K with respect to an asset-backed issuer whose asset pool includes receivables.

(b) Each assessment of compliance provided by a Subservicer pursuant to Section 6.7(a)(iii) shall address each of the Servicing Criteria specified on a certification to be delivered by such Subservicer to the Servicer, the Issuer, the Depositor and the Administrator on or prior to the date of such appointment. An assessment of compliance provided by a Subcontractor pursuant to Section 6.7(a)(iii) need not address any elements of the Servicing Criteria other than those specified by the Servicer and the Issuer on the date of such appointment.

ARTICLE VII SERVICER RESIGNATION AND TERMINATION; SUCCESSOR SERVICER

Section 7.1 No Resignation. The Servicer will not resign as Servicer under this Agreement unless it determines it is legally unable to perform its obligations under this Agreement. The Servicer will notify the Issuer, the Parent Support Provider, the Owner Trustee and the Indenture Trustee of its resignation as soon as practicable after it determines it is required to resign, together with an Opinion of Counsel supporting its determination. The Issuer will

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promptly notify the Rating Agencies of any resignation of the Servicer. Notwithstanding anything to the contrary in this Agreement or in any other Transaction Document, immediately upon the resignation of Cellco as Servicer pursuant to this Section 7.1, Cellco, in its individual capacity, will be required to assume the obligations of the Servicer to acquire Receivables as set forth in Sections 3.4 and 4.7 of the Master Trust Receivables Transfer Agreement and Sections 2.5 and 2.6 of this Agreement without further action.

Section 7.2 Servicer Termination Events.

(a) Servicer Termination Events. The following events will each be a Servicer Termination Event:

(i) (x) the Servicer fails to deposit, or deliver to the Owner Trustee or the Indenture Trustee for deposit, any Collections required to be delivered under this Agreement; (y) so long as Cellco is the Servicer, the Marketing Agent fails to deposit, or to cause the related Originators to deposit, into the Collection Account any Upgrade Payments required to be delivered under this Agreement, or (z) so long as Cellco is the Servicer, the Parent Support Provider fails to make any payments with respect to the items set forth in clause (x) or clause (y) above, to the extent the Servicer, or the Marketing Agent or any related Originator, respectively, fails to do so, and, in each case, which such failure continues for five (5) Business Days after the Servicer, the Marketing Agent or the Parent Support Provider, as applicable, receives written notice of the failure from the Owner Trustee or the Indenture Trustee, or a Responsible Person of the Servicer, the Marketing Agent or the Parent Support Provider, as applicable, obtains actual knowledge of the failure; or

(ii) the Servicer (including in its capacity as Custodian) fails to observe or to perform any obligation under this Agreement, other than as set forth in clause (i) or (iii), which failure has a material adverse effect on the Noteholders and continues for ninety (90) days after the Servicer receives written notice of the failure from the Owner Trustee, the Indenture Trustee or the Noteholders of at least a majority of the Note Balance of the Controlling Class; or

(iii) so long as Cellco is the Servicer, the failure by (x) the Marketing Agent to make, or to cause the related Originators to make, (i) any payments required to be paid by the Marketing Agent, including without limitation Credit Payments or (ii) payments relating to the acquisition by the Marketing Agent or the related Originators of Receivables that are subject to certain transfers, but not including Upgrade Payments, or (y) the Parent Support Provider to make any payments set forth in clause (x) above, to the extent that the Marketing Agent or any related Originator fails to do so, and in either case, that continues for ten (10) Business Days after the Marketing Agent or Parent Support Provider, as applicable, receives written notice of the failure from the Owner Trustee or the Indenture Trustee, or a Responsible Person of the Marketing Agent or the Parent Support Provider, as applicable, obtains actual knowledge of the failure; or

(iv) an Insolvency Event of the Servicer occurs;

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provided, however, that a delay or failure of performance referred to in clauses (i), (ii) or (iii) above for an additional period of sixty (60) days will not constitute a Servicer Termination Event if such delay or failure was caused by force majeure or other similar occurrence, as further described in Section 6.2(d).

(b) Notice of Servicer Termination Event. The Servicer will notify the Issuer, the Owner Trustee and the Indenture Trustee of any Servicer Termination Event or any event that with the giving of notice or passage of time, or both, would become a Servicer Termination Event, no later than five (5) Business Days after a Responsible Person of the Servicer has received written notice of or has actual knowledge of the event. If a Servicer Termination Event occurs, the Issuer will promptly notify the Rating Agencies and the Asset Representations Reviewer.

(c) Removal. If a Servicer Termination Event occurs and is continuing, the Indenture Trustee may and, if directed by the Noteholders of a majority of the Note Balance of the Controlling Class, must remove the Servicer and terminate its rights and obligations under this Agreement by notifying the Servicer, the Issuer, the Parent Support Provider, the Owner Trustee, and the Secured Parties. The notice of termination will state the date the termination will be effective. On receipt of the notice, the Issuer will promptly notify the Rating Agencies, and the Owner Trustee will promptly notify the Certificateholders. Notwithstanding anything to the contrary in this Agreement or in any other Transaction Document, immediately upon the removal of Cellco as Servicer pursuant to this Section 7.2, Cellco, in its individual capacity, shall assume the obligations of the Servicer to acquire Receivables as set forth in Sections 3.4 and 4.7 of the Master Trust Receivables Transfer Agreement and Sections 2.5 and 2.6 of this Agreement without further action.

(d) Waiver of Servicer Termination Events. The Noteholders of a majority of the Note Balance of the Controlling Class or, if no Notes are Outstanding, the Owner Trustee, at the direction of the Class A Certificateholder, may direct the Indenture Trustee to waive a Servicer Termination Event, except with respect to a failure to make required deposits to or payment from any of the Bank Accounts, and the consequences thereof. Upon the waiver, the Servicer Termination Event will be deemed not to have occurred. No waiver will extend to any other Servicer Termination Event or impair a right relating to any other Servicer Termination Event. The Issuer will promptly notify the Rating Agencies of any waiver.

Section 7.3 Continue to Perform. If the Servicer resigns under Section 7.1, it will continue to perform its obligations as Servicer under this Agreement until the earlier to occur of (a) a Successor Servicer accepting its engagement as Servicer under Section 7.4 or (b) the date the Servicer is legally unable to act as Servicer. If the Servicer is terminated under this Agreement, it will continue to perform its obligations as Servicer under this Agreement until the date stated in the notice of termination. If Cellco is the resigning or removed Servicer, Cellco shall (x) remit any amounts due on the Receivables that are remitted to Cellco in error, rather than to the Successor Servicer as set forth in the notice sent to Obligors under Section 3.13, and provide the Successor Servicer with any necessary information regarding the amount remitted to the Successor Servicer by Cellco and the Receivable for which such amount was remitted and (y) continue to perform its remittance obligations set forth in Section 3.12(b) for as long as any

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Receivable continues to have a Principal Balance or until this Agreement is terminated as set forth in Section 8.3.

Section 7.4 Successor Servicer.

(a) Engagement of Successor Servicer; Indenture Trustee to Act.

(i) If the Servicer resigns or is terminated under this Agreement, the Indenture Trustee will promptly engage an institution having a net worth of not less than $50,000,000 whose regular business and operations includes the servicing of consumer receivables and can accommodate the servicing of device payment plan agreements, as the successor to the Servicer under this Agreement (the Successor Servicer) and successor to the Administrator under Section 3.4 of the Administration Agreement.

(ii) If no Person has accepted the engagement as Successor Servicer when the Servicer stops performing its obligations, the Indenture Trustee, without further action, will be automatically appointed the Successor Servicer to perform the obligations of the Servicer (other than any obligations specifically excluded) until such time as another Successor Servicer shall accept engagement as Successor Servicer. If the Indenture Trustee becomes the Successor Servicer, it (A) will do so in its individual capacity and not in its capacity as Indenture Trustee and, accordingly, Article VI of the Indenture will be inapplicable to the Indenture Trustee solely in its capacity as Successor Servicer and (B) may appoint as Servicer any one of its Affiliates, but the Indenture Trustee, in its capacity as Successor Servicer, will be liable for the actions and omissions of such Affiliate. If the Indenture Trustee is unwilling or legally unable to act as Successor Servicer, it will appoint, or petition a court of competent jurisdiction to appoint, an institution having a net worth of not less than $50,000,000 whose regular business and operations includes the servicing of consumer receivables and can accommodate the servicing of device payment plan agreements, as successor to the Servicer under this Agreement. The Indenture Trustee will be released from its obligations as Successor Servicer on the date that a new Servicer accepts its engagement as Successor Servicer.

(b) Acceptance of Engagement. The Successor Servicer will accept its engagement by assuming the Servicer's obligations under this Agreement or entering into an amendment to this Agreement or a new servicing agreement on substantially the same terms as this Agreement, in a form acceptable to the Owner Trustee and the Indenture Trustee. The Successor Servicer will deliver a copy of the assumption, amendment or new servicing agreement to the other parties and the Indenture Trustee. The Successor Servicer (other than the Indenture Trustee as Successor Servicer) will accept its engagement as Administrator according to Section 3.5 of the Administration Agreement. Promptly following a Successor Servicer's acceptance of its engagement, the Indenture Trustee will notify the Issuer, the Owner Trustee and the Secured Parties of the engagement. On receipt of a notice of engagement, the Issuer will promptly notify the Rating Agencies and the Asset Representations Reviewer, and the Owner Trustee will promptly notify the Certificateholders. Any Successor Servicer will agree to provide to Cellco any information relating to payments received from Obligors (including any payments received on a Receivable that was the subject of an upgrade for which none of the Marketing Agent, the related Originator or the Parent Support Provider deposited a required Upgrade Payment),

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delinquencies in payments by Obligors, any Written-Off Receivables and any other information related to the Obligors and the Receivables required by Cellco to service the accounts of which any Receivables are a part, including, but not limited to, granting and applying credits to any account for which none of the Marketing Agent, the related Originator or the Parent Support Provider remitted an Upgrade Payment, as set forth in Section 3.12(b). Any Successor Servicer will agree to be bound by the terms and conditions of the legal, regulatory, privacy and data protection policies set forth in Exhibit A attached hereto to the extent such Successor Servicer receives information from Cellco or any of its Affiliates relating to the Receivables. For the avoidance of doubt, no Successor Servicer will be required to assume or undertake the obligations of Cellco, as Servicer, under Sections 3.4 and 4.7 of the Master Trust Receivables Transfer Agreement or Sections 2.5 and 2.6 of this Agreement. No Successor Servicer shall have any liability for the acts or omissions of any predecessor Servicer.

(c) Compensation of Successor Servicer. The Indenture Trustee may make arrangements for the compensation of the Successor Servicer out of Collections as it and the Successor Servicer may agree. In addition to the Servicing Fee, on the date of its appointment as Successor Servicer, such Successor Servicer will receive a fee of $150,000 payable pursuant to Section 8.2(c) or 8.2(e) of the Indenture, as applicable, and thereafter, will be entitled to the Additional Successor Servicer Fee, which will be paid in accordance with the priorities set forth in Section 8.2(c) or 8.2(e) of the Indenture, as applicable.

(d) Transfer of Authority. On the effective date of the Servicer's resignation or termination or the later date that the Servicer stops performing its obligations, and solely to the extent the Successor Servicer is an entity other than the Indenture Trustee, all rights and obligations of the Servicer under this Agreement and of the Administrator under the Administration Agreement will become the rights and obligations of the Successor Servicer, including as successor Administrator. For the avoidance of doubt, (x) the resignation or removal of Cellco as Servicer will not result in the termination of Cellco's duties as Marketing Agent and (y) if the Indenture Trustee is the Successor Servicer, Cellco will continue to act as Administrator under the Administration Agreement, to the extent it is able to continue to perform thereunder pursuant to the terms of the Administration Agreement.

(e) Authority of Issuer and Indenture Trustee. The Issuer and the Indenture Trustee are authorized to execute and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all documents, and to do all other acts or things necessary or advisable to effect the termination and replacement of the Servicer.

Section 7.5 Transition of Servicing.

(a) Cooperation on Termination. On its resignation or termination, the Servicer will cooperate with the Issuer, the Owner Trustee, the Indenture Trustee and the Successor Servicer in effecting (i) the termination of its rights and obligations under this Agreement and (ii) an orderly transition of such rights and obligations to the Successor Servicer.

(b) Transfer of Cash, Receivable Files and Records. As soon as practicable after the effective date of its resignation or termination, the predecessor Servicer will (i) transfer to the Successor Servicer all funds relating to the Receivables that are held or later received by the

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predecessor Servicer and (ii) deliver to the Successor Servicer the Receivable Files and the accounts and records maintained by the Servicer. The Servicer will not be obligated to provide, license or assign its processes, procedures, models, servicing software or other applications to any Successor Servicer or any third party, or provide anything covered by a restriction on transfer or assignment or a confidentiality agreement or otherwise restricted by legal, regulatory, privacy or data protection policies.

(c) Expenses of Servicing Transition. All reasonable expenses incurred by the Issuer, the Owner Trustee, the Indenture Trustee and the Successor Servicer in connection with (i) the transition of servicing rights and obligations to the Successor Servicer and (ii) amending this Agreement or entering into an assumption agreement or new agreement to reflect a succession of the Servicer will be paid by the resigning or terminated Servicer on receipt of an invoice in reasonable detail.

Section 7.6 Merger, Consolidation, Succession or Assignment. Any Person (a) into which the Servicer is merged or consolidated, (b) resulting from a merger or consolidation to which the Servicer is a party, (c) succeeding to the Servicer's business or (d) that is an Affiliate of the Servicer to whom the Servicer has assigned this Agreement, will be the successor to the Servicer under this Agreement. Within fifteen (15) Business Days after the merger, consolidation, succession or assignment, such Person will (i) execute an agreement to assume the Servicer's obligations under this Agreement and each Transaction Document to which the Servicer is a party (unless the assumption happens by operation of Law), (ii) deliver to the Issuer, the Owner Trustee and the Indenture Trustee an Officer's Certificate and an Opinion of Counsel each stating that the merger, consolidation, succession or assignment and the assumption agreement comply with this Section 7.6 and (iii) notify the Rating Agencies of the merger, consolidation, succession or assignment.

ARTICLE VIII TERMINATION

Section 8.1 Optional Acquisition of Receivables; Clean-Up Redemption of Notes.

(a) Optional Acquisition. On each Payment Date following the last day of a Collection Period as of which the aggregate Principal Balance of the Receivables shall be equal to or less than 10% of the aggregate Principal Balance of the Receivables as of the Closing Date, the Class A Certificateholder (for as long as the Class A Certificateholder is an Originator or an Affiliate of the Originators), with the consent of the Administrator, on behalf of the Issuer, shall have the option to acquire, as of the end of the immediately preceding Collection Period, any Receivables remaining in the Trust Property on such date by transferring to the Issuer an amount equal to the Optional Acquisition Amount (the Optional Acquisition), and to redeem the Notes, in whole but not in part (the Clean-Up Redemption) without any Make-Whole Payment (other than any Make-Whole Payments already due and payable on such date).

(b) Exercise of Optional Acquisition and Clean-Up Redemption of Notes. The Class A Certificateholder may exercise its option set forth in Section 8.1(a) by notifying the Issuer, the Servicer, the Indenture Trustee, the Owner Trustee and the Rating Agencies, in writing, at least ten (10) days before the Payment Date on which the Optional Acquisition is to be exercised,

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After receiving such notice, the Indenture Trustee will promptly notify the Noteholders of the resulting Clean-Up Redemption and provide instructions for surrender of the Notes for final payment including all accrued and unpaid interest and any applicable Make-Whole Payments already due and payable on the Notes, as set forth in Section 10.1(a) of the Indenture.

On the Payment Date related to the Collection Period in which the Optional Acquisition is exercised, the Class A Certificateholder will deposit into the Collection Account the acquisition amount for such remaining Receivables as set forth in Section 8.1(a) equal to the fair market value of such Receivables as of the last day of the Collection Period immediately preceding such Payment Date as agreed upon by the Class A Certificateholder and the Issuer (the Optional Acquisition Amount); provided that the transfer may only occur if the Optional Acquisition Amount, together with any amounts on deposit in the Bank Accounts, is greater than or equal to the sum of (A) the Note Balance of the Notes, any accrued but unpaid interest and any unpaid Make-Whole Payments and (B) all other amounts payable by the Issuer under the Transaction Documents including, but not limited to, all fees, expenses and indemnities owed to the Indenture Trustee and the Owner Trustee under the Transaction Documents as of such date. For the avoidance of doubt, if the Class A Certificateholder and the Issuer cannot agree on the Optional Acquisition Amount, the Class A Certificateholder will not be permitted to exercise its option set forth in Section 8.1(a). On the Payment Date on which the Optional Acquisition is to be exercised, the Indenture Trustee shall transfer any amounts on deposit in the Reserve Account, the Acquisition Account and the Negative Carry Account into the Collection Account. Upon the exercise of the Optional Acquisition, the Notes will be redeemed and paid in full.

Section 8.2 Optional Redemption of Notes.

(a) Optional Redemption. On any Payment Date on and after the Payment Date in February 2021, the Class A Certificateholder (for as long as the Class A Certificateholder is an Originator or an Affiliate of the Originators), with the consent of the Administrator, on behalf of the Issuer, shall have the option to redeem the Notes, in whole but not in part (the Optional Redemption), with a required Make-Whole Payment.

(b) Exercise of Optional Redemption. The Class A Certificateholder may exercise its option set forth in Section 8.2(a) by notifying the Issuer, the Servicer, the Indenture Trustee, the Owner Trustee and the Rating Agencies, in writing, at least ten (10) days before the Payment Date on which the Optional Redemption is to be exercised. After receiving such notice, the Indenture Trustee will promptly notify the Noteholders of the Optional Redemption and provide instructions for surrender of the Notes for final payment including all accrued and unpaid interest and any applicable Make-Whole Payments due and payable on the Notes, as set forth in Section 10.1(a) of the Indenture.

On the Payment Date on which the Optional Redemption is to be exercised, the Issuer shall transfer the entire pool of Receivables to another Verizon special purpose entity or a third-party purchaser and the party receiving the Receivables shall cause the acquisition amount received by the Issuer for the Receivables to be deposited by the Issuer (or the Servicer, on its behalf) into the Collection Account, which amount shall be equal to the fair market value of such Receivables as of the last day of the Collection Period immediately preceding such Payment Date as agreed upon by the Class A Certificateholder and the Issuer; provided that the transfer

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may only occur if the amount received in connection with any such transfer, together with any amounts on deposit in the Bank Accounts, is greater than or equal to the sum of (A) the Note Balance of the Notes, any accrued but unpaid interest and any unpaid Make-Whole Payments and (B) all other amounts payable by the Issuer under the Transaction Documents including, but not limited to, all fees, expenses and indemnities owed to the Indenture Trustee and the Owner Trustee under the Transaction Documents as of such date. On the Payment Date on which the Optional Redemption is to be exercised, the Indenture Trustee shall transfer any amounts on deposit in the Reserve Account, the Acquisition Account and the Negative Carry Account into the Collection Account. Upon the exercise of the Optional Redemption, the Notes will be redeemed and paid in full.

Section 8.3 Termination. This Agreement will terminate on the earlier to occur of (a) the date upon which the last remaining Receivable is paid in full, settled, sold or written off and any amounts received are applied and (b) the Issuer is terminated under Section 8.1 of the Trust Agreement.

ARTICLE IX OTHER AGREEMENTS

Section 9.1 Financing Statements.

(a) Filing of Financing Statements. The Depositor will file financing and continuation statements, and amendments to the statements, in the jurisdictions and with the filing offices necessary to perfect the Issuer's interest in the Depositor Transferred Property. The Depositor will promptly deliver to the Issuer and the Indenture Trustee file-stamped copies of, or filing receipts for, any financing statement, continuation statement and amendment to a previously filed financing statement.

(b) Issuer and Indenture Trustee Authorized to File Financing Statements. The Depositor authorizes the Issuer and the Indenture Trustee (but the Indenture Trustee will not be required to do so) to file financing and continuation statements, and amendments to the statements, in the jurisdictions and with the filing offices as the Issuer or the Indenture Trustee may determine are necessary or advisable to perfect the Issuer's interest in the Depositor Transferred Property. The financing and continuation statements may describe the Depositor Transferred Property as the Issuer or the Indenture Trustee may reasonably determine to perfect the Issuer's interest in the Depositor Transferred Property. The Issuer or the Indenture Trustee (with respect to the Indenture Trustee, solely to the extent it has elected to make such filing) will promptly deliver to the Depositor file-stamped copies of, or filing receipts for, any financing statement, continuation statement and amendment to a previously filed financing statement. The permissive right of the Indenture Trustee to file any financing statement shall not be construed as a duty or obligation.

(c) Relocation of Depositor. The Depositor will notify the Owner Trustee and the Indenture Trustee at least ten (10) days before a relocation of its chief executive office or change in its corporate structure, form of organization or jurisdiction of organization if it could require the filing of a new financing statement or an amendment to a previously filed financing statement under Section 9-307 of the UCC. If required, the Depositor will promptly file new

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financing statements or amendments to all previously filed financing statements. The Depositor will maintain its chief executive office within the United States and will maintain its jurisdiction of organization in only one State.

(d) Change of Depositor's Name. The Depositor will notify the Owner Trustee and the Indenture Trustee at least ten (10) days before any change in the Depositor's name that could make a financing statement filed under this Section 9.1 seriously misleading under Section 9-506 of the UCC. If required, the Depositor will promptly file amendments to all previously filed financing statements.

Section 9.2 No Transfer or Lien by Depositor. Except for the transfer and assignment under this Agreement, the Depositor will not transfer or assign any Depositor Transferred Property to another Person or Grant or allow a Lien, other than a Permitted Lien, on an interest in any Depositor Transferred Property. The Depositor will defend the Issuer's interest in the Depositor Transferred Property against claims of third parties claiming through the Depositor.

Section 9.3 Expenses. The Depositor will pay the expenses to perform its obligations under this Agreement and the Issuer's and the Indenture Trustee's reasonable expenses to perfect the Issuer's interest in the Depositor Transferred Property and to enforce the Depositor's obligations under this Agreement.

Section 9.4 Receivables Information.

(a) Servicer's Receivables Systems. On and after the Closing Date or Acquisition Date, as applicable, until a Receivable has been paid in full, acquired or sold to a third party under Section 3.4, the Servicer will mark its receivables systems to indicate clearly that the Receivable is owned by the Issuer and has been pledged to the Indenture Trustee under the Indenture.

(b) List of Receivables. If requested by the Owner Trustee or the Indenture Trustee, the Servicer will furnish a list of Receivables (by loan number) to the Owner Trustee and the Indenture Trustee.

Section 9.5 No Petition. The parties agree that, before the date that is one year and one day (or, if longer, any applicable preference period) after the payment in full of (a) all securities issued by the Depositor or by a trust for which the Depositor was a depositor or (b) the Notes, it will not start or pursue against, or join any other Person in starting or pursuing against, (i) the Depositor or (ii) the Issuer, respectively, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other proceedings under any bankruptcy or similar Law. This Section 9.5 will survive the termination of this Agreement.

Section 9.6 Limited Recourse. Each party agrees that any claim that it may seek to enforce against the Depositor or the Issuer under this Agreement is limited to the Depositor Transferred Property only and is not a claim against the Depositor's or the Issuer's assets as a whole or against assets other than the Depositor Transferred Property.

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Section 9.7 Limitation of Liability.

(a) Owner Trustee. This Agreement has been signed on behalf of the Issuer by Wilmington Trust, National Association not in its individual capacity but solely in its capacity as Owner Trustee of the Issuer. In no event will Wilmington Trust, National Association in its individual capacity or as a beneficial owner of the Issuer be liable for the representations, warranties, covenants, agreements or other obligations of the Issuer under this Agreement. For all purposes under this Agreement, the Owner Trustee is subject to, and entitled to the benefits of, the Trust Agreement. Neither the Issuer nor the Owner Trustee will have any liability for any act or failure to act of the Servicer, including any action taken under a power of attorney given under this Agreement.

(b) Indenture Trustee. This Agreement has been signed by U.S. Bank National Association not in its individual capacity but solely in its capacity as Indenture Trustee. In performing its obligations under this Agreement, the Indenture Trustee is subject to, and entitled to the benefits of, the Indenture. The Indenture Trustee will not have any liability for any act or failure to act of the Servicer, the Custodian, the Marketing Agent, the Issuer or any other Person.

Section 9.8 Tax Treatment of Notes. Each of the Depositor and the Servicer agree to treat the Notes as indebtedness for U.S. federal, State and local income and franchise tax purposes.

Section 9.9 Regulation RR Risk Retention. Cellco, as Sponsor, agrees that (i) each of the Sponsor, the Master Trust, each Originator and the nominee of the Originators is under the common control of Verizon and therefore, the nominee of the Originators (which nominee is also the sole equityholder of the Master Trust) is a majority-owned affiliate of the Sponsor as defined in the U.S. Credit Risk Retention Rules, (ii) the Sponsor will cause the nominee of the Originators to, and the nominee of the Originators will, retain the Residual Interest on the Closing Date and (iii) the Sponsor will not, and will not permit the Master Trust, the Originators or the nominee of the Originators to, sell, transfer, finance or hedge the Residual Interest except as permitted by the U.S. Credit Risk Retention Rules.

Section 9.10 Cap Collateral Account. If the Cap Counterparty is required to post collateral under the terms of the Cap Agreement, upon written direction and notification of such requirement, the Servicer shall establish a segregated account (the Cap Collateral Account) at a Qualified Institution that (i) is not affiliated with the Cap Counterparty and (ii) has total assets of at least $10,000,000,000 (the Cap Custodian), titled as an account of the Cap Counterparty as depositor and entitlement holder. In the event that the Cap Custodian no longer satisfies the requirements set forth in the immediately preceding sentence, the Issuer, the Servicer and the Cap Counterparty shall use their reasonable best efforts to move the Cap Collateral Account and any collateral posted therein to another financial institution satisfying the requirements set forth in the immediately preceding sentence within sixty (60) calendar days. The Cap Collateral Account shall be subject to a tri-party account control agreement to be entered into among the Cap Counterparty, the Issuer and the Cap Custodian (the Control Agreement). The Control Agreement shall provide, among other customary matters, that (x) the Cap Counterparty shall be entitled to originate entitlement orders and instructions, and receive interest and distributions, with respect to the Cap Collateral Account so long as the Issuer has not delivered a notice to the

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Cap Custodian and the Cap Counterparty to the effect that the Issuer shall have exclusive control over the Cap Collateral Account, (y) following delivery of such notice of exclusive control the Cap Custodian shall comply with instructions and entitlement orders originated by the Issuer without further consent by the Cap Counterparty, and (z) the Control Agreement shall terminate on the fifth Business Day following delivery of a notice from the Cap Counterparty to the Cap Custodian and the Issuer that the Cap Counterparty has designated an Early Termination Date (as defined in the Cap Agreement) in respect of all Transactions (as defined in the Cap Agreement) for the reason that the Issuer is the Defaulting Party (as defined in the Cap Agreement) or the sole Affected Party (as defined in the Cap Agreement) with respect to a Termination Event (as defined in the Cap Agreement), unless such notice is contested by the Issuer within such period of five (5) Business Days. The Issuer agrees that it shall not assert exclusive control over, or originate entitlement orders or instructions for the disposition of funds with respect to, the Cap Collateral Account unless the conditions for the exercise of its rights and remedies pursuant to the Cap Agreement are met and such assertion of exclusive control or origination of instructions or entitlement orders is for the purpose of exercising such rights and remedies. The only permitted withdrawal from or application of funds on deposit in, or otherwise to the credit of, the Cap Collateral Account shall be (i) for application to obligations of the Cap Counterparty to the Issuer under the Cap Agreement in accordance with the terms of the Cap Agreement or (ii) to return collateral to the Cap Counterparty when and as required by the Cap Agreement or applicable law. Investment earnings on the Cap Collateral Account, if any, will be distributed to the Cap Counterparty.

ARTICLE X MISCELLANEOUS

Section 10.1 Amendments.

(a) Amendments to Clarify and Correct Errors and Defects. The parties may amend this Agreement (including Appendix A) to clarify an ambiguity, correct an error or correct or supplement any term of this Agreement that may be defective or inconsistent with the other terms of this Agreement, or to make Benchmark Replacement Conforming Changes, in each case, without the consent of the Noteholders, the Certificateholders or any other Person. The parties may amend any term or provision of this Agreement (including Appendix A) from time to time for the purpose of conforming the terms of this Agreement (including Appendix A) to the description thereof in the Prospectus, without the consent of Noteholders, the Certificateholders or any other Person. The Administrator may amend any term or provision of this Agreement (including Appendix A) from time to time for the purpose of making Benchmark Replacement Conforming Changes, without the consent of Noteholders, the Certificateholders, any party to this Agreement or any other Person. Notice of the occurrence of a Benchmark Transition Event and its related Benchmark Replacement Date, the determination of a Benchmark Replacement and the making of any Benchmark Replacement Conforming Changes will be delivered in writing by the Administrator to the Issuer, the Owner Trustee, a Responsible Person of the Indenture Trustee, the Parent Support Provider, the Sponsor, the Depositor and the Servicer and included in the Monthly Investor Report. Notwithstanding anything in the Transaction Documents to the contrary, upon the delivery of notice to a Responsible Person of the Indenture Trustee and the inclusion of such information in the Monthly Investor Report, the relevant Transaction Documents will be deemed to have been amended to reflect the new Unadjusted

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Benchmark Replacement, Benchmark Replacement Adjustment and/or Benchmark Replacement Conforming Changes without further compliance with the amendment provisions of the relevant Transaction Documents.

(b) Other Amendments. Other than as set forth in Section 10.1(c), the parties may amend this Agreement (including Appendix A) to add any provisions to, or change in any manner or eliminate any provisions of, this Agreement or for the purpose of modifying in any manner the rights of the Noteholders under this Agreement, with the consent of the Certificateholders, either (1) without the consent of the Noteholders if (x) the Issuer or the Administrator delivers an Officer's Certificate to the Indenture Trustee and the Owner Trustee stating that the amendment will not have a material adverse effect on the Noteholders, or (y) the Rating Agency Condition is satisfied with respect to such amendment or (2) if the interests of the Noteholders are materially and adversely affected, with the consent of the holders of a majority of the Note Balance of the Controlling Class.

(c) Amendments Requiring Consent of all Affected Noteholders and Certificateholders. No amendment to this Agreement (including Appendix A) may, without the consent of all adversely affected Noteholders and Certificateholders, (i) change the applicable Final Maturity Date on a Note or change the principal amount of or interest rate or Make-Whole Payment on a Note; (ii) modify the percentage of the Note Balance of the Notes or the Controlling Class required for any action; (iii) modify or alter the definition of Outstanding, Controlling Class or Amortization Events, or (iv) change the Required Reserve Amount, the Required Acquisition Deposit Amount or the Required Negative Carry Amount.

(d) Consent of Indenture Trustee and Owner Trustee. The consent of the Indenture Trustee will be required for any amendment under Sections 10.1(b) or (c) that has a material adverse effect on the rights, obligations, immunities or indemnities of the Indenture Trustee. The consent of the Owner Trustee will be required for any amendment under Sections 10.1(b) or (c) that has a material adverse effect on the rights, obligations, immunities or indemnities of the Owner Trustee, which consent will not be unreasonably withheld.

(e) Opinion of Counsel. Before executing any amendment to this Agreement, the Owner Trustee and the Indenture Trustee shall be entitled to receive and conclusively rely upon, and the Depositor will deliver, an Opinion of Counsel stating that the execution of the amendment is permitted by this Agreement and all conditions precedent thereto have been satisfied.

(f) Notice of Amendments. Promptly after the execution of an amendment, the Depositor will deliver, or will cause the Administrator to deliver, a copy of the amendment to the Indenture Trustee and the Rating Agencies, and the Indenture Trustee will notify the Noteholders of the substance of the amendment.

(g) Noteholder Consent. For any amendment to this Agreement (or Appendix A) requiring the consent of any Noteholders, the Indenture Trustee will, when directed by Issuer Order, notify the Noteholders to request consent and follow its reasonable procedures to obtain consent. It shall not be necessary for the consent of the Noteholders to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall

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approve the substance thereof. For the avoidance of doubt, any Noteholder consenting to any amendment shall be deemed to agree that such amendment does not have a material adverse effect on such Noteholder.

Section 10.2 Assignment; Benefit of Agreement; Third-Party Beneficiary.

(a) Assignment. Except as stated in Sections 5.3, 7.4 and 7.6, this Agreement may not be assigned by the Depositor or the Servicer without the consent of the Owner Trustee, the Indenture Trustee, the Certificateholders and the Noteholders of at least 66-2/3% of the Note Balance of the Controlling Class.

(b) Benefit of Agreement; Third-Party Beneficiaries. This Agreement is for the benefit of and will be binding on the parties and their permitted successors and assigns. The Owner Trustee and the Indenture Trustee, for the benefit of the Secured Parties, will be third-party beneficiaries of this Agreement and may enforce this Agreement against the Depositor and the Servicer. No other Person will have any right or obligation under this Agreement.

Section 10.3 Notices.

(a) Notices to Parties. All notices, requests, directions, consents, waivers or other communications to or from the parties must be in writing and will be considered received by the recipient:

(i) for personally delivered, express or certified mail or courier, when received;

(ii) for a fax, when receipt is confirmed by telephone, reply email or reply fax from the recipient;

(iii) for an email, when receipt is confirmed by telephone or reply email from the recipient; and

(iv) for an electronic posting to a password-protected website to which the recipient has access, on delivery of an email (without the requirement of confirmation of receipt) stating that the electronic posting has been made.

(b) Notice Addresses. A notice, request, direction, consent, waiver or other communication must be addressed to the recipient at its address stated in Schedule B, which address the party may change at any time by notifying the other parties.

(c) Notices to Noteholders. Notices to a Noteholder will be considered received by the Noteholder:

(i) for Definitive Notes, for overnight mail, on delivery or, for registered first class mail, postage prepaid, three (3) days after deposit in the mail properly addressed to the Noteholder at its address in the Note Register; or

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(ii) for Book-Entry Notes, when delivered under the procedures of the Clearing Agency, whether or not the Noteholder actually receives the notice.

Section 10.4 Agent for Service.

(a) Depositor. The agent for service of the Depositor for this Agreement will be the person holding the office of Secretary of the Depositor at the following address:

Verizon ABS LLC One Verizon Way Basking Ridge, New Jersey 07920

(b) Servicer. The agent for service of the Servicer for this Agreement will be the person holding the office of Secretary of the Servicer at the following address:

Cellco Partnership d/b/a Verizon Wireless One Verizon Way Basking Ridge, New Jersey 07920

(c) Marketing Agent. The agent for service of the Marketing Agent for this Agreement will be the person holding the office of Secretary of the Marketing Agent at the following address:

Cellco Partnership d/b/a Verizon Wireless One Verizon Way Basking Ridge, New Jersey 07920

Section 10.5 GOVERNING LAW. THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO ANY OTHERWISE APPLICABLE CONFLICTS OF LAW PRINCIPLES). FOR PURPOSES OF THE UCC, NEW YORK SHALL BE DEEMED TO BE THE SECURITIES INTERMEDIARY'S JURISDICTION, AND THE LAW OF THE STATE OF NEW YORK SHALL GOVERN ALL ISSUES SPECIFIED IN ARTICLE 2(1) OF THE HAGUE SECURITIES CONVENTION. NOTWITHSTANDING SECTION 10.1 OF THIS AGREEMENT, THE PARTIES WILL NOT AGREE TO AMEND THIS AGREEMENT TO CHANGE THE GOVERNING LAW TO ANY LAW OTHER THAN THE LAWS OF THE STATE OF NEW YORK.

Section 10.6 Submission to Jurisdiction. Each party submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State Court sitting in New York, New York for legal proceedings relating to this Agreement. Each party irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or in the future have to the venue of a proceeding brought in such a court and any claim that the proceeding was brought in an inconvenient forum.

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Section 10.7 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY MATTER ARISING THEREUNDER WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

Section 10.8 No Waiver; Remedies. No party's failure or delay in exercising a power, right or remedy under this Agreement will operate as a waiver. No single or partial exercise of a power, right or remedy will preclude any other or further exercise of the power, right or remedy or the exercise of any other power, right or remedy. The powers, rights and remedies under this Agreement are in addition to any powers, rights and remedies under Law.

Section 10.9 Severability. If a part of this Agreement is held invalid, illegal or unenforceable, then it will be deemed severable from the remaining Agreement and will not affect the validity, legality or enforceability of the remaining Agreement.

Section 10.10 Headings. The headings in this Agreement are included for convenience and will not affect the meaning or interpretation of this Agreement.

Section 10.11 Counterparts. This Agreement may be executed in multiple counterparts. Each counterpart will be an original and all counterparts will together be one document.

Section 10.12 Limitation of Rights of the Cap Counterparty. All of the rights of the Cap Counterparty in, to and under this Agreement or any other Transaction Document, other than the Cap Agreement (including, but not limited to, the Cap Counterparty's rights to receive notice of any action hereunder or under any other Transaction Document and to give or withhold consent to any action hereunder or under any other Transaction Document), shall terminate upon the termination of the Cap Agreement in accordance with the terms thereof.

Section 10.13 Intent of the Parties; Reasonableness. The Depositor, the Servicer and the Issuer acknowledge and agree that the purpose of Sections 6.6 and 6.7 of this Agreement is to facilitate compliance by the Issuer and the Depositor with the provisions of Regulation AB and related rules and regulations of the Commission. None of the Depositor, the Administrator nor the Issuer shall exercise its right to request delivery of information or other performance under these provisions other than in good faith, or for purposes other than compliance with the Securities Act, the Exchange Act and the rules and regulations of the Commission thereunder. The Servicer acknowledges that interpretations of the requirements of Regulation AB may change over time, whether due to interpretive guidance provided by the Commission or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agrees to comply with requests made by the Issuer or the Administrator in good faith for delivery of information under these provisions on the basis of evolving interpretations of Regulation AB. In connection with this transaction, the Servicer shall cooperate fully with the Administrator and the Issuer to deliver to the Administrator or Issuer, as applicable (including any of its assignees or designees), any and all statements, reports, certifications, records and any other information necessary in the good faith determination of the Issuer or the Administrator to permit the Issuer or Administrator (acting on behalf of the Issuer) to comply with the provisions of Regulation AB, together with such disclosures relating to the Servicer, any Subservicer and

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the Receivables, or the servicing of the Receivables, reasonably believed by the Issuer or the Administrator to be necessary in order to effect such compliance.

ARTICLE XI

ASSET REPRESENTATIONS REVIEW; DISPUTE RESOLUTION

Section 11.1 Asset Representations Review.

(a) Upon the occurrence of a Delinquency Trigger with respect to any Collection Period, the Servicer will promptly send to the Administrator, the Indenture Trustee and each Noteholder (and to each applicable Clearing Agency for distribution to Note Owners in accordance with the rules of such Clearing Agency) as of the most recent Record Date a notice describing (i) the occurrence of the Delinquency Trigger, and including reasonably detailed calculations thereof, and (ii) the rights of the Noteholders and Note Owners regarding an Asset Representations Review (including a description of the method by which Noteholders and Note Owners may contact the Indenture Trustee in order to request a Noteholder vote in respect of an Asset Representations Review). In connection with the foregoing, upon request from the Servicer, the Indenture Trustee shall provide a list of the Noteholders of record as of the most recent Record Date. The notice provided under this Section 11.1 (a) and the related 10-D that is filed are the only notices that will be provided to Noteholders concerning whether the Delinquency Trigger has occurred.

(b) If the Indenture Trustee notifies the Servicer pursuant to 14.2 of the Indenture that sufficient Noteholders have voted within the required time to initiate an Asset Representations Review of all 60-Day Delinquent Receivables by the Asset Representations Reviewer pursuant to the Asset Representations Review Agreement, then the Servicer shall:

(i) promptly notify the Asset Representations Reviewer and the Indenture Trustee of the number of 60-Day Delinquent Receivables;

(ii) within sixty (60) days after receipt by the Servicer of that notice from the Indenture Trustee, render reasonable assistance, including granting access to copies of any underlying documents and Receivable Files and all other relevant documents, to the Asset Representations Reviewer to facilitate the performance of a review of all 60-Day Delinquent Receivables, pursuant to Section 3.3(a) of the Asset Representations Review Agreement, in order to verify compliance with the representations and warranties made to the Issuer by the Depositor; provided, that the Servicer shall use its best efforts to redact any materials provided to the Asset Representations Reviewer in order to remove any Personally Identifiable Information without changing the meaning or usefulness of the Review Materials; and

(iii) provide such other reasonable assistance to the Asset Representations Reviewer as it requests in order to facilitate its Asset Representations Review of the 60-Day Delinquent Receivables pursuant to the Asset Representations Review Agreement.

Section 11.2 Dispute Resolution.

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(a) If (i) the Issuer or the Indenture Trustee (acting on behalf of the Noteholders) or (ii) any Noteholder or Verified Note Owner requests, by written notice to (x) the Indenture Trustee (which will be forwarded to the related Originator or the Servicer as applicable) or (y) the related Originator or the Servicer (in the case of Receivables transferred by the Master Trust) (any such party making a request, the Requesting Party), that a Receivable be reacquired or acquired due to an alleged breach of the Eligibility Representation with respect to that Receivable as set forth in Section 3.3 of the Originator Receivables Transfer Agreement or Section 3.3 of the Master Trust Receivables Transfer Agreement, respectively, and the request has not been fulfilled or otherwise resolved to the reasonable satisfaction of the Requesting Party within one-hundred eighty (180) days of the receipt of such request by the related Originator or the Servicer (in the case of Receivables transferred by the Master Trust), then the Requesting Party will have the right to refer the matter, at its discretion, to either mediation (including non-binding arbitration) or third-party binding arbitration pursuant to this Section 11.2. Dispute resolution to resolve reacquisition or acquisition requests will be available regardless of whether Noteholders and Note Owners voted to direct an Asset Representations Review or whether the Delinquency Trigger occurred. The Depositor will provide written direction to the Indenture Trustee instructing it to notify the Requesting Party (directly if the Requesting Party is a Noteholder and through the applicable Clearing Agency for distribution to such Requesting Party, if the Requesting Party is a Note Owner, in accordance with the rules of such Clearing Agency) no later than five (5) Business Days after the end of the 180-day period of the date when the 180-day period ends without resolution by the appropriate party, which written direction will specify the identity of the Requesting Party and the date as of which that 180-day period shall have ended; provided, that the Indenture Trustee shall have no other obligation whatsoever to participate in any dispute resolution, mediation or arbitration to determine if a reacquisition or acquisition request has been resolved within the applicable 180-day period. The Requesting Party must provide notice of its intention to refer the matter to mediation, to refer the matter to arbitration, or to institute a legal proceeding, to the Depositor within thirty (30) days after the delivery of notice of the end of the 180-day period. The Depositor will participate in the resolution method selected by the Requesting Party. For the avoidance of doubt, the Owner Trustee shall have no obligation whatsoever to participate in any dispute resolution, mediation or arbitration to determine if a reacquisition or acquisition request has been resolved within the applicable 180-day period. For the avoidance of doubt, if the Indenture Trustee does not agree to pursue or otherwise be involved in resolving any reacquisition or acquisition request or dispute resolution proceeding, the related Noteholders or Verified Note Owners may independently pursue dispute resolution in respect of such reacquisition or acquisition. If the Indenture Trustee brings a dispute resolution action based on Noteholder direction to do so, the Requesting Party shall be deemed to be the requesting Note Owners (or the party to the arbitration) for purposes of the dispute resolution proceeding, including allocation of fees and expenses. The Indenture Trustee shall not be liable for any costs, expenses and/or liabilities allocated to a Requesting Party as part of the dispute resolution proceeding. Further, the Indenture Trustee shall be under no obligation under this Agreement, any other Transaction Document or otherwise to monitor reacquisition or acquisition activity or to independently determine which reacquisition or acquisition requests remain unresolved after one-hundred eighty (180) days.

(b) If the Requesting Party selects mediation (including non-binding arbitration) as the resolution method, the following provisions will apply:

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(i) The mediation will be administered by JAMS pursuant to its Mediation Procedures in effect on the date the arbitration is filed.

(ii) The mediator will be impartial, knowledgeable about and experienced with the laws of the State of New York and an attorney specializing in commercial litigation with at least 15 years of experience and who will be appointed from a list of neutrals maintained by JAMS. Upon being supplied a list of at least 10 potential mediators by JAMS each party will have the right to exercise two peremptory challenges within fourteen (14) days and to rank the remaining potential mediators in order of preference JAMS will select the mediator from the remaining attorneys on the list respecting the preference choices of the parties to the extent possible.

(iii) The parties will use commercially reasonable efforts to begin the mediation within thirty (30) days of the selection of the mediator and to conclude the mediation within sixty (60) days of the start of the mediation.

(iv) The fees and expenses of the mediation will be allocated as mutually agreed by the parties as part of the mediation.

(c) If the Requesting Party selects binding arbitration as the resolution method, the following provisions will apply:

(i) The arbitration will be administered by the AAA pursuant its Arbitration Rules in effect on the date the arbitration is filed.

(ii) The arbitral panel will consist of three members, (i) one to be appointed by the Requesting Party within five (5) Business Days of providing notice to the Depositor of its selection of arbitration, (ii) one to be appointed by the Depositor within five (5) Business Days of that appointment and (iii) the third, who will preside over the panel, to be chosen by the two party-appointed arbitrators within five (5) Business Days of the second appointment. If any party fails to appoint an arbitrator or the two party-appointed arbitrators fail to appoint the third within the stated time periods, then the appointments will be made by AAA pursuant to the Arbitration Rules. In each such case, each arbitrator will be impartial, knowledgeable about and experienced with the laws of the State of New York and an attorney specializing in commercial litigation with at least 15 years of experience.

(iii) Each arbitrator will be independent and will abide by the Code of Ethics for Arbitrators in Commercial Disputes in effect as of the date of this Agreement. Prior to accepting an appointment, each arbitrator must promptly disclose any circumstances likely to create a reasonable inference of bias or conflict of interest or likely to preclude completion of the hearings within the prescribed time schedule. Any arbitrator may be removed by AAA for cause consisting of actual bias, conflict of interest or other serious potential for conflict.

(iv) After consulting with the parties, the arbitral panel will devise procedures and deadlines for the arbitration, to the extent not already agreed to by the parties, with the goal of expediting the proceeding and completing the arbitration within ninety (90)

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days after appointment. The arbitral panel will have the authority to schedule, hear, and determine any and all motions, including dispositive and discovery motions, in accordance with then-prevailing New York law (including prehearing and post hearing motions), and will do so on the motion of any party to the arbitration.

(v) Notwithstanding whatever other discovery may be available under the Rules, unless otherwise agreed by the parties, each party to the arbitration will be presumptively limited to the following discovery in the arbitration: (A) four witness depositions not to exceed five hours, and (B) one set of interrogations, document requests, and requests for admissions; provided that the arbitral panel will have the ability to grant the parties, or either of them, additional discovery to the extent that the arbitral panel determines good cause is shown that such additional discovery is reasonable and necessary.

(vi) The arbitral panel will make its final determination no later than ninety (90) days after appointment. The arbitral panel will resolve the dispute in accordance with the terms of this Agreement, and may not modify or change this Agreement in any way. The arbitral panel will not have the power to award punitive damages or consequential damages in any arbitration conducted by them. In its final determination, the arbitral panel will determine and award the costs of the arbitration (including the fees of the arbitral panel, cost of any record or transcript of the arbitration, and administrative fees) and reasonable attorneys' fees to the parties as determined by the arbitral panel in its reasonable discretion. The determination in any binding arbitration of the arbitral panel will be in writing and counterpart copies will be promptly delivered to the parties. The determination will be final and non-appealable and may be enforced in any court of competent jurisdiction.

(vii) By selecting binding arbitration, the selecting party is giving up the right to sue in court, including the right to a trial by jury.

(viii) No person may bring class or collective claims in arbitration even if the Arbitration Rules would allow them. Notwithstanding anything herein to the contrary, the arbitral panel may award money or injunctive relief in favor of the individual party seeking relief and only to the extent necessary to provide relief warranted by that party's individual claim.

(d) The following provisions will apply to both mediations and arbitrations:

(i) Any mediation or arbitration will be held in New York, New York; and

(ii) The details and/or existence of any unfulfilled reacquisition or acquisition request, any informal meetings, mediations or arbitration proceedings conducted under this Section 11.2, including all offers, promises, conduct and statements, whether oral or written, made in the course of the parties' attempt to informally resolve an unfulfilled reacquisition or acquisition request, and any discovery taken in connection with any arbitration, will be confidential, privileged and inadmissible for any purpose, including impeachment, in any mediation, arbitration or litigation, or other proceeding (including

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any proceeding under this Section 11.2). This information will be kept strictly confidential and will not be disclosed or discussed with any third party (excluding a party's attorneys, experts, accountants and other agents and representatives, as reasonably required in connection with any resolution procedure under this Section 11.2), except as otherwise required by law, regulatory requirement or court order. If any party to a resolution procedure receives a subpoena or other request for information from a third party (other than a governmental regulatory body) for such confidential information, the recipient will promptly notify the other party to the resolution procedure and will provide the other party with the opportunity to object to the production of its confidential information.

[Remainder of Page Left Blank]

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IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed by its duly authorized officer as of the date and year first above written.

VERIZON ABS LLC, as Depositor

By:  Name: Title:

VERIZON OWNER TRUST 2020-A, as Issuer

By: Wilmington Trust, National Association, not in its individual capacity but solely as Owner Trustee of Verizon Owner Trust 2020-A

By:  Name: Title:

CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS, as Servicer, Marketing Agent and Custodian

By:  Name: Title:

Source: VERIZON ABS LLC, 8-K, 1/23/2020





AGREED AND ACCEPTED BY:

U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture Trustee

By:  Name: Title:

Solely with respect to Section 4.1(f):

U.S. BANK NATIONAL ASSOCIATION, not in its individual capacity but solely as Securities Intermediary

By:  Name: Title:

WILMINGTON TRUST, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee

By:  Name: Title:

CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS, solely with respect to the obligations set forth in Section 7.1, in its individual capacity

By:  Name: Title:

Source: VERIZON ABS LLC, 8-K, 1/23/2020





CELLCO PARTNERSHIP d/b/a VERIZON WIRELESS, as Sponsor, solely with respect to the obligations set forth in Section 3.5(a)(ii) and Section 9.9

By:  Name: Title:

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Schedule A

Schedule of Initial Receivables

Delivered Electronically to Indenture Trustee at Closing

SA-1

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Schedule B

Notice Addresses

1. If to Cellco, in its individual capacity or as Servicer, Marketing Agent, Custodian or Administrator:

Cellco Partnership One Verizon Way Basking Ridge, New Jersey 07920 Attention: Assistant Treasurer Telephone: 908-559-5870 Email: kee.chan.sin@verizon.com

2. If to the Depositor:

Verizon ABS LLC One Verizon Way Basking Ridge, New Jersey 07920 Attention: Chief Financial Officer Telephone: 908-559-5870 Email: kee.chan.sin@verizon.com

With a copy to:

Cellco Partnership One Verizon Way Basking Ridge, New Jersey 07920 Attention: Assistant Treasurer Telephone: 908-559-5870 Email: kee.chan.sin@verizon.com

3. If to the Issuer:

c/o the Owner Trustee at the Corporate Trust Office of the Owner Trustee

With copies to:

Cellco Partnership One Verizon Way Basking Ridge, New Jersey 07920 Attention: Assistant Treasurer Telephone: 908-559-5870 Email: kee.chan.sin@verizon.com

SB-1

Source: VERIZON ABS LLC, 8-K, 1/23/2020





4. If to the Parent Support Provider:

Verizon Communications Inc. 1095 Avenue of the Americas New York, New York 10036 Attn: Assistant Treasurer Telephone: 908-559-5870 Email: kee.chan.sin@verizon.com

5. If to the Owner Trustee, at the Corporate Trust Office of the Owner Trustee

6. If to the Indenture Trustee, at the Corporate Trust Office of the Indenture Trustee

7. If to S&P:

S&P Global Ratings 55 Water Street New York, New York 10041 Attention: Asset Backed Surveillance Department Telephone: (212) 438-1000 Fax: (212) 438-2649

8. If to Moody's:

Moody's Investors Service, Inc. ABS Monitoring Department 7 World Trade Center 250 Greenwich Street New York, New York 10007 Email: abssurveillance@moodys.com

9. If to the Cap Counterparty:

Bank of America Merrill Lynch 1133 Avenue of the Americas 42nd Floor, NY1-533-42-01 New York, NY 10036-6710 Attention: Agreements & Documentation Facsimile No.: (212) 548-8622

With a copy to: dg.dg_gmg_cid_fax_notices@bofasecurities.com

10. If to the Asset Representations Reviewer:

Pentalpha Surveillance LLC 375 N French Rd Suite 100 Amherst NY 14228

SB-2

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Attention: VZOT 2020-A Transaction Manager Telephone: (716) 418-1634 Fax: (716) 204-5902 Email: notices@pentalphasurveillance.com (with VZOT 2020-A in the subject line)

SB-3

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Appendix A

Usage and Definitions

Verizon Owner Trust 2020-A

Usage

The following usage rules apply to this Appendix, any document that incorporates this Appendix and any document delivered under any such document:

(a) The term document includes any document, agreement, instrument, certificate, notice, report, statement or other writing, whether in electronic or physical form.

(b) Accounting terms not defined or not completely defined in this Appendix will have the meanings given to them under generally accepted accounting principles, international financial reporting standards or other applicable accounting principles in effect in the United States on the date of the document that incorporates this Appendix.

(c) References to Article, Section, Exhibit, Schedule, Appendix or another subdivision of or to an attachment are, unless otherwise stated, to an article, section, exhibit, schedule, appendix or subdivision of or an attachment to the document in which the reference appears.

(d) Any document defined or referred to in this Appendix or in any document that incorporates this Appendix means the document as amended, modified, supplemented, restated or replaced, including by waiver or consent, and includes all attachments to and instruments incorporated in the document.

(e) Any statute defined or referred to in this Appendix or in any document that incorporates this Appendix means the statute as amended, modified, supplemented, restated or replaced, including by succession of comparable successor statute, and includes any rules and regulations under the statute and any judicial and administrative interpretations of the statute.

(f) References to law or applicable law in this Appendix or in any document that incorporates this Appendix include all rules and regulations enacted under such law.

(g) The calculation of any amount as of a Cutoff Date or any other day, unless otherwise stated, will be determined as of the end of that calendar day after the application or processing of any funds, payments and other transactions on that day.

(h) References to deposits, transfers and payments of any funds refer to deposits, transfers or payments of such funds in immediately available funds.

(i) The terms defined in this Appendix apply to the singular and plural forms of those terms.

A-1

Source: VERIZON ABS LLC, 8-K, 1/23/2020





(j) The term including means including without limitation.

(k) References to a Person are also to its permitted successors and assigns, whether in its individual or representative capacity.

(l) In the computation of periods of time from one date to or through a later date, the word from means from and including, the word to means to but excluding, and the word through means to and including.

(m) Except where not less than zero or similar language is indicated, amounts determined by reference to a mathematical formula may be positive or negative.

(n) References to a month, quarter or year are, unless otherwise stated, to a calendar month, calendar quarter or calendar year.

(o) No Person will be deemed to have knowledge of a particular event or occurrence for purposes of any document that incorporates this Appendix, unless either (i) a Responsible Person of the Person has actual knowledge of the event or occurrence or (ii) the Person has received notice of the event or occurrence according to any Transaction Document.

Definitions

60-Day Delinquent Receivable means, for any date of determination, a Receivable for which there are unpaid charges remaining on the account sixty (60) days after the bill's date due; provided that a Written-Off Receivable is not considered a 60-Day Delinquent Receivable.

AAA means the American Arbitration Association.

Account Control Agreement means the Account Control Agreement, dated as of the Closing Date, among the Issuer, as grantor, the Indenture Trustee, as secured party, and U.S. Bank National Association, in its capacity as both a securities intermediary as defined in Section 8- 102 of the UCC and a bank as defined in Section 9-102 of the UCC, as amended, restated, supplemented or modified from time to time.

Accrued Note Interest means, for a Class and a Payment Date, the sum of the Note Monthly Interest and the Note Interest Shortfall.

Acquired Receivable means, for a Collection Period, a Receivable (a) acquired by the Servicer under Section 3.3 of the Transfer and Servicing Agreement, (b) acquired by the Marketing Agent under Section 4.3(i) of the Transfer and Servicing Agreement, (c) reacquired by an Originator under Section 3.4 or 4.6 of the Originator Receivables Transfer Agreement, or (d) acquired by the Servicer under Section 3.4 or 4.7 of the Master Trust Receivables Transfer Agreement and for which, in each case, the acquisition or reacquisition is effective during the Collection Period and the Acquisition Amount is included in Available Funds for the related Payment Date.

A-2

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Acquisition Account means the subaccount of the Collection Account established under Section 4.1(a) of the Transfer and Servicing Agreement.

Acquisition Amount means, for an Acquired Receivable for which the Acquisition Amount is to be included in Available Funds for a Payment Date, the excess of (i) the present value of the Principal Balance of the Receivable as of the last day of the Collection Period immediately preceding the related Collection Period (calculated using the Discount Rate on the basis of a 360-day year of twelve 30-day months and assuming each amount is received at the end of the Collection Period in which the amount is scheduled to be received) over (ii) all cash collections and any other cash proceeds received by the Issuer on the related Receivable from (but excluding) the last day of the Collection Period immediately preceding the related Collection Period to the day on which such Receivable becomes an Acquired Receivable.

Acquisition Date means each date during the Revolving Period on which the Issuer acquires Additional Receivables under Section 2.1(b) of the Transfer and Servicing Agreement and the Depositor acquires Additional Receivables under Section 2.1(b) of the Originator Receivables Transfer Agreement or Section 2.1(a) of the Master Trust Receivables Transfer Agreement; provided that there shall be no more than five (5) Acquisition Dates in any calendar month.

Acquisition Date Supplement means, for any Collection Period that includes an Acquisition Date, the supplement (which may be incorporated into the Monthly Investor Report) delivered by the Servicer setting forth (a) the aggregate Principal Balance as of the Cutoff Date for the Additional Receivables transferred by the Issuer, (b) the Additional Receivables Transfer Amount for such Acquisition Date, (c) the amount in the Acquisition Account on such Acquisition Date, (d) the Yield Supplement Overcollateralization Amount for such Acquisition Date and (e) the results of the Credit Enhancement Test, the Pool Composition Tests and the Floor Credit Enhancement Composition Tests as of such Acquisition Date.

Acquisition Deposit Amount means, for any Payment Date during the Revolving Period, an amount equal to (a) the Required Acquisition Deposit Amount minus (b) the amount on deposit in the Acquisition Account on such Payment Date (before payments under Section 8.2(c) of the Indenture on that Payment Date).

Additional Originator has the meaning stated in Section 6.11 of the Originator Receivables Transfer Agreement.

Additional Receivable means any device payment plan agreement acquired by the Issuer on an Acquisition Date and listed on the Schedule of Receivables attached to a Transfer Notice delivered to the Issuer and the Indenture Trustee in connection with such Acquisition Date.

Additional Receivables Cash Transfer Amount means, for an Acquisition Date, the lesser of (x) the Additional Receivables Transfer Amount and (y) the amount on deposit in the Acquisition Account on such Acquisition Date.

A-3

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Additional Receivables Transfer Amount means, for an Acquisition Date, an amount equal to the discounted present value of the remaining payments (after the end of the calendar day on the related Cutoff Date) for the remaining term of such Additional Receivable discounted using the Discount Rate.

Additional Successor Servicer Fee means, for any Payment Date, the excess, if any, of (x) $425,000 over (y) the Servicing Fee.

Additional Trust Property means, for any Acquisition Date, (a) the Depositor Transferred Property for that Acquisition Date, (b) all present and future claims, demands, causes of action and choses in action for any of the foregoing, and (c) all payments on or under and all proceeds for any of the foregoing.

Adjusted Pool Balance means, on the Closing Date, an amount equal to:

(a) the Initial Pool Balance; minus (b) the Yield Supplement Overcollateralization Amount for the Closing Date;

and means, on a Payment Date or Acquisition Date, an amount (not less than zero) equal to:

(a) the Pool Balance as of the last day of the Collection Period immediately preceding such Payment Date or Acquisition Date; minus (b) the Yield Supplement Overcollateralization Amount for such Payment Date or Acquisition Date.

Administration Agreement means the Administration Agreement, dated as of the Closing Date, between the Administrator and the Issuer, as amended, restated, supplemented or modified from time to time.

Administrator means Cellco, in its capacity as administrator under the Administration Agreement.

Adverse Claim means any Lien other than a Permitted Lien.

Affiliate means, for a specified Person (other than a natural Person), (a) another Person controlling, controlled by or under common control with the specified Person, (b) any other Person beneficially owning or controlling more than fifty percent (50%) of the outstanding voting securities or rights of or interest in the capital, distributions or profits of the specified Person or (c) any controlling shareholder of, or partner in, the specified Person. For the purposes of this definition, control when used with respect to any Person means the direct or indirect possession of the power to direct or cause the direction of the management or policies of the Person, whether through ownership, by contract, arrangement or understanding, or otherwise.

Amortization Event means the occurrence of any of the following:

A-4

Source: VERIZON ABS LLC, 8-K, 1/23/2020





(a) the Issuer fails on a Payment Date during the Revolving Period to (i) pay the Accrued Note Interest on the Notes, (ii) have the Required Reserve Amount on deposit in the Reserve Account or (iii) have the Required Negative Carry Amount on deposit in the Negative Carry Account;

(b) for any Payment Date, the sum of the fractions, expressed as percentages for each of the three Collection Periods immediately preceding such Payment Date, calculated by dividing the aggregate Principal Balance of Written-Off Receivables during each of those Collection Periods by the Pool Balance as of the first day of each of those Collection Periods, multiplied by four, exceeds 10.00%, as determined by the Servicer at least two (2) Business Days before each Payment Date;

(c) for any Payment Date, the sum of the fractions, expressed as percentages for each of the three Collection Periods immediately preceding such Payment Date, calculated by dividing the aggregate Principal Balance of all Receivables that are ninety-one (91) days or more Delinquent at the end of each of those Collection Periods by the Pool Balance as of the last day of each of those Collection Periods, divided by three, exceeds 2.00%, as determined by the Servicer at least two (2) Business Days before each Payment Date;

(d) the Adjusted Pool Balance is less than 50.00% of the aggregate Note Balance of the Notes;

(e) on any Payment Date, after giving effect to all payments to be made on such Payment Date pursuant to Section 8.2 of the Indenture and the acquisition of Additional Receivables on that date, the amount of Overcollateralization for the Notes is not at least equal to the Overcollateralization Target Amount; provided, that if the Overcollateralization Target Amount is not reached on any Payment Date solely due to a change in the percentage used to calculate such Overcollateralization Target Amount, such an event will not constitute an Amortization Event unless the Overcollateralization Target Amount is not reached by the end of the third month after the related Payment Date;

(f) a Servicer Termination Event has occurred and is continuing; or

(g) an Event of Default has occurred and is continuing.

Amortization Period means the Payment Date beginning on the earlier of (i) the Payment Date in February 2022 or (ii) the Payment Date on or immediately following the date on which an Amortization Event occurs and ending on the earlier of (a) the Payment Date on which each Class of Notes have been paid in full and (b) the Final Maturity Date.

Amount Financed means, for a Receivable, the amount of credit provided to the Obligor for the purchase of the related Device.

A-5

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Annual Percentage Rate or APR of a Receivable means the annual rate of finance charges stated in the Receivable or in any federal Truth-in-Lending Act correction notice related to the Receivable.

Annual Upgrade Offer means the annual upgrade offer extended by Verizon Wireless as of the date hereof to an existing Obligor under which such Obligor can upgrade certain specified Devices that are the subject of a device payment plan agreement if the following terms and conditions specified in such offer are satisfied:

• The customer may be able to upgrade an eligible device for a new qualifying device after thirty (30) days provided that such customer has paid at least 50% of the retail price of the eligible device under the related device payment plan agreement and returns such eligible device to Verizon Wireless in good working condition with no significant damage as determined by Verizon Wireless;

• The customer is required to purchase a new qualifying device under a new device payment plan agreement. New device purchases are subject to then-available offers and any associated wireless service requirements;

• A customer's account must be in good standing and such customer must satisfy Verizon Wireless' eligibility requirements for a new device payment plan agreement;

• Upon entering into a device payment plan agreement for a new qualifying device, and after returning the eligible device to Verizon Wireless within fourteen (14) days, Verizon Wireless will agree, for the benefit of such customer and for the express benefit of any assignee of such customer's original device payment plan agreement, to acquire such customer's eligible device for the remaining balance of the related customer's original device payment plan agreement and pay off and settle that remaining balance. After Verizon Wireless does that, such customer's only remaining obligations will be under the new device payment plan agreement and for associated wireless service;

• If a customer does not return an eligible device when upgrading, or if it is not returned to Verizon Wireless in good working condition, in each case the remaining balance under such customer's original device payment plan agreement will be due on such customer's next bill. Good working condition requires, among other things, that the customer's returned device powers on and off, does not have a cracked screen, has no significant damage as determined by Verizon Wireless, and has all password-protected security features (e.g., Find My iPhone) turned off;

• The Annual Upgrade Offer and the related terms and conditions may be modified or terminated by Verizon Wireless at any time. A customer's upgrade eligibility will be determined in the sole discretion of Verizon Wireless. If the Annual Upgrade Offer is terminated or the related terms and conditions are not satisfied, a customer will remain responsible for the remaining balance due under the original device payment plan agreement.

A-6

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Applicable Anti-Money Laundering Law has the meaning stated in Section 6.8 of the Trust Agreement.

Arbitration Rules means the AAA's Commercial Arbitration Rules and Mediation Procedures.

Asset Representations Review means, following the occurrence of a Delinquency Trigger, the review of 60-Day Delinquent Receivables to be undertaken by the Asset Representations Reviewer pursuant to the terms of the Asset Representations Review Agreement.

Asset Representations Review Agreement means the Asset Representations Review Agreement, dated as of the Closing Date, among the Asset Representations Reviewer, the Issuer, the Servicer and the Administrator.

Asset Representations Reviewer means Pentalpha Surveillance LLC, or any successor Asset Representations Reviewer under the Asset Representations Review Agreement.

Asset Representations Reviewer Fee means (i) a monthly fee equal to $416.67 per month, payable on each Payment Date, and (ii) the amount of any fee payable to the Asset Representations Reviewer in connection with its review of 60-Day Delinquent Receivables in accordance with the terms of the Asset Representations Review Agreement.

Assumed Amortization Schedule means, for each class of Notes, an amortization that results in the Note Balance for such class on any future Payment Date being equal to the percentage of the initial Note Balance of such class shown in the decrement table for such class set forth under Maturity and Prepayment Considerations-Weighted Average Life in the Prospectus, using a prepayment assumption percentage of 100% and assuming exercise of the Optional Acquisition on the earliest applicable Payment Date.

Authenticating Agent has the meaning stated in Section 2.14(a) of the Indenture.

Available Funds means, for a Payment Date, the sum of the following amounts for the Payment Date (without duplication):

(a) Collections on the Receivables (other than Temporarily Excluded Receivables) for the related Collection Period in the Collection Account; plus

(b) Acquisition Amounts received on Receivables that became Acquired Receivables during the related Collection Period and any amounts in respect of Acquisition Amounts paid by the Parent Support Provider; plus

(c) Credit Payments received on Receivables from the Marketing Agent or the related Originators during the related Collection Period and any amounts in respect of Credit Payments paid by the Parent Support Provider; plus

A-7

Source: VERIZON ABS LLC, 8-K, 1/23/2020





(d) Upgrade Payments received from the Marketing Agent or the related Originators on Receivables subject to an Upgrade Offer during the related Collection Period and any amounts in respect of Upgrade Payments paid by the Parent Support Provider; plus

(e) any amounts deposited by the Class A Certificateholder to acquire the Receivables on the Payment Date under Section 8.1 of the Transfer and Servicing Agreement or any amounts received by the Issuer from a transferee of the Receivables under Section 8.2 of the Transfer and Servicing Agreement; plus

(f) the Negative Carry Account Draw Amount, if any; plus

(g) the Reserve Account Draw Amount, if any, and, after withdrawing the Reserve Account Draw Amount from the Reserve Account, any amount in excess of the Required Reserve Amount remaining on deposit in the Reserve Account; plus

(h) the amount, if any, deposited into the Collection Account from the Negative Carry Account and, on the first Payment Date during the Amortization Period, the entire amount on deposit in the Negative Carry Account and the Acquisition Account; plus

(i) any Cap Payment paid by the Cap Counterparty to the Issuer under the Cap Agreement and deposited into the Collection Account.

Bank Accounts means the Collection Account, the Reserve Account, the Acquisition Account and the Negative Carry Account.

Bankruptcy Action has the meaning stated in Section 5.5 of the Trust Agreement.

Bankruptcy Code means the United States Bankruptcy Code, 11 U.S.C. 101 et seq.

Bankruptcy Surrendered Receivable means any Receivable that is secured by the related Device and is not a Written-Off Receivable for which (i) the related Obligor has entered into a bankruptcy proceeding and (ii) the Servicer has accepted the surrender of the related Device in satisfaction of the Receivable.

Benchmark means, initially, One-Month LIBOR; provided that if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to One-Month LIBOR or the then-current Benchmark, then Benchmark means the applicable Benchmark Replacement.

Benchmark Administrator means, (1) with respect to One-Month LIBOR, the ICE Benchmark Administration Limited, (2) with respect to SOFR, the Federal Reserve Bank of New York and (3) with respect to any other Benchmark, the entity responsible for administration of such Benchmark (or in each case, any successor administrator).

A-8

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Benchmark Replacement means the first alternative set forth in the order below that can be determined by the Administrator as of the Benchmark Replacement Date:

(1) the sum of (a) Term SOFR and (b) the Benchmark Replacement Adjustment, provided that there has been no official public statement or publication of information by the Benchmark Administrator or the regulatory supervisor for the Benchmark Administrator announcing that Term SOFR is not yet representative that has not been either withdrawn or superseded by a similar official public statement or publication that Term SOFR has become representative,

(2) the sum of (a) Compounded SOFR and (b) the Benchmark Replacement Adjustment,

(3) the sum of (a) the ISDA Fallback Rate and (b) the Benchmark Replacement Adjustment,

(4) the sum of (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark for the applicable Corresponding Tenor and (b) the Benchmark Replacement Adjustment, and

(5) the sum of (a) the alternate rate of interest that has been selected by the Administrator in its reasonable discretion as the replacement for the then-current Benchmark for the applicable Corresponding Tenor and (b) the Benchmark Replacement Adjustment.

Benchmark Replacement Adjustment means the first alternative set forth in the order below that can be determined by the Administrator as of the Benchmark Replacement Date:

(1) the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero), that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement,

(2) if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, then the ISDA Fallback Adjustment, and

(3) the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Administrator in its reasonable discretion for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement.

Benchmark Replacement Conforming Changes means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the timing and frequency of determining rates and making payments of interest, and other administrative matters) that the Administrator decides in its reasonable discretion may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or, if the Administrator decides that adoption of any portion of such market practice is not administratively feasible or if the Administrator determines that no

A-9

Source: VERIZON ABS LLC, 8-K, 1/23/2020





market practice for use of the Benchmark Replacement exists, in such other manner as the Administrator determines in its reasonable discretion is reasonably necessary).

Benchmark Replacement Date means:

(1) in the case of clause (1) or (2) of the definition of Benchmark Transition Event, the later of (a) the date of the related official public statement or publication of information referenced therein and (b) the date on which the applicable Benchmark Administrator permanently or indefinitely ceases to provide the Benchmark, or

(2) in the case of clause (3) of the definition of Benchmark Transition Event, the date of the official public statement or publication of information.

For the avoidance of doubt, if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date shall be deemed to have occurred prior to the Reference Time for such determination.

Benchmark Transition Event means the occurrence of one or more of the following events with respect to the then-current Benchmark:

(1) an official public statement or publication of information by or on behalf of the Benchmark Administrator announcing that such Benchmark Administrator has ceased or will cease to provide the Benchmark, permanently or indefinitely; provided, that, at the time of such statement or publication, there is no successor Benchmark Administrator that will continue to provide the Benchmark,

(2) an official public statement or publication of information by the regulatory supervisor for the Benchmark Administrator, the central bank for the currency of the Benchmark, an insolvency official with jurisdiction over the Benchmark Administrator, a resolution authority with jurisdiction over the Benchmark Administrator or a court or an entity with similar insolvency or resolution authority over the Benchmark Administrator, which states that the Benchmark Administrator has ceased or will cease to provide the Benchmark permanently or indefinitely; provided, that, at the time of such statement or publication, there is no successor Benchmark Administrator that will continue to provide the Benchmark, or

(3) an official public statement or publication of information by the regulatory supervisor for the Benchmark Administrator announcing that the Benchmark is no longer representative.

Beneficiary has the meaning stated in the Parent Support Agreement.

Benefit Plan means an employee benefit plan as defined in Section 3(3) of ERISA, which is subject to the provisions of Title I of ERISA, a plan described in and subject to

A-10

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Section 4975 of the Code, an entity whose underlying assets include plan assets by reason of an employee benefit plan's or plan's investment in the entity or any other employee benefit plan that is subject to any Similar Law.

Book-Entry Note means any of the Notes issued in book-entry form under Section 2.12 of the Indenture.

Business Day means any day other than (a) a Saturday, Sunday or other day on which banks in New York, New York or any jurisdiction in which the Corporate Trust Office of the Indenture Trustee or the Owner Trustee is located are authorized or required to close or (b) a holiday on the Federal Reserve calendar.

Cap Agreement means the interest rate cap agreement relating to the Class A-1b Notes consisting of the 2002 ISDA Master Agreement (Multicurrency Cross-Border), schedule and credit support annex, each dated as of January 24, 2020, and the confirmation, dated on or about January 23, 2020, in each case, between the Issuer and the Cap Counterparty, as such agreement may be amended and supplemented from time to time in accordance with its terms.

Cap Collateral Account means the account or accounts, if any, established under Section 9.10 of the Transfer and Servicing Agreement as required by the terms of the Cap Agreement.

Cap Counterparty means Bank of America, N.A., or any Eligible Replacement Cap Counterparty, to the extent such Eligible Replacement Cap Counterparty replaces the existing Cap Counterparty under the Cap Agreement or any replacement interest rate cap agreement.

Cap Custodian has the meaning stated in Section 9.10 of the Transfer and Servicing Agreement.

Cap Payment means, for any Interest Period in which One-Month LIBOR (calculated in accordance with the Cap Agreement) exceeds 3.00%, an amount equal to the product of (x) the excess, if any, of One-Month LIBOR (calculated in accordance with the Cap Agreement) for the related Payment Date over 3.00%, (y) the notional amount of the cap for such Payment Date, as set forth in the Cap Agreement, and (z) a fraction, the numerator of which is the actual number of days elapsed in such Interest Period and the denominator of which is 360, which payment shall be deposited into the Collection Account by the Cap Counterparty on or before the second Business Day preceding the related Payment Date.

Cellco means Cellco Partnership d/b/a Verizon Wireless, a Delaware general partnership, doing business as Verizon Wireless.

Certificate means either the Class A Certificate or the Class B Certificate, as the context requires.

Certificate Distribution Account means the account established and maintained as such pursuant to Section 4.1 of the Trust Agreement.

A-11

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Certificate of Trust means the Certificate of Trust of Verizon Owner Trust 2020-A.

Certificate Paying Agent means initially the Owner Trustee and any other Person appointed as Certificate Paying Agent under Section 3.11 of the Trust Agreement.

Certificateholder means the registered holder of a Certificate.

Class means the Class A-1a Notes, the Class A-1b Notes, the Class B Notes and the Class C Notes, as applicable.

Class A Certificate means the Class A Certificate executed by the Issuer and authenticated by the Owner Trustee, evidencing a portion of the Equity Interest in the Issuer, substantially in the form attached as Exhibit B-1 to the Trust Agreement.

Class A Certificateholder means collectively, the Originators or their designee.

Class A Notes means, collectively, the Class A-1a Notes and the Class A-1b Notes.

Class A-1a Notes means the $1,325,700,000 Class A-1a 1.85% Asset Backed Notes issued by the Issuer, substantially in the form of Exhibit A to the Indenture.

Class A-1b Notes means the $100,000,000 Class A-1b One-Month LIBOR (or, upon the occurrence of a Benchmark Transition Event, the appropriate Benchmark Replacement) + 0.27% Asset Backed Notes issued by the Issuer, substantially in the form of Exhibit A to the Indenture.

Class B Certificate means the variable funding certificate executed by the Issuer and authenticated by the Owner Trustee, substantially in the form attached as Exhibit B-2 to the Trust Agreement.

Class B Certificate Principal Balance means (i) on the Closing Date, $0, (ii) on any Acquisition Date, an amount equal to the excess, if any, of the Additional Receivables Transfer Amount for the Additional Receivables to be acquired by the Issuer on such Acquisition Date over the Additional Receivables Cash Transfer Amount for such Additional Receivables, and (iii) during the Amortization Period, $0; provided, that, with respect to clause (ii), immediately following the acquisition by the Depositor of Additional Receivables from the Originators on any Acquisition Date, and upon distribution by the Depositor to the Originators of the amounts set forth in Section 2.2(b) of the Originator Receivables Transfer Agreement, the Class B Certificate Principal Balance will be decreased to zero for such date.

Class B Certificateholder means the Depositor or its designee.

Class B Notes means the $98,300,000 Class B 1.98% Asset Backed Notes issued by the Issuer, substantially in the form of Exhibit A to the Indenture.

Class C Notes means the $76,000,000 Class C 2.06% Asset Backed Notes issued by the Issuer, substantially in the form of Exhibit A to the Indenture.

A-12

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Clean-Up Redemption has the meaning stated in Section 8.1(a) of the Transfer and Servicing Agreement.

Clearing Agency means an organization registered as a clearing agency under Section 17A of the Exchange Act.

Closing Date means January 29, 2020.

Code means the Internal Revenue Code of 1986, as amended.

Collateral means (a) the Trust Property, (b) all present and future claims, demands, causes of action and choses in action relating to the Trust Property and (c) all payments on or under and all proceeds of the Trust Property.

Collection Account means the account or accounts established under Section 4.1(a) of the Transfer and Servicing Agreement.

Collection Period means each calendar month. For a Payment Date, the related Collection Period means (i) for any Payment Date other than the initial Payment Date, the Collection Period immediately preceding the month in which the Payment Date occurs, or (ii) for the initial Payment Date, the period from the end of the calendar day on the Initial Cutoff Date and ending on and including the last day of the month immediately preceding the initial Payment Date. For purposes of determining the Principal Balance, Pool Balance or Note Pool Factor, the related Collection Period is the month in which the Principal Balance, Pool Balance or Note Pool Factor is determined.

Collections means, for a Collection Period, all cash collections received from Obligors and any other cash proceeds (whether in the form of cash, wire transfer or check) in respect of the Receivables received and applied by the Servicer to the payment of the Receivables during that Collection Period, but excluding:

(i) the Supplemental Servicing Fee;

(ii) amounts on any Receivable for which the Acquisition Amount is included in the Available Funds for the related Payment Date; and

(iii) any Recoveries or cash collections received with respect to Written-Off Receivables that were written-off before or during such Collection Period.

Commission means the U.S. Securities and Exchange Commission, and any successor thereto.

Comparable Treasury Issue means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term, referred to as the Remaining Life, of the Notes to be redeemed that would be utilized, at the time of

A-13

Source: VERIZON ABS LLC, 8-K, 1/23/2020





selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.

Comparable Treasury Price means (1) the average of three Reference Treasury Dealer Quotations for that date of redemption, or (2) if the Independent Investment Banker is unable to obtain three Reference Treasury Dealer Quotations, the average of all quotations obtained.

Compounded SOFR means the compounded average of SOFRs for the applicable Corresponding Tenor, with the rate, or methodology of this rate, and conventions of this rate (which, for example, may be compounded in arrears with a lookback and/or suspension period as a mechanism to determine the interest amount payable prior to the end of each Collection Period or compounded in advance) being established by the Administrator in accordance with:

(1) the rate, or methodology of this rate, and conventions of this rate selected or recommended by the Relevant Governmental Body for determining compounded SOFR; provided that

(2) if, and to the extent that, the Administrator determines that Compounded SOFR cannot be determined in accordance with clause (1) above, then the rate, or methodology of this rate, and conventions of this rate that have been selected by the Administrator in its reasonable discretion.

Control Agreement has the meaning stated in Section 9.10 of the Transfer and Servicing Agreement.

Controlling Class means (a) the Outstanding Class A Notes, voting together as a single class, (b) if no Class A Notes are Outstanding, the Outstanding Class B Notes and (c) if no Class B Notes are Outstanding, the Outstanding Class C Notes.

Corporate Trust Office means,

(a) for the Owner Trustee:

Rodney Square North, 1100 North Market Street Wilmington, Delaware 19890-1600 Attn: Corporate Trust Administration Telephone: 302-636-6704 Fax: 302-636-4141

or at another address in the State of Delaware as the Owner Trustee may notify the Indenture Trustee, the Administrator and the Depositor,

(b) for the Indenture Trustee, the office of the Indenture Trustee at which at any particular time its corporate trust business shall be administered which office on the date of the execution of the Indenture is located at:

A-14

Source: VERIZON ABS LLC, 8-K, 1/23/2020





(i) solely for the purposes of transfer, surrender, exchange or presentation for final payment:

EP-MN-WS2N 111 Fillmore Avenue East St. Paul, MN 55107, Attn: Bondholder Services/VZOT 2020-A

and (ii) for all other purposes:

MK-IL-SL7C 190 South LaSalle Street Chicago, Illinois 60603 Attention: Global Structured Finance/VZOT 2020-A Fax: (312) 332-7992

or at such other address as the Indenture Trustee may designate from time to time by notice to the Noteholders, the Servicer, and the Owner Trustee, or the principal corporate trust office of any successor Indenture Trustee (the address of which the successor Indenture Trustee will notify the Noteholders, the Servicer and the Owner Trustee), and

(c) for the Master Trust Owner Trustee:

Rodney Square North, 1100 North Market Street Wilmington, Delaware 19890-1600 Attn: Corporate Trust Administration Telephone: 302-636-6704 Fax: 302-636-4141

or at another address in the State of Delaware as the Master Trust Owner Trustee may notify the Indenture Trustee, the Administrator, the Owner Trustee and the Depositor.

Corresponding Tenor means a tenor (including overnight) having approximately the same length (disregarding business day adjustment) as the applicable tenor for the then-current Benchmark.

Covered Entity and Covered Entities have the meanings stated in Section 1(a) of the Parent Support Agreement.

Credit means any payment credit (including one-time upfront credits and contingent, recurring credits), including the application of a returned security deposit, allocated to the account of an Obligor that is applied by the Servicer against amounts due on the Obligor's related invoice.

Credit Enhancement Test means the test that will be satisfied on the Closing Date and on each Acquisition Date, after giving effect to all payments required to be made under Section 8.2(c) of the Indenture and the acquisition of Additional Receivables on the Acquisition Date, if

A-15

Source: VERIZON ABS LLC, 8-K, 1/23/2020





(a) (i) the Adjusted Pool Balance as of the end of the Collection Period immediately preceding the Closing Date or such Acquisition Date, as applicable, plus (ii) any amounts on deposit in the Acquisition Account minus (iii) the Overcollateralization Target Amount, is equal to or greater than (b) the aggregate Note Balance on that date.

Credit Payment means, with respect to any Collection Period, an amount equal to the reduction in the amount owed by an Obligor under a Receivable due to the application of any Credits to such Obligor's account that would have otherwise constituted Collections during such Collection Period.

Custodian means Cellco, in its capacity as custodian of the Receivable Files.

Customer Tenure means the number of months an Obligor has had a Verizon Wireless account based on the oldest active account establishment date for such Obligor, inclusive of any periods of up to fifty (50) days of disconnected service, up to ninety (90) days of suspended service or longer service suspensions in connection with the Servicemembers Civil Relief Act, as amended.

Cutoff Date means (a) for the Initial Receivables, the Initial Cutoff Date and (b) for any Additional Receivables, the end of the calendar day on the last day of the month immediately preceding the month in which such Acquisition Date occurs.

Default means any event that with notice or the passage of time or both would become an Event of Default.

Definitive Notes has the meaning stated in Section 2.13 of the Indenture.

Delaware Statutory Trust Act means Chapter 38 of Title 12 of the Delaware Code.

Delinquent means an account on which an Obligor has unpaid charges remaining on the related account on the day immediately following the related date due as indicated on the Obligor's bill.

Delinquency Trigger means, with respect to a Collection Period, the aggregate Principal Balance of 60-Day Delinquent Receivables as a percentage of the aggregate Principal Balance of Receivables as of the end of such Collection Period exceeds the Delinquency Trigger Percentage for such Collection Period.

Delinquency Trigger Percentage equals (i) during the Revolving Period, 5.0% and (ii) during the Amortization Period, 5.5%.

Depositor means Verizon ABS LLC, a Delaware limited liability company.

Depositor Transferred Property means, for the Closing Date and any Acquisition Date, (a) the Originator Transferred Property, (b) the Master Trust Transferred Property, (c) the Depositor's rights under the Receivables Transfer Agreements, (d) all present and future claims,

A-16

Source: VERIZON ABS LLC, 8-K, 1/23/2020





demands, causes of action and choses in action relating to any of the property described above and (e) all payments on or under and all proceeds of the property described above.

Depository Agreement means the letter of representations for the Notes, dated January 29, 2020, by the Issuer in favor of The Depository Trust Company.

Device means the wireless device that is the subject of a device payment plan agreement that is a Receivable.

Discount Rate means, with respect to a Receivable, the greater of (i) the APR with respect to such Receivable, and (ii) 7.65%.

Eligibility Representation has the meaning stated in Section 3.3 of the related Receivables Transfer Agreement.

Eligible Receivable means a Receivable that satisfies the characteristics set forth in Section 3.3 of the related Receivables Transfer Agreement.

Eligible Replacement Cap Counterparty means a counterparty that meets the eligibility requirements set forth in the Cap Agreement.

Equity Interest means a beneficial ownership interest in the Issuer, as recorded on the Trust Register.

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

Event of Default has the meaning stated in Section 5.1(a) of the Indenture.

Exchange Act means the Securities Exchange Act of 1934, as amended.

FATCA Information has the meaning stated in Section 3.3(e) of the Indenture.

FATCA Withholding Tax has the meaning stated in Section 3.3(e) of the Indenture.

FICO® Score 8 means the FICO® Score 8 calculated on or about the date on which such Receivable was originated.

Final Maturity Date means, for (i) the Class A-1a Notes, the Payment Date in July, 2024, (ii) the Class A-1b Notes, the Payment Date in July, 2024, (iii) the Class B Notes, the Payment Date in July, 2024, and (iv) the Class C Notes, the Payment Date in July, 2024.

First Priority Principal Payment means, for a Payment Date, the greater of:

(a) an amount (not less than zero) equal to the aggregate Note Balance of the Class A Notes as of the immediately preceding Payment Date (or, for the initial Payment Date, as of the Closing Date) minus the Adjusted Pool Balance; and

A-17

Source: VERIZON ABS LLC, 8-K, 1/23/2020





(b) on and after the Final Maturity Date for the Class A Notes, the aggregate Note Balance of the Class A Notes until paid in full.

Floor Credit Enhancement Composition Tests means, for any Payment Date and the pool of Receivables (excluding any Temporarily Excluded Receivables) held by the Issuer as of such date, each of the following tests calculated as of the end of the month preceding the month in which such date occurs:

(a) the weighted average FICO® Score 8 of the Obligors with respect to the Receivables is at least 700 (excluding Receivables with Obligors for whom FICO® Score 8s are not available),

(b) Receivables with Obligors for whom FICO® Score 8s are not available represent no more than 4.50% of the Pool Balance,

(c) Receivables with Obligors that have less than 12 months of Customer Tenure with Verizon Wireless represent no more than 22.00% of the Pool Balance,

(d) Receivables with Obligors that have 7 months or more, but less than 24 months of Customer Tenure with Verizon Wireless represent no more than 12.00% of the Pool Balance,

(e) Receivables with Obligors that have 60 months or more of Customer Tenure with Verizon Wireless represent at least 55.00% of the Pool Balance,

(f) Receivables with Obligors that have less than 12 months of Customer Tenure with Verizon Wireless and (i) for whom FICO® Score 8s are not available or (ii) that have FICO® Score 8s below 650, represent no more than 10.00% of the Pool Balance,

(g) Receivables with Obligors that have 12 months or more, but less than 60 months of Customer Tenure with Verizon Wireless and (i) for whom FICO® Score 8s are not available or (ii) that have FICO® Score 8s below 650, represent no more than 50.00% of the aggregate Principal Balance of all Receivables with Obligors that have 12 months or more, but less than 60 months of Customer Tenure with Verizon Wireless, and

(h) Receivables with Obligors that have 60 months or more of Customer Tenure with Verizon Wireless and (i) for whom FICO® Score 8s are not available or (ii) that have FICO® Score 8s below 650, represent no more than 27.50% of the aggregate Principal Balance of all Receivables with Obligors that have 60 months or more of Customer Tenure with Verizon Wireless.

Governmental Authority means any government or political subdivision or any agency, authority, bureau, regulatory body, central bank, commission, department or instrumentality of any such government or political subdivision, or any other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government or any

A-18

Source: VERIZON ABS LLC, 8-K, 1/23/2020





court, tribunal, grand jury or arbitrator, or any accounting board or authority (whether or not part of a government) which is responsible for the establishment or interpretation of national or international accounting principles, in each case whether foreign or domestic.

Grant means to mortgage, pledge, assign and to grant a lien on and a security interest in the relevant property.

Guaranteed Obligations has the meaning stated in Section 1(a) of the Parent Support Agreement.

Hague Securities Convention means The Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary (Concluded 5 July 2006), which became effective in the United States of America on April 1, 2017.

Indemnified Person has the meaning stated in Section 6.7(b) of the Indenture, Section 6.3(a) of the Transfer and Servicing Agreement and Section 7.2(a) of the Trust Agreement, as applicable.

Indenture means the Indenture, dated as of the Closing Date, between the Issuer and the Indenture Trustee.

Indenture Trustee means U.S. Bank National Association, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture.

Indenture Trustee Fee means a monthly fee equal to 1/12th of $12,000, payable on each Payment Date.

Independent means that the relevant Person (a) is independent of the Issuer, the Depositor and their Affiliates, (b) does not have any direct financial interest or any material indirect financial interest in the Issuer, the Depositor or their Affiliates and (c) is not an officer, employee, underwriter, trustee, partner, director or person performing similar functions of or for the Issuer, the Depositor or their Affiliates.

Independent Certificate means a certificate or opinion to be delivered to the Indenture Trustee under the circumstances described in Section 11.3 of the Indenture, made by an Independent appraiser, a firm of certified public accountants of national reputation or other expert appointed by an Issuer Order and approved by the Indenture Trustee in the exercise of reasonable care, and such opinion or certificate shall state that the signer has read the definition of Independent in this Indenture and that the signer is Independent within the meaning thereof.

Independent Investment Banker means an independent investment banking or commercial banking institution of national standing appointed by Verizon.

Initial Cutoff Date means the end of the calendar day on December 31, 2019.

A-19

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Initial Pool Balance means $1,917,450,478.10 which is the aggregate Principal Balance of the Initial Receivables as of the Initial Cutoff Date.

Initial Receivable means any device payment plan agreement acquired by the Issuer on the Closing Date and listed on the Schedule of Receivables delivered on the Closing Date.

Initial Trust Property means (a) the Depositor Transferred Property for the Closing Date, (b) the Issuer's rights under the Transfer and Servicing Agreement, (c) the Issuer's rights under the Cap Agreement, (d) all security entitlements relating to the Bank Accounts and the property deposited in or credited to any of the Bank Accounts, (e) all present and future claims, demands, causes of action and choses in action for any of the foregoing and (f) all payments on or under and all proceeds for any of the foregoing.

Insolvency Event means, for a Person, that (1) (a) such Person admits in writing its inability to pay its debts generally as they become due, or makes a general assignment for the benefit of creditors, or (b) any proceeding is instituted by or against such Person seeking to adjudicate it bankrupt or insolvent, or seeking the liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property, or (c) such Person generally does not pay its debts as such debts become due and, in the case of any proceeding instituted against such Person, such proceeding remains unstayed for more than sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered or (2) such person takes any corporate action to authorize any such action.

Interest Period means for any Payment Date and (a) the Class A-1a Notes, Class B Notes and Class C Notes, the period from and including the 20th day of the calendar month immediately preceding the Payment Date to but excluding the 20th day of the month in which the Payment Date occurs (or from and including the Closing Date to but excluding March 20, 2020 for the first Payment Date) or (b) the Class A-1b Notes, the period from and including the Payment Date immediately preceding the current Payment Date to but excluding the current Payment Date (or from and including the Closing Date to but excluding March 20, 2020 for the first Payment Date).

Investment Company Act means the Investment Company Act of 1940, as amended.

ISDA Definitions means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time.

ISDA Fallback Adjustment means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark for the applicable tenor.

A-20

Source: VERIZON ABS LLC, 8-K, 1/23/2020





ISDA Fallback Rate means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark for the applicable tenor excluding the applicable ISDA Fallback Adjustment.

Issuer means Verizon Owner Trust 2020-A, a Delaware statutory trust.

Issuer Order and Issuer Request has the meaning stated in Section 11.3(a) of the Indenture.

Law means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, executive order, order, court order, injunction, writ, decree, directive, judgment, injunction, award or similar item of or by a Governmental Authority or any interpretation, implementation or application thereof.

LIBOR Determination Date means, (i) with respect to the first Payment Date, the second London Business Day prior to the Closing Date and (ii) with respect to each subsequent Payment Date, the second London Business Day prior to the immediately preceding Payment Date.

Lien means a security interest, lien, charge, pledge or encumbrance.

London Business Day means any day other than a Saturday, Sunday or day on which banking institutions in London, England are authorized or obligated by law or government decree to be closed.

Make-Whole Payment means, for any payment of principal of the Notes on any Payment Date:

(a) for any Make-Whole Payment due, other than with respect to an Optional Redemption,

(i) for each Class of Notes other than the Class A-1b Notes, the excess of (a) the present value of (i) the amount of all future interest payments that would otherwise accrue on the principal payment until the Payment Date in February 2022 and (ii) the principal payment, each such payment discounted from the Payment Date in February 2022 to such Payment Date monthly on a 30/360 day basis at 0.15% plus the higher of (1) zero and (2) the then-current maturity matched Treasury Rate to such payment over (b) the principal payment; or

(ii) for the Class A-1b Notes, the excess of (a) the present value of (i) the amount of all future interest payments that would otherwise accrue on the principal payment at an interest rate of One-Month LIBOR applicable to such Payment Date plus 0.27% until the Payment Date in February 2022 and (ii) the principal payment, each such payment discounted from the Payment Date in February 2022 to such Payment Date monthly on an actual/360 day basis at One-

A-21

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Month LIBOR applicable to such Payment Date over (b) the principal payment; and

(b) for any Make-Whole Payment due with respect to an Optional Redemption,

(i) for each Class of Notes other than the Class A-1b Notes, the excess of (a) the present value of (i) the amount of all future interest payments that would otherwise accrue on such Class of Notes assuming principal payments on such Class are made based on the Assumed Amortization Schedule for such Class and (ii) the amount of all future principal payments that would otherwise be paid on such Class of Notes assuming principal payments on such Class are paid based on the Assumed Amortization Schedule for such Class, each such amount discounted from the Payment Date on which such payment would be made in accordance with the Assumed Amortization Schedule to the Payment Date on which the Optional Redemption occurs, monthly on a 30/360 day basis at 0.15% plus the higher of (1) zero and (2) the then-current maturity matched Treasury Rate to such payment over (b) the Note Balance of such Class of Notes immediately prior to the Optional Redemption; or

(ii) for the Class A-1b Notes, the excess of (a) the present value of (i) the amount of all future interest payments that would otherwise accrue on the Class A-1b Notes at an interest rate of One-Month LIBOR applicable to such Payment Date plus 0.27% assuming principal payments on the Class A-1b Notes are made based on the Assumed Amortization Schedule for the Class A-1b Notes and (ii) the amount of all future principal payments that would otherwise be paid on the Class A-1b Notes assuming principal payments on the Class A-1b Notes are paid based on the Assumed Amortization Schedule for the Class A-1b Notes, each such amount discounted from the Payment Date on which such payment would be made in accordance with the Assumed Amortization Schedule to the Payment Date on which the Optional Redemption occurs, monthly on an actual/360 day basis at One-Month LIBOR applicable to such Payment Date over (b) the Note Balance of the Class A-1b Notes immediately prior to the Optional Redemption;

provided, that, upon the occurrence of a Benchmark Transition Event, One-Month LIBOR used in the calculation of Make-Whole Payments will be replaced by the appropriate Benchmark Replacement as set forth in Section 2.16 of the Indenture.

Marketing Agent means Cellco.

Marketing Agent Agency Agreement means the Amended and Restated Marketing Agent Agency Agreement, dated as of September 27, 2016, between the Marketing Agent and the Verizon Originators, as amended, restated, supplemented or modified from time to time.

A-22

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Marketing Agent Remittance Obligation has the meaning stated in the Parent Support Agreement.

Master Collateral Agency Agreement means the Amended and Restated Master Collateral Agency and Intercreditor Agreement, dated as of May 8, 2019, among the Master Trust, U.S. Bank National Association, as master collateral agent, Cellco, as servicer, and each creditor representative from time to time party thereto, as amended, restated, supplemented or modified from time to time.

Master Trust means Verizon DPPA Master Trust, a Delaware statutory trust, created and existing pursuant to the Master Trust Agreement.

Master Trust Administrator means Cellco.

Master Trust Agreement means the Second Amended and Restated Trust Agreement, dated as of May 8, 2019, between Verizon ABS II LLC, as depositor, and the Master Trust Owner Trustee, as amended, restated, supplemented or modified from time to time.

Master Trust Owner Trustee means Wilmington Trust, National Association, a national banking association, not in its individual capacity but solely as Master Trust Owner Trustee under the Master Trust Agreement.

Master Trust Receivables Transfer Agreement means the Master Trust Receivables Transfer Agreement, dated as of the Closing Date, among the Master Trust, the Servicer and the Depositor, as amended, restated, supplemented or modified from time to time.

Master Trust Transferred Property means, for the Closing Date and any Acquisition Date, (a) the Initial Receivables or the Additional Receivables, as applicable, transferred by the Master Trust, (b) all amounts received and applied on such Receivables after the end of the calendar day on the related Cutoff Date, (c) all present and future claims, demands, causes of action and choses in action relating to any of the property described above and (d) all payments on or under and all proceeds of the property described above.

Material Adverse Effect means, with respect to any event or circumstance, a material adverse effect on the ability of the applicable Person to perform its obligations under any Transaction Document.

Monthly Deposit Required Ratings has the meaning stated in Section 4.3(b)(i) of the Transfer and Servicing Agreement.

Monthly Investor Report has the meaning stated in Section 3.5(a)(i) of the Transfer and Servicing Agreement.

Moody's means Moody's Investors Service, Inc.

Negative Carry Account means the account or accounts established under Section 4.1(a) of the Transfer and Servicing Agreement.

A-23

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Negative Carry Deposit Amount means, for a Payment Date during the Revolving Period on which amounts are in the Acquisition Account, an amount equal to (a) the Required Negative Carry Amount for that Payment Date minus (b) the amount in the Negative Carry Account on that Payment Date (before payments under Section 8.2(c) of the Indenture on that Payment Date).

Negative Carry Account Draw Amount means, for a Payment Date during the Revolving Period:

(a) if that Payment Date is not an Acquisition Date, the lesser of:

(i) an amount (not less than zero) equal to the Total Required Payment, plus the Reserve Deposit Amount, plus the Acquisition Deposit Amount, minus the Available Funds determined without regard to the Negative Carry Account Draw Amount or the Reserve Account Draw Amount; and

(ii) the amount in the Negative Carry Account; and

(b) if the Payment Date is an Acquisition Date, the amount in the Negative Carry Account in excess of the Required Negative Carry Amount.

New Upgrade DPP has the meaning stated in Section 4.3(g) of the Transfer and Servicing Agreement.

Note Balance means, for a Note or Class, the initial aggregate principal balance of the Note or Class minus all amounts distributed on the Note or Class that is applied to principal.

Note Interest Rate means a per annum rate equal to, for: (i) the Class A-1a Notes, 1.85% (computed on the basis of a 360 day year consisting of twelve 30 day months), (ii) the Class A-1b Notes, One-Month LIBOR (or, upon the occurrence of a Benchmark Transition Event, the appropriate Benchmark Replacement) + 0.27% (computed on the basis of the actual number of days elapsed during the relevant Interest Period and a 360 day year), (iii) the Class B Notes, 1.98% (computed on the basis of a 360 day year consisting of twelve 30 day months), and (iv) the Class C Notes, 2.06% (computed on the basis of a 360 day year consisting of twelve 30 day months).

Note Interest Shortfall means, for a Class and a Payment Date, an amount equal to the excess, if any, of the Accrued Note Interest for the Payment Date immediately preceding such Payment Date for the Class over the amount of interest that was paid to the Noteholders of that Class on the Payment Date immediately preceding such Payment Date, together with interest on the excess amount, to the extent lawful, at the Note Interest Rate for the Class for that Interest Period.

A-24

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Note Monthly Interest means, for a Class and a Payment Date, the aggregate amount of interest accrued on the Note Balance of the Class at the Note Interest Rate for the Class for the related Interest Period.

Note Owner means, for a Book-Entry Note, the Person who is the beneficial owner of a Book-Entry Note as reflected on the books of the Clearing Agency or on the books of a Person maintaining an account with the Clearing Agency (as a direct participant or as an indirect participant, in each case according to the rules of the Clearing Agency).

Note Paying Agent means initially the Indenture Trustee and any other Person appointed as Note Paying Agent under Section 2.15 of the Indenture.

Note Pool Factor means, for a Class and a Payment Date, a seven-digit decimal figure equal to the Note Balance of the Class after giving effect to any payments of principal of the Class on that Payment Date divided by the initial Note Balance of the Class.

Note Register and Note Registrar have the meanings stated in Section 2.4 of the Indenture.

Noteholder means the Person in whose name a Note is registered on the Note Register.

Noteholder Tax Identification Information means properly completed and signed tax certifications (generally with respect to U.S. Federal Income Tax, IRS Form W-9 (or applicable successor form) in the case of a person that is a United States Person within the meaning of Section 7701(a)(30) of the Code or the appropriate IRS Form W-8 (or applicable successor form) in the case of a person that is not a United States Person within the meaning of Section 7701(a)(30) of the Code).

Notes or Note means, collectively or individually, as the context may require, the Class A-1a Notes, the Class A-1b Notes, the Class B Notes and the Class C Notes.

Obligor means the Person that has signed the account agreement of which the device payment plan agreement that constitutes the Receivable is a part and who owes payments under the Receivable.

Officer's Certificate means (a) for the Issuer, a certificate signed by a Responsible Person of the Issuer, (b) for the Depositor, the Administrator, the Marketing Agent, the Parent Support Provider, any Originator or the Servicer, a certificate signed by any officer of such entity, as applicable, (c) for the Master Trust, a certificate signed by a Responsible Person of the Master Trust and (d) for the Indenture Trustee, a certificate signed by a Responsible Person of the Indenture Trustee.

One-Month LIBOR means, with respect to any Interest Period for which One-Month LIBOR is the Benchmark, the London interbank offered rate for deposits in U.S. Dollars having a maturity of one month commencing on the related LIBOR Determination Date which appears on the Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, on such LIBOR

A-25

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Determination Date; provided, however, that for the first Interest Period, One-Month LIBOR shall mean an interpolated rate for deposits based on London interbank offered rates for deposits in U.S. Dollars for a period that corresponds to the actual number of days in the first Interest Period. If the rates used to determine One-Month LIBOR do not appear on the Reuters Screen LIBOR01 Page, the rates for that day will be determined on the basis of the rates at which deposits in U.S. Dollars, having a maturity of one month and in a principal balance of not less than U.S. $1,000,000 are offered at approximately 11:00 a.m., London time, on such LIBOR Determination Date to prime banks in the London interbank market by the Reference Banks. The Administrator will request the principal London office of each Reference Bank to provide a quotation of its rate to the Administrator and the Indenture Trustee. If at least two such quotations are provided, the Indenture Trustee will calculate the rate for that day as the arithmetic mean of such quoted rates to the nearest 1/100,000 of 1.00% (0.0000001), with five one-millionths of a percentage point rounded upward, of all such quotations. If fewer than two such quotations are provided, the Indenture Trustee will calculate the rate for that day as the arithmetic mean to the nearest 1/100,000 of 1.00% (0.0000001), with five one-millionths of a percentage point rounded upward, of the offered per annum rates that one or more major banks in New York City, selected by the Administrator, are quoting as of approximately 11:00 a.m., New York City time, on such LIBOR Determination Date to leading European banks for United States Dollar deposits for that maturity; provided that if the Administrator is not able to identify any major banks in New York City that are quoting as described in this sentence and for the avoidance of doubt, regardless of whether others in similar transactions are using a different index, it shall direct the Indenture Trustee to use One-Month LIBOR in effect for the applicable Interest Period which will be One-Month LIBOR in effect for the previous Interest Period, and any such direction will be deemed to apply to all subsequent LIBOR Determination Dates unless otherwise directed by the Administrator. In no event shall the Indenture Trustee be responsible for determining One-Month LIBOR or any substitute for One-Month LIBOR if such rate does not appear on Reuters Screen LIBOR01 Page.

Opinion of Counsel means a written opinion of counsel (which may be internal counsel) which counsel is reasonably acceptable to the Indenture Trustee, the Owner Trustee and the Rating Agencies, as applicable.

Optional Acquisition has the meaning stated in Section 8.1(a) of the Transfer and Servicing Agreement.

Optional Acquisition Amount has the meaning stated in Section 8.1(b) of the Transfer and Servicing Agreement.

Optional Redemption has the meaning stated in Section 8.2(a) of the Transfer and Servicing Agreement.

Originator means (i) with respect to the Initial Receivables or the Additional Receivables, any of Cellco or certain Affiliates of Verizon listed on Schedule B to the Originator Receivables Transfer Agreement and (ii) with respect to the Additional Receivables transferred to the Depositor pursuant to the Originator Receivables Transfer Agreement, any additional Affiliate of Verizon not listed on Schedule B to the Originator Receivables Transfer Agreement

A-26

Source: VERIZON ABS LLC, 8-K, 1/23/2020





that executes an Additional Originator Joinder Agreement substantially in the form of Exhibit B to the Originator Receivables Transfer Agreement; provided, that with respect to any amounts remitted by, or caused to be remitted by, the Marketing Agent pursuant to Sections 4.3(g), (h) and (i) of the Transfer and Servicing Agreement, the term Originator shall also mean, with respect to the Additional Receivables transferred to the Depositor pursuant to the Master Trust Receivables Transfer Agreement, any additional Affiliate of Verizon not listed on Schedule B to the Originator Receivables Transfer Agreement that originated any such Receivables.

Originator Reacquisition Obligation has the meaning stated in the Parent Support Agreement.

Originator Receivables Transfer Agreement means the Originator Receivables Transfer Agreement, dated as of the Closing Date, between the Originators party thereto and the Depositor, as amended, restated, supplemented or modified from time to time.

Originator Transferred Property means, for the Closing Date and any Acquisition Date, (a) the Initial Receivables or the Additional Receivables, as applicable, transferred by the Originators, (b) all amounts received and applied on such Receivables after the end of the calendar day on the related Cutoff Date, (c) all present and future claims, demands, causes of action and choses in action relating to any of the property described above and (d) all payments on or under and all proceeds of the property described above.

Other Assets means any assets (other than the Trust Property) sold, assigned or conveyed or intended to be sold, assigned or conveyed by the Depositor to any Person other than the Issuer, whether by way of a sale, capital contribution, pledge or otherwise.

Outstanding means, as of a date, all Notes authenticated and delivered under the Indenture on or before that date except (a) Notes that have been cancelled by the Note Registrar or delivered to the Note Registrar for cancellation, (b) Notes to the extent the amount necessary to pay the Notes has been deposited with the Indenture Trustee or Note Paying Agent in trust for the Noteholders and, if those Notes are to be redeemed, notice of the redemption has been given under the Indenture, and (c) Notes in exchange for or in place of which other Notes have been authenticated and delivered under the Indenture unless proof satisfactory to the Indenture Trustee is presented that the Notes are held by a bona fide purchaser. In determining whether Noteholders of the required Note Balance have made or given a request, demand, authorization, direction, notice, consent or waiver under any Transaction Document, Notes owned by the Issuer, the Depositor, the Servicer or their Affiliates will not be considered to be Outstanding. However, Notes owned by the Issuer, the Depositor, the Servicer or their Affiliates will be considered to be Outstanding if (A) no other Notes remain Outstanding, or (B) the Notes have been pledged in good faith and the pledgee establishes to the reasonable satisfaction of the Indenture Trustee the pledgee's right to act for the Notes and that the pledgee is not the Issuer, the Depositor, the Servicer or their Affiliates.

Overcollateralization means, for any date of determination other than the Closing Date, the amount by which (x) the sum of (i) the Adjusted Pool Balance as of the last day of the related

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





Collection Period, and (ii) the amount on deposit in the Acquisition Account after giving effect to the acquisition of Receivables on that date exceeds (y) the aggregate Note Balance.

Overcollateralization Target Amount means an amount equal to:

(i) on the Closing Date, 10.50% of the Adjusted Pool Balance as of the Initial Cutoff Date;

(ii) for any date of determination (other than the Closing Date), prior to the Amortization Period, on which the pool of Receivables meets all of the Floor Credit Enhancement Composition Tests, the greater of (x) the result of (a)(i) the aggregate Note Balance, divided by (ii) 1 minus 0.1050, minus (b) the aggregate Note Balance, and (y) 1.00% of the Adjusted Pool Balance as of the Closing Date;

(iii) for any date of determination (other than the Closing Date), prior to the Amortization Period, on which the pool of Receivables does not meet all of the Floor Credit Enhancement Composition Tests, the greater of (x) the result of (a)(i) the aggregate Note Balance, divided by (ii) 1 minus 0.1350, minus (b) the aggregate Note Balance, and (y) 1.00% of the Adjusted Pool Balance as of the Closing Date;

(iv) for any date of determination, during the Amortization Period, on which the pool of Receivables meets all of the Floor Credit Enhancement Composition Tests, the greater of (x) 14.50% of the Adjusted Pool Balance as of the end of the calendar month immediately preceding such date of determination, and (y) 1.00% of the Adjusted Pool Balance as of the Closing Date; or

(v) for any date of determination, during the Amortization Period, on which the pool of Receivables does not meet all of the Floor Credit Enhancement Composition Tests, the greater of (x) 17.50% of the Adjusted Pool Balance as of the end of the calendar month immediately preceding such date of determination, and (y) 1.00% of the Adjusted Pool Balance as of the Closing Date.

Owner Trustee means Wilmington Trust, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement.

Owner Trustee Fee means a monthly fee equal to 1/12th of $15,000, payable on each Payment Date.

Parent Support Agreement means the guaranty, dated as of the Closing Date, among the Parent Support Provider, the Depositor, the Issuer and the Indenture Trustee, as amended, restated, supplemented or modified from time to time.

Parent Support Provider means Verizon.

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





Payment Date means the 20th day of each month or, if not a Business Day, the next Business Day, starting in March 2020. For a Collection Period, the related Payment Date means the Payment Date following the end of the Collection Period.

Percentage Interest shall mean, with respect to each Certificate, the percentage interest in the Issuer represented by such Certificate.

Permitted Activities has the meaning stated in Section 2.3(a) of the Trust Agreement.

Permitted Investments means book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form that evidence:

(a) (x) direct or fully guaranteed United States treasury obligations, (y) U.S. Department of Housing and Urban Development public agency bonds, Federal Housing Administration debentures, Government National Mortgage Association guaranteed mortgage-backed securities or participation certificates, RefCorp debt obligations, SBA-guaranteed participation certificates and guaranteed pool certificates or (z) Farm Credit System consolidated systemwide bonds and notes, Federal Home Loan Banks' consolidated debt obligations, Federal Home Loan Mortgage Corp. debt obligations and Federal National Mortgage Association debt obligations, if, with respect to the investments listed in clause (z), they meet the criteria of S&P for collateral for securities having ratings equivalent to the respective ratings of the Notes in effect at the Closing Date;

(b) demand deposits, time deposits, certificates of deposit or bankers' acceptances of any depository institution or trust company (i) incorporated under the laws of the United States or any State or any United States branch or agency of a foreign bank, (ii) subject to supervision and examination by federal or State banking or depository institution authorities and (iii) where the commercial paper or other short-term unsecured debt obligations (other than obligations with a rating based on the credit of a Person other than the depository institution or trust company) of such depository institution or trust company have the Required Rating;

(c) commercial paper, including asset-backed commercial paper, having the Required Rating;

(d) investments in money market funds having a rating in the highest investment grade category from each of S&P and Moody's (including funds for which the Indenture Trustee or the Owner Trustee or any of their Affiliates is investment manager or advisor); and

(e) any other investment that is acceptable to each Rating Agency.

Permitted Lien means a Lien that attaches by operation of law, or any security interest of the Depositor in the Originator Transferred Property and the Master Trust Transferred Property under the related Receivables Transfer Agreement, the Issuer in the Depositor

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





Transferred Property under the Transfer and Servicing Agreement or the Indenture Trustee in the Collateral under the Indenture.

Person means a legal person, including a corporation, natural person, joint venture, limited liability company, partnership, trust, business trust, association, government, a department or agency of a government or any other entity.

Personally Identifiable Information has the meaning stated in the Asset Representations Review Agreement.

Pool Balance means, for any Collection Period, an amount equal to (i) the aggregate Principal Balance of the Receivables on the last day of the Collection Period immediately preceding such Collection Period (excluding Acquired Receivables), plus the aggregate Principal Balance on the related Cutoff Date of any Additional Receivables transferred during the Collection Period less (ii) the aggregate Principal Balance of any Temporarily Excluded Receivables as of the last day of the Collection Period immediately preceding such Collection Period.

Pool Composition Tests means, for the Closing Date, each Payment Date and any Acquisition Date and with respect to the pool of Receivables held by the Issuer as of the related Cutoff Date, including any Additional Receivables acquired by the Issuer on an Acquisition Date, each of the following tests calculated as of the end of the month preceding the month in which such date occurs:

(a) the weighted average FICO® Score 8 of the Obligors with respect to the Receivables is at least 685 (excluding Receivables with Obligors for whom FICO® Score 8s are not available),

(b) Receivables with Obligors for whom FICO® Score 8s are not available represent no more than 5.00% of the Pool Balance,

(c) Receivables with Obligors that have less than 12 months of Customer Tenure with Verizon Wireless represent no more than 28.00% of the Pool Balance,

(d) Receivables with Obligors that have 7 months or more, but less than 24 months of Customer Tenure with Verizon Wireless represent no more than 15.00% of the Pool Balance,

(e) Receivables with Obligors that have 60 months or more of Customer Tenure with Verizon Wireless represent at least 50.00% of the Pool Balance,

(f) Receivables with Obligors that have less than 12 months of Customer Tenure with Verizon Wireless and (i) for whom FICO® Score 8s are not available or (ii) that have FICO® Score 8s below 650, represent no more than 10.00% of the Pool Balance,

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





(g) Receivables with Obligors that have 12 months or more, but less than 60 months of Customer Tenure with Verizon Wireless and (i) for whom FICO® Score 8s are not available or (ii) that have FICO® Score 8s below 650, represent no more than 55.00% of the aggregate Principal Balance of all Receivables with Obligors that have 12 months or more, but less than 60 months of Customer Tenure with Verizon Wireless, and

(h) Receivables with Obligors that have 60 months or more of Customer Tenure with Verizon Wireless and (i) for whom FICO® Score 8s are not available or (ii) that have FICO® Score 8s below 650, represent no more than 30.00% of the aggregate Principal Balance of all Receivables with Obligors that have 60 months or more of Customer Tenure with Verizon Wireless.

Principal Balance means, for a Receivable as of the last day of a month, an amount (not less than zero) equal to, without duplication:

(a) the Amount Financed; minus

(b) the portion of the amounts paid by the related Obligor applied on or before that date allocable to principal; minus

(c) any Credits allocated to such Receivable;

provided that, the Principal Balance for any Written-Off Receivable will be deemed to be zero.

Proceeding means a suit in equity, action at law or other judicial or administrative proceeding, or governmental investigation.

Prospectus means the prospectus dated as of January 21, 2020, relating to the offering of the Notes.

Qualified Institution means U.S. Bank National Association, Wilmington Trust, National Association, or a trust company or a bank or depository institution organized under the laws of the United States or any State or any United States branch or agency of a foreign bank or depository institution that (i) is subject to supervision and examination by federal or State banking authorities, (ii) has a short-term deposit rating of P-1 from Moody's, if rated by Moody's, and A-1+ from S&P, if rated by S&P, (iii) if the institution holds any Bank Accounts, has a long-term unsecured debt rating or issuer rating of at least Aa3 from Moody's, if rated by Moody's, and at least A from S&P, if rated by S&P and (iv) if the institution is organized under the laws of the United States, whose deposits are insured by the Federal Deposit Insurance Corporation.

Rating Agency means each of Moody's and S&P.

Rating Agency Condition means, for an action or request and with respect to a Rating Agency, that, according to the then-current policies of the relevant Rating Agency for that action

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





or request, the Rating Agency has notified the Depositor, the Servicer, the Owner Trustee and the Indenture Trustee that the proposed action or request will not result in a downgrade or withdrawal of its then-current rating on any of the Notes.

Receivable means, for a Collection Period, an Initial Receivable or an Additional Receivable, excluding any device payment plan agreement that became an Acquired Receivable during a prior Collection Period or was a Written-Off Receivable sold under Section 3.4 of the Transfer and Servicing Agreement during a prior Collection Period.

Receivable File has the meaning stated in Section 3.10(b) of the Transfer and Servicing Agreement.

Receivables Transfer Agreements or Receivables Transfer Agreement means, collectively or individually, the Originator Receivables Transfer Agreement and the Master Trust Receivables Transfer Agreement, as the context may require.

Record Date means, for a Payment Date and a Book-Entry Note, the close of business on the day before the Payment Date and, for a Payment Date and a Definitive Note, the last day of the calendar month immediately preceding the month in which the Payment Date occurs and with respect to any notice, vote or consent, the most recently occurring Record Date for a Payment Date.

Recoveries means, for any Written-Off Receivable and a Collection Period, an amount equal to:

(a) all amounts received and applied by the Servicer during the Collection Period for the Receivable after the date on which it became a Written-Off Receivable, including any proceeds from the sale of a Device securing any Receivable; minus

(b) any amounts paid by the Servicer for the account of the related Obligor, including collection expenses and other amounts paid to third parties, if any, in connection with collections on the Written-Off Receivable; minus

(c) amounts, if any, required by Law or under the Servicing Procedures to be paid to the Obligor.

Redemption Date has the meaning stated in Section 10.1 of the Indenture.

Reference Banks means, for any LIBOR Determination Date, the four major banks in the London interbank market selected by the Administrator.

Reference Time with respect to any determination of the Benchmark means (1) if the Benchmark is One-Month LIBOR, 11:00 a.m. (London time) on the day that is two (2) London banking days preceding the date of such determination, and (2) if the Benchmark is not One- Month LIBOR, the time determined by the Administrator in accordance with the Benchmark Replacement Conforming Changes.

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





Reference Treasury Dealer means (1) any independent investment banking or commercial banking institution of national standing and any of its successors appointed by Verizon; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in the United States, referred to as a Primary Treasury Dealer, another Primary Treasury Dealer substituted therefor, and (2) any other Primary Treasury Dealer selected by an Independent Investment Banker and approved in writing by Verizon.

Reference Treasury Dealer Quotations means, with respect to each Reference Treasury Dealer and any date of determination, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 3:30 p.m., New York City time, on the third Business Day preceding the date of determination.

Regular Priority Principal Payment means, for a Payment Date, an amount equal to the greater of (A) an amount (not less than zero) equal to the excess, if any, of (a) the aggregate Note Balance of the Class A Notes, the Class B Notes and the Class C Notes as of the immediately preceding Payment Date (or, for the initial Payment Date, as of the Closing Date), minus the sum of the First Priority Principal Payment, the Second Priority Principal Payment and the Third Priority Principal Payment for the current Payment Date, over (b) the Adjusted Pool Balance as of the last day of the related Collection Period minus the Overcollateralization Target Amount, and (B) on and after the Final Maturity Date for any Class of Notes, the amount that is necessary to reduce the principal amount of each such Class, as applicable, to zero (after the application of any First Priority Principal Payment, Second Priority Principal Payment and Third Priority Principal Payment).

Regulation AB means Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1125, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Commission in the adopting releases (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005) and Asset-Backed Securities Disclosure and Registration, Securities Act Release No. 33-9638, 79 Fed. Reg. 57,184 (Sept. 24, 2014)) or by the staff of the Commission, or as may be provided by the Commission or its staff from time to time.

Relevant Governmental Body means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York, or any successor thereto.

Requesting Noteholders has the meaning stated in Section 14.1 of the Indenture.

Requesting Party has the meaning stated in Section 11.2 of the Transfer and Servicing Agreement.

Required Acquisition Deposit Amount means, for any Payment Date during the Revolving Period, an amount equal to the excess, if any, of (x) the aggregate Note Balance of the Notes over (y) (i) the Adjusted Pool Balance as of the end of the related Collection Period minus

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





(ii) the Overcollateralization Target Amount, after giving effect to any acquisition of Additional Receivables on such date.

Required Negative Carry Amount means, for any Payment Date during the Revolving Period, an amount equal to the product of (i) the amount in the Acquisition Account on the Payment Date (after giving effect to all payments under Section 8.2(c) of the Indenture and the acquisition of Additional Receivables, if any, on the Payment Date), (ii) the weighted average Note Interest Rate and (iii) 1/12.

Required Rating means, for short-term unsecured debt obligations, a rating of (a) P-1 from Moody's and (b) A-1+ from S&P.

Required Reserve Amount means $17,877,097.97, or approximately 1% of the Adjusted Pool Balance as of the Initial Cutoff Date.

Reserve Account means the account established under Section 4.1(a) of the Transfer and Servicing Agreement.

Reserve Account Draw Amount means:

(a) for each Payment Date before the Amortization Period, the lesser of:

(i) an amount (not less than zero) equal to the Total Required Payment minus the Available Funds determined without regard to the Reserve Account Draw Amount; and

(ii) the amount in the Reserve Account; and

(b) for each Payment Date during the Amortization Period, an amount equal to the amount in the Reserve Account, if that amount together with Available Funds for that Payment Date is sufficient to pay the entire Note Balance of the Notes, all accrued and unpaid interest and any unpaid Make-Whole Payments and all other amounts to be distributed to the Secured Parties under the Indenture and the Transfer and Servicing Agreement in full.

Reserve Deposit Amount means, for a Payment Date, an amount equal to (a) the Required Reserve Amount minus (b) the amount in the Reserve Account on the Payment Date (before payments under Section 8.2(c) of the Indenture on that Payment Date).

Residual Interest means an eligible horizontal residual interest (as defined in the U.S. Credit Risk Retention Rules) equal to at least 5% of the fair value of all of the ABS interests (as defined in the U.S. Credit Risk Retention Rules) in the Issuer issued as part of the transactions contemplated by the Transaction Documents, determined as of the Closing Date using a fair value measurement framework under United States generally accepted accounting principles.

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





Responsible Person means:

(a) for the Administrator, the Depositor, the Sponsor, the Servicer, the Marketing Agent, the Parent Support Provider or any Originator, a Person designated in an Officer's Certificate of the Person or other notice signed by an officer of the Person authorized to act for the Person or any treasurer, assistant treasurer or corporate secretary of such Person that has responsibility for the matter;

(b) for the Issuer, an officer in the Corporate Trust Office of the Owner Trustee, any officer of the Owner Trustee to whom any matter is referred because of the officer's knowledge of and familiarity with the matter, and a Responsible Person of the Administrator;

(c) for the Master Trust, an officer in the Corporate Trust Office of the Master Trust Owner Trustee, any officer of the Master Trust Owner Trustee to whom any matter is referred because of the officer's knowledge of and familiarity with the matter, and a Responsible Person of the Master Trust Administrator; and

(d) for the Indenture Trustee or the Owner Trustee, an officer in the Corporate Trust Office of the Indenture Trustee or the Owner Trustee, as applicable, including each vice president, assistant vice president, secretary, assistant secretary or other officer customarily performing functions similar to those performed by those officers listed above, and any officer of the Indenture Trustee or the Owner Trustee, as applicable, to whom any matter is referred because of the officer's knowledge of and familiarity with the matter, and in each case, having direct responsibility for the administration of the Transaction Documents.

Review has the meaning stated in the Asset Representations Review Agreement.

Review Materials has the meaning stated in the Asset Representations Review Agreement.

Review Notice has the meaning stated in the Asset Representations Review Agreement.

Review Receivable has the meaning stated in the Asset Representations Review Agreement.

Review Report means, for an Asset Representations Review, the report of the Asset Representations Reviewer described in Section 3.5 of the Asset Representations Review Agreement.

Revolving Period means the period from the Closing Date to the start of the Amortization Period.

S&P means S&P Global Ratings.

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





Sarbanes Certification has the meaning stated in Section 6.7(a)(iv) of the Transfer and Servicing Agreement.

Schedule of Receivables means (a) the schedule identifying the Initial Receivables attached as Schedule A to each Receivables Transfer Agreement and Schedule A to each of the Transfer and Servicing Agreement and the Indenture or the electronic file with respect thereto delivered on the Closing Date, and (b) each schedule identifying any Additional Receivables attached as Schedule A to any Transfer Notice or the electronic file with respect thereto delivered by the Depositor, or the Administrator on its behalf, to the Issuer and the Indenture Trustee for an Acquisition Date.

Second Priority Principal Payment means, for a Payment Date, the greater of:

(a) an amount (not less than zero) equal to:

(i) the aggregate Note Balances of the Class A Notes and the Class B Notes as of the immediately preceding Payment Date (or, for the initial Payment Date, as of the Closing Date); minus

(ii) the Adjusted Pool Balance; minus

(iii) the First Priority Principal Payment; and

(b) on and after the Final Maturity Date for the Class B Notes, the Note Balance of the Class B Notes until paid in full.

Secured Parties means the Indenture Trustee, for the benefit of the Noteholders.

Securities Account means each Bank Account subject to the terms of the Account Control Agreement.

Securities Act means the Securities Act of 1933, as amended.

Securities Intermediary means U.S. Bank National Association.

Servicer means Cellco or any Successor Servicer engaged under Section 7.4 of the Transfer and Servicing Agreement.

Servicer Acquisition Obligation has the meaning stated in the Parent Support Agreement.

Servicer Deposit Obligation has the meaning stated in the Parent Support Agreement.

Servicer Representation Obligation has the meaning stated in the Parent Support Agreement.

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





Servicer Termination Event has the meaning stated in Section 7.2 of the Transfer and Servicing Agreement.

Servicer's Certificate means an Officer's Certificate of the Servicer delivered pursuant to Section 6.6 of the Transfer and Servicing Agreement.

Servicing Criteria means the servicing criteria set forth in Item 1122(d) of Regulation AB, as such may be amended from time to time.

Servicing Fee means, for a Collection Period, the fee payable to the Servicer in an amount equal to the product of:

(a) one-twelfth of the Servicing Fee Rate; times

(b) the Adjusted Pool Balance at the beginning of the full calendar month immediately preceding such Payment Date;

provided, that the Servicing Fee for the initial Payment Date will equal the product of (i) a fraction, the numerator of which is the number of days from and including the Closing Date to and including the last day of the first Collection Period and the denominator of which is 360, and (ii) the Servicing Fee Rate times the Adjusted Pool Balance as of the Closing Date.

Servicing Fee Rate means 0.75%.

Servicing Procedures means the servicing procedures of Cellco relating to device payment plan agreements originated by the Originators, as amended or modified from time to time.

Similar Law means any federal, State, local or non-U.S. law or regulation that is substantially similar to Title I of ERISA or Section 4975 of the Code.

SOFR with respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the Benchmark Administrator for SOFR (or a successor Benchmark Administrator).

Solvent means, with respect to any Person and as of any particular date, that (i) the present fair market value (or present fair saleable value) of the assets of such Person is not less than the total amount required to pay the probable liabilities of such Person on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured, (ii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business and (iii) such Person is not incurring debts or liabilities beyond its ability to pay such debts and liabilities as they mature.

Sponsor means Cellco.

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





State means a state or commonwealth of the United States of America, or the District of Columbia.

Subcontractor means any vendor, subcontractor or other Person that is not responsible for the overall servicing (as servicing is commonly understood by participants in the asset-backed securities market) of the Receivables but performs one or more discrete functions identified in the Servicing Criteria with respect to the Receivables under the direction or authority of the Servicer or a Subservicer.

Subservicer means any Person that services Receivables on behalf of the Servicer or any Subservicer and is responsible for the performance (whether directly or through Subservicers or Subcontractors) of a substantial portion of the material servicing functions required to be performed by the Servicer under this Agreement that are identified in the Servicing Criteria.

Successor Servicer has the meaning stated in Section 7.4(a)(i) of the Transfer and Servicing Agreement.

Supplemental Servicing Fee means, for a Collection Period, all net Recoveries, late fees, prepayment charges, extension fees and other administrative fees or similar charges on the Receivables.

Temporarily Excluded Receivables means any Receivable deemed to be temporarily excluded by the Administrator from any calculation required to be made by the Administrator or the Servicer pursuant to and in accordance with the terms of the Transaction Documents.

Temporarily Excluded Receivables Servicing Fee means, for a Collection Period, the fee payable to the Servicer in an amount equal to the product of:

(a) one-twelfth of the Servicing Fee Rate; times

(b) the aggregate Principal Balance of all Temporarily Excluded Receivables at the beginning of the calendar month immediately preceding such Collection Period.

Term SOFR means the forward-looking term rate for the applicable Corresponding Tenor based on SOFR that has been selected or recommended by the Relevant Governmental Body.

Third Priority Principal Payment means, for a Payment Date, the greater of:

(a) an amount (not less than zero) equal to:

(i) the aggregate Note Balances of the Class A Notes, the Class B Notes and the Class C Notes as of the immediately preceding Payment Date (or, for the initial Payment Date, as of the Closing Date); minus

(ii) the Adjusted Pool Balance; minus

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





(iii) the First Priority Principal Payment; minus

(iv) the Second Priority Principal Payment; and

(b) on and after the Final Maturity Date for the Class C Notes, the Note Balance of the Class C Notes until paid in full.

Total Required Payment means,

(a) for a Payment Date and the Reserve Account Draw Amount, the sum of the amounts set forth in Sections 8.2(c)(i) through (viii) of the Indenture; and

(b) for a Payment Date and the Negative Carry Account Draw Amount, the sum of the amounts set forth in Sections 8.2(c)(i) through (xiii) of the Indenture.

Following an Event of Default and an acceleration of the Notes or an Insolvency Event or dissolution of the Depositor, until the Note Balances of each Class of Notes have been paid in full, the Total Required Payment will also include the aggregate Note Balances of all Notes.

Transaction Documents means the Certificate of Trust, the Trust Agreement, the Receivables Transfer Agreements, the Transfer and Servicing Agreement, the Indenture, the Administration Agreement, the Asset Representations Review Agreement, the Parent Support Agreement, the Underwriting Agreement, the Marketing Agent Agency Agreement, the Depository Agreement, the Cap Agreement and the Account Control Agreement.

Transfer and Servicing Agreement means the Transfer and Servicing Agreement, dated as of the Closing Date, among the Issuer, the Depositor and Cellco as Servicer, Marketing Agent and Custodian, as amended, restated, supplemented or modified from time to time.

Transfer Notice means the notice to the Issuer, the Depositor and the Indenture Trustee regarding the acquisition of Additional Receivables under Section 2.1(d) of each of the Receivables Transfer Agreements, substantially in the form of Exhibit A to each such Receivables Transfer Agreement.

Treasury Rate means, for any Payment Date on which a Make-Whole Payment is to be made, the rate determined on the third Business Day preceding such Payment Date equal to:

(i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release published by the Board of Governors of the Federal Reserve System designated as Statistical Release H. 15(519) or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption Treasury Constant Maturities, for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Remaining Life (as defined in the definition of Comparable Treasury Issue), yields for the two published

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Source: VERIZON ABS LLC, 8-K, 1/23/2020





maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from those yields on a straightline basis, rounding to the nearest month), or

(ii) if that release (or any successor release) is not published during the week preceding the calculation date or does not contain those yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for the date of redemption.

Treasury Regulations shall mean regulations, including proposed or temporary regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations.

True Up Trust means Verizon DPPA True Up Trust, a Delaware statutory trust, or its successors or assigns.

Trust Agreement means the Amended and Restated Trust Agreement, dated as of the Closing Date, between the Depositor and the Owner Trustee, as amended, restated, supplemented or modified from time to time.

Trust Indenture Act or TIA means the Trust Indenture Act of 1939 as in force on the date hereof, unless otherwise specifically provided.

Trust Property means the Initial Trust Property and any Additional Trust Property.

Trust Register has the meaning stated in Section 3.3(a) of the Trust Agreement.

Trust Registrar has the meaning stated in Section 3.3(a) of the Trust Agreement.

U.S. Credit Risk Retention Rules means Regulation RR, 17 C.F.R. §246.1, et seq.

UCC means the Uniform Commercial Code as in effect in any relevant jurisdiction.

Unadjusted Benchmark Replacement means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.

Underwriting Agreement means the Underwriting Agreement, dated as of January 21, 2020, by and among the Depositor, Cellco and each of BofA Securities, Inc., Mizuho Securities USA LLC, MUFG Securities Americas Inc. and Wells Fargo Securities, LLC, each on its own behalf and as a representative of the several underwriters identified therein.

Underwriting Procedures means the underwriting procedures of the Originators, as established by Cellco, relating to device payment plan agreements originated by the Originators, as such underwriting procedures may be amended or modified from time to time.

A-40

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Upgrade Contract has the meaning stated in the Glossary of the Marketing Agent Agency Agreement.

Upgrade Offer means the Annual Upgrade Offer or any other upgrade offer extended by Verizon Wireless to an existing Obligor under which such Obligor can upgrade a Device that is the subject of a device payment plan agreement if the terms and conditions specified in such offer are satisfied.

Upgrade Payment means a prepayment amount equal to the remaining unpaid Principal Balance of the related Receivable determined as of the date of the relevant upgrade, after giving effect to any prepayment made by the related Obligor in connection with the related Upgrade Offer.

Verified Note Owner has the meaning stated in Section 14.1 of the Indenture.

Verizon means Verizon Communications Inc., a Delaware corporation.

Verizon Originators means the various subsidiaries and Affiliates of Cellco listed on Schedule I to the Marketing Agent Agency Agreement.

Verizon Wireless means the wireless business of Verizon, operated by Cellco and various other subsidiaries of Verizon, including the Originators, under the Verizon Wireless brand.

Written-Off Receivable means any Receivable that in accordance with the Servicing Procedures has been charged off or written off by the Servicer.

Yield Amount means, for each Receivable on the Closing Date, on each Payment Date and on each Acquisition Date other than a Payment Date, the amount by which (x) the Principal Balance as of the last day of the related Collection Period or as of the applicable Cutoff Date, as applicable, for such Receivable exceeds (y) the present value of the future scheduled payments on the Receivable as of the last day of the related Collection Period (or as of the applicable Cutoff Date, for the first Payment Date for the Receivables) calculated using the Discount Rate. For purposes of this calculation, the future scheduled payments on each Receivable are the equal monthly payments that would reduce the Receivable's Principal Balance as of the related Cutoff Date to zero on the Receivable's final scheduled payment date, at an interest rate equal to the APR of the Receivable, which payments are received at the end of each month without any delays, defaults or prepayments.

Yield Supplement Overcollateralization Amount means, for the Closing Date, for each Payment Date and for each Acquisition Date other than a Payment Date, an amount calculated as the sum of the Yield Amounts for all Receivables owned by the Issuer with an APR as stated in the related device payment plan agreement of less than 7.65%.

A-41

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Exhibit A

Custodian's Security Requirements

(See Attached)

EA-1

Source: VERIZON ABS LLC, 8-K, 1/23/2020





Exhibit B

FORM OF ANNUAL CERTIFICATION

Re: The Transfer and Servicing Agreement, dated as of January 29, 2020 (the Agreement), among Verizon Owner Trust 2020-A (the Issuer), Verizon ABS LLC (the Depositor), and Cellco Partnership d/b/a Verizon Wireless (Cellco), as servicer (in such capacity, the Servicer), as marketing agent and as custodian.

I, ________________________________, the _____________of __________ [NAME OF COMPANY] (the Company), certify to the Issuer, the Administrator and the Depositor, and their officers, with the knowledge and intent that they will rely upon this certification, that:

(1) I have reviewed the servicer compliance statement of the Company provided in accordance with Item 1123 of Regulation AB (the Compliance Statement), the report on assessment of the Company's compliance with the servicing criteria set forth in Item 1122(d) of Regulation AB (the Servicing Criteria), provided in accordance with Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended (the Exchange Act) and Item 1122 of Regulation AB (the Servicing Assessment), the registered public accounting firm's attestation report provided in accordance with Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of Regulation AB (the Attestation Report), and all servicing reports, officer's certificates and other information relating to the servicing of the Receivables by the Company during 20[__] that were delivered by the Company to the Issuer and the Depositor pursuant to the Agreement (collectively, the Company Servicing Information);

(2) Based on my knowledge, the Company Servicing Information, taken as a whole, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in the light of the circumstances under which such statements were made, not misleading with respect to the period of time covered by the Company Servicing Information;

(3) Based on my knowledge, all of the Company Servicing Information required to be provided by the Company under the Agreement has been provided to the Issuer and the Depositor;

(4) I am responsible for reviewing the activities performed by the Company as Servicer under the Agreement, and based on my knowledge and the compliance review conducted in preparing the Compliance Statement [and except as disclosed in the Compliance Statement, the Servicing Assessment or the Attestation Report,] the Company has fulfilled its obligations under the Agreement in all material respects; and

(5) The Compliance Statement required to be delivered by the Company pursuant to the Agreement, and each Servicing Assessment and Attestation Report required to be provided by the Company and by any Subservicer or Subcontractor pursuant to the Agreement, have been provided to the Issuer, the Administrator, the Depositor, the Indenture Trustee and the Owner Trustee. Any material instances of

EB-1

Source: VERIZON ABS LLC, 8-K, 1/23/2020





noncompliance with the Servicing Criteria have been disclosed in such reports and have been disclosed to the Issuer, the Administrator and the Depositor.

Capitalized terms used herein and not otherwise defined have the meaning given to such terms in the Agreement.

Date: _________________________

By: ___________________________ Name: Title: EB-2

Source: VERIZON ABS LLC, 8-K, 1/23/2020 
Question: Highlight the parts (if any) of this contract related to Third Party Beneficiary that should be reviewed by a lawyer. Details: Is there a non-contracting party who is a beneficiary to some or all of the clauses in the contract and therefore can enforce its rights against a contracting party?

Ex Output:
The Owner Trustee and the Indenture Trustee, for the benefit of the Secured Parties, will be third-party beneficiaries of this Agreement and may enforce this Agreement against the Depositor and the Servicer.


Ex Input:
Exhibit 10.1 NOTE: Certain information indicated with [***] in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed. MASTER JOINT DEVELOPMENT AGREEMENT This Master Joint Development Agreement (Agreement) is between iBio Inc., a Public corporation, with a location at iBio Inc., 600 Madison Ave, Suite 01601 NY, NY 10022-1735 and Beijing CC-Pharming Ltd. of Beijing, China (CC-Pharming), a Chinese Corporation with a location at Shunyi District, Beijing, China, 101312, each of the foregoing being individually referred to as a Party and collectively as the Parties. WHEREAS, iBio and CC-Pharming wish to establish a long-term working relationship for various joint research and development projects (Projects) related to the development of various products, with the work for each Project to be described in a separate Statement of Work (SOW) agreed by the Parties; WHEREAS, iBio has developed and owns proprietary technology used to produce proteins using proprietary vector systems that support transient gene expression and protein production in plants, and iBio has developed and/or acquired additional proprietary biopharmaceutical technology, cGMP manufacturing expertise (iBio's Technology), and a facility design team that provides capabilities for application to the development of biotherapeutics; and WHEREAS, iBio and CC-Pharming, wish to develop one or more biopharmaceuticals Product(s) (each a Product) based on iBio's proprietary and patented plant-based protein production technology and know-how; WHEREAS, iBio and CC-Pharming wish to develop a long-term, mutually beneficial relationship for the production and sale of biopharmaceuticals in China and to form a collaborative business venture to be majority owned and controlled by CC-Pharming and minority owned by iBio; and NOW, THEREFORE, for good and valuable consideration as stated herein, the sufficiency of which is hereby expressly acknowledged by each Party, iBio and CC-Pharming agree as follows: 1.0 Limited Technology License 1.1 iBio hereby grants to CC-Pharming for the term of this Agreement, a nonexclusive, non- assignable, non-sublicensable, limited right and license to use iBio's Technology in order to manufacture, process, prepare, and obtain regulatory approval for the development and production of Product(s) and work to be performed under this Agreement. Each Product will be set forth in a separate Statement of Work in the form set forth in Appendix A, which will be signed by representatives of each Party with signing authority. Each phase of the project(s) will be subject to the terms and conditions set forth in this Agreement unless otherwise provided for or in a Statement of Work (SOW), including but not limited to project purpose, project phases, and a project budget.

Master Joint Development Agreement iBio CC-Pharming Page 1 of 12

Source: IBIO, INC., 8-K, 3/13/2020





1.2 No right or license is being conveyed to CC-Pharming to export Products or to otherwise use the Technology in any country other than China. 1.3 iBio will work with CC-Pharming to perform a thorough Manufacturing Development Program based from an initial comprehensive two- day charrette to be held at its subsidiary iBio CDMO LLC facility in Bryan, Texas with the goals of CC-Pharming understanding the definitive capital expenditure necessary and initiating a preliminary design for the first Product. iBio will provide an architect, construction supervisor, mechanical engineer and process engineer with knowledge of the iBio CDMO facility currently in operation in Bryan, Texas. 1.4 CC-Pharming hereby expressly acknowledges the validity and highly confidential and proprietary nature of iBio's Technology and technical information, know-how, documents, materials, software, vectors, constructs, trade secrets, and other valuable business or scientific information that iBio will share with CC-Pharming in order to fulfill the purpose of this Agreement, namely, to form a legal structure for a collaborative business venture in which CC-Pharming and iBio shall share revenue from product sales. iBio's double-digit percentage, minority interest in this structure will provide compensation to iBio for providing CC-Pharming with a license to use iBio's Technology and enabling know-how and will provide CC-Pharming with ongoing and mutually agreed technology transfer services relevant to the evolving business and Product(s) of the collaborative venture. 1.5 The parties agree that the first product focus of the joint business collaboration will be a bio-better or bio-similar version of the therapeutic monoclonal antibody, rituximab. iBio will provide all necessary gene expression and vector technology for the transient expression and cGMP manufacturing of this protein in plants and will also provide pilot plant design services, construction consulting, product and process development services, training, quality management system design, and clinical planning and regulatory consulting. The tasks to be conducted in the first stage of the joint business collaboration will apply specifically to the rituximab product candidate but will be applicable, in part, to additional products to be selected by mutual agreement for development, with the timeline for such work to be determined by CC-Pharming. 1.5 Any milestones or completion dates set forth in a Statement of Work will be estimates only, and are not binding on the Parties. 2.0 Coordinators and Governance Terms 2.1 Project Technical Coordinators will be appointed by each the Parties for each Statement of Work. The Project Technical Coordinators will be responsible for exchanging information with the other Party, coordinating any visits and arranging all other matters pertinent to that Statement of Work.

Master Joint Development Agreement iBio CC-Pharming Page 2 of 12

Source: IBIO, INC., 8-K, 3/13/2020





2.2 Agreement Administration. The Agreement administrator for each Party must be contacted regarding all business-related matters, including any proposed modifications to this Agreement, the phasing plan of the SOW, for each project. An iBio Agreement Administrator is to be named on or before the Effective Date of the First Phase of the SOW. A CC-Pharming Agreement Administrator is to be named on or before the Effective Date of the First Phase of the SOW. 2.4 Governance Terms 2.4.1 The Agreement Administrators shall oversee the overall direction and management of this Agreement and to provide guidance and direction when needed, which agreement shall be unanimous. The responsibilities of the Agreement Administrator for iBio and CC- Pharming will include the following: a) Perform oversight for each of the ongoing projects, per phase, under the SOW's. b) Agreement on any modifications to the tasks and responsibilities for an ongoing project under the SOW's, will fall under the oversight of the Agreement Administrators. c) Neither Agreement Administrator is authorized to modify or change any term or condition of the Agreement or the overall scope of work for any SOW. d) Review any disputes between or among the Parties, and, if resolution of the dispute cannot be achieved, escalate the dispute to the Designated Executives of iBio and CC-Pharming. Designated Executive means the executive designated by iBio and by CC-Pharming, who will be responsible for general oversight of the Agreement and for resolving issues that require escalation under this Agreement. iBio and CC-Pharming shall each inform the other of the name and contact information of their respective Designated Executives on or before the Effective Date of the first SOW. 2.4.2 The Agreement Administrators may agree to change the tasks, task responsibilities and milestones as set forth in a Statement of Work, provided the changes do not alter the overall scope of work in a phase of the SOW, which agreement shall not be unreasonably withheld. Any modifications to the overall scope of work of phase of the SOW must be reduced to writing as an amendment to the SOW and signed by authorized representatives of iBio and CC-Pharming. 2.4.3 The Agreement Administrators shall meet regularly as required during the term of this Agreement, but at least two (2) times each calendar year, at a mutually agreeable location, which agreement shall not be unreasonably withheld. The face-to-face meetings may be replaced with conference calls or video conferences upon request by a Party. 2.4.4 The Parties shall be responsible for their own respective costs incurred relating to their participation in oversight meetings.

Master Joint Development Agreement iBio CC-Pharming Page 3 of 12

Source: IBIO, INC., 8-K, 3/13/2020





2.5 Each Party may change its Agreement Administrators, at any time, with written notice to the other Party. 3.0 Costs and Expenses 3.1 Upon execution of this Agreement and acceptance of iBio's proposal for the development of a Plant-Made Rituximab, and in consideration for providing the technology transfer contemplated herein, CC-Pharming shall pay iBio [***], which shall be paid as follows: 3.1.1 First payment of [***] is required to initiate the project: [***]. 3.1.2 Second payment of [***]. Due upon presentation of the following deliverables: a) Detailed design drawings of the pilot plant; b) Schematic design of the commercial facility; c) Purified antibody for pre-clinical testing and development; and d) The quality management system (QMS) development up to and including governance documents and governance standard operating procedures (SOP's). 3.1.3 Final payment of [***], due upon presentation of the following deliverables: a) Detailed Design drawings for the commercial facility; b) Completion of QMS documentation for rituximab including batch records, release documents, and assay SOPs; c) Completion of all training sessions and training documentation; d) Delivery of antibody drug substance for clinical trials; and e) Completion of a chemistry, manufacturing, and controls (CMC) document to support an (investigational new drug application (IND) or equivalent. 4.0 Inventions 4.1 Inventorship of inventions, developments, or discoveries first conceived or actually reduced to practice under this Agreement (Agreement Inventions) will be determined under U.S. Patent Law. All inventions, developments, or discoveries made solely by iBio prior to this Agreement is, and shall be, the sole property of iBio. All inventions, developments, or discoveries made solely by CC- Pharming thereof prior to this Agreement is, and shall be, the sole property of CC-Pharming. 4.2 All rights to inventions, patentable or non-patentable, made solely by employees of iBio during the term of this Agreement shall belong solely to iBio. All rights to inventions, patentable or non-patentable, made solely by employees of CC-Pharming during the term of this Agreement shall belong solely to CC-Pharming. All rights to Agreement Inventions, patentable or non-patentable, made jointly by employees of iBio and employees of CC-Pharming (Joint Inventions) will belong jointly to iBio and CC-Pharming, with inventorship determined as described in 35 U.S.C. § 262 and (Chin Patent Law). The Parties contemplate that each will benefit from Joint Inventions, as such, iBio will be responsible for direct control over the drafting and prosecution of any patents to Joint Inventions, with copy to CC- Pharming. The parties shall share equally in the costs of patent protection for Joint Inventions.

Master Joint Development Agreement iBio CC-Pharming Page 4 of 12

Source: IBIO, INC., 8-K, 3/13/2020





4.3 Each Party shall promptly provide to the other Party a written invention disclosure of each Agreement Invention made by its employees that results directly from the present Agreement for worked performed under the SOWs herein. The other Party agrees to delay making public, by publication or otherwise, until the earlier of (a) the first filing of a patent application claiming the Agreement Invention by the Inventing Party; or (b) six months after the date the Agreement Invention is disclosed to the other Party; or (c) mutual agreement of the Parties that neither will pursue legal protection of an Agreement Invention. 4.5 Each disclosure shall be held in confidence and not revealed to any third party without the written consent of the other Party. The other Party must advise the Inventing Party in writing within 60 days of each disclosure to the other Party whether or not the other Party elects to negotiate a license agreement to obtain commercial rights to such Agreement Invention. In the event that the other Party elects to negotiate for a commercial license to an Agreement Invention, the Parties must initiate negotiation of a license agreement, with negotiations not to extend beyond ninety (90) days from notice of election without the consent of both Parties. The Parties will negotiate in good faith a license containing reasonable business terms common to the other party's field of commercial interest and proposed application. 5.0 Copyrights 5.1 Title to and the right to determine the disposition of any copyrights or copyrightable material first produced or composed in the performance of this research program (Copyright Materials) will remain with the Party whose employees solely created such materials or works of authorship (the Creating Party). Copyright Materials that are jointly created by the Parties shall be jointly owned. Either Party may license and assign its rights to jointly owned Copyright Materials without the consent of or accounting to the other Party, subject to the applicable confidentiality obligations set forth in Section 7 of this Agreement and/or a SOW. 5.2 The Creating Party grants to the other Party a time-limited first right to negotiate a commercial license to use, reproduce, display, and perform commercially valuable Copyright Materials for commercial purposes, and to distribute and/or sublicense such commercially valuable Copyright Materials to third parties. The other Party must advise the Creating Party in writing within sixty (60) days following disclosure or delivery of such commercially valuable Copyright Materials to the other Party whether or not the other Party elects to negotiate a license agreement to obtain commercial rights to the Copyright Materials. In the event that the other Party elects to negotiate for a commercial license to Copyright Materials, the Parties must initiate negotiation of a license agreement, the negotiations not to extend beyond ninety (90) days from notice of election without the consent of both Parties. The Parties will negotiate in good faith a license containing reasonable business terms common to the other Party's field of commercial interest and proposed application.

Master Joint Development Agreement iBio CC-Pharming Page 5 of 12

Source: IBIO, INC., 8-K, 3/13/2020





6.0 Term and Termination 6.1 The term of this Agreement (Term) will begin on the date this Agreement is signed by the last signatory (Effective Date) and remain in effect for [***]; provided, however, that the terms of this Agreement shall remain applicable to any SOW that was executed by the Parties prior to the expiration or termination of this Agreement but whose period of performance extends beyond the expiration or termination of this Agreement. 6.2 The term of any SOW will be as provided in the Statement of Work. 6.3 If either Party to this Agreement fails to perform or violates any material obligation of this Agreement, then, upon thirty (30) days written notice to the breaching Party specifying such failure or violation, the non-breaching Party may terminate this Agreement without liability, unless: (a) the failure or violation specified in the default notice has been cured within the thirty (30) day notice period; or (b) the failure or violation reasonably requires more than thirty (30) days to correct, and the breaching Party has begun substantial corrective action to remedy the failure or violation within the thirty (30) day notice period and diligently pursues such action, in which event, termination shall not be effective unless sixty (60) days has expired from the date of the default notice without such corrective action being completed and the failure or violation remedied. 7.0 Confidentiality 7.1 Except as provided in a Statement of Work and Article 5.3 regarding non-disclosure of Agreement Inventions, any information provided by either Party under this Agreement or under any Statement of Work will be treated as follows. 7.2 Confidential Information includes but is not limited to, technologies, discoveries, inventions, know-how, methods, procedures, trade secrets, business information and other proprietary intellectual property (Information). All such Information is considered by the parties to be secret and confidential and constitutes valuable commercial assets. 7.3 Each of the parties agrees that for five (5) years from the date of disclosure, the receiving Party agrees to limit disclosure of the disclosing Party's Confidential Information to those of the receiving party's employees and contractors, and employees and contractors of its Subsidiaries, who have a need to know it, and the receiving Party agrees to use the same care and discretion to avoid disclosure, publication or dissemination outside of those employees and contractors as the receiving Party does with similar information of its own which it does not desire to publish, disclose or disseminate. 7.4 The receiving Party may disclose Confidential Information if the disclosure is required by law, but the receiving Party must give the disclosing Party reasonably prior notice to allow the disclosing Party an opportunity to obtain a protective order. The obligations of Article 7.3 will not apply to information that is:

Master Joint Development Agreement iBio CC-Pharming Page 6 of 12

Source: IBIO, INC., 8-K, 3/13/2020





a) already rightfully in the possession of the receiving Party or its Subsidiaries without an obligation of confidence; b) independently developed by the receiving Party of its Subsidiaries as evidenced by written documentation; c) publicly available when received by the receiving Party, or becomes publicly available through no fault of the receiving Party or its Subsidiaries; d) disclosed by the disclosing Party without obligation of confidence; or e) inherently disclosed by the receiving Party or its Subsidiaries in the use, distribution or marketing of any product or service. 7.5 The Parties agree that the disclosure of Confidential Information under this Agreement does not limit either Party from assigning or reassigning employees in any way. 7.6 Confidential Information must be identified as Confidential at the time of disclosure, and all material containing Confidential Information must have a restrictive marking. Any Confidential Information disclosed orally or visually must be summarized by the disclosing Party in writing and the writing must be provided to the receiving Party within twenty (20) days after the disclosure. In the case of inadvertent disclosure of Confidential information that was not marked as Confidential, the Disclosing Party has ten (10) business days from the time they discover that the information should have been marked Confidential, to inform the other Party of such a designation, and the parties agree to retroactively mark any such information as Confidential. 7.7 The parties agree that limitations on disclosure of Confidential information under section 7.3 shall last 5 years from signing date. 8.0 Representations, Warranties, Disclaimers and Limitation of Liability 8.1 ANY PROTOTYPES, MATERIALS, COMPONENT PARTS, DESIGNS, SPECIFICATIONS, KNOW-HOW, PROCEDURES, PROCESSES, DATA, INFORMATION, INVENTIONS AND WORK PERFORMED UNDER THIS AGREEMENT BY EITHER PARTY, ARE PROVIDED AS IS, WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED. EACH PARTY SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ANY WARRANTY OF NONINFRINGEMENT OF PATENTS, COPYRIGHTS, OR ANY OTHER INTELLECTUAL PROPERTY RIGHT. 8.2 EACH PARTY ALSO SPECIFICALLY DISCLAIMS ANY GUARANTEE THAT IT WILL BE ABLE TO SUCCESSFULLY ACHIEVE THE DESIRED RESULTS REGARDING THE WORK UNDER ANY STATEMENT OF WORK, OR THAT ANY PROTOTYPE(S) WHICH MAY BE DEVELOPED PURSUANT TO THIS AGREEMENT WILL MEET ANY DEVELOPMENT OBJECTIVES, OR ANY REQUIREMENTS OF EITHER PARTY. THE FOREGOING NOTWITHSTANDING, EACH PARTY WILL MAKE REASONABLE GOOD FAITH EFFORTS TO COMPLETE THE ACTIVITIES DESCRIBED IN THE STATEMENTS OF WORK. FAILURE TO ACHIEVE THE DESIRED RESULTS UNDER A STATEMENT OF WORK DOES NOT CONSTITUTE BREACH OF CONTRACT.

Master Joint Development Agreement iBio CC-Pharming Page 7 of 12

Source: IBIO, INC., 8-K, 3/13/2020





8.3 Except for claims arising out of Articles 4.3 and 7.0, or as may be set forth in a SOW, neither Party will be liable for any consequential damages, lost profits, lost savings, loss of anticipated revenue, or any exemplary, punitive, special or indirect damages, even if advised of their possibility. 8.4 CC-Pharming represents and warranties that it shall maintain all of iBio's Technology and technical information, how-how, documents, materials, software, vectors, constructs, trade secrets, and other valuable business or scientific information strictly confidential at all times, and shall take all steps necessary to safe-guard iBio's Technology and technical information with reasonable business care and will be of the same types as currently practiced by iBio to maintain its highly confidential information. 8.5 Equitable Relief for iBio. CC-Pharming acknowledges that a breach by CC-Pharming of this Agreement shall cause iBio irreparable damages, for which an award of damages would not be adequate compensation, and agrees that, in the event of a breach or threatened breach, iBio will be entitled to seek equitable relief, including a restraining order, injunctive relief, specific performance and any other relief that may be available from any court, in addition to any other remedy to which iBio may be entitled at law or in equity. iBio's equitable remedies are not exclusive but are in addition to all other remedies available at law or in equity. 8.6 Attorney's Fees. In the event that any claim, suit, action or proceeding is instituted or commenced by any Party hereto against any other Party arising out of or related to this Agreement, the prevailing Party will be entitled to recover its reasonable attorneys' fees, expert fees, expenses and court costs from the non-prevailing Party. 9.0 General Provisions 9.1 Independent Contractor. Each Party is an independent contractor. Neither Party is, nor will claim to be, a legal representative, partner, franchisee, agent or employee of the other. Neither Party will assume or create obligations for the other. Each Party is responsible for the direction and compensation of its employees. 9.2 Trademarks. Except as otherwise provided herein, this Agreement does not confer any rights to use in advertising, publicity or other marketing activities any name, trade name, trademark, or other designation of either Party hereto, including any contraction, abbreviation, or simulation of any of the foregoing, without prior written agreement, and each Party agrees not to use or refer to this Agreement or its terms in any such activities without the express written approval of the other Party.

Master Joint Development Agreement iBio CC-Pharming Page 8 of 12

Source: IBIO, INC., 8-K, 3/13/2020





9.3 Publication. iBio and CC-Pharming jointly, may publish and present technical presentations subject to Articles 5.2, 7.0 and this Article 9.2. 9.4 Notice. All notices shall be in writing and shall be valid and sufficient if sent by: (a) registered or certified mail, return receipt required, postage prepaid; (b) by facsimile (provided the receipt of the facsimile is evidenced by a printed record of completion of transmission); or (c) by express mail or courier service providing a receipt of delivery. Notice shall be effective upon receipt. The notices shall be addressed to: iBio, Inc. Beijing CC-Pharming Ltd. Robert L. Erwin Kevin Y. Wang President Chairman 600 Madison Ave, Suit 1601 Shunyi Distict New York, NY 10022-1737 U.S.A Beijing, China, 101312 Attn: Rober L. Erwin Attn: Kevin Y. Wang Either Party may change its address by a notice given to the other Party in the manner set forth above. 9.5 Force Majeure. Neither Party shall be liable for any failure or delay in the performance of its obligations under this Agreement if such failure or delay is due to acts of God, acts of the other Party, fire, flood, natural catastrophe, acts of any government or of any civil or military authority, national emergencies, riots, war, insurrection, strikes, or any occurrence beyond the reasonable control of such Party. 9.6 Export Restrictions. Each Party agrees to comply and to reasonably assist the other in complying with applicable government export and import laws and regulations. Further, each Party agrees that unless authorized by applicable government license or regulation, including but not limited to both US and China authorization, both Parties will not directly or indirectly export or re-export, at any time, any technology, software and/or commodities furnished or developed under this or any other, Agreement between the Parties, or its direct product, to any prohibited country (including release of technology, software and/or commodities to nationals, wherever they may be located, of any prohibited country) as specified in applicable export, embargo, and sanctions regulations. This section will survive after termination or expiration of this Agreement and will remain in effect until fulfilled. 9.7 No Implied Licenses. Except as expressly set forth in this Agreement, no license is granted, either directly or indirectly, by implication or estoppel or otherwise, to either Party under any patent, copyright or other intellectual property right of the other Party. 9.8 Assignment. Neither Party may assign its rights or delegate any of its duties under this Agreement without the prior written consent of the other Party. Any unauthorized assignment of this Agreement is void. 9.9 Intent. Neither Party relies on any promises, inducements, representations made by the other, or expectations of more business dealings except as expressly provided in this Agreement. This Agreement accurately states the Parties' agreement.

Master Joint Development Agreement iBio CC-Pharming Page 9 of 12

Source: IBIO, INC., 8-K, 3/13/2020





9.10 Power to Enter Agreement. Each Party represents that it has, or will have, in place appropriate agreements with its employees or others whose services the Party may require, sufficient to enable such Party to comply with all the provisions of this Agreement. 9.11 Independent Parties. Each Party may have similar agreements with others, and may design, develop, manufacture, acquire or market competitive products and services, and conduct its business in whatever way it chooses. Each Party will independently establish prices and terms for its products and services. 9.12 Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby so long as the intent of the Parties can be preserved. 9.13 Governing Law. This Agreement is governed by the laws of the State of Texas, without regard to the conflict of laws provisions thereof. Any proceedings to resolve disputes relating to this Agreement shall be brought only in the State of Texas and in a U.S. federal court if there is jurisdiction. The United Nations' Convention on International Sales of Goods does not apply. 9.14 Survival. Any rights and obligations which by their nature survive and continue after any expiration or termination of this Agreement shall survive and continue and shall bind the Parties and their successors and assigns, until such obligations are fulfilled. 9.15 No Oral Modifications. Any amendment or modification of this Agreement shall be in writing and shall be signed by authorized representatives of the Parties. No approval, consent or waiver will be enforceable unless signed by the granting Party. Failure to insist on strict performance or to exercise a right when entitled does not prevent a Party from doing so later for that breach, or a future breach. 9.16 Incorporation. This Agreement, Appendix A and SOW's added as Appendix A-x (where x is the sequential number of the respectively added SOW's) are the complete and exclusive agreement between the Parties regarding the subject matter hereof and supersedes any prior oral or written communications or understandings between the parties related to the subject matter hereof. 9.17 Independent Judgment. The Parties acknowledge that: (a) they had read this Agreement; (b) they understand the terms and conditions of this Agreement; (c) they have had the opportunity to seek legal counsel and advice; (d) are of equal bargaining power; and (e) they have relied on their own judgment in entering into this Agreement. Signature Page to Follow

Master Joint Development Agreement iBio CC-Pharming Page 10 of 12

Source: IBIO, INC., 8-K, 3/13/2020





By signing below, the parties agree to the terms of this Agreement. iBio Inc. Beijing CC-Pharming Ltd. /s/ Robert L. Erwin /s/ Kevin Yueju Wang Name: Robert L Erwin Name: Kevin Yueju Wang Title: President Title: Chairman Date: August 07, 2018 Date: August 08, 2018

Master Joint Development Agreement iBio CC-Pharming Page 11 of 12

Source: IBIO, INC., 8-K, 3/13/2020





APPENDIX A-1

Proposal to Beijing CC-Pharming Ltd. Development of a Plant-Made Rituximab Prepared by iBio, Inc. for Beijing CC-Pharming Ltd., Beijing, China February 24, 2018 [***] Project Agreement Administrators For iBio: Robert L. Erwin For CC-Pharming: Kevin Y. Wang By signing below, the parties agree to the terms of this Statement of Work. IBio CC-Pharming /s/ Robert L. Erwin /s/ Kevin Yueju Wang Name: Robert L. Erwin Name: Kevin Yueju Wang Title: President Title: Chairman Date: August 7, 2018 Date: August 8, 2018

Master Joint Development Agreement iBio CC-Pharming Page 12 of 12

Source: IBIO, INC., 8-K, 3/13/2020 
Question: 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.

Ex Output:
Except for claims arising out of Articles 4.3 and 7.0, or as may be set forth in a SOW, neither Party will be liable for any consequential damages, lost profits, lost savings, loss of anticipated revenue, or any exemplary, punitive, special or indirect damages, even if advised of their possibility.


Ex Input:
FRANCHISE AGREEMENT                                                   TABLE OF CONTENTS

1.       INTRODUCTION AND DEFINITIONS.......................................1          1.A.     INTRODUCTION..............................................1          1.B.     DEFINITIONS...............................................3

2.       GRANT OF FRANCHISE RIGHTS..........................................7          2.A.     GRANT OF FRANCHISE........................................7          2.B.     PRINCIPAL OWNERS' GUARANTY................................7          2.C.     TERRITORIAL RIGHTS........................................8          2.D.     RESERVATION OF RIGHTS.....................................8          2.E.     OPTION TO DEVELOP OTHER SITES WITHIN THE TERRITORY........9          2.F.     TERM OF FRANCHISE.........................................9

3.       OTHER DISTRIBUTION METHODS........................................10          3.A.     SPECIAL DISTRIBUTION ARRANGEMENTS........................10

4.       FRANCHISE AND OTHER FEES..........................................10          4.A.     INITIAL FRANCHISE FEE....................................10          4.B.     DEFERRAL OF FRANCHISE FEE................................10          4.C.     ROYALTY FEE..............................................10          4.D.     ADVERTISING FUND FEE.....................................11          4.E.     TRANSFER FEE.............................................11          4.F.     FEES FOR ADDITIONAL FRANCHISES...........................11          4.G.     FEES FOR RENEWAL OF FRANCHISE............................12          4.H.     PAYMENT BY ELECTRONIC FUNDS TRANSFER.....................12          4.I.     LATE CHARGE AND INTEREST. ...............................12

5.       RENEWAL OF FRANCHISE TERM.........................................13          5.A.     FRANCHISEE'S RIGHT TO A SUCCESSOR FRANCHISE..............13          5.B.     RELEASES.................................................14          5.C.     NOTICES..................................................15

6.       TRADEMARKS AND LIMITATIONS........................................15          6.A.     OWNERSHIP OF MARKS.......................................15          6.B.     DISCONTINUANCE OF USE OF MARKS...........................16          6.C.     CORPORATE NAME...........................................16          6.D.     TERMINATION..............................................17          6.E.     TRADEMARK ENFORCEMENT....................................17          6.F.     USE OF SERVICE MARK......................................17

7.       SELECTION OF FRANCHISE LOCATION...................................18          7.A.     SITE SELECTION...........................................18          7.B.     LEASE....................................................18          7.C.     RELOCATION...............................................20

8.       DEVELOPMENT OF UNIT...............................................21          8.A.     UNIT DESIGN SPECIFICATIONS AND CONSTRUCTION PLANS........21          8.B.     DEVELOPMENT OF THE UNIT..................................21          8.C.     EQUIPMENT, FIXTURES, FURNISHINGS, AND SIGNS..............22          8.D.     EXCEPTIONS TO EQUIPMENT OR FURNISHINGS...................22          8.E.     CONSTRUCTION ASSISTANCE..................................23          8.F.     LIMITATION ON LIABILITY..................................23

9.       UNIT OPENING......................................................24          9.A.     COMMENCEMENT OF OPERATIONS...............................24

10.      FRANCHISEE TRAINING...............................................24          10.A.    INITIAL TRAINING.........................................24          10.B.    EMPLOYEE TRAINING........................................25          10.C.  ON-SITE TRAINING...........................................26          10.D.    COMPANY GROWTH...........................................26          10.E.    RETRAINING PROGRAMS......................................26          10.F.    OTHER GUIDANCE...........................................26

11.      ADVERTISING AND OTHER PROMOTIONS..................................27          11.A.    PROVIDING OF ADVERTISING MATERIALS.......................27          11.B.    CONTROL OF ADVERTISING PROGRAMS AND CONCEPTS.............27          11.C.    SEGREGATION OF ADVERTISING FUND..........................28          11.D.    SUSPENSION OF ADVERTISING FUND FEES......................29          11.E.    FRANCHISEE'S REQUIRED ADVERTISING EXPENDITURES...........29          11.F.    USE OF TRADEMARK REFERENCES AND APPROVAL...............                                     OF FRANCHISEE'S MARKETING..............29

12.      ADHERENCE TO UNIFORM STANDARDS....................................30          12.A.    STANDARDS AND OPERATIONS MANUAL..........................30          12.B.    CONFIDENTIALITY OF OPERATIONS MANUAL.....................32          12.C.    INCORPORATION OF OPERATIONS MANUAL INTO AGREEMENT........32          12.D.    MODIFICATIONS/UPDATES OF OPERATIONS MANUAL...............33

13.      UNIT IMAGE AND OPERATION..........................................33          13.A.    CONDITION AND APPEARANCE OF UNIT.........................33          13.B.  UNIT MENU..................................................35          13.C.    ADHERENCE TO APPROVED ITEMS..............................35          13.D.    EXCEPTION PROCESS........................................36          13.E.  PROMOTIONAL ALLOWANCES.....................................37

14.      FRANCHISEE OPERATIONS.............................................37          14.A.    MANAGEMENT...............................................37          14.B.  SUFFICIENT WORKING CAPITAL.................................38          14.C.  FILING OF OPERATIONS AND SALES REPORTS.....................38          14.D.    EMPLOYEE DRESS AND CUSTOMER SERVICE......................38





         14.E.  COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES...........38          14.F.    PAYMENT OF TAXES.........................................39          14.G.    SALE OF PRODUCT..........................................39          14.H.    COOPERATION..............................................39          14.I.    INSURANCE................................................39          14.J.    SUGGESTED RETAIL PRICES..................................40

15.      ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS......................41          15.A.  ESTABLISHMENT OF ACCOUNTING SYSTEM.........................41          15.B.   MAINTENANCE OF RECORDS....................................41

16.      AUDITS AND INSPECTIONS............................................42          16.A.    AUDITS...................................................42          16.B.    RIGHT OF ENTRY AND INSPECTION............................42

17.      TRANSFER, ASSIGNMENT AND REPURCHASE. .............................43          17.A.  BY PRETZEL TIME............................................43          17.B.  BY FRANCHISEE..............................................43          17.C.  CONDITIONS FOR APPROVAL OF TRANSFER........................44          17.D.    TRANSFER TO A WHOLLY-OWNED CORPORATION...................45          17.E.  FORMATION OF A CORPORATION.................................46          17.F.  DEATH OR DISABILITY OF FRANCHISEE..........................47          17.G.    PRETZEL TIME'S FIRST RIGHT OF REFUSAL....................47          17.H.    PUBLIC OR PRIVATE OFFERINGS..............................48

18.      TERMINATION OF AGREEMENT BY FRANCHISEE............................49          18.A.  FRANCHISEE'S RIGHT TO TERMINATE............................49

19.      DEFAULT AND TERMINATION...........................................50          19.A.  EXACT AND COMPLETE PERFORMANCE REQUIRED....................50          19.B.    DEFAULT AND RIGHT TO CURE................................50          19.C.  EXTENSION OF NOTICE........................................50          19.D.  REPEATED BREACHES..........................................50          19.E.    EVENTS OF DEFAULT - 30 DAYS NOTICE - CURABLE DEFAULTS....51          19.F.    EVENTS OF DEFAULT - IMMEDIATE TERMINATION - NO                   RIGHT TO CURE............................................53

20.      RIGHTS AND OBLIGATIONS OF PRETZEL TIME AND FRANCHISEE UPON TERMINATION            OR EXPIRATION OF THE FRANCHISE..................................56          20.A.  AMOUNTS OWED...............................................56          20.B.    DISCONTINUANCE OF MARKS..................................56          20.C.    RETURN OF MATERIALS......................................57          20.D.    TELEPHONE COMPANY........................................57          20.E.    CONFIDENTIAL INFORMATION.................................58          20.F.    LEASING..................................................58          20.G.    COVENANT NOT TO COMPETE..................................58          20.H.  PRETZEL TIME'S RIGHT TO PURCHASE ASSETS OF THE UNIT........59

21.      RELATIONSHIP OF THE PARTIES/INDEMNIFICATION.......................60          21.A.    EXCLUSIVE RELATIONSHIP...................................60          21.B.  NO LIABILITY FOR ACTS OF OTHER PARTY.......................61          21.C.    TAXES....................................................61          21.D.    INDEMNIFICATION..........................................62          21.E.  INDEPENDENT CONTRACTOR.....................................62

22.      PROTECTION OF TRADE SECRETS.......................................63          22.A.  CONFIDENTIAL INFORMATION...................................63          22.B.  DISCLOSURE OF IDEAS AND NEW PROCEDURES.....................64

23.      ENFORCEMENT.......................................................65          23.A.    UNAVOIDABLE DELAYS.......................................65          23.B.    RIGHTS OF PARTIES ARE CUMULATIVE.........................65          23.C.    WAIVER OF OBLIGATIONS....................................65          23.D.    CONTINUING OBLIGATIONS...................................66          23.E.    INVALID OR UNENFORCEABLE PROVISIONS......................66          23.F.  INJUNCTIVE RELIEF..........................................66          23.G.    APPLICABLE LAW...........................................67          23.H.    ENTIRE STATUS OF AGREEMENT...............................67          23.I.    AMENDMENT OF AGREEMENT...................................67          23.J.    HEIRS, SUCCESSORS AND ASSIGNS............................67          23.K.    CONDITIONS AND CONTINGENCIES.............................67          23.L.    WAIVER BY PRETZEL TIME...................................68          23.M.    COSTS AND EXPENSES OF ENFORCEMENT........................68          23.N.    RIGHTS OF PARTIES ARE CUMULATIVE ........................69          23.O.    WAIVER OF JURY TRIAL.....................................69          23.P.  WAIVER OF PUNITIVE DAMAGES.................................69          23.Q.  EXCLUSIVE JURISDICTION.....................................69          23.R.    LIMITATIONS OF CLAIMS....................................69

24.      ACKNOWLEDGMENTS AND REPRESENTATIONS...............................70

25.      CONSTRUCTION......................................................70          25.A.    HEADINGS.................................................70          25.B.  TERMINOLOGY................................................70          25.C.    COUNTERPARTS.............................................71          25.D.  REASONABLENESS.............................................71

26.      SECURITY AGREEMENT................................................70          26.A.    SECURITY INTEREST........................................71          26.B.  DEFAULT REMEDIES UNDER U.C.C...............................72

27.      NOTICES...........................................................72          27.A.    DELIVERY OF NOTICES......................................72





EXHIBITS

         FRANCHISE ACKNOWLEDGMENTS AND REPRESENTATIONS            STATEMENT        . . . . . . . . . . . . . . . . . . . . . . .. A

         PRINCIPAL OWNER, OTHER OWNERS, DESIGNATED PRINCIPAL            OWNERS, UNIT AND MANAGER, SUPERVISING OWNERS AND INITIAL            CAPITALIZATION           . . . . . . . . . . . . . . . .. . . . B

         PERMITTED COMPETITIVE BUSINESSES, FORM DEVELOPMENT            AGREEMENT (FOR SINGLE-UNIT FRANCHISES), IDENTITY OF           DEVELOPER AND DATE OR DEVELOPMENT AGREEMENT               . . . .C

         OWNER'S AND GUARANTOR'S UNDERTAKING AND ASSUMPTION OF                  OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . D

         AUTHORIZATION AGREEMENT FOR PREARRANGED PAYMENTS (DIRECT DEBITS). E

         UNIT SITE AGREEMENT               . . . . . . . . . . . . . . .   F

         COLLATERAL ASSIGNMENT OF TELEPHONE NUMBERS AND LISTINGS       . . G

         MUTUAL CONFIDENTIALITY AGREEMENT                            . .  .H

         TCBY YOGURT PRODUCTS ADDENDUM                        . . . . . .  I

FRAN.AGT 6.5.96

         SATELLITE UNIT ADDENDUM            . . . . .  . . . . . . . . .   J

         RELEASE AGREEMENT                  .  .  . . . . . . . . . . . .  K

         THIRD PARTY ASSIGNMENT AGREEMENT            . . . . . . . . .     L

         SUBLEASE                   .  .  . . . . . . . . . . . . . . .    M

         COLLATERAL ASSIGNMENT OF LEASE              . . . . . . . . .     N

                               PRETZEL TIME, INC.                                FRANCHISE AGREEMENT

         This  agreement is made and entered into this day of , 19  (hereinafter referred  to  as  Effective  Date)  by  and  between  Pretzel  Time,  Inc.,  a Pennsylvania   corporation   with  its  principal  place  of  business  at  4800 Linglestown Road, Suite 202,  Harrisburg,  Pennsylvania  17112 trading and doing business  as  Pretzel  Time  (hereinafter  referred  to  as  Pretzel  Time)  and Franchisee (as defined below) who hereby agrees to the following:

Franchisee:

,

a

,

with its principal address at:

         NOW  THEREFORE,   in  consideration  of  the  mutual  covenants  herein contained,  and  intending  to be legally  bound  hereby,  the parties  agree as follows:

1.       INTRODUCTION AND DEFINITIONS.

         1.A.     INTRODUCTION.

         Pretzel Time and its  Affiliates  (as defined below) have developed and continue to develop methods of operating food service businesses,  including the food  service  business  referred to in this  Agreement  as a Pretzel  Time Unit (defined  below),  which  feature  Products  (defined  below)  for off  premises consumption.  Pretzel Time has established  quality  products and services which will  continue to be a unique  benefit to Pretzel Time and its  Franchisees.  In addition to off-premises dining, Pretzel Time may, in its sole discretion, offer to a Pretzel  Time Unit the right to offer  TCBY  frozen  yogurt  and other TCBY yogurt  products.  Pretzel  Time  Units  operate  at  locations  that  feature a distinctive  food  service  format and Trade Dress  (defined  below) and utilize distinctive  business formats,  specifications,  employee selection and training programs,  signs, equipment,  layouts, unit fronts, operation systems,  recipes,





methods,  procedures,  designs  and  marketing  and  advertising  standards  and formats,  all of which  Pretzel  Time may  modify  from time to time in its sole discretion  (the Pretzel Time System).  Pretzel Time operates,  and franchises certain  qualified  persons and entities to license and grants the  privildge to operate, Pretzel Time Units using the Pretzel Time System and the Marks (defined below).

         Pretzel Time has  developed and perfected a System for providing to the public, at retail, in an efficient manner, a variety of distinctive, hand-rolled soft pretzels,  pretzel-related  products (such as pretzel dogs), beverages, and complimentary  pretzel  toppings.  These  Products and services which comprise a part of the Pretzel  Time System are  delineated  and set forth in detail in the Pretzel Time Operations Manual (hereinafter  Operations Manual). These Pretzel Time Units,  which may include stores,  carts, and kiosks, are known as Pretzel Time Units.

         Franchisee  acknowledges  and agrees that  Pretzel  Time has expended a considerable  amount of time and effort in  developing  and refining the recipes for, the methods of preparation of, the Products.  Pretzel Time may from time to time modify such recipes and methods of preparation, which may include requiring Franchisee  to prepare  pretzels and other  Products  from scratch  mixes and to purchase  prepared food  products from Pretzel Time or an approved  Pretzel Time Affiliate.  Pretzel Time and its Affiliates  currently operate and will continue to operate  Pretzel Time Units  offering and selling the Products.  Pretzel Time franchises  others to operate Pretzel Time Units and other outlets  offering and selling the Products.  Pretzel Time owns, uses,  promotes and franchises certain trade names, trademarks,  service marks and other commercial symbols,  including the trade and service marks,  Pretzel Time and  associated  logos,  which have gained and continue to gain public  acceptance  and goodwill,  and may hereafter create, use and franchise  additional  trademarks,  service marks and commercial symbols in conjunction with the operation of Pretzel Time Units.

         The distinguishing  characteristics of the Pretzel Time System include, but are not limited to, the following:

                  (a) The Pretzel Time trade name and in combination  with other          commercial  symbols owned by Pretzel Time with a color scheme  pattern,          Unit design,  insignia,  slogans,  coordinating  Pretzel Time's overall          operation, retail facilities,  advertising, training, and other related          matters;

                  (b) A developed  marketing  concept and uniform  procedure for          the operation of a Pretzel Time Unit,  including  stylized  designs and          display  facilities  to provide  the  highest  quality of Pretzel  Time          pretzels,  soft  beverages,  toppings and other  Pretzel  Time-approved          products; and

                  (c) Rules of  operation  and a  procedure  for  operating  and          training Franchisees, managers and employees.

         Franchisee  recognizes the benefits to be derived from being identified with and  licensed by Pretzel  Time,  and being able to utilize the Pretzel Time System of retailing  Pretzel Time  Products  and related  products,  service and trademarks which Pretzel Time makes available to its Franchisees. Franchisee has applied  for a  franchise  to operate a Pretzel  Time Unit at the Site  (defined below). Franchisee's application and the Site have been approved by Pretzel Time in reliance upon all of the  representations  made in such  application  and the Franchisee's  Acknowledgments and Representations  Statement, a copy of which is attached hereto as Exhibit A, which shall be executed by Franchisee concurrently with this  Agreement.  Franchisee  desires to operate a Pretzel  Time  Franchise pursuant  to the  provisions  hereof  and  at the  Site  specified  herein,  and Franchisee has had a full and adequate  opportunity to be thoroughly  advised of the terms and conditions of this Franchise Agreement by legal counsel of its own choosing.

         1.B.     DEFINITIONS.

         For  purposes  of this  Agreement,  the  terms  listed  below  have the following meanings: Other terms used in this Agreement are defined and construed in the context in which they occur.

         Affiliate  - Any person or legal entity that  directly or  indirectly owns or  controls  Pretzel  Time,  that  is  directly  or  indirectly  owned  or controlled by Pretzel  Time, or that is under common  control with Pretzel Time. For purposes of this  definition,  control  means the power to direct or cause the direction of the management and policies of an entity.

         Cart - It is a type of Pretzel Time Unit which is  free-standing  and sells Pretzel Time pretzels and other Pretzel  Time-approved  Products which are produced  or  manufactured  at a  co-existing  Kiosk  (defined  below)  or Store (defined below) situated in the Territory.

     Competitive  Business  - A business or  enterprise,  other than a Pretzel Time Unit,  that:  (1) Offers food products  which are the same as or similar to the  products  for  consumer  consumption  off  premises  or other  distribution channels;  or (2) Grants or has granted franchises or licenses or establishes or has  established  joint  ventures  for the  development  and/or  operation  of a business or an enterprise described in the foregoing clause (1).

         Controlling  Interest - An interest,  the ownership of which empowers the holder  thereof to exercise a  controlling  influence  over the  management, policies  or  personnel  of an entity on any issue and shall  prevent  any other person, group, combination,  or entity from blocking voting control on any issue or exercising any veto power. If a limited  partnership,  a general  partnership interest or such percentage of limited partnership interests as shall permit the





replacement or removal of any general  partner.  Without limiting the generality of the  foregoing,  ownership  of forty  percent  (40%) or more of the equity or voting  securities  of a  corporation  or ownership  of any general  partnership interest in a  partnership  or joint  venture  shall be deemed  conclusively  to constitute a  Controlling  Interest in the  corporation,  partnership,  or joint venture, as the case may be.

         Area  Developer's  Agreement  -  Agreement  pursuant to which an area developer  is granted the right to develop one (1) or more Pretzel Time Units in a geographic area in which the Unit is located.

         Franchisee  - The  party  to whom the  Franchise  is  granted  by the Franchisor,  Pretzel Time, Inc. The term is applicable to one or more persons, a corporation or a partnership,  as the case may be. If two or more persons are at any time the Franchisee hereunder,  their obligations and liabilities to Pretzel Time shall be joint and several. References to Franchisee and assignee which are applicable to an individual or individuals  shall mean the Owner (defined below) or Principal  Owners (defined  below) of the equity or operating  control of the Franchisee or the assignee,  if the  Franchisee or the assignee is a corporation or partnership.

         Net  Revenues  - For  purposes  of  this  Agreement,  the  term  Net Revenues  includes all gross sums, monies and other  consideration  received by Franchisee  of every kind and nature from sales and services  made in, upon,  or from any and all retail  Units  operated by  Franchisee  under the Pretzel  Time Marks in his  Territory,  whether  upon credit or for cash,  without  reserve or deduction for inability or failure to collect,  less all refunds and allowances, if any,  given in good faith to  customers,  and any sales,  use or excise taxes which are separately  stated and which Franchisee pays to any federal,  state or local tax authority.

         Immediate  family - (1) The spouse of a person;  and (2) the  natural and  adoptive  parents and natural and  adopted  children  and  siblings of such person and their spouses;  and (3) the natural and adoptive  parents and natural and adopted  children  and  siblings of the spouse of such  person;  and (4) any other member of the household of such person.

         Interest  - Eighteen  percent  (18%) per annum for the number of days overdue or the highest applicable rate allowed by law.

         Kiosk - Is a type of  Pretzel  Time  Unit,  which is a  free-standing enclosed area located within the common area of a mall which can manufacture and sell Pretzel Time pretzels and other Pretzel Time-approved  Products without the co-existence of a Pretzel Time Store within the territory.

         Marks - The  trademarks,  service marks,  logos and other  commercial symbols which Pretzel Time authorizes Franchisee to use to identify the services and/or products offered by Pretzel Time Units, including the mark Pretzel Time and the Trade Dress  (defined  below);  provided that such  trademarks,  service marks,  logos,  other  commercial  symbols  and the Trade  Dress are  subject to modification  and  discontinuance  at Pretzel  Time's  sole  discretion  and may include additional or substitute  trademarks,  service marks, logos,  commercial symbols and Trade Dress as provided in this Agreement.

         Owner - Each person or entity  holding  direct or indirect,  legal or beneficial Ownership Interests (defined below) in Franchisee and each person who has other direct or indirect property rights in Franchisee,  this Agreement, the Franchise or the Unit and as designated  in Exhibit B attached and  incorporated herein.

         Ownership Interests - In relation to a: (i) corporation, the legal or beneficial ownership of shares in the corporation;  (ii) partnership,  the legal or beneficial ownership of a general or limited partnership  interest;  or (iii) trust, the ownership of a beneficial interest of such trust.

         Permanent Disability - A mental or physical disability, impairment or condition  that is  reasonably  expected  to prevent or  actually  does  prevent Franchisee or an Owner of a Controlling  Interest in Franchisee from supervising the management and operation of the Unit for a period of six (6) months from the onset of such disability, impairment or condition.

         Permitted  Competitive  Business  - A business  which  constitutes  a Competitive  Business  and is  disclosed  in  Exhibit  C which  shall be made by Franchisee  and  Owners  as of the date of this  agreement  provided  that  such business does not offer hard or soft pretzels, or yogurt on its menu.

         Pretzel Time Unit  -  A food service business that:

                  (1) offers  Products  for consumer  consumption  off-premises,          provided  that  Pretzel  Time,  may in its sole  discretion,  authorize          and/or require such business to offer TCBY yogurt products  pursuant to          a  Yogurt  Product  Addendum  (defined  below)  or to  operate  Special          Distribution  Arrangements pursuant to a Special Distribution Agreement          (defined below); and

                  (2) operates using the Pretzel Time System and the Marks; and

                  (3) is either  operated by Pretzel Time or its  Affiliates  or          pursuant to a valid franchise from Pretzel Time.

         Pretzel Time Units are of three types: stores, carts, and kiosks.

         Principal Owner  - Each Owner which:





                  (1)  is a general partner in Franchisee; or

                  (2) has a direct or indirect equity interest:

                           (a) in  Franchisee  of twenty  percent  (20%) or more                            (regardless of whether such Owner is entitled to vote                            thereon); or

                           (b)  in any Pretzel Time unit; or

                  (3) is  designated  as a Principal  Owner in Exhibit B of this Agreement.

         Products - Products approved or required by Pretzel Time from time to time in its sole  discretion for sale at or from Pretzel Time Units,  including, without  limitation,  hand-rolled  soft pretzels of various  flavors  including, without limitation,  chocolate chip, raisin,  honey-wheat,  and cinnamon, frozen pretzels  and  other  pretzel-related  products  and  toppings,  frozen  yogurt, beverages, and other Pretzel Time-approved products, provided that the foregoing products are subject to  modification or  discontinuance  in Pretzel Time's sole discretion from time to time and may

include additional or substitute products.

         Site - The  location of the Pretzel  Time Unit as  described  in this Agreement. The term refers to the inside of the four walls of the Unit premises.

         Special Distribution Agreement - A separate agreement whereby Pretzel Time  authorizes  a  Franchisee  of a  Pretzel  Time  Unit to  operate a Special Distribution  Arrangement  at a  Special  Distribution  Location  designated  by Pretzel Time.

         Special Distribution  Arrangement - The sale of Products at or from a Special  Distribution  Location  (defined  below),  whether or not by or through on-premises food service  facilities or concessions,  pursuant to Pretzel Time's standards and  specifications for such sales, which Pretzel Time may change from time to time in its sole discretion.

         Special Distribution  Location - A facility or location,  which as by way of example and without limitation,  a school,  hospital,  office, work site, military facility, grocery store, convenience store, supermarket,  entertainment or sporting facility or event, bus or train station,  park, toll road or limited access highway  facility,  shopping mall or other similar  facility,  at or from which  Pretzel  Time,  in its sole  discretion,  authorizes  the  operation of a Special Distribution  Arrangement pursuant to a Special Distribution  Agreement, which facility may be located within or outside the Territory.

         Store - Is a traditional in-line Pretzel Time Unit where Pretzel Time Products  are  produced  and  sold  to  customers  at  retail  for  off-premises consumption.

         Territory  - The geographic area described in this Agreement.

         Trade  Dress - The unit  design,  decor and image which  Pretzel Time authorizes  and requires  Franchisee to use in connection  with the operation of Pretzel Time Units,  as it may be revised and further  developed by Pretzel Time or its Affiliates from time to time and as further described in the Manuals.

         Transfer - The voluntary, involuntary, direct or indirect assignment, sale, gift, pledge, mortgage, hypothecation, encumbrance or other disposition by Franchisee (or any of its Owners) or by operation of law of:

         (1)  Any interest in this Agreement;

         (2)  A Controlling Interest in Franchisee; or

         (3) Any interest in the Unit, equipment, furnishings or fixtures.

         A Transfer shall also be deemed to include a merger or consolidation of Franchisee  with  any  other  entity,  the  issuance  of  additional  securities representing,  or convertible into, an Ownership  Interest in Franchisee and any Transfer as a result of death  (subject to this Section),  divorce,  insolvency, corporate or  partnership  dissolution  proceedings or otherwise by operation of law.

Unit - The Pretzel Time Unit which  Franchisee is franchised to operate at the Site pursuant to this Agreement.

         Yogurt  Product  Addendum  - The form of  addendum  to the  Franchise Agreement used by Pretzel Time attached  hereto as Exhibit I from time to time to authorize or require, in its sole discretion,  a franchisee of a Pretzel Time Unit to offer TCBY frozen yogurt and other TCBY frozen yogurt products.

2.       GRANT OF FRANCHISE RIGHTS.

         2.A.     GRANT OF FRANCHISE.

         Pretzel  Time hereby  grants to  Franchisee  and  Franchisee  agrees to undertake,  during the term of this  Agreement and upon the terms and conditions stated in this Agreement, the right, license and privilege to operate,  conduct,





and do business  and to use certain  trade  names,  trademarks,  service  marks, logos,  and other  commercial  symbols,  including  Pretzel Time (referred to as Marks) solely and  exclusively for the operation of one retail  franchise Unit (referred to as Franchise), which is in the form of a (Store/Kiosk/Cart),  and to sell  those  Products  known as  Pretzel  Time  pretzels  and  other  Pretzel Time-approved   menu  items  and  Products   further   described  in  Section  2 (hereinafter Products) in accordance with the provisions of this Agreement and in accordance with rules,  standards,  systems,  and procedures as prescribed by Pretzel Time which may be changed,  improved and further  developed from time to time,  (hereinafter  Pretzel  Time  System),  at one (1) location  only,  such location to be

 (hereinafter Site).

         Pretzel  Time  will not,  as long as this  Agreement  is in effect  and Franchisee  is not in default,  enfranchise  or operate any other  Pretzel  Time Franchise  within the following  enclosed  mall or building  except as otherwise provided herein (hereinafter  referred to as Territory):  none. Franchisee has no territory other than the actual store location.  Franchisee acknowledges that Franchisee  has no rights  outside of the actual store location and that Pretzel Time has the right to sell certain  frozen  products as Pretzel Time desires and Pretzel  Time may conduct  Pretzel  Time's  business as Pretzel  Time so desires without hinderance from Franchisee.

         Franchisee  shall not  conduct  the  business of the Unit from any Site other  than  the  Site  specified,  except  as  otherwise  provided  under  this Agreement.  The form of addendum to the Franchise Agreement used by Pretzel Time is  attached  hereto  as  Exhibit  J to be  used  from  time  to time to add a satellite unit pursuant to the Satelite Unit Addendum.

         2.B.     PRINCIPAL OWNERS' GUARANTY.

         Franchisee shall cause all Principal Owners,  and their spouses,  as of the Effective Date to execute and deliver to Pretzel Time concurrently with this Agreement,  and all persons or entities which become Principal Owners, and their spouses,  thereafter to execute and deliver to Pretzel Time promptly thereafter, the  Owner's  and  Guarantor's  Undertaking  and  Assumption  of  Obligations, attached hereto as Exhibit D, or such other agreement as Pretzel Time prescribes from time to time,  undertaking  to be bound  jointly and  severally  by, and to guarantee the payment and  performance  of, all  provisions  of this  Agreement. Franchisee shall furnish to Pretzel Time, at any time upon request, in such form as Pretzel Time may require,  a list of its  shareholders or partners (of record and beneficially) reflecting their respective interests in Franchisee.

         2.C.     TERRITORIAL RIGHTS.

         Except as  otherwise  provided  in this  Agreement  and  provided  that Franchise  is in full  compliance  with  this  Agreement,  Pretzel  Time and its Affiliates  will  not  during  the  term  of this  Agreement  operate  or  grant franchises  for the operation of Pretzel Time Units within the  Territory  other than the Franchise granted to Franchisee pursuant to this Agreement.  Franchisee acknowledges  that  Franchisee  shall  have no  right  to any  Territory  unless Franchisee  and  Pretzel  Time have  entered  into a separate  Area  Developer's Agreement. Franchisee shall have no exclusive Territory based on this Agreement.

         2.D.     RESERVATION OF RIGHTS.

         Except as expressly limited by Section 2.C., Pretzel Time (on behalf of itself,  its Affiliates and its designees)  retains all rights,  in its sole and exclusive discretion,  to offer to sell the Products and services authorized for Pretzel Time Units under the Marks  hereinafter  described in Section 6 or other trade names, trademarks, service marks and commercial symbols through similar or dissimilar  channels of distribution and national  accounts and pursuant to such terms and  conditions  as Pretzel Time deems  appropriate.  Pretzel Time and its Affiliates  retain the right to offer for sale and sell, and franchise others to offer for sale and sell,  any other  Products or services  under the Marks and own and  operate  and grant to others  the right to operate  Pretzel  Time Units solely or in conjunction with TCBY stores or other snack food businesses at such locations  and on such  terms  and  conditions  as  Pretzel  Time,  in its  sole discretion,  deems appropriate.  Such Products shall include, but not be limited to, soft pretzels,  frozen pretzels and other pretzel-related  products,  frozen yogurt and other Pretzel Time-approved Products and such methods of distribution may include,  but shall not be limited to, sales at sports  arenas and stadiums, amusement  parks,   department  stores,   airports,  toll  road  travel  plazas, hospitals, office buildings, schools and colleges and other Non Traditional Unit venues  as  well  as  sales  to  wholesalers  and/or  distributors  for  resale. Notwithstanding  the foregoing,  Pretzel Time reserves the right both within and outside the  Territory  (if any) to sell at wholesale  all Products and services which comprise a part of the Pretzel Time System.

         FRANCHISEE  ACKNOWLEDGES  AND AGREES THAT PRETZEL TIME HAS THE RIGHT TO PLACE UNITS AT ANY LOCATION,  EXCEPT AS LIMITED BY THIS  AGREEMENT,  AT ITS SOLE DISCRETION  AND  WITHOUT  REGARD TO THE IMPACT UPON THE  FRANCHISEE'S  BUSINESS. FRANCHISEE  ACKNOWLEDGES  THAT  ABSENT A SEPARATE  AREA  DEVELOPER'S  AGREEMENT, PRETZEL  TIME  HAS THE  RIGHT  TO  PLACE  UNITS  AT ANY  LOCATION,  AT ITS  SOLE DISCRETION, AND WITHOUT REGARD TO THE IMPACT UPON THE FRANCHISEE'S BUSINESS.

         Franchisee  acknowledges that because complete and detailed  uniformity under many varying  conditions  may not be possible or  practical,  Pretzel Time specifically reserves the right and privilege,  at its sole discretion and as it may deem in the best  interests of all  concerned in any specific  instance,  to





vary standards for any Franchisee based upon the peculiarities of the particular Site,  landlords'  requirements,  business potential,  or other conditions which Pretzel  Time deems to be of  importance  to the  successful  operation  of such Franchisee's business.

         2.E.     OPTION TO DEVELOP OTHER SITES WITHIN THE TERRITORY.

         If Franchisee  seeks to add a different type of Pretzel Time Unit, such as a kiosk or a cart,  within the Territory,  then  Franchisee must seek Pretzel Time's  approval by  notifying  Pretzel  Time,  in  writing,  that he desires to develop  and  operate  other  units,  including  a cart  or  kiosk,  within  the Territory.  If Pretzel  Time has fully  negotiated  a lease  agreement  for such location,  then  Franchisee  shall (1) obtain the  consent  of the  landlord  to execute such lease and execute such lease,  if applicable;  (2) execute  Pretzel Time's then current form of Satellite Unit Addendum  (containing  Pretzel Time's then  current  fees  and  expense  requirements)  and such  ancillary  documents (including guarantees) as are then customarily used by Pretzel Time in the grant of franchises for Pretzel Time Units as modified for use in connection  with the Site, as necessary, and (3) pay Pretzel Time's reasonable out-of-pocket expenses incurred in locating such additional  Site and negotiating the lease  agreement, all within ten (10) business days after Pretzel Time's delivery to Franchisee of the lease agreement and the franchise documents.

         If Franchisee  timely notifies  Pretzel Time in writing that Franchisee desires to develop and operate an additional  Pretzel Time Unit, such as a kiosk or cart,  within its Territory and Pretzel Time has not fully negotiated a lease agreement for such location, then Franchisee will have thirty (30) days in which to negotiate and deliver to Pretzel Time a lease agreement for such site in form for execution.  If Pretzel Time  disapproves  the lease agreement for failure to meet  Pretzel  Time's  requirements,  Franchisee  will have ten (10) days within which to negotiate  and deliver to Pretzel Time a revised  lease  agreement  for such  location  in form for  execution.  If  Pretzel  Time  approves  the  lease agreement  for such  location  as  meeting  Pretzel  Time's  requirements,  then Franchisee  will (1) execute  such lease  agreement;  (2) execute the  franchise documents;   and  (3)  pay  Pretzel  Time's  reasonable  out-of-pocket  expenses incurred,  if any, in locating such  additional  Site and  negotiating the lease agreement,  all within ten (10) business days after Pretzel  Time's  delivery to Franchisee of the lease agreement and the franchise documents.

         2.F.     TERM OF FRANCHISE.

         The term of this Agreement shall commence on the Effective Date of this Agreement  and shall expire  twenty (20) years from the  effective  date of this Agreement.  References in this  Agreement to the term of this Agreement mean the initial term and any renewal term.

3.       OTHER DISTRIBUTION METHODS.

         3.A.     SPECIAL DISTRIBUTION ARRANGEMENTS.

         Franchisee  acknowledges  and agrees that (1) Franchisee is not granted any rights to operate Special  Distribution  Arrangements  within or outside the Territory  pursuant to this agreement;  and (2) the right to operate or grant to others the right to operate  Special  Distribution  Arrangements  is reserved to Pretzel Time;  and (3) Pretzel Time has no obligation to offer to Franchisee the right to operate Special Distribution Arrangements;  and (4) Pretzel Time or its designees  may instead  operate or grant to others the right to operate  Special Distribution Arrangements within and/or outside the Territory.

4.       FRANCHISE AND OTHER FEES.

         4.A.     INITIAL FRANCHISE FEE.

         The initial franchise fee is Twenty-Five Thousand Dollars ($25,000.00). Upon execution of this Agreement by Franchisee,  Franchisee shall pay to Pretzel Time, in consideration  of the franchise  granted herein,  Twenty-Five  Thousand Dollars  ($25,000.00)  payable by certified  check or cashier's  check in United States currency due upon execution of the Franchise Agreement. The franchise fee is fully  earned  by  Pretzel  Time  upon the  payment  in full  thereof  and is nonrefundable   (except  as   specifically   provided  in  this   agreement)  as consideration for expenses incurred by Pretzel Time in furnishing assistance and services to Franchisee  and for Pretzel  Time's lost or deferred  opportunity to franchise others,  and not as compensation for the use of the copyrighted works, Marks or Trade Dress. Franchisee acknowledges and agrees that this franchise fee is reasonable. The fee is not reduced if Pretzel Time is unable to obtain a TCBY Franchise.  An  additional  $1,000 is payable by Franchisee to Pretzel Time as a Yogurt Fee if Yogurt Product is included in the Franchise.

         4.B.     DEFERRAL OF FRANCHISE FEE.

         Payment of the initial  franchise fee is deferred for  franchises to be located in Minnesota and for Minnesota  residents until the franchise Unit opens at which time the franchise fee must be paid in full to Pretzel Time.  Franchise fees for Maryland  residents  and  franchises  to be located in Maryland will be escrowed  until the unit is  opened.  There may be other  stores in which  state administrators have required fees or royalties to be deferred or escrowed.

         4.C.     ROYALTY FEE.





         Franchisee,  in  partial  consideration  of the  grant of a  franchise, agrees to pay to Pretzel  Time a  continuing  Royalty of seven  percent  (7%) of Franchisee's  net  revenues  (as  defined  in  Section  1) on a weekly  basis as specified in this  Section;  provided  only 4% Royalty  shall be payable on TCBY frozen yogurt and other TCBY frozen yogurt products.  The Royalty is not uniform as to  all  franchisees,  it is  fully  earned,  and  is  nonrefundable  in  any circumstance.  Franchisee  shall pay weekly by electronic  funds  transfer (ACH) without offset,  defalcation,  credit or deduction of any nature to Pretzel Time the royalty fee, the advertising  fund fee and all other amounts due and payable on each Wednesday for the immediately  preceding week. The Royalty shall be paid by electronic funds transfer from Franchisee's  general operating  account.  The Royalty is paid,  in part,  to  compensate  Pretzel  Time for  various  services provided  to  Franchisee  after the Unit opens,  including,  but not limited to, quality, service, and cleanliness inspections. Pretzel Time, upon written notice to  Franchisee,  shall  have the right to  change  the  timing  of  Franchisee's payments of Royalty  Fees and  Advertising  Fund Fees due under this  Agreement. Franchisee  shall not subordinate to any other  obligation his obligation to pay the Royalty Fee or any other fee or charge hereunder.

         4.D.     ADVERTISING FUND FEE.

         Franchisee  agrees to pay on a weekly basis to Pretzel Time, as partial consideration  for the grant of the Franchise,  an  Advertising  Fund Fee of one percent  (1%) of Net revenues  for the  preceding  week as defined in Section 1. Franchisee  herein  acknowledges that the Advertising Fund Fee is not uniform as to all franchisees.  The Advertising Fund Fee is fully earned and nonrefundable. The  Advertising  Fund Fee shall be paid by electronic  funds  transfer from the Franchisee's  general  operating  account on Wednesday of each week based on the preceding week's Net revenues.

         4.E.     TRANSFER FEE.

         If Franchisee desires to assign his rights under the Franchise to a new franchisee,  Franchisee  (Assignor of the  Franchise),  agrees to pay to Pretzel Time a transfer  fee equal to the  greater of SIX  THOUSAND  TWO  HUNDRED  FIFTY DOLLARS  ($6,250.00) or the then current  transfer fee being paid by franchisees upon the assignment, gift, bequeath or transfer of ownership of the Franchise to cover administrative costs and expenses. The transfer fee is non-refundable. The fee shall be due and payable by the current  Franchisee to Pretzel Time five (5) days prior to the transfer of the Franchise to the assignee.  Additionally,  the assignee  of the  Franchisee  shall pay  Pretzel  Time an  additional  amount of Twenty-Five  Thousand Dollars  ($25,000.00) (plus $1,000.00 if Yogurt Product is included),  for any  additional  units that are not existing  stores or the then current initial franchisee fee for traditional Pretzel Time Units.

         4.F.     FEES FOR ADDITIONAL FRANCHISES.

          In the event that Franchisee  meets Pretzel Time's  qualifications  to open  additional  Franchises at sites  acceptable to both Franchisee and Pretzel Time,  which  approval is at the sole  discretion of Pretzel  Time,  the initial franchisee  fee shall be the greater of FIVE THOUSAND  DOLLARS  ($5,000.00)(plus $1,000.00 if Yogurt  Product is included) or the then current fee for additional franchises set by Pretzel Time, at its sole discretion. The decision to grant an additional  franchise  location shall be in the sole  discretion of Pretzel Time and at no time does Pretzel Time promise or guarantee that additional franchises will be offered  or  approved.  Such  decisions  will be made on a  case-to-case basis,  based on  factors  including,  but not  limited to the  availability  of suitable locations,  quality of standards maintained in the Franchisee's current Units,   the  impact  of  additional   locations  upon  the  operations  of  the Franchisee's  current Units, the geographical  distance between the Franchisee's existing and proposed  location,  the business  plan of Pretzel  Time,  national contracts  with  major  corporations,  the  population  of  the  area  near  the prospective  site,  the quality of the site,  and other  economic  and  business factors.  Under no  circumstances  is  Franchisee  entitled to demand or require Pretzel Time to grant to Franchisee a Franchise or a similar variation thereof.

         4.G.     FEES FOR RENEWAL OF FRANCHISE.

         Franchisee  agrees that in consideration of the grant of the Successor Franchise  (defined in Section 5.A.),  Franchisee shall pay the current renewal fee as of the  date of  renewal  and  execute  a  general  release  in the  form prescribed  by Pretzel Time in  accordance  with Section 5.B. The renewal fee is due and payable thirty (30) days prior to the renewal day.

         4.H.     PAYMENT BY ELECTRONIC FUNDS TRANSFER.

         Franchisee agrees to pay all Royalties,  Advertising Fund Fees, amounts due Pretzel Time for purchases by Franchisee from Pretzel Time or its Affiliates and other amounts which  Franchisee  owes to Pretzel Time via  electronic  funds transfer from Franchisee's general account,  which shall be initiated by Pretzel Time and any transfer fees shall be paid by Franchisee  every  Wednesday for the preceding week based upon the Net Revenues.  Franchisee herein agrees to execute and complete all necessary  documentation required by Pretzel Time to permit the wire transfer to Pretzel Time (in the form attached  hereto as Exhibit E or such other form as Pretzel Time shall accept). Under this procedure, Franchisee shall authorize  Pretzel  Time to initiate  debit  entries  and/or  credit  correction entries  to  Franchisee's   general  operating  bank  account  for  payments  of Royalties,  Advertising Fund Fees and other amounts payable under this Agreement and any late or interest  charges due thereon.  Franchisee  shall make the funds





available to Pretzel Time for  withdrawal by  electronic  transfer no later than one day prior to the due date for payment therefor.  The Royalty and Advertising Fund Fees amount actually  transferred from Franchisee's  account shall be based on the Unit's Net Revenues  indicated on the reports  submitted by Franchisee as required  hereunder.  If Franchisee  has not reported the Unit's Net Revenues to Pretzel  Time  for any week as  required  herein,  then  Pretzel  Time  shall be authorized  to  debit  Franchisee's  account  in an  amount  equal  to the  fees transferred from Franchisee's  account for the last reporting period for which a report of the Unit's Net  Revenues  was  provided  to Pretzel  Time as  required hereunder.  If,  at any  time,  Pretzel  Time  determines  that  Franchisee  has under-reported the Unit's Net Revenues, or underpaid Royalty or Advertising Fund Fees or other  amounts  due  hereunder,  Pretzel  Time  shall be  authorized  to initiate  immediately a debit to Franchisee's  account in the appropriate amount in  accordance  with the foregoing  procedure,  plus interest as provided for in this  Agreement.  Any  overpayment  shall be  credited to  Franchisee's  account through a credit  effective  as of the first week after  Franchisee  and Pretzel Time  determine  that such credit is due.  Notwithstanding  any  designation  by Franchisee, Pretzel Time shall have the sole discretion to apply any payments by Franchisee to any past  indebtedness  of Franchisee  for Royalty or  Advertising Fund Fees,  purchases from Pretzel Time and/or its  Affiliates,  interest or any other indebtedness,  including,  without  limitation,  payment of rental sums in arrears for the Unit.

         4.I.     LATE CHARGE AND INTEREST.

         To compensate Pretzel Time for the increased  administrative expense of handling late payments,  Pretzel Time may charge Franchisee a $50.00 late charge for each delinquent payment.  All Royalty and Advertising Fund Fees, amounts due for  purchases by  Franchisee  from Pretzel  Time or its  Affiliates,  and other amounts  which  Franchisee  owes to Pretzel  Time or its  Affiliates  shall bear interest  after  their due date at a rate equal to the  lesser of: (1)  eighteen percent (18%) per annum for the number of days which such payment is due; or (2) the highest  applicable  legal rate  permitted  by  applicable  law.  Franchisee acknowledges  that this  Section  shall  not  constitute  Pretzel  Time's or its Affiliates' agreement to accept such payments after they are due or a commitment by Pretzel  Time or its  Affiliates  to extend  credit to or  otherwise  finance operation of the Unit.  Notwithstanding  the  provisions  of this Section  4.I., Franchisee  acknowledges and agrees that his failure to pay all amounts when due shall constitute grounds for termination of this Agreement.

5.       RENEWAL OF FRANCHISE TERM.

         5.A.     FRANCHISEE'S RIGHT TO A SUCCESSOR FRANCHISE.

         Upon the expiration of the initial term of this  Agreement,  Franchisee shall  have the one time  right to obtain a  successor  franchise  to  operate a Pretzel  Time Unit at the Site (a  Successor  Franchise)  for a single term of five (5) years  immediately  following the expiration of the initial term of the Franchise upon giving Pretzel Time six (6) months notice prior to the expiration of the then current term if:

         (1) Franchisee and its Owners have complied with this Agreement and any          amendment  during the initial  term of this  Agreement  in all material          respects; and

         (2) Franchisee  maintains  possession of the Site and agrees to remodel          and/or expand the Unit, add or replace equipment, furnishings, fixtures          and signs and  otherwise  modify  the Unit to bring it into  compliance          with   specifications  and  standards  then  applicable  under  new  or          Successor Franchises for Pretzel Time Units; or if Franchisee is unable          to maintain  possession  of the Site, or if, in the judgment of Pretzel          Time,  the Unit should be  relocated,  Franchisee  secures a substitute          site approved by Pretzel Time and agrees to develop  expeditiously such          substitute  site in compliance with  specifications  and standards then          applicable  under new or successor  franchises  for Pretzel Time units;          and

         (3) Pretzel  Time has not given notice of its election not to renew six          (6) months  prior to the  expiration  of the  initial  twenty (20) year          term; and

         (4)  Franchisee  is not in default of any material term or condition of          the lease  agreement,  or any other agreement  between Pretzel Time and          Franchisee; and

         (5) Franchisee executes Pretzel Time's then current Franchise Agreement          and  other  ancillary  agreements  required  and being  offered  to new          Franchisees on the date of renewal, which agreements shall supersede in          all respects this  Agreement and the terms of which may differ from the          terms of this Agreement,  including,  without limitation,  Royalty Fees          and  Advertising  Fund  Fees,  other  fees  and  charges,   performance          criteria,  and a provision which allows Pretzel Time and its Affiliates          to reserve  the right,  both within and  outside of the  Territory,  to          offer and sell at wholesale or retail, through channels of distribution          distinct  from  those  of a  Franchise,  Products  and  services  which          comprise,  or may in the  future  comprise a part of the  Pretzel  Time          System, which Products may be resold at retail to the general public by          such entities; and

         (6) Franchisee is in full  compliance  with Pretzel  Time's  Operations Manual; and

         (7) On renewal,  Franchisee  agrees to pay the current renewal fee, the          Royalty and  Advertising  Fund fees specified in Pretzel Time's current





         Franchise  Agreement then being offered new  Franchisees on the date of          renewal; and

         (8) Franchisee shall execute general releases,  in form satisfactory to          Pretzel  Time,  of any and all  claims  against  Pretzel  Time  and its          Affiliates and their officers, directors, employees, agents, successors          and assigns arising under this Agreement; and

         (10)   Franchisee   has  complied  with  Pretzel  Time's  then  current          qualification and training requirements.

         Following receipt of Franchisee's election to renew, Pretzel Time shall provide Franchisee with an execution copy of the form of Franchise  Agreement to be entered into for the renewal  term.  If the  Franchisee  does not execute and return the renewal Franchise Agreement within thirty (30) days of receipt,  then Franchisee  shall be deemed to have  withdrawn  its notice of renewal,  and this Agreement shall terminate at the end of the current term.

         Pretzel Time may, at its option, with reasonable cause and upon written notice,  elect not to renew the Franchise  Agreement.  Pretzel Time shall notify Franchisee  of the  nonrenewal  not  less  than  six  (6)  months  prior  to the expiration  of the term of this  Agreement.  If  applicable  law  requires  that Pretzel Time give longer  notice to  Franchisee  prior to the  expiration of the term than is specified in the Franchise Agreement,  the Franchise Agreement will remain in effect on a  month-to-month  basis until the requisite notice has been given.

         5.B.     RELEASES.

         Franchisee  and its Owners  shall  execute  general  releases,  in form satisfactory  to Pretzel Time (the  general form of which is attached  hereto as Exhibit K), of any and all claims against  Pretzel Time and its Affiliates and their  respective  shareholders,   officers,   directors,   employees,   agents, successors and assigns. Failure by Franchisee and its Owners to sign and deliver to Pretzel  Time,  such  agreements  and releases  within thirty (30) days after delivery  thereof to Franchisee shall be deemed an election by Franchisee not to obtain a Successor Franchise.

         5.C.     NOTICES.

         Franchisee  shall give Pretzel  Time written  notice of its election to obtain a Successor  Franchise not more than twelve (12) months and not less than six (6) months prior to the expiration of this Agreement. Pretzel Time agrees to give Franchisee, written notice, not more than thirty (30) days after receipt of Franchisee's notice of (a) Pretzel Time's  determination  whether or not it will grant Franchisee a Successor  Franchise  pursuant to this Section and/or (b) any deficiencies  in  Franchisee's  operation  of the Unit (or any other  failure to comply  with the terms of this  Agreement)  which could  cause  Pretzel  Time to refuse to grant a  Successor  Franchise.  Such notice  shall state what  actions Franchisee  must take to correct  the  deficiencies  and shall  specify the time period in which such  deficiencies  must be  corrected.  Pretzel Time shall give Franchisee written notice of a decision not to grant a Successor Franchise based upon  Franchisee's  failure to cure  deficiencies not less than ninety (90) days prior to the expiration of the initial term of this Agreement. Such notice shall state the reasons for Pretzel Time's refusal to grant a Successor Franchise.  In the event Pretzel Time fails to give  Franchisee (a) notice of  deficiencies  in the Unit or in Franchisee's operation of the Unit, within thirty (30) days after receipt of Franchisee's timely election to obtain a Successor Franchise,  or (b) notice of Pretzel  Time's  decision not to grant a Successor  Franchise at least ninety (90) days prior to the expiration of the term of this Agreement,  Pretzel Time  may  extend  the term of this  Agreement  for  such  period  of time as is necessary in order to provide Franchisee reasonable time to cure deficiencies or to provide ninety (90) days notice of Pretzel Time's  determination not to grant a Successor  Franchise.  The grant of a Successor Franchise shall be conditioned upon Franchisee's continued compliance with all the terms and conditions of this Agreement until the date of expiration.

6.       TRADEMARKS AND LIMITATIONS.

         6.A.     OWNERSHIP OF MARKS.

          Franchisee  acknowledges  that Pretzel Time is the owner of all right, title  and  interest  together  with  all  the  goodwill  in and  to the  Marks. Franchisee  acknowledges  that his right to use the Marks is derived solely from this  Agreement  and is limited to his  conduct of  business  pursuant to and in compliance with this agreement and all applicable standards,  specifications and operating  procedures Pretzel Time prescribes from time to time during its term. Franchisee  shall not have nor assert any right,  title or  interest  in Pretzel Time's Marks or any goodwill of Pretzel Time. Franchisee agrees that he will not register  such  trade  name or marks in his own name or that of any other  firm, person  or  corporation.  The  following  Marks  are  currently  authorized  for Franchisee's use in the Franchised Business as follows:

         Pretzel TimeJ          Pretzel Time Stylized7          Pretzel Time Clock DesignJ          Pretzel Time StorefrontJ          Fitness with a twist.J

         Franchisee  acknowledges  and recognizes  Pretzel  Time's  interest and exclusive   right  to  the   concepts  of  the  Pretzel   Time  System  and  its distinguishing characteristics, including the name and style of the unique decor





of the Pretzel Time  stylized  literature,  display and  promotional  materials, marketing methods, operating procedures, training program and the manufacture of Pretzel Time Products. Pretzel Time makes no representation or warranty, express or implied,  as to the use, exclusive  ownership,  validity or enforceability of the Marks. Pretzel Time reserves the right to develop other trademarks,  service marks,  copyrights  and patents for use in other  businesses.  Pretzel  Time and Franchisee  acknowledge  and agree that it is not required to defend  Franchisee against  a claim  against  his use of  Pretzel  Time  Marks.  Pretzel  Time  may reimburse  Franchisee for his liability and reasonable  costs in connection with defending Pretzel Time's registered  trademarks provided Franchisee has notified Pretzel Time immediately when he learned about the infringement or challenge.

         Franchisee  agrees to use  Pretzel  Time's  trade name and Marks as the sole trade  identification  of the Unit and in connection  with, and exclusively for the  promotion  and conduct of the  Franchise as provided  hereunder  and in accordance with instructions,  rules, and procedures  prescribed by Pretzel Time from  time  to  time  with  respect  thereto.   Notwithstanding  the  foregoing, Franchisee  shall identify  himself as the independent  owner of the Unit in the manner  prescribed  by Pretzel Time.  Franchisee  agrees to give such notices of trademark  and service  mark  registrations  as Pretzel  Time may specify and to obtain such business name registrations as may be required under applicable law. Franchisee  shall not at any time during the term of this Agreement or after its termination, contest the validity or ownership of any of the Marks or assist any other person in contesting the validity or ownership of the Marks.

         6.B.     DISCONTINUANCE OF USE OF MARKS.

         If it becomes advisable at any time, in Pretzel Time's sole discretion, for Pretzel Time or the Unit to modify or  discontinue  use of any Mark,  and/or use of one or more  additional or substitute  trade names,  trademarks,  service marks, or other commercial symbols,  Franchisee shall comply with Pretzel Time's directions  within a reasonable time after notice to Franchisee by Pretzel Time. Neither  Pretzel Time nor its Affiliates  shall have any obligation to reimburse Franchisee for any expenditures  made by Franchisee to modify or discontinue the use of a Mark or to adopt  additional  marks or  substitutes  for a discontinued Mark, including, without limitation, any expenditures relating to advertising or promotional  materials or to compensate  Franchisee for any goodwill  related to the discontinued Mark.

         6.C.     CORPORATE NAME.

         Franchisee  agrees not to use any Mark or trade name of Pretzel Time or any part thereof or with any prefix,  suffix or other  modifying  words,  terms, designs,  or symbols or in any modified  form as part of any  corporate or trade name  nor  shall  Franchisee  use any  Mark in  connection  with the sale of any unauthorized  product or service or in any other manner not expressly authorized in writing by Pretzel Time.

         6.D.     TERMINATION.

         Immediately  upon the  termination  of this  Agreement,  the Franchisee agrees to cease and forever  abstain  from using the Pretzel Time trade name and Marks and return to Pretzel Time all documents, manuals,  instructions,  display items and the like bearing the aforesaid trade names or any of the Marks.

         6.E.     TRADEMARK ENFORCEMENT.

         Pretzel  Time shall  police and enforce its rights with  respect to its trademarks  and other  proprietary  aspects of the Pretzel  Time System with the cooperation of Franchisee,  and shall bring  appropriate  actions or proceedings against infringers or other unlawful users at its sole expense.

         Franchisee  agrees to  immediately  notify  Pretzel  Time of any claim, demand or suit based upon or arising from or of any attempt by any other person, firm or corporation to use Pretzel Time's trademarks, service marks, copyrights, trade secrets,  or Systems licensed hereunder or colorable  variation thereof in which Pretzel Time has a proprietary interest. Pretzel Time will take the action it thinks  appropriate.  In the event Pretzel Time undertakes any prosecution of litigation or defense  relating to the  proprietary  Marks  licensed  hereunder, Franchisee  agrees to execute any and all  documents and do such acts and things as may in Pretzel  Time's  opinion,  be  necessary  to carry out such defense or prosecution.  Franchisee  agrees  that  Pretzel  Time has the  right to  control administrative proceedings or litigation with respect to this issue.

         Franchisee  agrees to participate  and cooperate in the  prosecution of any action to prevent the infringement,  imitation, illegal use or misuse of the Marks and  agrees  to be named as a party in any such  action  if  requested  by Pretzel  Time.  Pretzel  Time  agrees to bear the  legal  expenses  incident  to Franchisee's  participation in such action,  except for the cost of Franchisee's personal legal counsel if Franchisee  elects to be represented by counsel of his own choosing.

         6.F.     USE OF SERVICE MARK.

         Except  with the prior  written  consent  of Pretzel  Time,  Franchisee agrees not to infringe upon, use or imitate Pretzel Time's System, or any of its distinguishing  characteristics,  and  further  agrees not to cause or allow any other person to infringe upon, use or imitate  Pretzel Time's System,  or any of its  distinguishing  characteristics.  Franchisee  agrees to use and display the Marks at all times only in  accordance  with the quality  control  standards set forth in this  Agreement and in the Operations  Manual.  During the term of this Agreement, and renewal term, if any, Franchisee will operate the Unit only under the Marks . Franchisee  will use or display the Marks only within the designated Territory.  Franchisee  will cause a sign  bearing the name  Pretzel  Time which meets Pretzel Time's  specifications for color, design and size, to be installed





on the outside of the retail Unit.  Franchise  shall not, at any time during the term of this  Agreement or after its  termination  or expiration use any Mark in connection with the sale of any unauthorized  product or service or in any other manner not expressly authorized in writing by Pretzel Time.

7.       SELECTION OF FRANCHISE LOCATION.

         7.A.     SITE SELECTION.

         Franchisee  shall be  responsible  for leasing a suitable  site for the Franchise  subject to Pretzel  Time's  approval.  Pretzel  Time agrees to assist Franchisee  in locating and securing a location for the unit which is acceptable to both Pretzel Time and Franchisee.  Franchisee  shall submit to Pretzel Time a list of desired locations on the Location Agreement attached hereto as Exhibit W or if Pretzel  Time  directs on a form  prepared  by Pretzel  Time and  attached hereto as Exhibit F, and  Pretzel  Time shall  contact the  appropriate  leasing representatives to determine the availability of sites at those locations. After obtaining  information from appropriate  leasing  representatives,  Pretzel Time shall notify Franchisee  whether or not the sites made available to Pretzel Time are  acceptable  by Pretzel  Time.  In the event  that a site for the  franchise cannot be located  which is  acceptable  and  suitable to both  Pretzel Time and Franchisee  within One Hundred Twenty (120) days,  then the Franchise  Agreement shall be terminated and all franchise fees paid by Franchisee shall be refunded.

         Pretzel  Time  shall  approve  the site for the unit in  reliance  upon information furnished and representations made by Franchisee with respect to the size, appearance, and other physical characteristics of the site, photographs of the site, demographic characteristics,  traffic patterns, competition from other businesses in the area,  and other  commercial  characteristics.  Pretzel Time's approval of the site  indicates  only that Pretzel Time  believes  that the site falls  within  acceptable  criteria  established  by Pretzel Time as of the time period  encompassing the evaluation.  Franchisee  agrees that Pretzel Time shall not be responsible for the failure of a franchise, site and/or premises approved by Pretzel  Time to meet  expectations  as to potential  revenue or  operational criteria.  Franchisee acknowledges and agrees that his acceptance of a Franchise for the  operation of a Unit in the  Territory  is based on his own  independent investigation of the suitability of the mall location.

         Franchisee  acknowledges  that Pretzel Time's  approval of the lease or sublease  for the Unit does not  constitute  a guarantee  or warranty by Pretzel Time, express or implied, of the successful operation or profitability of a Unit operated at the designated Site. Such approval  indicates only that Pretzel Time believes  that the Unit and the terms of the lease fall  within  the  acceptable criteria  established  by Pretzel  Time as of the time period  encompassing  the evaluation.

         7.B.     LEASE.

         Pretzel  Time and  Franchisee  further  agree that  Pretzel  Time shall negotiate  the  basic  economic  terms  of the  lease in  consultation  with the Franchisee.  Franchisee  agrees to  execute  a letter  of  intent  for the lease premises  which  outlines the basic economic terms of the lease and return it to Pretzel  Time within five (5) days of receipt of same.  Franchisee  acknowledges and agrees that he is  responsible  for reviewing the terms of the agreement and making  any  necessary  changes  to the lease  agreement.  Franchisee  shall not execute any lease  agreement  without the prior approval of Pretzel Time,  which shall be conditioned  upon inclusion of terms in the lease acceptable to Pretzel Time and at Pretzel Time's option shall contain such provisions,  including, but not limited, to:

          (1). Notice to Pretzel  Time of,  and  Pretzel  Time's  right to cure,                Franchisee's default under the lease provided,  however,  that if                Pretzel  Time  cures any such  default,  the total  amount of all                costs and payments incurred by Pretzel Time in effecting the cure                shall be immediately due and owing to Pretzel Time by Franchisee;

          (2). Franchisee's  right to  assign  his  interest  under the lease or                sublease  to Pretzel  Time  without the  lessor's or  sublessor's                consent;

          (3). Allowing  Franchisee  to  transfer  the lease to Pretzel  Time or                another  approved  franchisee in the event that Franchisee  sells                his  business (a copy of the form of the third  party  assignment                agreement that  Franchisee and the  prospective  purchaser  would                sign is attached hereto as Exhibit L);

          (4). Authorizing  and requiring the Lessor or sublessor to disclose to                Pretzel Time, upon its request,  sales and other information that                Franchisee furnishes to the lessor or sublessor; and

          (5). Providing  that  Pretzel  Time (or one of its  Affiliates  or its                Assignee) shall have the right (but not the obligation) to assume                the lease or sublease:

                  (i) Upon termination of this Agreement by Pretzel Time or upon                   expiration of this Agreement (unless a Successor  Franchise is





                  granted to Franchisee), or

                  (ii) If  Franchisee  fails to exercise any options to renew or                   extend the lease or sublease or,

                  (iii) If Franchisee commits a default that gives the lessor or                   sublessor the right to terminate the lease or sublease, or

                  (iv)  If  Pretzel  Time  or  one  of  its  Affiliates  or  its                   designee/assignee purchases the Unit.

          (6). A provision allowing sampling in front of the retail Unit;

          (7). A provision  that the premises are to be used  exclusively  for a                Pretzel Time Unit only; and

          (8). A provision which permits alterations to the premises in a good          and workman-like manner by Franchisee as required by Pretzel Time.

         Franchisee further agrees to execute and return the lease and any other riders,  guaranties or sureties  required by the Landlord  within seven (7) days from receipt of the same and no later than sixty (60) days after signing of this Agreement.  If any lease  expires  prior to the  expiration  of this  Agreement, Franchisee  will be  required to arrange  any  necessary  lease for the Unit and Pretzel Time shall have the right to approve the terms of the renewal  lease for the Unit prior to Franchisee's execution thereof. Franchisee agrees that he will not execute a lease or sublease which Pretzel Time has  disapproved.  Franchisee shall  deliver a copy of the signed  lease to Pretzel  Time for the Unit  within five (5) business days after its full execution.  The copy shall be complete and include copies of all signature pages and exhibits.

         A copy of the form of the sublease  that  Franchisee  shall execute (if Pretzel Time is the tenant  pursuant to the lease) is attached hereto as Exhibit M. A copy of the form of the  collateral  assignement  of lease that  Franchisee shall execute (if  Franchisee  is the tenant  pursuant to the lease) is attached hereto as Exhibit N.

         Franchisee  shall be  responsible  for all terms and  conditions of the lease covering the franchise  location,  including any required security deposit and  prepaid  rent.  Franchisee  agrees  to pay the Unit  rent  directly  to the landlord at the rate and terms  specified in the primary lease between  landlord and Franchisee. Rent is generally paid monthly on the first day of the month and is  non-refundable.  Franchisee  agrees  that the Unit  shall be used  only as a Pretzel Time franchise.

         If  Franchisee  fails to obtain  lawful  possession of an approved Site (through a lease or assignment) within sixty (60) days after delivery of Pretzel Time's approval of the Site, Pretzel Time, may, in its sole discretion, withdraw approval of such Site at any time.

         7.C.     RELOCATION.

         In the event that  Franchisee's  lease is  terminated,  with or without fault of  Franchisee,  if the Site is damaged,  condemned or otherwise  rendered unusable as a Pretzel Time Unit in accordance with this Agreement, or if, in the judgment of Pretzel Time and  Franchisee,  there is a change in the character of the location of the Site sufficiently  detrimental to his business  potential to warrant its relocation,  Pretzel Time will not unreasonably  withhold permission for  relocation  of the  Unit  to  another  Site,  which  meets  Pretzel  Time's then-current  site  criteria,  subject to the rights of  existing  Pretzel  Time franchisees  under their  franchise  agreements  with Pretzel  Time.  Franchisee acknowledges  and agrees that Pretzel Time is under no  obligation  to approve a relocation of the Franchise.  However,  upon written approval from Pretzel Time, Franchisee may relocate the Franchise to another  location.  Such approval shall not be granted unless  Franchisee is in compliance with all terms and conditions of this  Agreement  and  Franchisee  has the  financial  resources  available to relocate the Unit and construct a new and  comparable  Unit according to Pretzel Time's then current design  standards.  Any such  relocation of the Franchise is subject to Pretzel Time's prior  approval of the new Unit  location.  Relocation shall be at  Franchisee's  sole expense and Pretzel Time shall have the right to charge  Franchisee  for  any and all  costs  incurred  by  Pretzel  Time,  and a reasonable  fee  for  its  services,  in  connection  with  any  such  approval, evaluation  and  relocation  of the  Franchise.  The Unit  shall  re-open at the replacement  Site as soon as  reasonably  practicable  but in no event more than ninety (90) days after the closing of the original location.

8.       DEVELOPMENT OF UNIT.

         8.A.     UNIT DESIGN SPECIFICATIONS AND CONSTRUCTION PLANS.

         Franchisee  shall be responsible  for  constructing  and developing the Unit,  including payment of all costs.  Pretzel Time shall furnish to Franchisee prototypical plans and  specifications  for the Unit,  reflecting Pretzel Time's requirements for dimensions,  interior design and decor, layout, image, building materials,  color scheme, exterior and interior finishes,  fixtures,  equipment, furnishings, and signs.

         Franchisee shall promptly after obtaining  approval of the Site for the Franchise:

         (1).  cause to be prepared by a Pretzel  Time  approved  architect  and





         submit for approval by Pretzel Time a site survey and any modifications          to Pretzel Time's basic  architectural plans and specifications for the          Pretzel Time Unit  (including  requirements  for  dimensions,  exterior          design,  materials,  interior design and layout,  equipment,  fixtures,          furniture,  signs and decorating)  required for the construction of the          Franchise at the Site leased  therefor.  Franchisee shall have all such          modifications   approved  by  Pretzel   Time  and  prior  to  obtaining          permitting;

         (2). insure that such plans and  specifications  comply with applicable          ordinances,  building  codes,  and permit  requirements  and with lease          requirements  and  restrictions  and all modification to Pretzel Time's          basic plans and  specifications are modified to the extent necessary to          comply with local  ordinances and state laws,  building  codes,  permit          requirements, lease restrictions and federal law; and

         (3).  Franchisee  shall also submit all revised or as built plans and          specifications  during the course of such  construction upon request of          Pretzel Time.  Franchisee  agrees to pay for any and all architect fees          and pay the architectural fees for the architect to review, approve and          modify the plans.

         8.B.     DEVELOPMENT OF THE UNIT.

         Pretzel  Time shall have the right to approve any  contractor  hired by Franchisee  to develop the Unit.  Within  one-hundred  twenty  (120) days of the execution of the Franchise Agreement, Franchisee agrees, at his sole expense, to do or cause to be done the following with respect to developing the Unit:

          (1). Familiarizing   himself  with  the  physical   condition  of  the                property, local laws, ordinances and          other requirements in connection with the construction of the Unit;

          (2). Secure all financing required to develop and operate the Unit;

          (3). Obtain all required building,  utility, sign, health, sanitation,                business,  environmental  and other permits and licenses required                for construction and operation of the Unit;

          (4). Extending all utilities to the Site and constructing all required                improvements to the Unit and decorate the Unit in compliance with                plans and specifications Pretzel Time approves within four to six                weeks  of  possession  of the  Site  and two  days  prior  to the                commencement date set forth in the lease for the Unit;

          (5). Purchase   and  install  all  required   fixtures,   furnishings,                equipment  and signs  required for the Unit  (provided,  however,                that Pretzel Time shall have the right,  in its sole  discretion,                to install all required  signs at the Unit at  Franchisee's  sole                expense);

          (6). Purchase  an  opening  inventory  of  Products,   materials,  and                supplies;

          (7). In  accordance  with  Pretzel  Time's  standard   specifications,                Franchisee  shall totally equip,  ready and inventory the Site at                its sole cost for opening to the public two (2) days prior to the                opening date specified in the lease; and

          (8). Franchisee  agrees  that it will not  open the Unit for  business                without Pretzel Time's prior approval and training.

         8.C.     EQUIPMENT, FIXTURES, FURNISHINGS, AND SIGNS.

         Franchisee agrees to use in developing and operating the Unit only such fixtures,  furnishings,  equipment, and signs that Pretzel Time requires and has approved for Pretzel Time Units as meeting its  specifications and standards for quality, design, appearance, function and performance. Franchisee further agrees to place or display at the Unit only such signs, emblems,  lettering,  logos and display  materials  that  Pretzel  Time  approves in writing  from time to time; provided,  however,  that  Pretzel  Time  shall  have  the  right,  in its  sole discretion,  to install  all  required  signs at the Unit at  Franchisee's  sole expense.  Franchisee shall purchase or lease approved brands, types or models of fixtures,  furnishings,  equipment and signs only from  suppliers  designated or approved by Pretzel Time (which may include Pretzel Time and/or its Affiliates). Franchisee  further agrees that all fixtures,  furnishings and equipment used in connection  with the operation of the Unit shall be free and clear of all liens, claims and  encumbrances  whatsoever,  except  with  respect to any such  liens, claims or  encumbrances  asserted by Pretzel Time or third party  purchase money security interests.

         8.D.     EXCEPTIONS TO EQUIPMENT OR FURNISHINGS.

         If Franchisee proposes to purchase any brand or type of construction or decorating material, fixture, equipment,  furniture or sign not then approved by Pretzel  Time,  or any such item from a supplier  which is not then  approved by Pretzel Time,  Franchisee shall first notify Pretzel Time, in writing, and shall submit  to  Pretzel   Time,   upon  its  request,   sufficient   specifications, photographs,  drawings and other  information or samples for a determination  by Pretzel  Time of  whether  such  brand  or type of  construction  or  decorating material, fixture, equipment, furniture or sign complies with its specifications and standards or such supplier meets Pretzel Time's approved supplier  criteria, which  determination  shall be made and  communicated  in writing to  Franchisee within a reasonable time.  Additionally,  Franchisee shall pay all fees for said





testing and be responsible for acquiring and submitting  equipment necessary for such testing.

         8.E.     CONSTRUCTION ASSISTANCE.

         Upon request by Franchisee and without  liability,  Pretzel Time agrees to provide construction assistance to Franchisee in one or more of the following areas:

          (1). Assist  Franchisee in finding an architect  for the  construction                and development of the Unit;

          (2). Assist  Franchisee  in  finding  a  general  contractor  for  the                construction and development of the Unit; and

          (3). Respond to a  reasonable  amount of questions  from  Franchisee's                contractor  relating to construction  and development of the Unit                in accordance with the requirements of Pretzel Time.

         8.F.     LIMITATION ON LIABILITY.

         Pretzel Time shall not be liable to Franchisee,  the contractor, or any other person,  and Franchisee  waives all claims for liability or damages of any type  whatsoever  (whether  direct,  indirect,  incidental,   consequential,  or exemplary),  on account of the  rendition  of any  services  by Pretzel  Time in accordance  with  this  Section,  except  to the  extent  caused  by  the  gross negligence  or  intentional  misconduct  of  Pretzel  Time,  and  then  any such liability  or damages  shall be limited to five  thousand  dollars  ($5,000.00). Without  limiting the generality of the  foregoing,  Pretzel Time shall not have liability  with  respect  to any of the  following,  all of  which  are the sole responsibility of Franchisee:

          (1). if   construction   of  the  Unit  does  not  fully  satisfy  the                requirements  (if  any)  of  the  landlord,  the  architect,  the                contractor,  and any governmental  agency having  jurisdiction or                does not fully satisfy the criteria  established  by Pretzel Time                for construction and development of Pretzel Time Units;

          (2). if the Unit improvements are not structurally  sound or free from                defects or deficiencies;

          (3). if there are any construction delays or cost overruns; or

          (4). if  there  are  any  disputes  with  any  landlord,   contractor,                subcontractor,  architect,  supplier or governmental  agency with                respect to any aspect of the design, construction,  provision, or                equipping of the Unit.

9.       UNIT OPENING.

         9.A.     COMMENCEMENT OF OPERATIONS.

         Franchisee shall commence operation of the Franchise the earlier of: 1) one  hundred  fifty (150) days after the  execution  of this  Agreement;  (2) as specified in the lease for the Site; or (3) as otherwise required or approved in writing by Pretzel Time. Failure to open the Unit within the aforementioned time period shall  result in the  termination  of this  Franchise  Agreement  and all franchise fees paid by Franchisee shall be nonrefundable.  Franchisee agrees not to open the Unit for business until the following has occurred:

          (1). Pretzel  Time  approves  the  Unit  pursuant  to its  Pre-Opening                Checklist;

          (2). Pre-opening  training of Franchisee  and Unit  personnel has been                completed to Pretzel Time's satisfaction;

          (3). The  initial  franchise  fee and all  other  amounts  then due to                Pretzel Time have been paid in full;

         (4).  Pretzel  Time has been  furnished  with  copies of all  insurance          policies  required  by  this  Agreement,  or  such  other  evidence  of          insurance  coverage and payment of premiums as Pretzel  Time  requests;          and

     (5) Franchisee has executed Pretzel Time's wire transfer agreement.

         Franchisee  agrees  to open the  Unit for  business  on or  before  the opening date specified in the lease if it has the  Landlord's  approval and only after Pretzel Time notifies Franchisee that the conditions set forth in Sections 8 and 9 have been satisfied.

10.      FRANCHISEE TRAINING.

         10.A.    INITIAL TRAINING.

         Franchisee  acknowledges and agrees that, while Pretzel Time's training program will provide  Franchisee  with the  fundamental  knowledge  necessary to operate a unit,  Franchisee  cannot  expect  success  unless he devotes his best personal efforts to the business and exercises good business judgment in dealing with customers,  suppliers, and employees.  Prior to the Unit's opening, Pretzel Time shall  furnish an initial  training  program on the  operation of a Pretzel Time Unit which shall take place at Pretzel Time's  headquarters  in Harrisburg, Pennsylvania,  or at a location  which will  provide the best  training  for the





Franchisee,  which may or may not be close to Pretzel Time's  headquarters.  The Franchisee agrees that he and his Unit Manager shall attend the initial training session held four (4) to eight (8) weeks prior to the Unit's  projected  opening date. Pretzel Time will not charge for the initial training of the Franchisee or if a corporation or partnership,  the Principal Owners of the Franchisee and the Unit  Manager.  All  incidental  expenses  relative  to the  required  training, including  travel  expenses,  hotel/motel  expenses,  and  meals  shall  be  the responsibility  of  the  Franchisee  while  attending  training.  Prior  to  the commencement  of the  operation  of the Unit,  the  manager  of the Unit  (Unit Manager) and the  Franchisee or if a corporation or  partnership,  one Owner of the Franchisee as identified in Exhibit B, who will be personally overseeing the Unit shall attend and  successfully  complete the Pretzel Time initial  training program to the satisfaction of Pretzel Time.

         The  Franchisee  and his  Unit  Manager  must  satisfactorily  complete Pretzel  Time's  training as  determined  by Pretzel  Time, in its sole opinion, before  Franchisee is allowed to operate the Franchise.  If Pretzel Time, in its sole discretion, determines that Franchisee is unable to satisfactorily complete the  training  program,  Pretzel  Time  shall have the right to  terminate  this Agreement and no franchise fees shall be refunded.  The initial training program shall cover material aspects of the operation of a Pretzel Time Unit,  including financial   controls,   employee  relations,   food  preparation,   service  and operational techniques,  sampling, recipes and cooking procedures, marketing and public  relations,  cleanliness and maintenance  procedures,  and maintenance of Pretzel  Time  System  standards.  Franchisee  shall  receive  one  copy  of the Operations Manual, which cannot be reproduced, in whole or in part. In the event that  the  Franchisee's  copy  is  lost  destroyed  or  significantly   damaged, Franchisee  shall be  obligated  to obtain from Pretzel  Time,  at  Franchisee's expense a replacement copy of the Operations Manual.

         10.B.    EMPLOYEE TRAINING.

         Pretzel  Time may  provide  to  Franchisee,  at  Franchisee's  request, guidance in the selection of a Unit Manager and may provide periodic evaluations of  Franchisee's  Unit,  Managers  and  employees,  but  without  any  liability therefore to Pretzel Time. Franchisee shall hire all employees of the franchise, be exclusively  responsible for the terms of their employment and  compensation, and  implement a training  program for  employees of the  franchise.  Franchisee agrees  to  maintain  a staff  of  trained  employees  to  operate  the  Unit in compliance with Pretzel Time's standards.

         In the event the Unit Manager ceases to hold such full-time position at the  Unit,  Franchisee  shall  have  thirty  (30)  days in  which to  appoint  a substitute  or  replacement  Unit  Manager,  who must  attend  and  successfully complete,  to  Pretzel  Time's  satisfaction  the  initial  training  program as specified  above within sixty (60) days after  employment  as Unit  Manager.  If Pretzel  Time in its sole  discretion  determines  that the Unit  Manager or any subsequently  appointed Unit Manager has failed to  satisfactorily  complete the initial  training  program or any  additional  or  refresher  training  program, Franchisee  agrees to  immediately  hire a substitute  Unit Manager and promptly arrange  for such  person  to  complete  the  initial  training  program  to the satisfaction  of Pretzel Time.  Franchisee  agrees to notify Pretzel Time of any new  Unit  Managers  for the  Unit  within  seven  (7)  business  days of  their employment.  In the event  Franchisee  operates more than one (1) Unit, at least one (1)  trained and  competent  Unit  Manager  referred to above shall act as a full-time manager in each Territory. Franchisee shall keep Pretzel Time informed at all times of the identity of any Unit Manager(s) of the Unit.

         All Unit  Managers  of the Unit must  have  successfully  completed  an initial training program as specified by Pretzel Time at the sole expense of the Franchisee, including, but not limited to, salary and incidental travel expenses attendant to any training provided by Pretzel Time. Franchisee and Unit Managers who  successfully  complete  training will receive a Training  Certificate  from Pretzel Time.  Pretzel Time shall make training  available to Franchisee's  Unit Manager during Pretzel Time's regularly  scheduled training course. In no event, will  Pretzel Time be under any  obligation  to provide  individual  training to Franchisee's  Unit  Managers.  Franchisee  agrees that each Unit  Manager  shall participate at Franchisee's  expense in Pretzel Time's initial  training program and all other mandatory  training  programs which may subsequently be offered by Pretzel Time.

         10.C.  ON-SITE TRAINING.

         Additionally,   Pretzel   Time  will   provide   on-site   training  at Franchisee's  business  location for a period of five (5) days,  generally to be commenced  immediately  prior to  Franchisee's  day of opening and continued the first three (3) days of operation.  Franchisee  herein agrees to notify  Pretzel Time,  in writing,  of his opening  date  twenty (20) days prior  thereto.  This training  will include all  functions  required for the proper  operation of the franchise.

         Should Franchisee  request  additional  assistance from Pretzel Time in order to facilitate  the opening of the  Franchise,  and should Pretzel Time, in its discretion,  deem it necessary,  feasible and appropriate to comply with the request or should Pretzel Time determine that  additional  training is required, Franchisee  shall  reimburse  Pretzel Time at Pretzel  Time's then current daily training  service fee, for the expense of Pretzel Time providing such additional assistance and for its training  related  expenses,  which may include,  travel, room and board.

         10.D.    COMPANY GROWTH.

         Throughout  the  term of  this  Agreement,  Pretzel  Time  may  provide Franchisee  with  information  on company  growth and  operations as well as new





techniques developed to reduce costs and/or enhance sales or profits.

         10.E.    RETRAINING PROGRAMS.

         Pretzel  Time shall  provide  re-training  programs  at a  location  of Pretzel Time's choice from time to time for  experienced  franchisees  and their managers and/or employees.  Pretzel Time may charge fees for refresher  training courses  for  previously  trained  and  experienced  managers.  Fees for special programs will be based upon Pretzel Time's actual costs and attendance  shall be required. Attendance at retraining programs or seminars shall be at Franchisee's sole expense,  provided,  however,  that attendance will not be required at more than two (2) such  programs  in any  calendar  year and shall  not  collectively exceed ten (10) business days in duration during any calendar year.

         10.F.    OTHER GUIDANCE.

         Pretzel  Time may  advise  Franchisee  from  time to time of  operating problems of the Unit which come to Pretzel Time's attention and, at Franchisee's request but without any liability  therefore to Pretzel Time, Pretzel Time shall furnish to Franchisee guidance in connection with:                             (i)  Methods,  standards,   specifications  and  operating  procedures                utilized by Pretzel Time Units;

          (ii) Purchasing  required  fixtures,  furnishings,  equipment,  signs,                Products, materials and supplies;

          (iii) Advertising and Promotional programs;

          (iv) Employee training; and

          (v)  Administrative, bookkeeping, accounting and general operating and                management procedures.

Such guidance shall, in Pretzel Time's  discretion,  be furnished in the form of Pretzel  Time's  Operations  Manual,  bulletins  and  other  written  materials, electronic computer messages,  telephone  conversations  and/or consultations at Pretzel Time's offices or at the Unit. Pretzel Time will make no separate charge to  Franchisee  for  such  operating  assistance  as  Pretzel  Time  customarily provides.  From time to time, Pretzel Time may make special assistance  programs available to  Franchisee,  however,  Franchisee  will be required to pay the per diem fees and charges that Pretzel Time  establishes  from time to time for such special assistance programs.

11.      ADVERTISING AND OTHER PROMOTIONS.

         11.A.    PROVIDING OF ADVERTISING MATERIALS.

         Franchisee  and Pretzel Time agree and  recognize  the value of uniform advertising to the goodwill and public image of Pretzel Time Units. Pretzel Time has  instituted  and  maintains and  administers  an  advertising  fund for such advertising  or  public  relations   programs  as  Pretzel  Time,  in  its  sole discretion,  may deem  necessary  or  appropriate  to  advertise  or promote the Pretzel Time System,  nationally or regionally.  Pretzel Time will  periodically provide Franchisee with programs,  promotional  concepts,  and other information designed to enhance the operation of the  Franchise.  In addition,  Pretzel Time may  provide  optional  special  promotions  from time to time  which will be at Franchisee's cost, which may be mandatory. At its initial opening, Pretzel Time, at  Franchisee's  expense,  shall  designate  and supply an initial  quantity of forms,  literature,   display,  and  promotional  materials.  Pretzel  Time,  in consideration of the Advertising Fund Fee, shall periodically provide Franchisee with  camera  ready  advertising  materials.   Multiple  copies  of  advertising materials will be furnished to Franchisee for an additional  fee,  including any related shipping, handling and storage charges.

         11.B.    CONTROL OF ADVERTISING PROGRAMS AND CONCEPTS.

         Pretzel Time shall direct all such programs,  with sole discretion over the creative concepts, materials,  endorsements, and media used therein, and the placement  and  allocation  thereof.   The  manner,   media  and  cost  of  such advertising,  public  relations  and  promotional  mailings  shall be solely and completely  within the  discretion of Pretzel Time.  Pretzel Time shall have the right to determine, in its sole discretion,  the target and market areas for the development  and  implementation  of such  programs.  Pretzel  Time may  expend, disburse and use funds from the Advertising  Fund, in its sole  discretion,  for the following purposes:

                  (1) The  creation  and  development  of nonlocal  advertising,          promotional campaigns,  and public relations to promote and enhance the          value of the Service  Marks and the  business  of all the Pretzel  Time          retail establishments;

                  (2) Payments to Pretzel Time of such reasonable sums as may be          necessary  for actual  costs of  advertising  production,  direct  mail          purchases, and other media marketing tools;

                  (3) Payment of salaries and  benefits  for staff  personnel in          the  marketing  and  public  relations  department  as  well  as  other          administrative  costs and overhead expenses of the department  incurred          by Pretzel Time;

                  (4) The  costs of  employing  advertising,  marketing,  public          relations and promotion  agencies to assist in preparing and conducting          media programs and activities and supporting public  relations,  market





         research and other advertising, promotion and marketing activities;

                  (5) Market  research  expenditures  related to the development          and evaluation of the effectiveness of advertising and sales promotion;          and

                  (6)  Costs  of  organizing   and  providing   facilities   for          international, national, or regional franchisee conferences.

         Franchisee  understands and  acknowledges  that the Advertising Fund is intended to maximize  recognition  of the Marks and  patronage  of Pretzel  Time Units.  Although  Pretzel Time will endeavor to utilize the Advertising  Fund to develop   advertising  and  marketing   materials  and  programs  and  to  place advertising that will benefit all Pretzel Time Units, Pretzel Time undertakes no obligation to ensure that  expenditures by the Advertising  Fund in or affecting any geographic area are  proportionate or equivalent to the contributions to the Advertising Fund by Pretzel Time Units operating in that geographic area or that any  Pretzel  Time  Units  will  benefit   directly  or  in  proportion  to  its contribution  to the  Advertising  Fund from the  development of advertising and marketing materials or the placement of Advertising.

         11.C.    SEGREGATION OF ADVERTISING FUND.

         Pretzel  Time  herein   agrees  to   administratively   segregate   the Advertising  Fund on its books and  records.  Fees paid by  Franchisee  into the advertising  fund  shall  not  under any  circumstance  be used for the  general operating  expenses of Pretzel Time but shall and will be used  exclusively  for advertising  as outlined  herein.  Pretzel  Time may spend in any fiscal year an amount greater or less than the aggregate  contributions  of the  franchisees to the fund in that  year and  Pretzel  Time  may  make  loans to the fund  bearing reasonable  interest  to cover  any  deficits  of the fund and cause the fund to invest any surplus for future use by the fund. It is anticipated,  and it is the intent of Pretzel Time that all  contributions to the Fund shall be expended for advertising  and  promotional  purposes during Pretzel Time's fiscal year within which  contributions  are made.  Any monies not  expended  in the fiscal year in which they were  contributed  shall be applied and used for Fund expenses in the following year.

                   11.D. SUSPENSION OF ADVERTISING FUND FEES.

         Pretzel  Time  reserves  the right to  suspend  contributions/fees  and operations of the  Advertising  Fund for one or more  periods,  and the right to terminate the  Advertising  Fund, upon thirty (30) days' prior written notice to Franchisee.  All unspent monies on the date of termination  shall be distributed to Pretzel Time's  franchisees and Pretzel Time, its Affiliates and designees in proportion to their  respective  contributions  to the Advertising Fund upon the same terms and  conditions set forth herein upon thirty (30) days' prior written notice Franchisee.

         11.E.    FRANCHISEE'S REQUIRED ADVERTISING EXPENDITURES.

         In addition to any contributions by Franchisee to the Advertising Fund, Franchisee is required to spend on marketing and related programs such amount as is  required  pursuant  to the terms and  conditions  of  Franchisee's  lease or sublease.  Franchisee  acknowledges  such amounts will vary from lease to lease, and therefore, all Pretzel Time Unit franchisees will not be obligated to expend the same amount on local advertising and marketing of the Unit.

         11.F.    USE OF TRADEMARK REFERENCES AND APPROVAL                   OF FRANCHISEE'S MARKETING.

         Franchisee further agrees that all advertising, promotion and marketing by Franchisee shall be completely clear and factual and not misleading and shall conform to the highest  standards of ethical  marketing and  promotion  policies which may be prescribed from time to time by Pretzel Time.  Franchisee agrees to use the  registration  symbol of R within a circle (7 ) in connection with its use of the Marks.  Franchisee  agrees to refrain  from any business or marketing practice  which may be  injurious  to the  business of Pretzel Time and the good will associated with the Marks and other Pretzel Time Units.  Prior to their use by  Franchisee,  all  press  releases,  literature,  and  samples  of all  local advertising, marketing, point-of-purchase, and related materials not prepared or previously  approved  by Pretzel  Time shall be  submitted  to Pretzel  Time for approval,  which shall not be unreasonably  withheld.  If written disapproval is not received within twenty (20) days from the date of receipt by Pretzel Time of such  materials,  Pretzel Time shall be deemed to have  approved the  materials. Franchisee  agrees not to use  promotional or advertising  materials  which have been  disapproved  by Pretzel Time or that have not been approved for use within the preceding twelve months.

         In  addition,  any  pamphlets,  brochures,  cards or other  promotional materials  offering  free Products may only be used if prepared by Pretzel Time, unless  otherwise  approved  in  advance by Pretzel  Time.  Notwithstanding  the foregoing, Pretzel Time will give favorable consideration to Franchisee's use of free product cards developed by Franchisee, if the cards clearly state that they may only be  redeemed  at Pretzel  Time Units  owned by  Franchisee.  Franchisee agrees to list and advertise the Franchise in the regular white pages  telephone directories distributed within Franchisee's metropolitan area.

         Franchisee  agrees to distribute and display at Franchisee's  location, literature,  display and promotional  materials  including  special  promotional materials  as  Pretzel  Time may from  time to time make  available.  Franchisee agrees that only those advertising,  promotional  materials,  or items which are authorized  by  Pretzel  Time in  writing  prior to use  shall be used,  sold or





distributed,  and no  alternate  display or use of the Pretzel Time Service Mark shall be made without the prior written permission of Pretzel Time.  Replacement or updated literature, display,  point-of-purchase and promotional materials may be obtained from Pretzel Time for a fee including shipping.

12.      ADHERENCE TO UNIFORM STANDARDS.

         12.A.    STANDARDS AND OPERATIONS MANUAL.

         Franchisee  acknowledges  and agrees that the  operation of the Pretzel Time Unit in accordance with the specifications, standards, operating procedures and rules Pretzel Time prescribes for the operation of Pretzel Time Units is the essence of this Agreement and is essential to preserve the goodwill of the Marks and all  Pretzel  Time  Units.  Franchisee  agrees to operate his Unit in strict compliance and adhere to Pretzel Time's Unit design,  signage,  interior  decor, equipment and  inventory  requirements  and rules and  standards and  procedures (hereinafter  referred to as Standards) set forth in any Operations  Manual or Training  Manual,  as periodically  modified and supplemented by Pretzel Time in its  discretion  during the term of this  Agreement  (Operations  Manual)  and acknowledges that the same are reasonable,  necessary and essential to the image and success of each Unit and the  Pretzel  Time System and agrees to comply with all such  requirements  and  procedures.  The  Operations  Manual shall  contain mandatory and suggested specifications,  standards and operating procedures that Pretzel Time prescribes from time to time for Pretzel Time Units and information relating to Franchisee's other obligations under this Agreement.  The Operations Manual  sets forth  Standards  regulating  and  relating  to  certain  important obligations  on  the  part  of  franchisees   and  sanctions  in  the  event  of noncompliance  with such  obligations.  Pretzel Time may regulate,  designate or approve any one or more of the following with respect to the Pretzel Time Unit:

         (1) Design, layout, decor, appearance and lighting;  periodic and daily          maintenance,  cleaning  and  sanitation;  replacement  of  obsolete  or          worn-out  fixtures,  furnishings,  equipment and signs; use of interior          and exterior signs,  emblems,  lettering and logos and the illumination          thereof;

         (2) Types,  models,  brands,  maintenance  and  replacement of required          equipment, fixtures, furnishings and signs;

         (3) Approved,  disapproved and required  Products and other items to be offered for sale;

         (4) Designated and approved  suppliers  (including  Pretzel Time and/or          its Affiliates) of equipment, fixtures,  furnishings,  signs, Products,          materials and supplies;

         (5)      Use and operation of an approved point of sale register;

         (6) Payment of vendors;  terms and  conditions  of sale and delivery of          and payment for  Products,  materials,  supplies and  services  sold by          Pretzel Time, its Affiliates or unaffiliated suppliers;

         (7) Marketing,  advertising  and  promotional  activities and materials required or authorized for use;

          (8)  Use of the Marks;

          (9)  Qualifications,  training,  dress,  appearance  and  staffing  of                employees;

          (10) Minimum hours of operation;

          (11) Participation  in market  research  and  testing  and Product and                service development programs prescribed by Pretzel Time;

          (12) Management  by Unit  Managers  who  have  successfully  completed                Pretzel Time's initial training program; communication to Pretzel                Time of the  identities  of such Unit  Managers;  replacement  of                managers whom Pretzel Time determines to be unqualified to manage                the  Pretzel  Time  Unit;  and  other  matters  relating  to  the                management of the Pretzel Time Unit and its management personnel;

          (13) Use of a designated  computer  hardware  and software  system and                equipment  with  telecommunications  capability,   including  the                procedures for providing sales information of the Unit to Pretzel                Time;

          (14) Bookkeeping,  accounting,  data  processing  and  record  keeping                systems and forms,  methods,  formats,  content and  frequency of                reports to Pretzel Time of sales, revenues, financial performance                and  condition;  operational  information;  tax returns and other                operating   and   financial   information,    including   without                limitation, audited yearly financial statements;

          (15) Types,  amounts,  terms and conditions and approved  underwriters                and          brokers of public, product, business interruption, crime loss, fire and          other  required  insurance  coverage;  Pretzel Time's rights under such          policies as an  additional  named  insured;  required or  impermissible          insurance contract  provisions;  assignment of policy rights to Pretzel          Time; Pretzel Time's right to obtain insurance coverage for the Unit at          Franchisee's  expense if Franchisee fails to obtain required  coverage;          Pretzel Time's right to defend claims;  and similar matters relating to





         insured and uninsured claims;

          (16) Compliance with applicable laws;  obtaining required licenses and                permits;  adherence to good business  practices;  observing  high                standards  of  honesty,   integrity,  fair  dealing  and  ethical                business  conduct in all dealings with  customers,  suppliers and                Pretzel   Time  and  its   Affiliates   and/or   designees;   and                notification  of Pretzel  Time in the event any  action,  suit or                proceeding  is commenced  against  Franchisee  or relating to the                Unit; and

          (17) Regulation of such other elements and aspects of the  appearance,                operation  of and conduct of business  by,  Pretzel Time Units as                Pretzel  Time   determines   from  time  to  time,  in  its  sole                discretion,  to be required to preserve or enhance the  efficient                operation, image or goodwill of Pretzel Time Units and the Marks.

         12.B.    CONFIDENTIALITY OF OPERATIONS MANUAL.

         Pretzel Time will make  available to Franchisee  during the term of the Franchise (1) copy of the Operations  Manual by loaning a copy of the Operations Manual to Franchisee. Franchisee acknowledges and agrees that all manuals loaned to Franchisee contain  confidential and proprietary  material and information of Pretzel  Time  provided  to  Franchisee  is to be  used  by  Franchisee  only in connection  with the  operation of the  franchised  Unit and other  Pretzel Time Units. The Operations Manual contains trade secrets and confidential information and will  remain the  property  of Pretzel  Time and shall be  returned to it on termination of this Agreement.  Franchisee  covenants not to reveal the contents of the Operations  Manual to  unauthorized  persons.  Franchisee may not, at any time,  copy the Operations  Manual,  in whole or in part,  either  physically or electronically. In the event Franchisee's copy of the Operations Manual is lost, destroyed or significantly damaged, Franchisee shall be obligated to obtain from Pretzel Time, at Pretzel Time's then applicable  charge,  a replacement  copy of the Operations Manual.

         12.C.    INCORPORATION OF OPERATIONS MANUAL INTO AGREEMENT.

         The  Operations  Manual's  specifications,   standards,  and  operating procedures  communicated to Franchisee in writing shall be deemed a part of this Agreement and are  incorporated  herein by  reference.  Such  Operations  Manual provisions and all reasonable  modifications shall be binding upon Franchisee to the same extent as if set forth verbatim in this Franchise  Agreement,  and such provisions  may be  changed  from  time to time by  Pretzel  Time,  in its  sole discretion,  provided that changes are  reasonably  designed to enhance  Pretzel Time's  Products,  the Pretzel  Time  System,  or  franchise  operation  and are uniformly  applied  with  respect  to all  franchisees.  Any  administrative  or financial  Section set forth in the  Operations  Manual shall be in addition to, and not in derogation or limitation  of, any right or remedy  granted to Pretzel Time  under  the  Franchise  Agreement,  the  Operations  Manual,  or any  other document,  or  otherwise  available  to  Pretzel  Time,  at  law  or in  equity, including,  without limitation,  the right to terminate a franchise in the event of certain defaults or delinquencies.

         12.D.    MODIFICATIONS/UPDATES OF OPERATIONS MANUAL.

          Franchisee  understands  and agrees  that the  Pretzel  Time System is constantly  being  modified  and  improved,  and  that  such  modifications  and improvements  require  changes  from time to time in the  system of  operations. Franchisee  further  agrees  to  accept  and  comply  with  such  modifications, revisions,  and additions to the Pretzel Time System and Operations Manual which Pretzel Time in the good faith exercise of its judgment believes to be desirable and reasonably necessary in the time period indicated by Pretzel Time.

         Franchisee  agrees  that  Standards  may be  periodically  modified  by Pretzel  Time and that such  modifications  may  obligate  Franchisee  to invest additional capital in the Unit and/or incur higher operating costs. Pretzel Time will not obligate  Franchisee to invest  additional  capital at a time when such investment cannot in Pretzel Time's reasonable  judgment be amortized during the remaining term of this  Agreement.  Franchisee  hereby agrees that standards and specifications  prescribed  from  time  to  time in the  Operations  Manual,  or otherwise  communicated  to  Franchisee  in  writing  or  electronically,  shall constitute provisions of this Agreement as if fully set forth herein.

13.      UNIT IMAGE AND OPERATION.

         13.A.    CONDITION AND APPEARANCE OF UNIT.

         Franchisee agrees that:

                  (1) neither the Unit nor the Site will be used for any purpose          other than the operation of a Pretzel Time Unit in full compliance with          this Agreement or other agreements with Pretzel Time; and

                  (2)  Franchisee  will maintain the condition and appearance of          the Unit, its equipment, furnishings, fixtures, and signs in accordance          with the  specifications  and standards of Pretzel Time and  consistent          with  the  image  of a  Pretzel  Time  Unit  as a  first-class,  clean,          sanitary,  attractive and efficiently  operated food service  business;          and

                  (3)  Franchisee  will  perform  such  maintenance  (including,          without limitation,  maintenance  procedures and routines which Pretzel          Time  prescribes  from  time  to  time)  with  respect  to  the  decor,





         equipment, fixtures,  furnishings,  vehicles, and signs of the Unit and          the Site,  as may be required or directed by Pretzel  Time from time to          time to maintain such condition,  appearance,  and efficient operation,          including, without limitation:

          (a)  continuous  and thorough  cleaning and sanitation of the interior                and exterior of the Unit;

          (b)  thorough repainting and redecorating of the interior and exterior                of the Unit and/or the Site at reasonable intervals;

          (c)  interior and exterior repair of the Unit and/or Site; and

          (d)  repair or replacement of damaged, worn out or obsolete                   furnishings,  equipment,  fixtures  and signs,  provided  that                   Pretzel  Time  will not  require  Franchisee  to  replace  any                   obsolete equipment unless Pretzel Time has initiated a program                   to  replace  such  equipment  as it becomes  necessary  in its                   company-owned Pretzel Time Units; and

                  (4) Franchisee  will not make any material  alterations to the          Site or to the appearance of the Unit as originally developed,  without          prior approval in writing by Pretzel Time; and

                  (5) Upon notice from Pretzel  Time,  Franchisee  shall remodel          and conform  Franchisee's  building design, Trade Dress, color schemes,          and  presentation  of Marks to Pretzel Time's then current public image          within a  reasonable  amount of time,  which  shall not  exceed six (6)          months.  Such a remodeling may include extensive  structural changes to          the Unit  fixtures and  improvements  as well as such other  changes as          Pretzel Time may direct and Franchisee  shall  undertake such a program          promptly upon notice from Pretzel Time;  provided the remodeling  shall          not be  required  until  such time as  Pretzel  Time has  commenced  or          completed a similar  program in at least fifty  percent  (50%) of those          Pretzel Time Units owned and operated by Pretzel Time. This requirement          shall not apply in the  event  notice  from  Pretzel  Time is  received          during the last year of the term hereof or the term of any agreement by          virtue of which Franchisee occupies the Unit.

         In addition to Pretzel Time's rights to terminate this Agreement as set forth herein,  if Franchisee  does not maintain the condition and  appearance of the Unit as herein  required,  Pretzel  Time,  may,  upon not less than ten (10) days'  written  notice  (or, in cases of health or  sanitation  hazards or other public endangerment, immediately on oral or written notice) to Franchisee:

          (i)  arrange  for  the  necessary  cleaning  or  sanitation,   repair,                remodeling, upgrading, painting or decorating; or

          (ii) replace the necessary fixtures, furnishings, equipment, signs.

         If Franchisee  fails or refuses to initiate  within ten (10) days after receipt  of  a  notice  that  the  general  state  of  repair,  appearance,  and cleanliness of your store does not meet Pretzel Time's standards, and thereafter continue in good faith and with due  diligence a bona fide  program to undertake and complete required  maintenance or refurbishing,  Pretzel Time has the right, but is not  obligated,  to enter upon the  premises  of the Unit and effect such maintenance and  refurbishing on Franchisee's  behalf,  and Franchisee shall pay the entire cost thereof to Pretzel Time on demand.

         13.B.  UNIT MENU.

         Franchisee  agrees that the Unit shall offer for sale all  Products and no other  products,  which Pretzel Time, in its sole  discretion,  may authorize and/or require from time to time for the Unit.  Franchisee  agrees that the Unit shall not offer for sale or sell any  Products  or  services at or from the Unit which have not been  approved in writing by Pretzel Time or use the Site or Unit for any purpose  other than the  operation  of a Pretzel  Time Unit.  Franchisee agrees that the Unit shall not sell any  Products at, from or away from the Site until Pretzel Time, in its sole discretion,  has approved the same, provided the foregoing  shall not limit  Franchisee  to sample in front of the lease  line as limited in  Franchisee's  lease.  Pretzel Time  reserves the right to change the types of  authorized  Products and require  Franchisee to offer to sell and sell the  new,  modified  or  substituted  Products.  Pretzel  Time may  develop  new Products,  methods  of  operations,  and  standards  and may  provide  you  with information about developments.  Franchisee also acknowledges and agrees that if Pretzel Time requires the Unit to use new or  substitute  products not currently offered at Pretzel  Time  Units,  Franchisee  agrees to offer such  Products  in compliance  with  Pretzel  Time's   specifications,   standards  and  procedures prescribed in the  Operations  Manuals or otherwise in writing and to diligently pursue  obtaining  any  permits  and  take  such  actions  (including,   without limitation,  constructing  improvements  and  acquiring  fixtures,  furnishings, equipment,  supplies, and materials) required to offer such Products. Franchisee acknowledges  and  understands  that such  modifications  to the  Products to be offered  by the Unit  may  require  Franchisee  to incur  additional  costs  and expenses to operate the Unit, including, without limitation, the purchase and/or lease of additional or substitute furnishings,  furniture, fixtures or equipment and Franchisee agrees to incur such expenses in connection therewith.

         13.C.    ADHERENCE TO APPROVED ITEMS.





         The  reputation  and goodwill of all Pretzel Time Units are based upon, and can only be maintained by, the sale of  distinctive,  high-quality  Products and the  presentation,  packaging  and service of Products in an  efficient  and appealing  manner.  Pretzel  Time has  developed  and shall  continue to develop certain  proprietary food products which will be prepared by or for Pretzel Time according to Pretzel Time's recipes and formulas. Pretzel Time has developed and shall continue to develop  standards and  specifications  for fresh  hand-rolled pretzels, frozen pretzels,  pretzel toppings,  beverages and other healthy snack food  products,   materials  and  supplies   incorporated  in  or  used  in  the preparation, baking, or serving of Products authorized by Pretzel Time. The need for quality and quantity control in the Products offered for sale at the Unit is acknowledged  by  Franchisee.  All  Products  offered by  Franchisee  must be of uniform  quality and quantity  and offered for sale to the public in  accordance with Pretzel Time's  specifications  as set forth in Pretzel  Time's  Operations Manual and as may be amended from time to time.

         Pretzel  Time has  approved  and shall  review and  continue to approve suppliers and  distributors  of the  foregoing  Products,  supplies,  materials, equipment,  fixtures  and  machines  that  meet  Pretzel  Time's  standards  and requirements  including,  without  limitation,  quality,  quantity and portions, prices,  output requirements,  distribution methods and locations,  standards of service, financial capability,  customer service and other criteria.  Franchisee agrees that minimum standards for items of inventory,  Products,  machines,  and equipment  may  be  recognized  by  brand  name  rather  than  by  technical  or engineering description.

         Franchisee  agrees  that  it  will  use  all  equipment  and  Products, including, without limitation, food products,  smallwares,  equipment, and paper products as designated by Pretzel Time and shall purchase Pretzel Time's private label  food  products,   materials,  supplies  and  proprietary  food  products, ingredients,  spices, sauces, mixes,  beverages,  materials and supplies used in the  preparation of Products  developed by or for Pretzel Time or its Affiliates whether or not pursuant to a special recipe or formula or bearing the Marks only from Pretzel  Time,  its  Affiliates  or  non-affiliated  sources  designated by Pretzel Time.  Franchisee  further agrees to purchase only from distributors and suppliers  approved  or  required by Pretzel  Time.  Franchisee  agrees that the approved Products, equipment, smallwares, and inventory used on the premises may alter from time to time as Pretzel Time reasonably deems  necessary.  Franchisee agrees to offer for sale only those  Products  approved  by Pretzel  Time and no others without the prior written approval of Pretzel Time. Franchisee shall not, after receipt in writing of any modification of an approved or required supplier or distributor,  manufacturer  of equipment,  products,  materials,  supplies or other items  reorder any product  from any  supplier or  distributor  that is no longer  approved.  Pretzel Time may approve or require a single  distributor  or supplier  for any  Products,  materials or supplies and may approve or require a distributor or supplier only as to certain products, materials and supplies, and such approval may be temporary pending a further  evaluation of such distributor or supplier by Pretzel Time. Pretzel Time may concentrate  purchases with one or more distributors or suppliers to obtain lower prices and/or advertising support and/or  services for the benefit of Pretzel Time, the Pretzel Time System and/or Pretzel Time Units.

         Pretzel Time will loan to Franchisee a list of approved  brand Products for use during the term of this  Franchise  Agreement  at the  initial  training session.  Franchisee  agrees to not copy the list.  Franchisee will,  during the term of this Agreement and after its  termination  or  expiration,  maintain the list  and its  contents  in  strict  confidence,  and  upon  the  expiration  or termination of this Franchise Agreement,  whichever is earlier, will immediately return it to Pretzel Time.  Pretzel Time shall promptly provide  Franchisee with any  amendments to the  designated  list of inventory of available  Products and supplies to be carried and sold at Franchisee's  location.  Franchisee  shall at all times  maintain an adequate  inventory of approved  Products  sufficient  in quality and variety to realize the full potential of the Unit.

         13.D.    EXCEPTION PROCESS.

         If   Franchisee   proposes  to  purchase   materials  or  supplies  not theretofore  approved by Pretzel Time as meeting its  specifications,  or from a supplier or  distributor  not  previously  approved by Pretzel Time,  Franchisee shall first notify Pretzel Time and request  Pretzel  Time's  approval using the special exception form provided to Franchisee in its Operations  Manual, and pay any reasonable fees that Pretzel Time designates therefor.  Further,  Franchisee agrees to use all forms  specified and developed by Pretzel Time for  requesting any exceptions in products or suppliers.  Pretzel Time may require submission of sufficient information and samples to determine whether such materials, supplies or suppliers meet its specifications as well as financial  information regarding the  supplier.  Pretzel Time will advise  Franchisee  within a  reasonable  time whether such

materials or supplies meet its specifications.  Pretzel Time does not maintain a formal criteria for approving materials,  supplies or suppliers.  All approvals, disapprovals  and  revocations of approval of suppliers will be  communicated to Franchisee,  in writing,  and shall be in the sole  discretion  of Pretzel Time. Franchisee  must  comply  with  the  following  conditions  in  order  to seek a substitution for a Pretzel Time approved Product:

                  (1) Franchisee  shall submit a written request to Pretzel Time





                  for approval of a non-approved supplier or product;

                  (2)  Franchisee  and  supplier  shall  demonstrate  to Pretzel                   Time's  reasonable  satisfaction that it is able to supply the                   commodity  which  meets  Pretzel  Time's   specifications   to                   Franchisee; and

                  (3)  The  supplier   shall   demonstrate   to  Pretzel  Time's                   reasonable  satisfaction that the supplier is of good standing                   in the  business  community  with  respect  to  its  financial                   soundness and the  reliability  of its product and service and                   shall  request  in  writing  to  Pretzel  Time to be  named an                   approved supplier.

         13.E.  PROMOTIONAL ALLOWANCES.

         Franchisee  acknowledges  and agrees that Pretzel Time may, in its sole discretion,  collect  and  retain all  allowances,  benefits,  credits,  monies, payments  or  rebates   (collectively   Promotional   Rebates),   whether  for promotional,  advertising  or other  purposes,  offered to Franchisee or Pretzel Time or its Affiliates by manufacturers,  suppliers and distributors  based upon Franchisee's  purchases of Products or other products and materials.  Franchisee assigns to Pretzel  Time or its designee all of  Franchisee's  right,  title and interest  in and to any and  all  such  Promotional  Allowances  and  authorizes Pretzel  Time or its  designee to collect any such  Promotional  Allowances  for remission to the general operating funds of Pretzel Time.

14.      FRANCHISEE OPERATIONS.

         14.A.    MANAGEMENT.

         Franchisee agrees that he will at all times faithfully,  honestly,  and diligently  perform his obligations  hereunder,  that he will continuously exert his best efforts and shall  continually  train and  supervise  his  personnel to Pretzel Time's  reasonable  standards,  in  furtherance  of the mutual  business interests of both Pretzel Time and Franchisee and that he will not engage in any other business or activity that may conflict with his obligations  hereunder.  A Unit  shall be under  the  direct,  on-premises  supervision  of a  trained  and competent  Franchisee  or a  trained  and  competent  employee  acting as a Unit Manager  at  all  times.  Franchisee  shall  remain  active  in  overseeing  the operations of the Unit  conducted  under the  supervision  of such Unit Manager. Pretzel  Time shall have the right to deal with the Unit  Manager and  assistant managers on matters  pertaining to the  day-to-day  operations of, and reporting requirements  for the Unit.  Franchisee shall be required to notify Pretzel Time within seven (7) business days of changing Unit Managers.  Franchisee shall hire all employees of the Unit and shall be exclusively  responsible for the terms of their  employment and compensation and for the proper training of such employees in the operation of the Unit.

         If the Unit at any time is not being  managed by you or a Unit  Manager who shall have satisfactorily completed Pretzel Time's training program, Pretzel Time is  authorized,  but is not  required to  immediately  appoint a Manager to maintain  the  operations  of the Unit for you.  Pretzel  Time has the  right to change a reasonable fee for such management  services,  not to exceed our costs, and to cease to provide such  management  services at any time.  Pretzel  Time's right to manage a Unit and obtain  reimbursement  for costs also  applies in the event of your death or disability.

         14.B.  SUFFICIENT WORKING CAPITAL.

         Franchisee shall maintain an adequate sales force to serve properly all customers,  and shall  carry at all times a stock of  merchandise  of such size, character,  quality and price to produce the maximum return to Franchisee and so as to produce all of the gross  revenue  which may be produced by such manner of operation.

         14.C.  FILING OF OPERATIONS AND SALES REPORTS.

         Franchisee's  net revenues and operational  analysis are to be reported on or before Tuesday at 12:00 P.M.  Eastern  Standard Time (or Eastern  Daylight Savings  Time) or any other  time  reasonably  designated  by Pretzel  Time,  to Pretzel Time on forms  designated by Pretzel Time for the immediately  preceding week.  If the gross sales report is not submitted as herein  specified,  Pretzel Time may, at its option,  charge a late fee of $50.00 to Franchisee.  There will only be one late fee for each late report.

         14.D.    EMPLOYEE DRESS AND CUSTOMER SERVICE.

         The  presentation  of an uniform  image is  essential  to a  successful franchise  system.  Franchisee  shall cause all  employees of  Franchisee  while working  at the  franchise  location  to dress  appropriately  (in the  specific uniform  approved and  designated  by Pretzel  Time) in keeping with the Pretzel Time image,  as Pretzel Time may designate  from time to time, to present a neat and clean  appearance  and to render  confident  and  courteous  service  to the Franchise's customers.

         14.E.  COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES.

         Franchisee  shall secure and maintain in force in his name all required licenses,  permits,  and  certificates  relating to the conduct of his  business pursuant to this  Agreement.  Franchisee  will  conduct the  Franchise in strict compliance  with  all  applicable  laws,  ordinances,   regulations,  and  other requirements  of any federal,  state,  county,  municipal  or other  government, including,   without  limitation,  those  laws  and  regulations  pertaining  to preparation,  purchase  and  handling of food  products,  occupational  hazards,





health,  safety and sanitation,  worker's compensation  insurance,  unemployment insurance,  and  withholding  and payment of all taxes.  While  Pretzel Time may advise  Franchisee  as  a  courtesy  on  any  applicable  laws,  ordinances,  or regulations,  Pretzel Time  undertakes  no duty to do so and  Franchisee  hereby acknowledges  it is Franchisee's  sole duty to inquire  regarding and concerning all laws,  ordinances,  and  regulations  affecting  the Unit,  its  operations, employees and Franchisee.

         Franchisee shall in all dealings with its customers, suppliers, Pretzel Time, and public officials adhere to high standards of honesty,  integrity, fair dealing and ethical conduct.  Franchisee  agrees to refrain from any business or advertising  practice which may be injurious to the business of Pretzel Time and the goodwill associated with the Marks and other Pretzel Time Units.

         Franchisee  shall notify  Pretzel  Time within three (3) business  days after the commencement of any action, suit, proceeding or issuance of any order, writ, injunction, award or court decree which may adversely affect the operation or financial  condition of Franchisee or the unit or immediately  notify Pretzel Time of any notice of health or sanitation violation.

         14.F.    PAYMENT OF TAXES.

         Franchisee  shall be  solely  responsible  for  payment  of all  taxes, including, but not limited to, real estate, sales, payroll,  franchise,  income, personal  property,  and gross  receipts taxes which are assessed as a result of Franchisee's operation of the Franchise.

         14.G.    SALE OF PRODUCT.

         Franchisee agrees not to sell or offer to sell any materials, supplies, or  inventory  used in the  preparation  of any of the  Products  other  than to Pretzel  Time and that he shall  not  sell,  dispense,  give  away or  otherwise provide without Pretzel Time's prior written consent any product except by means of retail sales in the  franchise  location.  Franchisee  may only sell finished Products  and may not sell any Products to any person or entity  purchasing  the Products for resale.  Notwithstanding  the foregoing,  Franchisee may offer free samples of  Products  at or  directly  in front of the Unit to retail  customers only.

         14.H.    COOPERATION.

         Franchisee  agrees that he shall  cooperate with Pretzel Time in taking any action, or refraining from any action, which in the judgment of Pretzel Time is  necessary or desirable to promote and enhance the quality of the products of the Franchise location, the service provided by the Franchisee,  or the image of the Franchise in the community.

         14.I.    INSURANCE.

         Franchisee shall maintain at Franchisee's expense, in form, amounts and with insurers  satisfactory  to Pretzel Time,  which  insurers must have an A.M. Best  Company  rating of A- or better and naming  Pretzel  Time an  additional insured,  insurance  against all types of public  liability with personal injury coverage and property damage coverage. In addition to coverage as aforesaid such insurance  shall  include  coverages as set forth in the  Operations  Manual and shall contain a provision  obligating  all insurers to provide a written  notice Pretzel Time of any  cancellation  or  modification  of coverage at least thirty (30) days prior to the effective date of such modification or cancellation.

         The insurance afforded by the policy or policies  respecting  liability shall  not be  limited  in any  way by  reason  of any  insurance  which  may be maintained  by  Pretzel  Time.  Within  sixty  (60) days of the  signing of this Agreement,  but in no event later than the date on which Franchisee  acquires an interest in the real  property  (by lease or  purchase) on which it will develop and operate the Franchise,  a Certificate of Insurance  showing  compliance with the foregoing  requirements shall be furnished by Franchisee to Pretzel Time for approval.  Such certificate shall state that said policy or policies will not be canceled or altered  without at least thirty (30) days prior  written  notice to Pretzel Time and shall reflect proof of payment of premiums. Maintenance of such insurance  and the  performance  by  Franchisee  of the  obligations  under this Section shall not relieve Franchisee of liability under the indemnity  provision set forth in this  Agreement.  Minimum  limits as required above may be modified from time to time, as conditions require by written notice to Franchisee.

         Should  Franchisee not procure and maintain such insurance  coverage as required  by Pretzel  Time,  Pretzel  Time  shall have the right and  authority, without any obligation to do so, immediately procure such insurance coverage and to charge same to Franchisee,  which charges  together with a reasonable fee for expenses incurred by Pretzel Time in connection with such procurement,  shall be payable by Franchisee immediately upon notice.

         Franchisee  shall fully  cooperate  with Pretzel Time in its efforts to obtain  such  insurance  policies,  promptly  execute  all forms or  instruments required to obtain or maintain such insurance policies, allow inspections of the Unit or vehicles  which are  required to obtain and maintain  insurance  and pay Pretzel Time on demand for any costs or premiums.

         14.J.    SUGGESTED RETAIL PRICES.

         Pretzel  Time  may  from  time to time  advise  or  offer  guidance  to Franchisee  relative to prices for Products  offered for sale by Franchisee that in Pretzel Time's judgment  constitute good business practice.  Franchisee shall not be  obligated  to accept any such advice or guidance and shall have the sole right  to  determine  and to sell  products  at any  price  that it  determines.





Whenever Pretzel Time recommends a retail price, such  recommendations are based on Pretzel  Time's  experience  concerning  all factors that enter into a proper price, but such recommendation is in no manner binding on Franchisee and no such advice or guidance  shall be deemed or construed to impose upon  Franchisee  any obligation  to charge any  fixed,  minimum  or  maximum  prices for any  product offered for sale by the Franchise.  Pretzel Time reserves the right to advertise retail  prices of Pretzel Time  Products,  provided  that such retail prices are qualified as suggested. The parties understand and agree that such advertising shall not be  construed  as  requiring  Franchisee  to adhere to such prices but Franchisee shall have complete freedom to establish retail prices.

15.      ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS.

         15.A.  ESTABLISHMENT OF ACCOUNTING SYSTEM.

         Franchisee  shall  establish at his own expense a complete and accurate bookkeeping,  accounting,  record keeping and data processing system prepared in accordance with generally accepted  accounting  principles and conforming to the requirements and formats that Pretzel Time prescribes from time to time. Pretzel Time shall provide  Franchisee with forms on which to maintain certain sales and operational  data.  Franchisee  shall furnish to Pretzel Time on said forms that Pretzel Time prescribes from time to time:

         (i) On Tuesday of each week,  a report on the Unit's net  revenues  and          sales and operations for the previous week;

         (ii) Every six calendar month period,  a balance sheet and a profit and          loss statement for the Unit for the previous  semi-annual  period and a          year to-date  statement  of  financial  condition as of the end of such          previous period; and

         (iii) Within  thirty (30) days after  Franchisee's  year end, an annual financial report.

The reports  required in Section 15.A. (ii) and (iii) if not audited,  should be signed  by the  Franchisee  or its  financial  officer,  attesting  that (1) the reports are true and accurate,  (2) they are prepared in accordance with GAPP on a basis  consistent  with prior periods,  (3) they fully describe and completely disclose the information sought, and (4) the signer has made diligent efforts to ascertain the truth and completeness of the information.

         15.B.   MAINTENANCE OF RECORDS.

         Franchisee  agrees, at all times, he shall keep and maintain  adequate, accurate,  true, and proper records, books, reports, data, and accounts relative to the  franchise  in the English  language  and in  accordance  with  generally accepted accounting principles, and retain the records for a period of three (3) years  after  the date they  were  prepared,  from  which  there may be  readily determined the  information  required in the operating  reports to be filed with Pretzel Time. Such records include, without limitation, daily cash reports, cash receipts  journal  and general  ledger,  cash  disbursements  journal and weekly payroll register,  monthly bank statements and daily deposit slips and cancelled checks;  tax returns,  supplier  invoices,  dated cash  register  tapes,  weekly inventories, sales reports, financial statements and tax returns.

         Franchisee hereby authorizes  Pretzel Time to utilize the data supplied by  Franchisee  under this  Section  in any  publication,  discovery  statement, Offering  Circular,  or  advertisements  related  to the sale of  Franchises  or related  entities  by Pretzel  Time,  anywhere,  at any time,  without  specific compensation therefor.

16.      AUDITS AND INSPECTIONS.

         16.A.    AUDITS.

         Pretzel  Time or its  designee  shall have the right at any time during business  hours and without prior notice to  Franchisee,  to inspect,  audit and copy or the right to cause to be  inspected,  audited and copied,  the  business records,  bookkeeping and accounting  records,  sales and income tax records and returns and other records of the Franchised Business,  including but not limited to,  daily  cash  reports,  cash  receipts  journal  and  general  ledger,  cash disbursements  journal and weekly payroll register,  monthly bank statements and daily deposit slips and cancelled checks; tax returns,  supplier invoices, dated cash register tapes, weekly inventories, sales reports, financial statements and tax returns and the books and records of any  corporation or  partnership  which holds the Franchise  including the personal financial records and tax returns of the Franchisee during and after the term of the Franchise Agreement.  Franchisee agrees to maintain on the premises  all sales and  operational  information  for four weeks.

         Any such  inspection  or audit will take place at a time which will not interfere with  Franchisee's  normal business.  Franchisee shall fully cooperate with Pretzel Time's representatives and independent accountants hired by Pretzel Time to conduct any such inspection or audit.  If Pretzel Time deems  necessary, Franchisee shall deliver to Pretzel Time or its designated  agents copies of all bookkeeping  records not already in the  possession of Pretzel  Time,  including customer  records,  cash  register  tapes,  sales and  purchase  records and tax records,  to enable Pretzel Time or its representative or designee to adequately audit Franchisee's  gross sales.  Franchisee hereby waives any right to withhold tax records relative to the Franchise as privileged information. Each report and





financial  statement  shall be signed and verified by  Franchisee  in the manner Pretzel Time prescribes.  Pretzel Time reserves the right to require  Franchisee to have audited or reviewed financial statements prepared on an annual basis.

         In the event  that an audit  discloses  that  Franchisee's  actual  net revenues exceed  Franchisee's  reported net revenues by two percent (2%) or more for any thirty day  period,  Franchisee  is  obligated  to pay to Pretzel  Time, within  fifteen (15) days after receipt of the  inspection or audit report,  the royalty of seven percent (7%) and the  Advertising  Fund Fee of one percent (1%) of the amount of such  understatement  plus interest from the date such payments were originally due. The audit will be conducted at the expense of Pretzel Time, provided that if an audit  disclosed an  understatement  of two percent (2%), as described above,  Franchisee will bear the cost of the audit,  including without limitation,  the charges of attorneys  and any  independent  accountants,  their travel   expenses,   room  and  board,   and   compensation  of  Pretzel  Time's representatives  and  independent  accountants.  Providing  that in no case will Franchisee be obligated to pay more than ten thousand dollars ($10,000) for such inspection  or audit  costs.  The  foregoing  remedies  shall be in  addition to Pretzel Time's other remedies and rights under this Agreement or applicable law.

         16.B.    RIGHT OF ENTRY AND INSPECTION.

         To determine  whether  Franchisee  and the Unit are complying with this Agreement and with all Pretzel Time's  standards and operations as prescribed by Pretzel Time,  Pretzel Time or its designated agents shall have the right at any reasonable time and without prior notice to Franchisee to:

         a.  Inspect the Unit;

         b. Observe,  photograph  and video tape the Unit's  operations for such          consecutive or intermittent periods as Pretzel Time deems necessary;

         c. Remove  samples of any  Products,  materials or supplies for testing and analysis;

         d.  Interview personnel of the Unit;

         e.  Interview customers of the Unit; and

         f. Inspect and copy any books,  records and  documents  relating to the          operation  of the Unit.  Franchisee  agrees  to  cooperate  fully  with          Pretzel Time in connection with any such inspections, observations,  photographing,  video  taping,  Product  removal and  interviews. Franchisee  shall present to his customers  such comment or evaluation  forms as Pretzel Time periodically  prescribes and shall  participate  and/or request his customers  to  participate  in any surveys  performed by or on behalf of Pretzel Time. At the conclusion of his inspection,  Pretzel Time's field  representative shall prepare a written report which shall contain all of his  observations  and conclusions.  If the field representative  determines that a condition amounting to a default of this Agreement has occurred or exists,  this conclusion shall be promptly communicated to Franchisee and Pretzel Time.

17.      TRANSFER, ASSIGNMENT AND REPURCHASE.

         17.A.  BY PRETZEL TIME.

         This Agreement is fully transferable by Pretzel Time and shall inure to the benefit of any  assignee,  transferee  or other legal  successor  to Pretzel Time's interest  herein.  If Pretzel Time's assignee will perform any of Pretzel Time's obligations under this Agreement,  then that assignee must be financially capable of performing  those  obligations and the assignee must expressly assume and agree to perform  them.  Franchisee  agrees that Pretzel Time shall have the right,  from time to time, to delegate the  performance of any portion or all of its obligations and duties under this Agreement.

         17.B.  BY FRANCHISEE.

         Franchisee  understands  and  acknowledges  that the  rights and duties created by this Franchise Agreement are personal to Franchisee (or if Franchisee is a  corporation  or  partnership,  to its  Owners) and that  Pretzel  Time has granted the Franchise to Franchisee in reliance upon Pretzel Time's  perceptions of the individual or collective character,  skill, aptitude,  attitude, business ability and  financial  capacity of  Franchisee  (or its  Owners).  Accordingly, Franchisee agrees no Transfer shall be made without Pretzel Time's prior written approval.  Any Transfer  without such approval shall constitute a breach of this Agreement  and shall be void and of no  effect.  Pretzel  Time's  consent to the assignment  shall  neither  constitute  a  novation  or change  in  Franchisee's obligations under this agreement,  nor constitute a waiver of any claims Pretzel Time may have  against  Franchisee  (or its  Owners)  nor be  deemed a waiver of Pretzel Time's right to demand the transferee's exact compliance with all of the terms or conditions of this Agreement.

         17.C.  CONDITIONS FOR APPROVAL OF TRANSFER.

         If  Franchisee  is in full  compliance  with this  Agreement  (and,  if Franchisee is a corporation or  partnership,  its Owners are in full  compliance with this Agreement),  Pretzel Time shall not unreasonably withhold its approval of a Transfer that meets all of the following requirements:

         (1) The  transferee  and its  Owners  must  meet  Pretzel  Time's  then          applicable  standards for Pretzel Time Unit  franchisees  and must have          had sufficient business experience,  aptitude,  and financial resources          to operate the Unit;





         (2) Franchisee has paid such royalty,  advertising  fund fees,  amounts          owed for purchases by Franchisee  from Pretzel Time and its  Affiliates          and all other amounts owed to Pretzel Time or its  Affiliates and third          party  creditors and shall have  submitted to Pretzel Time all required          reports and statements;

         (3)  Franchisee or the  transferee has paid Pretzel Time's then current          transfer fee to defray expenses  Pretzel Time incurs in connection with          the  transfer,  except that if the  proposed  Transfer  is, to or among          Owners of Franchisee, this provision shall not apply;

         (4) The  Transferee  and/or its Unit  Manager  have  agreed to complete          Pretzel  Time's  training  program to Pretzel Time's  satisfaction  and          prior to the date of transfer;

         (5) The  Transferee  has  agreed  to be bound by all of the  terms  and          conditions of this Agreement and executes a current Franchise Agreement          and other franchise documents, a sublease agreement,  if any, and other          documents required by Pretzel Time;

         (6) Franchisee  (and its  transferring  Owners) have executed a general          release,  in form  satisfactory  to Pretzel Time, of any and all claims          against Pretzel Time and its Affiliates and their officers,  directors,          employees and agents;

         (7) Pretzel Time has approved the material terms and conditions of such          Transfer,  including,  without limitation,  that the price and terms of          payment are not so burdensome as to affect  adversely the  transferee's          operation of the Unit; provided,  however, that Pretzel Time's approval          of such Transfer does not ensure the transferee's  success as a Pretzel          Time Unit  franchisee,  nor should  the  transferee  rely upon  Pretzel          Time's  approval  of such  Transfer in  determining  whether to acquire          Franchisee's  Pretzel Time Unit; (8) If Franchisee  (and/or its Owners)          finances  any  part of the  sale  price  of the  transferred  interest,          Franchisee  and/or its Owners have agreed that all  obligations  of the          transferee  under or pursuant to any  promissory  notes,  agreements or          security  interests  reserved by Franchisee or its Owners in the assets          of the Unit or the Premises shall be  subordinate  to the  transferee's          obligations  to pay royalty and service  fees and other  amounts due to          Pretzel  Time and its  Affiliates  and  otherwise  to comply  with this          Agreement;

         (9) Franchisee (and its Owners) have executed a noncompetition covenant          in favor of Pretzel Time and the transferee agreeing that, for a period          of twelve (12) months commencing on the effective date of the Transfer,          Franchisee,  its  Owners  and  members  of the  immediate  families  of          Franchisee  and each of its Owners will not hold any direct or indirect          interest  as  a  disclosed  or  beneficial  owner,  investor,  partner,          director,  officer manager,  employee,  consultant,  representative  or          agent, or in any other capacity,  in a Competitive  Business located or          operating  within  three (3) miles of the Unit,  and  within  three (3)          miles of any other Pretzel Time Unit;

         (10) If consent is required, the lessor of the Premises consents to the          assignment or sublease of the Premises to the transferee;

         (11)  Franchisee  has complied with all of its  obligations  to Pretzel          Time, its Affiliates,  suppliers,  and distributors,  and Franchisee is          not in default under this Agreement or any other Agreement with Pretzel          Time or Pretzel Time's Affiliates;

         (12)  All  improvements,  including  refurbishings,   remodelings,  new          equipment must be made prior to the Transfer; and

         (13)  Franchisee  (and its Owners) has agreed that he will not directly          or  indirectly  at any time or in any manner  (except  with  respect to          Pretzel Time Units owned and operated by Franchisee)  identify  himself          or any  business  as a current or former  Pretzel  Time  Unit,  or as a          franchisee,  licensee or dealer of Pretzel Time or its Affiliates,  use          any Mark, any colorable imitation thereof or other indicia of a Pretzel          Time Unit in any manner or for any  purpose or utilize  for any purpose          any tradename,  trade or service mark or other  commercial  symbol that          suggests or indicates a connection or association  with Pretzel Time or          its Affiliates.

         17.D.    TRANSFER TO A WHOLLY-OWNED CORPORATION.

         Notwithstanding Section 17.B., if Franchisee is in full compliance with this  Agreement,  Franchisee may transfer this Agreement to a corporation  which conducts no business  other than the Pretzel  Time Unit and in which  Franchisee maintains management control and owns and controls one hundred percent (100%) of the equity  and  voting  power of all  issued  and  outstanding  capital  stock. Transfers of shares of such  corporation  will be subject to the  provisions  of Section 17.C.(2) and 17.C.(8).  Notwithstanding anything to the contrary herein, Franchisee  shall  remain  personally  liable  under  this  Agreement  as if the Transfer to such  corporation had not occurred.  The articles of  incorporation, by-laws and other organizational documents of such corporation shall recite that the issuance and  assignment of any interest  therein is restricted by the terms of Section 17 of this Franchise Agreement,  and all issued and outstanding stock certificates  of such  corporation  shall bear a legend reciting or referring to the restrictions hereof.

         17.E.  FORMATION OF A CORPORATION.





         In the event,  Franchisee  desires to form a  corporation  for the sole purpose of acting as a  Franchisee  under this  Agreement,  in  addition  to the conditions  imposed under Section 17, the following terms and conditions must be complied with, unless otherwise agreed in writing by Pretzel Time:

                  (1) Franchisee  must be the owner of the majority  interest in                   the  voting  stock  of  the   corporation  and  the  principal                   executive officer thereof;

                  (2)  Franchisee's  shareholders  shall enter into an agreement                   under seal with Pretzel Time, on Pretzel Time's standard form,                   guaranteeing  the  full  payment  of the  corporation's  money                   obligations to Pretzel Time as individual  surety and agreeing                   to be bound  individually  by the  non-competition  obligation                   stated herein; and

                  (3) Franchisee and all shareholders  must continue to meet its                   obligations  under  the  noncompetition   provisions  of  this                   Agreement.

         In  the  event   Franchisee  or  its  successor  is  a  corporation  or partnership or similar entity, it is agreed as follows:

                  (1) That the  Articles  of  Incorporation  and  By-Laws or the                   Partnership  Agreement,  shall  reflect  that the issuance and                   transfer of voting stock or other ownership  interest therein,                   is restricted by the terms of this Agreement. Franchisee shall                   furnish  Pretzel  Time at the  time of the  execution  of this                   Agreement or of assignment to the  corporation  or partners of                   Franchisee, a written agreement stating that no stockholder or                   partner  will  sell,  assign  or  transfer  voluntarily  or by                   operation  of law  any  securities  of  Franchisee,  or  other                   ownership  interest  in  Franchisee,  to any  person or entity                   other than existing shareholders or partnership, to the extent                   permitted  hereunder,  without  the prior  written  consent of                   Pretzel Time.  All securities  issued by Franchisee  will bear                   the  following  legend  which  shall be  printed  legibly  and                   conspicuously  on each stock  certificate or other evidence of                   Ownership Interest:

                    The  transfer of these  securities  is subject to the terms                     and  conditions of a Franchise  Agreement with Pretzel Time,                     Inc.  dated , 199____.  Reference is made to said  Agreement                     and to  the  restrictive  provisions  of  the  Articles  and                     By-laws or Shareholders or Partnership Agreement.

                  (2) That if Franchisee or a successor,  is a corporation,  the                   majority of the capital stock thereof shall not at any time or                   in the  aggregate  be sold,  assigned,  pledged,  mortgaged or                   transferred without the prior written consent of Pretzel Time.

                  (3) Franchisee  represents and warrants that its Owners are as                   set  forth  on  Exhibit  B  attached  to  this  Agreement  and                   covenants that it will not vary from that ownership  structure                   without the prior written approval of Pretzel Time.

         17.F.  DEATH OR DISABILITY OF FRANCHISEE.

         Upon the death or Permanent  Disability of Franchisee or, if Franchisee is a  corporation  or  partnership,  the  Owner  of a  Controlling  Interest  in Franchisee, the executor, administrator, conservator, guardian or other personal representative  of such  person  shall  transfer  Franchisee's  interest in this Agreement or such interest in  Franchisee  to a third party  approved by Pretzel Time.  Such  disposition  of this  Agreement  or  such  interest  in  Franchisee (including,  without  limitation,  transfer by bequest or inheritance)  shall be completed  within a reasonable  time, not to exceed six (6) months from the date of death or  Permanent  Disability,  and shall be  subject  to all the terms and conditions  applicable to Transfers contained in Section 17.B. and 17.C. Failure to transfer the interest in this Agreement or such interest in Franchisee within said period of time shall constitute a breach of this Agreement.

         17.G.    PRETZEL TIME'S FIRST RIGHT OF REFUSAL.

          If  Franchisee  (or its Owners)  shall at any time  determine to sell, assign or transfer for consideration  this Agreement or an Ownership Interest in Franchisee  or the Unit,  Franchisee  (or its Owners)  shall obtain a bona fide, executed  written offer and earnest  money deposit from a responsible  and fully disclosed purchaser (including lists of the Owners of record and beneficially of any corporate  offeror and all general and limited  partners of any  partnership offeror and, in the case of a publicly-held  corporation or limited partnership, copies of the most current annual and quarterly  reports) and shall  immediately submit to Pretzel  Time a true and  complete  copy of such  offer,  which  shall include  details of the payment  terms of the proposed  sale and the sources and terms of any financing for the proposed purchase price. To be a valid, bona fide offer, the proposed purchase price shall be denominated in a dollar amount.  The offer must apply only to an interest in this  Agreement,  Franchisee or the Unit and may not  include  an offer to  purchase  any  other  property  or  rights of Franchisee (or its Owners).  However,  if the offeror  proposes to buy any other property  or  rights  from   Franchisee   (or  its  Owners)  under  a  separate, contemporaneous offer, the price and terms of purchase offered to Franchisee (or its Owners) for the  interest in this  Agreement,  Franchisee  or the Unit shall reflect the bona fide price  offered  therefore  and shall not reflect any value for any other property or rights.





          Pretzel  Time  shall  have the right,  exercisable  by written  notice delivered to Franchisee  (or its Owners) within sixty (60) days from the date of delivery  of an exact copy of such  offer to  Pretzel  Time,  to  purchase  such interest for the price and on the terms and conditions  contained in such offer, provided that Pretzel Time may substitute cash for any form of payment  proposed in such offer,  Pretzel Time's credit shall be deemed equal to the credit of any proposed  purchaser and Pretzel Time shall have not less than sixty (60) days to prepare  for  closing.  Without  regard to the  representations  and  warranties demanded by the proposed  purchaser,  if any,  Pretzel Time shall be entitled to purchase such interest subject to all customary  representations  and warranties given by the  Franchisee,  seller of the assets of a business or voting stock of an  incorporated  business,  as  applicable,   including,   without  limitation, representations  and  warranties as to ownership,  condition and title to stock, and /or assets,  liens and  encumbrances  relating to the stock  and/or  assets, validity  of  contracts  and  liabilities  of the  corporation  whose  stock  is purchased and affecting the assets, contingent or otherwise.

         If Pretzel Time exercises its right of first refusal,  Franchisee  (and its Owners)  agrees that,  for a period of twelve (12) months  commencing on the date of the closing,  neither  Franchisee (nor its Owners) shall have any direct or indirect interest  (through a member of the immediate  families of Franchisee or its Owners of  otherwise)  as a  disclosed  or  beneficial  owner,  investor, partner, director, officer, employee, consultant, representative, or agent or in any other capacity in any Competitive Business located or operating within three (3) miles of the Unit,  and/or  three (3) miles of any other  Pretzel Time Unit. The  restrictions  of this Section  shall not be  applicable to the ownership of shares  of a class of  securities  listed on a stock  exchange  or traded on the over-the-counter market that represent two percent (2%) or less of the number of shares of that class of  securities  issued  and  outstanding.  If Pretzel  Time exercises its right of first refusal, Franchisee (and its Owners) further agrees that he will abide by the restrictions of Section 17.C.(13).

          If  Pretzel  Time  does not  exercise  its  right  of  first  refusal, Franchisee or its Owners may complete the sale to such purchaser pursuant to and on the exact  terms of such  offer,  subject to Pretzel  Time's  approval of the Transfer as provided in Section 17,  provided that if the sale to such purchaser is not completed  within 120 days after  delivery of such offer to Pretzel Time, or if there is a  material  change  in the terms of the sale  (which  Franchisee shall  promptly  communicate  to Pretzel  Time),  Pretzel  Time's right to first refusal shall be extended for thirty (30) days after the  expiration of such 120 day period or after the material change in the terms of the sale so communicated to Pretzel Time.

         17.H.    PUBLIC OR PRIVATE OFFERINGS.

         In the event  Franchisee (or any of its Owners)  shall,  subject to the restrictions  and  conditions  of Transfer  contained in Section 17,  attempt to raise or secure funds by the sale of securities (including,  without limitation, common or preferred stock,  bonds,  debentures or general or limited partnership interests) in Franchisee or any affiliate of Franchisee, Franchisee, recognizing that the written information may reflect upon Pretzel Time, agrees to submit any such written information used with respect thereto prior to its inclusion in any registration  statement,  prospectus or similar offering  circular or memorandum and to obtain Pretzel Time's written consent to the method of financing prior to any offering or sale of such securities. Pretzel Time's written consent pursuant to this Section  shall not imply or  constitute  Pretzel  Time's  approval  with respect to the sale of the  securities,  the  offering  literature  submitted to Pretzel  Time or any other aspect of the  offering.  No  information  respecting Pretzel  Time  shall  be  included  in  any  disclosure   document  unless  such information  has  been  furnished  by  Pretzel  Time  in  writing   pursuant  to Franchisee's  written request,  in which Franchisee states the specific purposes for  which the  information  is to be used.  Should  Pretzel  Time,  in its sole discretion, object to any reference to it or its business or to the relationship of  Franchisee  or  a  controlled  affiliate  in  such  offering  literature  or prospectus,  such  literature or  prospectus  shall not be used unless and until Pretzel Time's objections are withdrawn.  Pretzel Time assumes no responsibility whatsoever for any offering.  Franchisee  shall pay Pretzel  Time's  expenses in connection with the offering or proposed offering.

         The prospectus or other literature  utilized in any such offering shall contain the  following  language in  bold-face  type on the first  textual  page thereof:

         PRETZEL  TIME,  INC. IS NOT  DIRECTLY OR  INDIRECTLY  THE ISSUER OF THE          SECURITIES OFFERED HEREBY AND ASSUMES NO RESPONSIBILITY WITH RESPECT TO          THIS OFFERING AND/OR THE SUFFICIENCY OR ACCURACY OF THE INFORMATION SET          FORTH HEREIN,  INCLUDING ANY  STATEMENTS  WITH RESPECT TO PRETZEL TIME,          INC.  PRETZEL TIME,  INC.  DOES NOT ENDORSE OR MAKE ANY  RECOMMENDATION          WITH RESPECT TO THE INVESTMENT CONTEMPLATED BY THIS OFFERING.

         Franchisee  (and each of its Owners)  agrees to  indemnify,  defend and hold harmless Pretzel Time, its parent company, subsidiaries, and Affiliates and their officers, directors, employees and agents from any and all claims, demands and  liabilities,  and all costs and expenses  (including,  without  limitation, reasonable  attorneys' fees) incurred in defending against such claims,  demands or  liabilities,  arising  from the  offer or sale of such  securities,  whether asserted  by a  purchaser  of any such  security  or by a  governmental  agency. Pretzel  Time shall have the right (but not the  obligation)  to defend any such claims,  demands or  liabilities  and/or to  participate  in the  defense of any action to which it is named as a party.

18.      TERMINATION OF AGREEMENT BY FRANCHISEE.





         18.A.  FRANCHISEE'S RIGHT TO TERMINATE.

         If  Franchisee is in  substantial  compliance  with this  Agreement and Pretzel Time  substantially  breaches a material provision of this Agreement and (1) fails to cure such  breach  within  thirty  (30) days after  written  notice thereof is delivered to Pretzel Time or (2) if such breach cannot  reasonably be cured  within  thirty (30) days after  Pretzel  Time's  receipt of such  notice, undertake  (within  thirty (30) days after Pretzel Time's receipt of such notice and  continue  until  completion),  reasonable  efforts  to  cure  such  breach, Franchisee may terminate this Agreement. Such termination shall be effective ten (10) days after delivery to Pretzel Time of notice that such breach has not been cured and Franchisee  elects to terminate this Agreement.  A termination of this Agreement  by  Franchisee  for any reason other than a  substantial  breach of a material provision of this Agreement by Pretzel Time, and Pretzel Time's failure to cure  such  breach  as  provided  above  shall  be  deemed a  termination  by Franchisee without cause.

19.      DEFAULT AND TERMINATION.

         19.A.  EXACT AND COMPLETE PERFORMANCE REQUIRED.

         Franchisee  acknowledges that complete  performance of all the terms of this  Agreement  is  necessary  for  the  protection  of  Pretzel  Time  and its franchisees.  It is therefore agreed that complete and exact  performance by the Franchisee  of each of his  promises  contained  herein  is a  condition  to the continuance of this Franchise.

         19.B.    DEFAULT AND RIGHT TO CURE.

         If Franchisee  defaults in the  performance of any of the terms of this Agreement  or the  Operations  Manual,  Pretzel  Time,  in addition to all other remedies  available to it at law or in equity and without prejudice to any other rights or remedies,  may  immediately  terminate  this Agreement by delivering a written notice to Franchisee of any breach of this Agreement and a notice period of  forty-five  (45) days shall be given to  Franchisee,  unless such default is cured by the  Franchisee  within thirty (30) days after written  notice  thereof from Pretzel Time to Franchisee.  Notwithstanding the foregoing,  if the default is other  than a failure to pay a monetary  obligation  to Pretzel  Time or to a related  company and of a nature that more than thirty (30) days are  reasonably required to cure,  Franchisee  shall  commence  to cure the default  within said thirty (30) day period and shall proceed with such cure with due diligence  with a view to accomplishing the cure at the earliest possible moment, and within the period,  if any,  designated  by Pretzel Time as the allowable  additional  time within which the cure must be accomplished.

         19.C.  EXTENSION OF NOTICE.

         If any  applicable  law or rule  requires  a  greater  prior  notice of termination,  the prior notice required by such law or rule shall be substituted for the notice requirements herein.

         19.D.  REPEATED BREACHES.

         Further,   notwithstanding  anything  herein  elsewhere  contained,  if Franchisee shall repeatedly fail to comply with the terms of this Agreement,  or any of them,  of any nature,  even though such  failures may be cured within the applicable  grace  periods,  Pretzel Time shall have the right by written notice given to Franchisee  immediately  to declare this  Agreement  terminated,  which right shall be in addition to and without prejudice to any other right or remedy to which Pretzel Time may be entitled  under this  Agreement or otherwise  under applicable law. As used in this Agreement the term repeatedly  fail shall mean three (3) defaults within any twelve (12) month period, even if the defaults are later cured.          19.E.    EVENTS OF DEFAULT - 30 DAYS NOTICE - CURABLE DEFAULTS.

         The  occurrence of any one of the following  events shall  constitute a default under this Agreement  requiring a 30 day notice period of termination by Pretzel Time to Franchisee:

                  (i) Franchisee  fails to pay money when due to Pretzel Time as                   required  under the Franchise  Agreement,  including,  without                   limitation,  the franchise  fee, the renewal fee, the transfer                   fee, royalties, and the advertising fund fee; or

                  (ii) If Franchisee or his Unit Manager fails to satisfactorily                   complete any mandatory  training  programs (except the initial                   training  in  which  case,  the  Franchise  Agreement  can  be                   terminated upon notice) offered by Pretzel Time; or

                  (iii) If Franchisee  fails to submit to Pretzel Time financial                   or other  information  when required  under this  Agreement or                   submits a financial statement which materially understates net                   revenues; or

                  (iv) If  Franchisee  fails to develop or construct the Unit in                   accordance  with  this  Agreement;  Pretzel  Time's  plans and                   specifications  or fails to equip and furnish the  location in                   accordance with Pretzel Time's plans and specifications; or

                  (v) A final judgment against Franchisee remains unsatisfied of                   record for thirty  (30) days,  unless a  supersedeas  or other                   appeal bond has been filed; or

                  (vi) Franchisee or any of its Owners  abandons,  surrenders or





                  transfers  control of the  operation  of the Unit  without the                   prior  written  approval  of Pretzel  Time,  or  threatens  to                   abandon the same; or

                  (vii) Franchisee fails to use Pretzel Time approved  marketing                   and  promotional  materials  or  Franchisee  fails to  receive                   Pretzel  Time's prior  approval of marketing  and  promotional                   materials; or

                  (viii) Failure to obtain Pretzel Time's prior written  consent                   or  approval  where   expressly   required  by  the  Franchise                   Agreement; or

                  (ix) If Franchisee  operates the franchise in such a manner so                   as  to  affect   materially  and  adversely  the  goodwill  or                   reputation  of  Pretzel  Time  or its  System  or any  product                   manufactured by any Affiliate; or

                  (x)  Franchisee  denies  Pretzel Time the right to inspect the                   Unit or to examine or audit his books; or

                  (xi)  Franchisee  misuses  Pretzel Time's Marks or asserts any                   interest  in  Pretzel   Time's  Marks;   uses  Pretzel  Time's                   tradename  or any  part  thereof  as part to of its  corporate                   name;  does not cooperate in the  enforcement  of any Mark; or                   challenges or seeks to challenge the validity of the Marks; or

                  (xii)  Franchisee  fails to  maintain  and operate the Unit in                   accordance  with standards and  specifications  established by                   Pretzel Time as to the services or  maintenance  of inventory;                   or

                  (xiii)  Franchisee  fails to obtain  all  permits,  insurance,                   licenses and other necessary  documents for the opening of the                   Unit; or

                  (xiv)  Franchisee  fails to maintain  uniform  Unit design and                   image,  and/or  fails to  refurbish  or remodel as required by                   Pretzel Time; or

                  (xv) Franchisee attempts or does mortgage, pledge or otherwise                   assign as security the premises,  any equipment,  furnishings,                   fixtures or any interest Franchisee may have; or

                  (xvi) Conduct by  Franchisee  which is of such a nature that a                   reasonably   objective   person  would  consider  same  to  be                   deleterious  to or to reflect  unfavorably  on Pretzel Time or                   the Pretzel Time Unit System; or

                  (xvii) Failure by Franchisee to maintain a responsible  credit                   rating by failing to make prompt payment of undisputed  bills,                   invoices and  statements  from  suppliers or  distributors  of                   goods and services to the Unit; or

                  (xviii)  Failure  to  comply  with  all  of the  terms  of the                   Operations  Manual as amended from time to time, the standards                   and  specifications  required  by  Pretzel  Time or any  other                   agreement between the Franchisee and Pretzel Time; or

                  (xix) Fails to pay any federal or state income, sales or other                   taxes due on the Unit's  operations  unless  Franchisee  is in                   good faith contesting his liability for such taxes; or

                  (xx)  Franchisee  knowingly  sells any product or service that                   does not  conform to Pretzel  Time's  specifications,  uses or                   sells products other

                  than  in  strict  accordance  with  the  requirements  of  the                   Franchise  Agreement or the Operations  Manual;  fails to sell                   products  or services  approved by Pretzel  Time or deals with                   vendors and suppliers not approved by Pretzel Time.

                  (xxi) Franchisee fails to pay any subcontractor, contractor or                   other  person  to whom  money is due and  that  subcontractor,                   contractor  or other  person  demands  said money from Pretzel                   Time.

                  (xxii)  Franchisee is late in paying rent to the landlord more                   than 2 times in any twleve month period.

         19.F.    EVENTS OF DEFAULT - IMMEDIATE TERMINATION - NO RIGHT TO CURE.

         The  following  acts of  default  will  result  in  termination  of the Franchise  effective  immediately upon delivery and receipt of written notice of same to Franchisee  and with no right to cure where the grounds for  termination or cancellation are:

          (i)  Franchisee or a Owner fails to complete all phases of the initial                training program to Pretzel Time's satisfaction; or





          (ii) Franchisee  fails to  commence  operation  of the Unit within the                time specified in this Agreement; or

          (iii) Any affirmative act of bankruptcy or insolvency by                   Franchisee,  or the filing by  Franchisee  of any  petition or                   action in bankruptcy or  insolvency,  or for  appointment of a                   receiver  or  trustee,   Franchisee   admits  in  writing  his                   inability to pay his debts or an assignment by Franchisee  for                   the benefit of creditors,  or the failure to vacate or dismiss                   within  five  (5)  days  after  filing  any  such  proceedings                   commenced  against  Franchisee  by a third  party.  Franchisee                   expressly  and  knowingly  waives any rights  that he may have                   under the provisions of the  Bankruptcy  Rules and consents to                   the  termination  of this  Agreement or any other relief which                   may be sought in a complaint filed by Pretzel Time to lift the                   provisions  of the  automatic  stay of the  Bankruptcy  Rules.                   Additionally Franchisee agrees not to seek an injunction order                   from any court in any  jurisdiction  relating  to  insolvency,                   reorganization of arrangement proceedings which would have the                   effect of staying or enjoining this provision.  THIS PROVISION                   MAY  NOT BE  ENFORCEABLE  UNDER  FEDERAL  BANKRUPTCY  LAW  (11                   U.S.C.A. Sec. 101 et seq.); or

                  (iv)  Failure to cure  within  seventy-two  (72)  hours  after                   delivery  of  written  notice of default  under the  Franchise                   Agreement  which  materially  impairs the goodwill  associated                   with Pretzel  Time's trade names,  trademarks,  service marks,                   logo types or other commercial

                    symbols or the use by Franchisee of any name,  mark,  system                     insignia or symbol not authorized by Pretzel Time; or

                  (v) The conviction of Franchisee,  or any if its principals if                   it is a partnership or corporation,  of a crime related to the                   business conducted pursuant to the franchise which may tend to                   affect  adversely the goodwill or  reputation  of  Franchisee,                   Pretzel Time or its System or the  products of Pretzel  Time's                   Affiliates; or

                  (vi)  Abandonment  of the  Franchise.  For  purposes  of  this                   agreement Abandonment shall mean Franchisee's failure (other                   than with Pretzel  Time's prior written  approval) to keep the                   franchise  open and operating for business  during the minimum                   opening hours specified in this Agreement or Lease  Agreement;                   or

                  (vii) Franchisee ceases to occupy the premises. If the loss of                   possession in the result of  governmental  exercise of eminent                   domain,  destruction  of the  site,  or  termination  of lease                   (except by reason of Franchisee's fault), Franchisee may (with                   Pretzel Time's consent and subject to  availability)  relocate                   to  other  premises  in  a  comparable  location.  Failure  to                   relocate to other Pretzel  Time-approved  premises  within the                   time specified in this Agreement  after loss of possession due                   to eminent  domain,  destruction of premises or termination of                   lease without  Franchisee's  fault shall  constitute an act of                   Default with no right to cure and immediate  termination  upon                   notice; or

                  (viii) The existence of an imminent danger to public health or                   safety or fails or refuses to comply with  standards  relating                   to the  cleanliness  or sanitation of the Unit or violates any                   health, safety or sanitation,  law ordinance or regulation and                   does not correct such  noncompliance  within  forty-eight (48)                   hours after written notice thereof is delivered to Franchisee;                   or

                  (ix) The loss of the right to occupy the  premises  from which                   the  franchise  is  operated by either  Franchisee  or Pretzel                   Time; or

                    (x) Material  falsification  of business records and reports                     required by Pretzel Time; or

                  (xi)  Franchisee  (or any of its Owners) makes an  assignment,                   surrenders  or  transfers  control of the Unit's  operation in                   violation of this Agreement; or

                  (xii)  Franchisee (or any of its Owners) has made any material                   misrepresentation  or  omission  in the  application  for  the                   Franchise or in materials submitted relating to a transfer; or

                  (xiii)  Franchisee,  (or  its  Owners)  or  members  of  their                   immediate  family violate the restrictions on the operation of                   Competitive Businesses during the term of this Agreement; or

                  (xiv)  Franchisee (or any of its Owners or employees) makes an                   unauthorized  use or disclosure  of or duplicates  any copy of





                  any Confidential  Information or uses, duplicates or discloses                   any  portion of the  Operations  Manual in  violation  of this                   Agreement; or

                  (xv) Failure on two (2) or more separate  occasions within any                   period  of  twelve  (12)  consecutive  months  or on three (3)                   occasions during the term of this Agreement to submit when due                   reports or other data, information or supporting records or to                   pay when due the  Royalty  and fees or other  payments  due to                   Pretzel Time or its  Affiliates  or otherwise  fails to comply                   with this  Agreement,  whether or not such  failures to comply                   with this Agreement,  Advertising Fund Fee are corrected after                   notice thereof is delivered to Franchisee; or

                  (xvi) Fails to cure a default under this Agreement  within the                   time specified or provide proof  acceptable to Pretzel Time of                   efforts  which  are  reasonably  calculated  to  correct  such                   failure within a reasonable  time,  which shall in no event be                   more than sixty (60) days after such  notice,  if such failure                   cannot  reasonably be corrected  within twenty (20) days after                   written  notice of such  notice of  default  is  delivered  to                   Franchisee; or

                  (xvii) Franchisee terminates this Agreement without cause; or

                  (xviii) Franchisee  understates the Unit's net revenues in any                   report or financial  statement  by an amount  greater than two                   (2) percent; or

                  (xix)  Franchisee  causes or permits to exist a default  under                   the  lease or  sublease  for the Site and  fails to cure  such                   default  within the  applicable  cure  period set forth in the                   lease or sublease; or

                  (xx)  Franchisee  (or any of its Owners) fails on three (3) or                   more separate  occasions within any period of twenty-four (24)                   consecutive  months to comply with this  Agreement  whether or                   not such  failures  to comply are  corrected  after  notice of                   default  is  given,  or  failure  on two (2) or more  separate                   occasions within any period of twelve (12) consecutive  months                   to comply within the same  requirement  under this  Agreement,                   whether or not such  failures  to comply are  corrected  after                   notice of default is given.

20. RIGHTS AND  OBLIGATIONS OF PRETZEL TIME AND FRANCHISEE  UPON  TERMINATION OR EXPIRATION OF THE FRANCHISE.

         20.A.  AMOUNTS OWED.

         Unless otherwise authorized by Pretzel Time in writing, in the event of expiration or termination  of this  Agreement for any reason,  or upon the sale, transfer or  assignment  of the  Franchise by  Franchisee,  all of  Franchisee's rights  hereunder  shall  terminate  and  Franchisee  shall cease to operate the Franchise.  Franchisee agrees to pay Pretzel Time within fifteen (15) days after the effective date of termination or expiration of this Agreement, or such later date that the amounts due to Pretzel Time are  determined,  such  Royalty  Fees, Advertising  Fund Fees,  amounts owed for purchases by  Franchisee  from Pretzel Time or its  Affiliates,  interest  due on any of the  foregoing  and all  other amounts owed to Pretzel Time or its Affiliates which are then unpaid.

         Expiration or  termination  of this  Agreement for any reason shall not affect,  modify, or discharge any note, account receivable,  or debt, contingent or otherwise,  existing or arising under this Agreement, or any prior agreement, contract, or dealing between Pretzel Time and Franchisee.

         20.B.    DISCONTINUANCE OF MARKS.

         Franchisee  agrees to immediately  discontinue  all use of trade names, trademarks,  logotypes,  forms of advertising  and other  commercial  symbols of Pretzel Time, and forms of advertising indicative of Pretzel Time and cancel all assumed  name  registrations.  Franchisee  further  shall  remove or cause to be removed all signs and  structures  indicative  of a Pretzel  Time Unit and shall alter the premises occupied by Franchisee so as to distinguish the same from its former appearance and from a Pretzel Time franchise.  Further,  Franchisee shall discontinue  the use of any and all printed goods and materials using said trade names,  trademarks,  logos and other  commercial  symbols  of Pretzel  Time.  If Franchisee  refuses to comply  with the terms of this  Section 20 after  Pretzel Time  requests  compliance,  Pretzel  Time  shall  have the right to enter  upon Franchisee's  premises  without being deemed guilty of  trespassing or any other offense,  and make or cause to be made such  changes  at  Franchisee's  expense, which Franchisee agrees to pay upon demand.

         Franchisee  agrees to not directly or  indirectly at any time or in any manner (except with respect to other Pretzel Time Units owned by the Franchisee) identify himself or any business as a current or former Pretzel Time Unit, or as a franchisee,  licensee or dealer of Pretzel Time or its Affiliates.  Franchisee further  agrees to not use any Mark,  any colorable  imitation  thereof or other indicia of a Pretzel  Time Unit in any manner or for any  purpose or utilize for any purpose any trade name,  trade or service  mark or other  commercial  symbol that suggests or indicates a connection or association  with Pretzel Time or its Affiliates.  Franchisee (or any of its Owners) agrees after  termination he will not do  business  under any name or in any  manner  that  might tend to give the general  public the  impression  that he is  associated,  affiliated,  licensed, franchised by or related to Pretzel Time.  The Franchisee (or any of its Owners) may not thereafter  use any name,  logo type, or symbol  confusingly  similar to





Pretzel  Time's  Service  Mark,  logo type or symbol.  If  Franchisee  continues operating a business at the franchised  location it will exert every  reasonable effort to inform the public of his new status,  including a change of  telephone number and advertising materials.

         The Franchise granted to Franchisee  hereunder to sell Products bearing Pretzel Time's Marks does not include the right to sell or advertise for sale of Franchisee's  Franchise itself or of its business location.  No advertisement by Franchisee  or  other  public  solicitation  for  sale of his  interest  in this Agreement  may  include a  representation  of Pretzel  Time's  trademark  or any reference to Pretzel Time or its trademark system.

         20.C.    RETURN OF MATERIALS.

         Franchisee  agrees to return to  Pretzel  Time all  signs,  sign-faces, forms,  invoices,  letterhead,  and  other  materials  containing  any  Mark  or otherwise identifying or relating to a Pretzel Time Unit and allow Pretzel Time, without liability to remove all such items from the Unit. Franchisee also agrees to return all  materials  and  confidential  information  loaned to  Franchisee, including,  without limitation,  all Operations Manuals and Training Manuals and videos. Franchisee agrees to return all materials and supplies identified by the Marks in full cases or  packages  to Pretzel  Time for credit and dispose of all other materials and supplies, but not equipment,  identified by the Marks within thirty (30) days after the effective  date of  termination or expiration of this Agreement.

         20.D.    TELEPHONE COMPANY.

         Franchisee  agrees to notify the  telephone  company and all  telephone directory  publishers of the termination or expiration of Franchisee's  right to use any  telephone  and telecopy  numbers and any regular,  classified  or other telephone  directory  listings  associated  with any Mark and to  authorize  the transfer  thereof to Pretzel Time or at its direction.  Franchisee  acknowledges and agrees  that as between  him and  Pretzel  Time,  Pretzel  Time has the sole rights to and  interest in all  telephone  and  telecopy  numbers and  directory listings  associated  with any Mark.  Franchisee  authorizes  Pretzel Time,  and hereby appoints Pretzel Time and any of its officers as Franchisee's attorney in fact, to direct the telephone company and all telephone directory  publishers to transfer any telephone and telecopy numbers and directory  listings  relating to the Pretzel Time Units to Pretzel Time or at its  direction,  should  Franchisee fail or refuse to do so, and the telephone  company and all telephone  directory publishers  may accept such direction or this agreement as conclusive of Pretzel Time's  exclusive  rights in such  telephone and telecopy  numbers and directory listings  and Pretzel  Time's  authority to direct  their  transfer.  Franchisee agrees to execute a  collateral  assignment  of  telephone  numbers and listings agreement  which is attached hereto as Exhibit G. In no event shall Pretzel Time be responsible  for any charges  incurred by Franchisee and associated  with the telephone company prior to the date of transfer.

         20.E.    CONFIDENTIAL INFORMATION.

         Franchisee (and its Owners) agrees that upon  termination or expiration of this Agreement, he will immediately cease to use any Confidential Information of Pretzel Time or its Affiliates disclosed to him pursuant to this Agreement in any business or otherwise.  This  provision is also  applicable to the Owners if the Franchise is a corporation or partnership.

         20.F.    LEASING.

         If Franchisee  has leased the  premises,  Pretzel Time may, in its sole discretion  and without any  obligation to do so,  assume the lease.  Franchisee will not be entitled to any refund of the initial franchise fee,  royalties,  or Advertising Fund Fees.

         20.G.    COVENANT NOT TO COMPETE.

         Upon  termination of this  Agreement,  in accordance with its terms and conditions or by Franchisee  without cause, or upon expiration of this Agreement (unless the Franchise is renewed as provided for in this Agreement),  Franchisee and its Owners agree that for a period of TWELVE (12) months  commencing  on the effective  date of  termination  or expiration  or the date on which  Franchisee complies  with this Section,  whichever is later,  neither  Franchisee,  nor its Owners,  nor any person or entity  affiliated  with  Franchisee or  Franchisee's shareholders or partners shall have any direct or indirect  interest  (through a member of the immediate  families of Franchisee or its Owners or otherwise) as a disclosed or beneficial owner, investor,  partner, director,  officer, employee, consultant,  representative,  agent or in any other capacity in any  Competitive Business  located or operating:  (1) at the Site;  (2) within three (3) miles of the Unit;  and/or (3) within  three (3) miles of any other  Pretzel Time Unit in operation  or  under  development  on  the  effective  date  of  termination  or expiration of this  agreement for a period of one year after the  termination or expiration.  The  restrictions  of this Section  shall not be  applicable to the ownership  of shares of a class of  securities  listed  on a stock  exchange  or traded on the over-the-counter market that represent two percent (2%) or less of the  number  of shares  of that  class of  securities  issued  and  outstanding. Franchisee  and its Owners  expressly  acknowledge  that they possess skills and abilities of a general nature and have other  opportunities  for exploiting such skills. Consequently, enforcement of the covenants made in this Section will not deprive the Franchisee or its Owners or shareholders of their personal  goodwill or ability to earn a living.

The Franchise  Agreement contains a covenant not to compete which extends beyond





the termination of the franchise. Franchisee and its Owners acknowledge that the covenant  not to compete is fair and  reasonable,  and will not impose any undue hardship,  since the Franchisee (and its Owners) has other considerable  skills, experience and education  which will afford him the opportunity to derive income from other endeavors.

Neither  Franchisee  nor any of its Owners shall divert or attempt to divert any business or any customers of any Pretzel Time Unit to any  Competitive  Business or employ or seek to employ any  person who is  employed  by Pretzel  Time,  its Affiliates  or a franchisee  of Pretzel Time nor induce or attempt to induce any such person to leave said  employment  without the prior written consent of such person's employer.

         20.H.  PRETZEL TIME'S RIGHT TO PURCHASE ASSETS OF THE UNIT.

         Upon  termination of this Agreement by Pretzel Time in accordance  with its terms and  conditions or by Franchisee  without cause or upon  expiration of this  Agreement  (unless the franchise  has been  renewed),  Pretzel  Time,  its Affiliates  or  its  assignee  shall  have  the  option  (not  the  obligation), exercisable  by giving  written  notice  thereof within sixty (60) days from the date of such  expiration  or  termination,  to acquire from  Franchisee  all the assets  in the Unit  including  the  equipment,  furnishings,  signs,  leasehold improvements,  usable  inventory  of  Products,  materials,  supplies  and other tangible assets of the Unit and an assignment of the lease for the Unit. Pretzel Time  shall  have the  unrestricted  right to assign  this  option to  purchase. Pretzel Time or its assignee  shall be entitled to all customary  warranties and representations  in  connection  with its  asset  purchase,  including,  without limitation,  representations  and  warranties as to ownership,  condition of and title to assets, no liens and encumbrances on the assets,  validity of contracts and agreements and liabilities  inuring to Pretzel Time or affecting the assets, contingent or otherwise.

         (1) The purchase price for the assets of the Unit shall be equal to the greater of:

                  The sum of the book  value  of the  Unit's  assets  (including                   furnishings,  fixtures, equipment, and leasehold improvements)                   amortized on a straight-line basis over a five (5) year period                   plus the lesser of costs and the then-current wholesale market                   value of all  usable  inventory  of  Products,  materials  and                   supplies (i.e. in good and saleable condition and not obsolete                   or discontinued), or

                  The  product of the Unit's  average  cash flow for the two (2)                   most recently  completed  fiscal years  multiplied by two (2).                   Cash  flow  represents  the  Unit's  net  revenues  less all                   pretzel  unit-related  costs (i.e., cost of goods sold, labor,                   occupancy   and  other  Unit   expenses)  as  well  as  annual                   administrative  costs of ten thousand dollars ($10,000.00) and                   royalty and  service  fees,  but not  including  interest  and                   depreciation.

         (2)  Pretzel  Time and its  Affiliates  shall have the right to set off against and reduce the purchase  price by any and all amounts owed by Franchisee to Pretzel  Time and its  Affiliates.  Pretzel  Time may exclude from the assets purchased  hereunder any  equipment,  furnishings,  signs,  usable  inventory of Products,  materials  or supplies of the Unit that Pretzel Time has not approved as meeting its standards for Pretzel Time Unit,  and the purchase price shall be reduced by the  replacement  costs of such excluded  items which are required in the operation of the Unit.

         (3) The  purchase  price  shall be paid in cash at the  closing  of the purchase, which shall take place no later than ninety (90) days after receipt by Franchisee  of Pretzel  Time's notice of exercise of this option to purchase the Unit, at which time Franchisee shall deliver instruments transferring to Pretzel Time or its assignee good and merchantable  title to the assets purchased,  free and clear of all liens and encumbrances  with all sales and other transfer taxes paid by  Franchisee,  and all  licenses  or  permits  of the Unit  which  may be assigned or transferred. In the event the closing of the purchase does not occur within said ninety (90) day period because Franchisee fails to act diligently in connection therewith,  the purchase price shall be reduced by ten percent (10%). Franchisee  further agrees that the purchase  price shall be further  reduced by ten percent (10%) per month for each subsequent  month  Franchisee  fails to act diligently to consummate this  transaction.  In the event that Franchisee cannot deliver clear title to all of the purchased assets as aforesaid, or in the event there are other unresolved  issues, at Pretzel Time's option,  the losing of the sale shall be accomplished through an escrow.  Prior to closing,  Franchisee and Pretzel  Time shall  comply with the  applicable  Bulk Sales  provisions  of the Uniform Commercial Code as enacted in the state in which the Unit is located.

         (4) If Pretzel Time or its assignee  exercises this option to purchase, pending  the  closing of such  purchase,  Pretzel  Time may appoint a manager to maintain the operation of the Unit, at its option,  require  Franchisee to close the Unit during such time period  without  removing any assets.  If Pretzel Time appoints a manager to maintain the operation of the Unit pending closing of such purchase, all funds from the Unit's operation during the period of management by a  Pretzel  Time  appointed  manager  shall be kept in a  separate  fund and all expenses of the Unit, including compensation,  other costs and travel and living expenses of the Pretzel Time appointed  manager,  shall be charged to such fund. As compensation for the management services provided,  Pretzel Time shall charge such fund ten  percent  (10%) of the  Unit's net  revenues  during the period of Pretzel Time's management. Operation of the Unit during any such period shall be for and on behalf of  Franchisee,  provided  that Pretzel Time shall have a duty only to utilize its good faith  efforts and shall not be liable to Franchisee or





its Owners for any debts,  losses or obligations  incurred by the Unit or to any creditor  of  Franchisee  for any  merchandise  materials,  supplies  or service purchased by the Unit during any period in which it is managed by Pretzel Time's appointed  manager.  Franchisee  shall maintain in force all insurance  policies required for the Unit until the date of closing.

21.      RELATIONSHIP OF THE PARTIES/INDEMNIFICATION.

         21.A.    EXCLUSIVE RELATIONSHIP.

         Franchisee acknowledges and agrees that Pretzel Time would be unable to protect  Confidential  Information  against  unauthorized  use or disclosure and would be unable to  encourage  a free  exchange of ideas and  information  among Pretzel Time Units if  Franchisees  of Pretzel Time Units were permitted to hold interests in or perform services for a Competitive  Business except as specified in Exhibit C.  Franchisee  also  acknowledges  that Pretzel Time has granted the Franchise to  Franchisee  in  consideration  of and reliance  upon  Franchisee's agreement to deal  exclusively  with Pretzel Time.  Franchisee  therefore agrees that  during the term of the  Franchise  Agreement,  or the period of time which Franchisee operates a Unit under this Agreement,  whichever is shorter,  neither Franchisee  nor  any  Affiliate,  immediate  family  member,  or  in  the  event Franchisee is a corporation

any Owner thereof and member of his immediate  family or in the event  Franchise is a partnership any partner  (general or limited) thereof and any member of his immediate family, shall:

         (1) Have  any  direct  or  indirect  interest  as an  owner,  investor,          partner, director, officer, employee, consultant, representative, agent          or in  any  other  capacity  in any  Competitive  Business  located  or          operating  at the Site or within  three (3) miles of any  Pretzel  Time          Unit  in  operation  or  under  development  on the  effective  date of          termination or expiration of this Agreement, except a Pretzel Time Unit          operated by Franchisee under Franchise Agreements with Pretzel Time; or

         (2) Recruit or hire any employee who, within the immediately  preceding          six (6) month period,  was employed by Pretzel Time or any Pretzel Time          Unit operated by Pretzel Time, its Affiliates or another  franchisee or          licensee  of  Pretzel  Time,   without   obtaining  the  prior  written          permission of Pretzel Time or such franchisee.

         Notwithstanding the foregoing,  Franchisee shall not be prohibited from owning securities  listed on a stock exchange or traded on the  over-the-counter market that represents two percent (2%) or less of that class of securities.

         Covenants contained in this Section shall be construed as severable and independent,   and  shall  be  interpreted  and  applied   consistent  with  the requirements  of  reasonableness.  Any judicial  reformation of these  covenants consistent  with this  interpretation  shall be enforceable as though  contained herein  and shall not affect any other  provisions  or terms of this  Agreement. This non-compete provision may not be enforceable under the laws of your state.

         21.B.  NO LIABILITY FOR ACTS OF OTHER PARTY.

         Franchisee shall not employ any of the Marks in signing any contract or applying  for any  franchise or permit or in a manner that may result in Pretzel Time's  liability for any of Franchisee's  indebtedness or obligations,  nor may Franchisee  use the Marks in any way not  expressly  authorized by Pretzel Time. Except as expressly  authorized in writing,  neither Pretzel Time nor Franchisee shall  make  any  express  or  implied  agreements,  warranties,  guarantees  or representations  or  incur  any  debt in the  name or on  behalf  of the  other, represent that their relationship is other than Pretzel Time and franchisee,  or be obligated by or have any liability  under any  agreements or  representations made by the other that are not  expressly  authorized  in writing.  Pretzel Time shall not be  obligated  for any damages to any person or  property  directly or indirectly  arising out of the  operation of the Unit or  Franchisee's  business authorized by or conducted pursuant to this Agreement.

         21.C.    TAXES.

         Pretzel  Time shall have no  liability  for any  sales,  use,  service, occupation,  excise,  gross receipts,  income,  property or other taxes, whether levied upon Franchisee, the Unit, Franchisee's property or upon Pretzel Time, in connection with the sales made or business  conducted by Franchisee.  Payment of all such taxes shall be Franchisee's responsibility.

         21.D.    INDEMNIFICATION.

         Franchisee   agrees  to  indemnify   and  hold  Pretzel  Time  and  its subsidiaries,  Affiliates, stockholders,  directors, officers, employees, agents and assignees harmless against, and to reimburse them for, any loss,  liability, judgment  or damages  (actual or  consequential)  and all  reasonable  costs and expenses of  defending  any claim  brought  against any of them or any action in which any of them is named as a party (including, without limitation, reasonable accountants,  attorneys' and expert witness fees, costs of investigation,  court costs, other litigation expenses,  damages to Pretzel Time's reputation and good will, travel expenses) which any of them may suffer,  sustain or incur by reason of, arising from or in connection  with  Franchisee's  ownership or operation of the Unit, unless such loss, liability or damage is only due to the negligence of Pretzel  Time  (or  its  Affiliates,  subsidiaries).  Pretzel  Time's  right  to indemnity  under  this  agreement  shall  arise  notwithstanding  that  joint or concurrent  liability  may be  imposed on Pretzel  Time by  statute,  ordinance, regulation or other law.  Franchisee  acknowledges and agrees that any action or inaction by any third party which is not an  Affiliate of Pretzel Time shall not





be attributable to or constitute negligence of Pretzel Time. The indemnities and assumptions of liabilities and  obligations  herein shall continue in full force and effect  subsequent to and  notwithstanding  the expiration or termination of this Agreement.

         Pretzel Time shall notify Franchisee of any claims and Franchisee shall be given the  opportunity  to assume the  defense of the matter.  If  Franchisee fails to assume the defense  within  three (3) days of notice  thereof,  Pretzel Time may defend the action in the manner reasonably appropriate,  and Franchisee shall pay to Pretzel Time all reasonable  costs,  including  without  limitation attorney's  fees,  court  costs,  expert  witness  fees,  travel  and  telephone expenses, incurred by Pretzel Time in effecting such defense, in addition to any such sum which Pretzel Time may pay by reason of any settlement agreed to by the parties or reasonably  negotiated by Pretzel Time in the event  Franchisee fails to assume the defense, or judgment against Pretzel Time.

         21.E.  INDEPENDENT CONTRACTOR.

         It is understood and agreed by the parties hereto that Franchisee is an independent contractor and is not an agent, partner, joint venturer, or employee of  Pretzel  Time.  Pretzel  Time and  Franchisee  agree  that  nothing  in this Agreement  is  intended  to  create  a  fiduciary   relationship  between  them. Franchisee  shall have no right to bind or obligate  Pretzel Time in any way nor shall he  represent  that he has any right to do so.  Pretzel Time shall have no control over the terms and conditions of employment of Franchisee's employees.

         In all public records and in his  relationship  with other persons,  on stationery, business forms and checks, Franchisee shall indicate his independent ownership of the  franchised  Unit and that he is a franchisee  of Pretzel Time. Franchisee  shall exhibit on the premises in such places as may be designated by Pretzel  Time,  a Pretzel  Time  approved  notice  that the  franchised  Unit is operated by an  independent  operator and not by Pretzel Time or Pretzel  Time's Affiliates,  which operate company owned  franchises.  Franchisee shall take all legal  steps  such as a  fictitious  name  registration  to ensure  Franchisee's independent business status.

22.      PROTECTION OF TRADE SECRETS.

         22.A.  CONFIDENTIAL INFORMATION.

         Pretzel Time  possesses  and will further  develop and acquire  certain confidential  and  proprietary  information  and trade  secrets  relating to the operation  of  Pretzel  Time  Units,  which  includes,  but not  limited  to the following  categories  of  information,  methods,  techniques,  procedures,  and knowledge  developed or to be  developed by Pretzel  Time,  its  consultants  or contractors,  its Affiliates or its designees, and/or franchisees (Confidential Information):

         (1)  methods,   techniques,   equipment,   specifications,   standards,          policies, procedures, information, concepts and systems relating to and          knowledge  of  and  experience  in  the   development,   operation  and          franchising of Pretzel Time Units:

         (2) site selection criteria;

         (3) marketing and promotional programs for Pretzel Time Units;

         (4) recipes, ingredients,  formulas, mixes, spices, seasonings, sauces,          recipes for, and methods for the preparation,  cooking,  and serving of          the Products;

         (5)  techniques,  formats,  specifications,  systems,  procedures,  and          knowledge of and experience in the development and operation of Pretzel          Time Units;

         (6) knowledge of specifications  for and suppliers of certain Products,          materials, supplies, equipment, furnishings and fixtures;

         (7) sales data and information  concerning  inventory  requirements for          Products,  materials and supplies, and specifications for and knowledge          of suppliers of certain materials,  equipment, and fixtures for Pretzel          Time Units;

         (8) employee selection procedures, training and staffing levels;

         (9) Operations Manual and other Manuals prepared by Pretzel Time; and

         (10) information concerning Product sales, operating results, financial          performance and other financial data of Pretzel Time Units.

         Pretzel Time will disclose such parts of the  Confidential  Information as  Pretzel  Time deems  necessary  or  advisable  from time to time in its sole discretion  for the  operation  of a  Pretzel  Time  Unit to  Franchisee  during training, and in guidance and assistance furnished to Franchisee during the term of the Franchise, and Franchisee may learn or otherwise obtain from Pretzel Time additional  Confidential  Information  of  Pretzel  Time  during the term of the Franchise.  Franchisee acknowledges that the foregoing Confidential  Information is highly  confidential.  Franchisee  acknowledges  and agrees  that he will not acquire  any  interest  in  Confidential  Information,  other  than the right to utilize Confidential Information disclosed to Franchisee in the operation of the Pretzel  Time  Unit  during  the  term of this  Agreement,  and  that the use or duplication  of  any  Confidential  Information  in  any  other  business  would constitute an unfair method of competition. Franchisee, including its directors,





officers,  shareholders,  and partners agree(s) that Confidential Information is proprietary,  includes  trade  secrets  of  Pretzel  Time  and is  disclosed  to Franchisee solely on the condition that Franchisee  agrees,  and Franchisee (and its Owners) does hereby agree, that he:

         (1) shall not disclose any  information  pertaining to the Pretzel Time          System,  directly or indirectly,  to any person,  natural or corporate,          without the express prior written  consent of Pretzel Time.  Franchisee          may disclose to its Unit Manager such  information  deemed necessary to          disclose,  provided  such Unit  Manager  has  agreed to  maintain  such          information in confidence in Pretzel Time's  confidentiality  agreement          and Pretzel Time has received such executed agreement  (attached hereto          as Exhibit H);

         (2) Will not use  Confidential  Information  in any other  business  or capacity;

         (3)  Will  maintain  the  absolute   confidentiality   of  Confidential          Information during and after the term of this Agreement;

         (4) Will not make  unauthorized  copies of any portion of  Confidential          Information disclosed in written or other tangible form; and

         (5) Will adopt and implement  all  reasonable  procedures  that Pretzel          Time  prescribes  from  time  to time to  prevent  unauthorized  use or          disclosure of Confidential Information,  including, without limitation,          restrictions on disclosure thereof to his employees.

         This  confidentiality  requirement  shall  not apply in a  judicial  or administrative  proceeding  to the extent  Franchisee  is legally  compelled  to disclose such information,  provided Franchisee shall have used his best efforts and shall have afforded  Pretzel Time the  opportunity  to obtain an appropriate protective order or other assurance satisfactory to Pretzel Time of confidential treatment for the information required to be so disclosed.  This restrictions on Franchisee's  disclosure and use of the Confidential  Information shall also not apply to the  disclosure of  information,  methods,  procedures,  techniques and knowledge which are or become  generally  known in the food service  business in the Territory, other than through disclosure (whether deliberate or inadvertent) by Franchisee.

         Notwithstanding   the  foregoing  and  any  other   provision  of  this Agreement,  Franchisee may use the  Confidential  Information in connection with the operation of other Pretzel Time Units (in addition to the Unit)  pursuant to other Franchise Agreements with Pretzel Time.

         22.B.  DISCLOSURE OF IDEAS AND NEW PROCEDURES.

         Franchisee  shall  fully and  promptly  disclose to Pretzel  Time,  all ideas,  concepts,  methods  and  techniques  relating  to  the  development  and operation  of a dessert or snack food  business  conceived  or  developed by the Franchisee  and/or  Franchisee's  employees  during the term of this  Agreement. Franchisee  agrees and grants to Pretzel Time and its Affiliates a perpetual and worldwide  right to use and  authorize  other  Pretzel  Time Units or other food service businesses  operated by Pretzel Time or its Affiliates,  franchisees and designees  to  use  such  ideas,  recipes,  formulas,   concepts,  methods,  and techniques  relating to the development  and/or  operation of a dessert or snack food business.  If incorporated into the Pretzel Time System for the development and/or operation of Pretzel Time Units, such ideas, recipes, formulas, concepts, methods and techniques  shall become the sole and exclusive  property of Pretzel Time without any further consideration to Franchisee. Pretzel Time shall have no obligation to make any lump sum or on-going  payments to Franchisee with respect to any such idea, concept, method, technique or product.  Franchisee agrees that Franchisee  will not use nor will it allow any other person or entity to use any such concept,  method,  technique or product  without  obtaining  Pretzel Time's prior written approval.

23.      ENFORCEMENT.

         23.A.    UNAVOIDABLE DELAYS.

         Delays in the  performance  of any duties  hereunder  which are not the fault of, and not within the reasonable  preventive control of, the party due to perform,  including but not limited to, fire,  flood,  labor  disputes,  natural disasters, acts of God, civil disorders, riots,  insurrections,  work stoppages, slowdowns or disputes,  or other  similar  events,  shall not cause a default in said  performance,  but the parties shall extend the time of  performance  for a period of time equivalent to the length of delay,  or for such other  reasonable period of time as agreed by the parties.

         23.B.    RIGHTS OF PARTIES ARE CUMULATIVE.

         The rights of Pretzel Time and Franchisee  hereunder are cumulative and no exercise or  enforcement by Pretzel Time or Franchisee of any right or remedy hereunder  shall  preclude  the  exercise  or  enforcement  by  Pretzel  Time or Franchisee  of any  other  right  or  remedy  herein  or which  Pretzel  Time or Franchisee is entitled by law to enforce.

         23.C.    WAIVER OF OBLIGATIONS.

         Pretzel Time may by written instrument unilaterally waive or reduce any obligation  of  or  restriction  upon  Franchisee  under  this  Agreement,   and Franchisee may by written instrument unilaterally waive or reduce any obligation of or  restriction  upon  Pretzel  Time under  this  Agreement,  effective  upon delivery of written  notice  thereof to the other or such other  effective  date stated on the notice of waiver.  Whenever this Agreement requires Pretzel Time's





prior  approval  or  consent,  Franchisee  shall make a timely  written  request therefore, and such approval shall be obtained in writing. Pretzel Time makes no warranties  or  guaranties  upon  which  Franchisee  may rely,  and  assumes  no liability or  obligation  to  Franchisee,  by granting  any waiver,  approval or consent to  Franchisee,  or by reason of any  neglect,  delay,  or denial of any request therefore. Any waiver granted by Pretzel Time shall be without prejudice to any other rights Pretzel Time may have, will be subject

to continuing review by Pretzel Time, and may be revoked, in Pretzel Time's sole discretion,  at any  time  and  for  any  reason,  effective  upon  delivery  to Franchisee of ten (10) days' prior written notice.

         23.D.    CONTINUING OBLIGATIONS.

          All  obligations of Pretzel Time and Franchisee  which expressly or by their very nature survive the expiration or termination of this Agreement  shall continue  in  full  force  and  effect  subsequent  to and  notwithstanding  its expiration  or  termination  and until  they are  satisfied  or by their  nature expire.

         23.E.    INVALID OR UNENFORCEABLE PROVISIONS.

         If any provisions of this  Agreement,  or its application to any person or  circumstance,  is deemed  invalid or  unenforceable  by a court of competent jurisdiction,  then the remainder of this  Agreement or the  application of such provision  to other  persons or  circumstances  shall not be  affected  thereby, provided,  however,  that if any provision or application  thereof is invalid or unenforceable,  the court shall  substitute a suitable and  equitable  provision therefore  in order to carry out,  so far as may be valid and  enforceable,  the intent and purpose of the invalid or unenforceable provision.

         If any applicable and binding law or rule of any jurisdiction  requires a  greater  prior  notice  of the  termination  of or  refusal  to enter  into a successor Franchise  Agreement to this Agreement than is required hereunder,  or the  taking of some  other  action  not  required  hereunder,  or if,  under any applicable  and binding law or rule of any  jurisdiction,  any provision of this Agreement  or any  standard or procedure  outlined in the  Operations  Manual is invalid or unenforceable,  the prior notice and/or other action required by such law or rule shall be  substituted  for the  comparable  provisions  hereof,  and Pretzel  Time shall  have the  right,  in its sole  discretion,  to modify  such invalid or unenforceable operations procedure or standard to the extent required to be valid and enforceable.

         23.F.  INJUNCTIVE RELIEF.

         Franchisee  recognizes and  acknowledges the unique value and secondary meaning  attached to the Pretzel Time system,  its  trademarks,  service  marks, standards of operation and Pretzel Time's property.  Franchisee acknowledges and agrees that any noncompliance with the restrictive  covenants  contained herein, including  without  limitation  those provisions  pertaining to  noncompetition, confidentiality  and the improper or  unauthorized  use of Pretzel  Time's Marks will cause  irreparable  damage to Pretzel Time and its franchisees.  Franchisee therefore agrees that should it violate any restrictive covenant, or threaten to breach the  restrictive  covenants,  then Pretzel Time shall be entitled to both permanent  and temporary  injunctive  relief,  without  bond,  from any court of competent  jurisdiction  in addition to any other remedies to which Pretzel Time may be entitled,  at law or in equity,  under this agreement or otherwise  under applicable law.

         23.G.    APPLICABLE LAW.

         Except to the extent governed by the U.S. Trademark Act of 1946 (Lanham Act, 15 U.S.C.  1051 et seq.),  this Agreement,  the other agreements  referred herein,  and the offer and the sale of the  franchise  shall be  governed in all respects  and  aspects  by the  laws of the  Commonwealth  of  Pennsylvania  and expressly  excluding  the laws  pertaining  to the choice of law and conflict of laws.

         23.H.    ENTIRE STATUS OF AGREEMENT.

         This Agreement  contains the entire  agreement of the parties and there are no other oral or written  understandings or agreements  between Pretzel Time and Franchisee  relating to the subject matter of this agreement,  except as set forth in Pretzel  Time's  Offering  Circular  required by Rule under the Federal Trade  Commission  Act, a copy of which has been provided to  Franchisee  and of which   Franchisee   acknowledges   receipt,   there  are  no   representations, inducements, promises, agreements arrangements or undertakings, oral or written, between  the  parties  hereto  other than those set forth and duly  executed  in writing.  No agreement of any kind shall be binding upon either party unless and until the same has been made in writing and duly executed by both parties.

         Upon  acceptance  of this  Agreement  by  Pretzel  Time,  all  previous agreements,  contracts,  arrangements  or  understandings  of any kind,  oral or written,  relative to the franchise granted herein are cancelled, and all claims and demands  thereon are fully  satisfied.  This  agreement,  although  drawn by Pretzel Time,  shall be construed  fairly and reasonable,  and not more strictly against one party than against the other party hereto.

         23.I.    AMENDMENT OF AGREEMENT.

         This  Agreement  shall not be  modified  or  amended  except by written





agreement  executed by both parties hereto.  No oral amendment or waiver will be effective and that this provision cannot be orally amended or waived.  No waiver of default or rights will be effective unless in writing.

         23.J.    HEIRS, SUCCESSORS AND ASSIGNS.

         Subject to the provisions  hereof  relating to transfer and assignment, this Agreement is intended to and does bind the heirs, executors, administrators and successors of any or all of the parties hereto.

         23.K.    CONDITIONS AND CONTINGENCIES.

         The obligations of the parties hereunder are expressly  conditional and contingent  upon the full execution of and performance of all obligations by the parties  under this  Agreement.  This  Agreement is expressly  conditional  upon Franchisee  executing all documents  required by this Agreement  within ten (10) days of receipt of the document.  Failure by Franchisee to execute any documents shall result in the Agreement being null and void.

         In addition during Franchisee's  training,  all documents pertaining to the  franchising of Franchisee as a Pretzel Time Unit shall be held in escrow by Pretzel Time. Title in and to the Pretzel Time Unit shall not pass to Franchisee until  Franchisee  has  been  trained  as  a  Pretzel  Time  franchisee  to  the satisfaction  of Pretzel Time. If Franchisee  fails to  satisfactorily  complete Pretzel Time initial  training,  the appointment of Franchisee as a Pretzel Time franchisee  and the granting of the franchise  business to  Franchisee  shall be null and void, all documents executed between Franchisee and Pretzel Time or its designees with respect to the transaction shall be terminated and cancelled. The Franchisee acknowledges and agrees that no portion of the Franchise fee shall be refunded if Franchisee  fails to complete  Pretzel Time's initial training class to the  satisfaction  of Pretzel Time. If the  Franchisee  completes the initial training to the  satisfaction  of Pretzel  Time,  Pretzel  Time will  provide to Franchisee fully signed copies of the Franchise Agreement.

         It is  understood  and agreed by the parties  that the  granting of the franchise  and all  contracts  and  agreements  entered  into by and between the parties with respect to the Unit are specifically contingent upon the signing of a lease for the Site.  In the event that a lease for the Site cannot be obtained on or before sixty (60) days after  delivery of Pretzel  Time's  approval of the Site at no fault  or delay by  Franchisee,  then all  contracts  and  agreements entered into by Pretzel Time, and  Franchisee  shall become null and void and of no effect,  and all monies  deposited by Franchisee less a nonrefundable  fee of $2,500 shall be refunded.

         23.L.    WAIVER BY PRETZEL TIME.

         No waiver by  Pretzel  Time of any  default  or  failure  to perform by Franchisee,  or of any  breach of the  terms of this  Agreement  or no  failure, refusal or neglect of Pretzel Time to exercise any right,  option or power given it under this Agreement,  shall preclude Pretzel Time from thereafter  requiring strict  compliance or from declaring  this  Agreement and the franchise  granted herein  revoke or  terminated.  The failure of Pretzel  Time to  terminate  this Agreement upon the occurrence of one or more Acts of Default will not constitute a waiver  or  otherwise  affect  the right of  Pretzel  Time to  terminate  this Franchise  because of a continuing or subsequent  failure to cure one or more of the aforesaid events of default or any other default.

         23.M.    COSTS AND EXPENSES OF ENFORCEMENT.

         If a claim  for  amounts  owed by  Franchisee  to  Pretzel  Time or its Affiliates  is  asserted  in any  judicial or  arbitration  proceeding  or later appeal,  or if Pretzel Time is required to enforce the Franchise  Agreement in a judicial or arbitration proceeding or later appeal, the prevailing party will be entitled  to  reimbursement  of its costs  and  expenses,  including  reasonable arbitrators',  accountants'  and  legal  fees,  whether  incurred  prior  to, in preparation for or in contemplation of the filing of any written demand,  claim, action,  hearing or  proceeding  to enforce  the  obligations  of the  Franchise Agreement.  If Pretzel Time incurs  expenses in connection  with your failure to pay when due amounts  owing to Pretzel  Time,  to submit  when due any  reports, information  or  supporting  records or otherwise  to comply with the  Franchise Agreement,  including,  but not limited to legal,  arbitrators'  and  accounting fees, you are required to reimburse Pretzel Time for any such costs and expenses which it incurs.          23.N.    RIGHTS OF PARTIES ARE CUMULATIVE

         THE  RIGHTS  OF  FRANCHISEE  AND  PRETZEL  TIME ARE  CUMULATIVE  AND NO EXERCISE OR  ENFORCEMENT  BY PRETZEL TIME OR  FRANCHISEE  OF ANY RIGHT OR REMEDY HEREUNDER  SHALL  PRECLUDE  THE  EXERCISE  OR  ENFORCEMENT  BY  PRETZEL  TIME OR FRANCHISEE OF ANY OTHER RIGHT OR REMEDY TO WHICH THE PARTY IS ENTITLED.

         23.O.    WAIVER OF JURY TRIAL.

     BOTH PRETZEL TIME AND THE  FRANCHISEE  IRREVOCABLY  WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM,  WHETHER AT LAW OR IN EQUITY, BROUGHT BY EITHER PARTY.  THE PARTIES  FURTHER AGREE THAT NEITHER SHALL DEMAND A JURY TRIAL IN THE EVENT OF LITIGATION.

         23.P.  WAIVER OF PUNITIVE DAMAGES.

         EXCEPT WITH RESPECT TO  FRANCHISEE'S  OBLIGATION  TO INDEMNIFY  PRETZEL TIME, THE PARTIES WAIVE TO THE FULLEST  EXTENT  PERMITTED BY LAW ANY RIGHT TO OR CLAIM FOR ANY PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER AND AGREE THAT, IN THE EVENT OF A DISPUTE  BETWEEN THEM,  THE PARTY MAKING A CLAIM SHALL BE LIMITED TO RECOVERY OF ANY ACTUAL DAMAGES IT SUSTAINS.





         23.Q.  EXCLUSIVE JURISDICTION.

         BOTH PRETZEL TIME AND  FRANCHISEE  AGREE THAT ANY ACTION ARISING OUT OF OR RELATING  TO THIS  AGREEMENT,  INCLUDING  WITHOUT  LIMITATION,  THE OFFER AND GRANTING OF THE FRANCHISE  RIGHTS  HEREUNDER  SHALL BE INSTITUTED AND MAINTAINED ONLY IN A STATE OR FEDERAL  COURT OF  GENERAL  JURISDICTION  IN DAUPHIN  COUNTY, PENNSYLVANIA  OR THE COUNTY IN WHICH PRETZEL TIME MAINTAINS ITS PRINCIPAL  PLACE OF BUSINESS.

         FRANCHISEE  IRREVOCABLY  SUBMITS TO THE  JURISDICTION OF SAID COURT AND WAIVES ANY OBJECTION  FRANCHISEE MAY HAVE TO EITHER THE JURISDICTION OR VENUE OF SUCH COURT.

         23.R.    LIMITATIONS OF CLAIMS

         EXCEPT FOR CLAIMS  BROUGHT BY PRETZEL TIME WITH REGARD TO  FRANCHISEE'S OBLIGATIONS  TO MAKE PAYMENTS TO PRETZEL TIME  PURSUANT TO THIS  AGREEMENT OR TO INDEMNIFY  PRETZEL TIME PURSUANT TO THIS  AGREEMENT,  ANY AND ALL CLAIMS ARISING OUT OF OR RELATING TO THIS  AGREEMENT  OR THE  RELATIONSHIP  OF  FRANCHISEE  AND PRETZEL  TIME  PURSUANT TO THIS  AGREEMENT  SHALL BE BARRED  UNLESS AN ACTION IS COMMENCED  WITHIN:  (1) TWO (2)  YEARS  FROM THE DATE ON WHICH  THE ACT OR EVENT GIVING  RISE TO THE  CLAIM  OCCURRED  OR (2) ONE (1) YEAR FROM THE DATE ON WHICH FRANCHISEE  OR  PRETZEL  TIME KNEW OR SHOULD  HAVE  KNOWN,  IN THE  EXERCISE  OF REASONABLE  DILIGENCE OF THE FACTS GIVEN RISE TO SUCH CLAIMS,  WHICHEVER  OCCURS FIRST.

24.      ACKNOWLEDGMENTS AND REPRESENTATIONS.

         Franchisee  acknowledges  that he has read this  Agreement  and that he understands  and accepts the terms,  conditions and covenants  contained in this Agreement as being reasonably  necessary to maintain Pretzel Time's high quality and service and the uniformity of those  standards at all Pretzel Time Units and thereby to protect and preserve the goodwill of the Marks.

         Pretzel Time  disclaims  and  Franchisee  acknowledges  that he has not received or relied upon any representations, promises, guarantees or warranties, expressed  or  implied,  made to induce the  execution  hereof or in  connection herewith which is not expressly contained herein or in the disclosure statement. More specifically,  Franchisee  acknowledges and agrees that no person acting on behalf of Pretzel Time or its affiliated  companies has made any written or oral claim,  statement,  assurance,  promise or projection of any sort  regarding the actual  or  prospective  sales,  earnings,  gross  profit  or net  profit of the franchise,  which is the subject of this agreement.  Franchisee acknowledges and agrees that Pretzel Time's officers, directors, employees and agents act only in a representative  and not in a personal capacity in connection with any of their dealings with  Franchisee.  Franchisee  recognizes that neither Pretzel Time nor any other person can guarantee  Franchisee's success in the franchised business. Franchisee  further  represents  to Pretzel  Time, as an inducement to its entry into this  Agreement,  that all statements in  Franchisee's  application for the Franchise   are  accurate  and  complete  and  that   Franchisee   has  made  no misrepresentations or material omissions in obtaining the franchise.

25.      CONSTRUCTION.

         25.A.    HEADINGS.

         The Section headings  throughout this Agreement are for the convenience and reference only of the parties and their  attorneys,  and the words contained therein shall not be held to expand,  modify,  limit, define,  amplify or aid in the interpretation, construction or meaning of this Agreement.

         25.B.  TERMINOLOGY.

         All terms and words used in this  Agreement,  regardless  of the number and gender in which they are used,  shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine,  feminine, or neuter,  as the  context  or sense of this  Agreement  or any  Section or clause herein may require,  as if such word had been fully and properly  written in the appropriate number and gender.          The  term  Franchisee  as  used  herein  is  applicable  to one or more persons,  a  corporation  or a  partnership,  as the case may be. If two or more persons are at any time Franchisee hereunder,  their obligations and liabilities to  Pretzel  Time  shall be joint and  several.  References  to  Franchisee  and assignee  which are  applicable to an individual or  individuals  shall mean the Owners of  Franchisee or the  assignee,  if the  Franchisee or the assignee is a corporation nor partnership.

         25.C.    COUNTERPARTS.

         This Agreement may be executed in one or more counterparts, any and all of which shall constitute one and the same instrument.

         25.D.  REASONABLENESS.

         Pretzel Time and  Franchisee  agree to act  reasonably  in all dealings with each other pursuant to this Agreement.  Whenever the consent or approval of either party is required or  contemplated,  the party whose  consent is required agrees not to unreasonably  withhold the same,  unless such consent is expressly subject to such party's sole discretion pursuant to the terms of this Agreement. In no event shall Pretzel Time's withholding of consent allow Franchisee a claim for money damages.

26.      SECURITY AGREEMENT.





         26.A.    SECURITY INTEREST.

         In order  to  secure  full and  prompt  payment  of the fees and  other charges to be paid by Franchisee to Pretzel Time,  and to secure  performance of the other  obligations  and covenants to be performed by Franchisee,  under this Agreement,  Franchisee hereby grants Pretzel Time a valid and effectual security interest  in,  lien  upon,  and  right of set off  against  all of  Franchisee's interest  in  the  improvements,  fixtures,  inventory,  goods,  appliances  and equipment now or hereafter owned and located at the Unit (whether annexed to the Premises or not) or used in connection with the business  conducted at the Unit, including,  without in any manner limiting the generality of the foregoing,  all machinery,  materials,  appliances and fixtures for  generating or  distributing air, water, heat,  electricity,  light, fuel or refrigeration,  for ventilating, cooling or sanitary purposes, for the exclusion of vermin or insects and for the removal  of  dust,   refuse  or  garbage;   all   engines,   machinery,   ovens, refrigerators,   freezers,  furnaces,   partitions,  doors,  vaults,  sprinkling systems, light fixtures,  fire hoses, fire brackets,  fire boxes, alarm systems, brackets,  screens,  floor tile,  linoleum,  carpets,  plumbing,  water systems, appliances,  walk-in refrigerator boxes, cabinets,  dishwashers,  stoves, set-up tables,  rolling  counters,   kitchen  ranges,  display  counters  and  shelves, humidified  cabinets,  computers and computer software,  and other equipment and installations;  all other and  further  installations  and  appliances;  all raw materials,   work  in  process,  finished  goods  and  all  inventory;  and  all replacements  thereof,  attachments,   additions  and  accessions  thereto,  and products  and  proceeds  thereof  in any  form,  including  but not  limited  to insurance proceeds and any claims against third parties for loss or damage to or destruction  of any or all of the foregoing  (collectively,  the  Collateral). Without the prior  written  consent of Pretzel Time,  Franchisee  agrees that no lien upon or security  interest in the  Collateral  or any item  thereof will be created or suffered  to be created  and that no lease will be entered  into with respect to any item of Collateral. Franchisee will not sell or otherwise dispose of any item of Collateral,  or remove any Collateral  from the Premises,  unless the same is replaced by a similar item of equal or greater value, and except for the sale of  inventory in the  ordinary  course of  business,  without the prior written  consent  of Pretzel  Time.  Franchisee  agrees to give to Pretzel  Time advance notice in writing of any proposed change in Franchisee's name,  identity or structure and not to make any such change  without the prior written  consent of Pretzel Time and compliance with the provisions of this Agreement. Franchisee agrees  to  execute  for  filing  such  financing  statements  and  continuation statements as Pretzel Time may require from time to time. Pretzel Time agrees to pay all filing  fees,  including  fees for  filing  continuation  statements  in connection with such financing statements.

         26.B.  DEFAULT REMEDIES UNDER U.C.C.

         In the event of a default by Franchisee  under this Agreement,  Pretzel Time  shall  have the  remedies  and rights  available  as a secured  party with respect to the Collateral  under the Uniform  Commercial  Code as in effect from time to time in the  state  where the  premises  are  located.  The grant of the security interest to Franchisee  pursuant to this Section shall not be construed to derogate  from or impair any other rights  which  Pretzel Time may have under this Agreement or otherwise at law or equity.

27.      NOTICES.

         27.A.    DELIVERY OF NOTICES.

         All  written  notices  permitted  or required  to be  delivered  by the provisions  of this  Agreement  or of the  Operations  Manual shall be deemed so delivered to the Franchisee:

         a.   At the time delivered by hand; or

         b.  One  business  day  after  transmission  by  facsimile,   telecopy, telegraph or other electronic system;

         c. One  business  day after being  placed in the hands of a  commercial          carrier service for next business day delivery; or

         d. Three (3) business days after placement in the United States mail by          registered or certified mail, return receipt requested, postage prepaid          and addressed to the party to be notified at the addresses listed below          or the most current  business  address of which the notifying party has          been notified.  If Franchisee  refuses delivery of the same then notice          shall be deemed delivered when refused by Franchisee.

         IF TO PRETZEL TIME:

                  Pretzel Time, Inc.                   Attn:  Martin Lisiewski, CEO                   4800 Linglestown Road, Suite 202                   Harrisburg, Pennsylvania 17112

         WITH COPIES TO:

                  Rashti and Mitchell                   Attorneys at Law                   Attn:  Timothy T. Mitchell                   4422 Ridgeside Drive                   Dallas, Texas 75244





         IF TO FRANCHISEE:

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first written above.

WITNESSES:                                           PRETZEL TIME, INC.                                                               FRANCHISOR

- -----------------------                                                               BY:

_______________________                           NAME:  ____________________

                                                 TITLE:  _____________________

WITNESSES:                                  FRANCHISEE:                                                   ----------------------------

                                                              BY:

______________________                           NAME:  _____________________

                                                TITLE:

                                              CORPORATE ACKNOWLEDGMENT

STATE OF                                        )                                                      : ' COUNTY OF                                     )

On this _____ day of ___________, 19 __, before me, (Name of Notary)

     the undersigned  officer,  personally appeared and , known personally to me to be the Presidentand Secretary,  respectively, of the above-named corporation, and that  they,  as such  officers,  being  authorized  to do so,  executed  the foregoing  instrument for the purpose therein contained,  by signing the name of the corporation for themselves as such officers.

         IN WITNESS WHEREOF I have hereunto set my hand and official seal.

                                                              (Notary Public)

My Commission Expires:

(Notary Seal)

                INDIVIDUAL OR PARTNERSHIP ACKNOWLEDGMENT

STATE OF                                        )                                                      : ' COUNTY OF                                     )

         On this _____ day of ___________, 19 __, before me,                                 (Name of Notary)

     the undersigned  officer,  personally  appeared to me personally  known and known to me to be the same  person(s)  whose  name(s)  is  (are)  signed  to the foregoing  instrument,  and acknowledged the execution  thereof for the uses and purposes therein set forth.

         IN WITNESS WHEREOF I have hereunto set my hand and official seal.

                                                              (Notary Public)

My Commission Expires:





(Notary Seal)

FRAN.AGT 6.5.96                                FRANCHISE AGREEMENT

                                 By and between

          Pretzel Time, Inc., a Pennsylvania corporation as Franchisor

                                       and

                                  , Franchisee

                                    EXHIBIT C                             TO THE OFFERING CIRCULAR                               OF PRETZEL TIME, INC.

                               FRANCHISE AGREEMENT

                                   Exhibit M

                                    Sublease

           [Substitute 2 page short form - Karen to send Tim the disk] 
Question: Highlight the parts (if any) of this contract related to Covenant Not To Sue that should be reviewed by a lawyer. Details: Is a party restricted from contesting the validity of the counterparty’s ownership of intellectual property or otherwise bringing a claim against the counterparty for matters unrelated to the contract?

Ex Output:

Franchisee  and its Owners  shall  execute  general  releases,  in form satisfactory  to Pretzel Time (the  general form of which is attached  hereto as Exhibit "K"), of any and all claims against  Pretzel Time and its Affiliates and their  respective  shareholders,   officers,   directors,   employees,   agents, successors and assigns.