instruction:
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.
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                                    EXHIBIT C

                                    AIRSOPURE                                FRANCHISE AGREEMENT

THIS AGREEMENT is entered into on this ____ day of ___________, 2000, by and between Airsopure International Group, Inc., a Nevada corporation whose principal place of business is located at 15400 Knoll Trail, Suite 200, Dallas, Texas 75248 (hereinafter AIRSOPURE or by reference we, us, our), and You:                                    ,     ------------------------------------ whose address is:

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- ---------------------------------------- (hereinafter You or by reference Franchisee, or Your). Either Party or both Parties respectively may be referred to as Party or Parties.

                                    RECITALS

A. AIRSOPURE and its affiliate design, manufacture and distribute indoor air cleaning systems under the name and mark AIRSOPURE (the Products).

B. AIRSOPURE has developed a system for the establishment, development and operation of sales centers (AIRSOPURE Center(s) or Center(s)) for the sale and servicing of AIRSOPURE's exclusive line of Products using the service mark AIRSOPURE and other trademarks, service marks (including but not limited to, The Essence of Clean Air), logos and identifying features designated from time to time by AIRSOPURE (the Licensed Marks) and using AIRSOPURE's distinctive methods for establishing and operating AIRSOPURE Centers.

C. You desire to establish an AIRSOPURE Center to be located in the following geographic area:

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

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

(the Exclusive Territory), and AIRSOPURE desires to grant You the right to operate an AIRSOPURE Center at such location under the terms and conditions contained in this Agreement.

NOW, THEREFORE, in consideration of the mutual rights, covenants and obligations set forth herein, the Parties agree as follows:

1.  GRANT OF FRANCHISE

1.01. AIRSOPURE grants to You, and You accept from AIRSOPURE, the right and license to operate an AIRSOPURE Center (or the Franchise) for the sale or lease of AIRSOPURE's exclusive line of Products or at a location in the Exclusive Territory to be approved in writing by AIRSOPURE and listed in attached Exhibit A (the Exclusive Territory and Center Location), to purchase Products from AIRSOPURE or its affiliates for resale at the Center to customers in the Exclusive Territory, and to use the Licensed Marks only in connection with the operation of the Franchise in accordance with the terms and conditions of this Agreement. AIRSOPURE grants the Franchise to You hereunder in reliance upon Your agreement to at all times operate and manage the Franchise faithfully, honestly and diligently in strict conformance with AIRSOPURE's operating procedures and specifications, as set forth herein and as otherwise from time to time communicated to You, using Your best efforts to promote and enhance the performance and operation of the Franchise.

1.02. AIRSOPURE hereby grants to You the exclusive right to solicit customers for the Products by direct mail advertising, or other approved means, but not including the World Wide Web (Internet) nor by printed catalogues, in

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the Exclusive Territory described above and in Exhibit A. Other AIRSOPURE franchisees will not be permitted to solicit customers for Products by advertising in Your Exclusive Territory. Likewise, You may not target or solicit customers for Products by advertising in other Franchisees respective Exclusive Territories. Exclusive Territories will not overlap into other Exclusive Territories. You shall not purposely solicit sales and service to customers located outside Your Exclusive Territory, provided such activity in not within an assigned Exclusive Territory. You have been granted an exclusive trade area by this Agreement.

2.  TERM AND RENEWAL

2.01. The term of this Agreement shall be for 10 years commencing on the date of execution of this Agreement by AIRSOPURE.

2.02. At the expiration of the term or any renewal term hereof, You may, at its option, renew the Franchise granted hereunder for 2 additional terms of 10 years each on the following terms and conditions:





A. You shall give AIRSOPURE notice in writing of Your election to renew this Agreement at least 3 months prior to the expiration of the then-current term.

B. You shall not be in default of any provision of this Agreement or amendment hereto, including without limitation all payment obligations to AIRSOPURE and its affiliates.

C. As a condition of renewal of the Franchise, You agree to execute AIRSOPURE's then-current form of franchise agreement and to comply fully with all terms and conditions thereof, and to pay AIRSOPURE the then-current renewal fee, which is presently $1,000.00. You understand that AIRSOPURE may revise its franchise agreement for any renewal term, at AIRSOPURE's sole discretion, including without limitation to increase the royalty fees or other fees payable by You or to require other obligations of franchisees.

D. You shall meet AIRSOPURE's then-current qualifications and training requirements.

E. You shall execute a general release in a form prescribed by AIRSOPURE releasing AIRSOPURE and its affiliates, directors, officers, employees and agents from all known and unknown claims and liabilities to the extent permitted by state and federal law.

F. You may be required, at AIRSOPURE's sole discretion, to upgrade or remodel Your AIRSOPURE Center to conform to AIRSOPURE's then-current specifications and standards as specified in AIRSOPURE's Operating Manual of otherwise in writing, provided such upgrade or remodel is reasonable in terms of cost and implementation schedule.

3.  FEES

3.01. In consideration of the Franchise rights and license granted herein, You agree to pay to AIRSOPURE the following fees:

A. You shall pay to AIRSOPURE an initial franchise fee of $25,000.00 upon execution of this Agreement. You agree that the initial franchise fee represents payment for the initial grant of the Franchise rights and license granted herein, shall be fully earned upon execution of this Agreement, and the said fee will not be refunded under any circumstances unless otherwise specifically set forth herein. You must find a suitable Center site within 90 days of signing the Franchise Agreement, unless we mutually agree otherwise. If we cannot agree on a Center location, within 4 months, we may a) extend your search time, b) exchange your territory, or c) terminate your Franchise and refund up to 70% of your Franchise Fee, at our sole discretion. There are no refunds under any other circumstances.

B. You shall pay to AIRSOPURE a continuing non-refundable royalty fee on a monthly basis of

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5% of Your total monthly gross sales, as defined below. This fee is due by the 7th of the month for the preceding month.

C. You shall account to AIRSOPURE for Your continuing non-refundable local advertising fee of 2% of Your total monthly gross sales, which You must spend on the promotion of Your Center. This accounting is due by the 7th of the month for the preceding month.

D. You shall pay to AIRSOPURE a continuing non-refundable Advertising Fund fee of 2% of Your total monthly gross sales, beginning January 1, 2001, or later at our sole option, as described in Section 10 hereof. This fee will be due by the 7th of the month for the preceding month.

E. Gross sales as used in this Section 3.01 shall mean the amount of gross revenues received by You from all sources, including without limitation sales of Products, services or other merchandise of every kind or nature from, at or in connection with the operation of the AIRSOPURE Center granted herein, excluding state, federal or local sales taxes collected from customers and paid to the appropriate taxing authority.

F. Fees payable under Paragraphs 3.01.B and 3.01.D above shall be due and payable monthly by the seventh day of each month, based on Your gross sales of the previous month. Delinquent fees shall bear interest at a rate of the lower of: (i) one and one-half percent (1.5%) per month, or (ii) the maximum rate permitted by applicable law.

4.  DUTIES OF AIRSOPURE

4.01. Prior to the opening of the Franchise, AIRSOPURE shall:

A. Following receipt in writing from You of a request for approval of at least 3 possible locations as the Authorized Location for the Franchise, AIRSOPURE will promptly evaluate such locations and notify You in writing of its approval or rejection of such location(s) within 7 working days.

B. Provide You with AIRSOPURE's specifications and requirements or other assistance deemed necessary by AIRSOPURE to assist You in opening the Center.

C. Provide an initial training program for 2 people to be designated by You as described in AIRSOPURE's Operations Manual.

D. Provide one copy, on loan to You, of AIRSOPURE's Operations Manual as described in Section 8 hereof for use solely in connection with operation of the





AIRSOPURE Center granted hereunder.

E. Sell to You an opening order of Products for resale or lease at the Franchise as described in Paragraph 6.01 below.

4.02. Following the opening of the Franchise, AIRSOPURE shall:

A. Provide daily consultation by telephone as reasonably requested by You during the first two weeks of operation of the AIRSOPURE Center Franchise.

B. Provide continuing general advisory assistance as deemed necessary by AIRSOPURE regarding the operation and advertising of the Franchise.

C. Provide updates, revisions and amendments to the AIRSOPURE Operating Manual and system as AIRSOPURE may from time to time deem necessary or desirable.

D. Fill Your orders for Products for resale at the Franchise in accordance with Section 6 below.

E. Provide training programs or seminars as AIRSOPURE may, from time to time in its sole discretion, deem appropriate. AIRSOPURE's training programs for franchisees is described in AIRSOPURE's Operations Manual, and is subject to change at any time in AIRSOPURE's sole

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discretion.

F. AIRSOPURE may, from time to time at its sole discretion, provide test customers or store visits by AIRSOPURE representatives to evaluate Your methods of operation and compliance with AIRSOPURE's standards and specifications.

5.  YOUR DUTIES

5.01.  You shall: A. You must find a suitable Center site within 90 days of signing the Franchise Agreement, unless we mutually agree otherwise, and attend (or if You are a corporation, Your majority shareholder will attend or Your Operating Principal or manager and one other employee) and successfully complete to AIRSOPURE's reasonable satisfaction AIRSOPURE's initial training program within 90 DAYS following execution of this Agreement.

B. Obtain all federal, state and local business licenses, permits, certifications and bonds required for lawful operation of the Franchise and certify in writing to AIRSOPURE prior to opening that all such requirements have been obtained.

C. Attend (with Your manager) and complete to AIRSOPURE's reasonable satisfaction such continuing training or educational programs as AIRSOPURE may from time to time require in writing. AIRSOPURE will not charge You for the training programs, but You shall be responsible for the costs of meals, lodging, travel and all other expenses incurred by You or Your employees in attending such programs.

D. Actively promote AIRSOPURE's Products and services and exert Your best efforts to fully develop and maximize the market for AIRSOPURE's Products and services in Your Exclusive Territory.

E. Devote Your full time (or if You are a corporation, designate a manager) to oversee the management and operation of the Center.

F. Purchase and maintain and adequate supply for use in connection with the operation of the Franchise Business various copyrighted materials and forms which are the proprietary property of AIRSOPURE and which are an integral part of AIRSOPURE's system franchised hereunder. Other supplies and equipment necessary for operation of the Center may be purchased from third Party suppliers who meet AIRSOPURE's standards and specifications and have been approved in writing by AIRSOPURE in accordance with the procedures set forth in AIRSOPURE's Operating Manual, which may be amended from time to time by AIRSOPURE at its sole discretion.

G. Purchase Products from AIRSOPURE for resale to customers in the Exclusive Territory in accordance with Section 6 below.

H. Comply with all federal, state and local health and safety laws, rules and standards applicable to operation of the Franchise. You will forward copies of all notices of non-compliance by the Franchise with any law, rule, regulation or ordinance to AIRSOPURE within three days from receipt thereof accompanied by a summary of action You will take to comply.

I. Maintain adequate working capital to operate the Franchise in accordance with the AIRSOPURE Operations Manual, as such may be amended by AIRSOPURE from time to time.

J. Operate the Franchise in strict conformance with AIRSOPURE's policies, procedures, standards and specifications as may be prescribed by AIRSOPURE from time to time in the Operations Manual or otherwise in writing, including without limitation all changes specified by AIRSOPURE to its system or Products. .

K. Display AIRSOPURE's Licensed Marks or logos on all marketing materials and at Your AIRSOPURE Center. AIRSOPURE reserves the

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right to alter or change its Licensed Marks, logos or trade dress at any time, and You agree to use such Licensed Marks, logos or trade dress as specified from time to time by AIRSOPURE promptly upon receipt of notice in writing from AIRSOPURE.

L. Maintain and supply to third Parties upon request information to be supplied by AIRSOPURE regarding the availability of franchises.

M. Provide AIRSOPURE and its representatives with unlimited access to FRANCHISEE'S offices or its AIRSOPURE Center (personal residence excluded), including Your books, computer system (for sales and products only, unless we are auditing You) and records of the Franchise, during normal business hours for purposes of conducting inspections to fully examine and evaluate Your methods of doing business, including interviews with Your employees and customers.

N. You acknowledge and agree that such inspections and evaluations are necessary for AIRSOPURE to insure the maintenance of its quality standards, and You agree to fully cooperate with any reasonable request by AIRSOPURE in connection with such inspections and evaluations.

O. Diligently and immediately take such steps as are deemed reasonably necessary by AIRSOPURE to correct any deficiencies detected by AIRSOPURE in Your adherence to AIRSOPURE's operating policies, procedures, standards and specifications.

P. In the event You are a corporation, comply with the following:

1. You will provide in Your Articles of Incorporation that Your sole corporate purpose is the operation of the Franchise.

2. Every certificate for shares of stock in the corporation will include the following legend printed thereon if sole purpose of the corporation is to own and operate franchised business:

THE TRANSFER, PLEDGE OR ASSIGNMENT OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND RESTRICTIONS CONTAINED IN A FRANCHISE AGREEMENT BETWEEN THE HOLDER OF THESE SHARES AND AIRSOPURE FRANCHISE GROUP, INC.

3. You agree to comply with the restrictions on transfer of ownership of the corporation set forth in Section 12.02 below.

4. You will provide AIRSOPURE, prior to the opening of the Franchise, with copies of Your Articles of Incorporation, Bylaws and other governing documents, including all amendments thereto, and a copy of the resolutions by Your Board of Directors authorizing execution of this Agreement, certified by the Secretary of the corporation.

5. You will provide AIRSOPURE with a current list of shareholders and will update such list from time to time as the list changes.

6. Each shareholder of the corporation (if sole corporate purpose is the franchise), will execute a personal guarantee of Your performance under this Agreement and all amounts owed by You to AIRSOPURE in the form of attached Exhibit B.

Q. The Parties recognize the importance of fully developing the market for Products in the Exclusive Territory, and a substantial part of the consideration for and inducement to AIRSOPURE to enter into this Agreement is Your agreement to devote Your best efforts to market, sell and support Products to customers located in Your Exclusive Territory. You agree to concentrate Your marketing efforts to customers located in Your Territory, and You agree not to advertise the Products using media or publications whose primary coverage area is outside Your Exclusive Territory.

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R. You may relocate Your Center at Your sole expense, within Your Exclusive Territory, provided You give us written notification at least 30 days prior to relocation stating the reasons for such a move.

6.  PURCHASE AND SALE OF PRODUCTS

6.01. You will purchase from AIRSOPURE and AIRSOPURE will sell to You for resale or lease at the Center to customers in the Exclusive Territory an opening order of Products having an aggregate cost to You of from $5,000.00 to $10,000.00, by mutual agreement, based on market conditions. Such purchase must be consummated in its entirety before You open Your Center, unless AIRSOPURE agrees in writing to extend such time period.

6.02. After the opening order contemplated by the preceding Paragraph, You will from time to time place orders for Products with AIRSOPURE on the following basis:

A. All orders for Products shall be accompanied by payment, unless at AIRSOPURE's sole discretion, other payment terms are permitted.

B. All orders will be shipped freight collect unless freight is paid in advance by You.

C. You will pay the prices then prevailing at the time AIRSOPURE receives each order. Such prices are subject to change at any time by AIRSOPURE.

D. All merchandise will be shipped to You at the Center for resale to customers





in the Exclusive Territory. You will sell Products only to end-user customers and not for resale. You will not sell or lease Products at any location other than within Your Exclusive Territory, engage in mail order sales of Products or supply Products to others for resale or lease at any other location.

E. All orders for Products are subject to availability. In the event any Product is in short supply, AIRSOPURE shall have the right to allocate such Product on an equitable basis.

F. You will not modify the Products, and You will not offer or carry any products or services other than AIRSOPURE's Products and services specified by AIRSOPURE without written approval from AIRSOPURE.

G. Notwithstanding nationally advertised prices by AIRSOPURE, You may resell Products purchased under this Agreement at prices set by You. However, AIRSOPURE retains the right, to the extent permitted by law, to refuse to fill Your orders for Products if You fail to honor AIRSOPURE's suggested prices for the same Products sold by other franchise owners in Your region.

7.  LICENSED MARKS

7.01. AIRSOPURE represents with respect to the Licensed Marks that:

A. AIRSOPURE is the owner of all right, title and interest in and to the Licensed Marks or has the right and license to use and grant a license to You to use the said Licensed Marks.

B. AIRSOPURE will take all steps reasonably necessary to preserve and protect the ownership and validity in and to the Licensed Marks.

7.02. With respect to Your licensed use of the Licensed Marks pursuant to this Agreement, You agree that:

A. You shall use only the Licensed Marks designated by AIRSOPURE and shall use them only in the manner authorized and permitted by AIRSOPURE.

B. You shall use the Licensed Marks only for the operation of the Franchise at the Authorized Location.

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C. During the term of this Agreement, You shall identify Yourself as the owner of the Franchise in conjunction with any use of the Licensed Marks, including, but not limited to, on invoices, order forms, receipts, business cards, contracts and at such conspicuous locations on the Center's premises or in the field as AIRSOPURE may specify. The identification shall be in a form which specifies Your name, followed by the term Independent Franchise Owner or such other identification as shall be approved by AIRSOPURE.

D. You shall not use the Licensed Marks to incur any obligation or indebtedness on behalf of AIRSOPURE, and You shall not represent that Your Center is owned, operated by or affiliated with AIRSOPURE other than as a franchisee.

E. You shall not use the Licensed Marks as part of Your corporate or other legal name, without the prior written consent of AIRSOPURE.

F. You shall file an assumed name registration, and shall execute any documents deemed necessary by AIRSOPURE to obtain protection for the Licensed Marks or to maintain their continued validity and enforceability.

7.03. You expressly understand and acknowledge that:

A. As between the Parties hereto, AIRSOPURE, by its trademark License Agreement with Airsopure, Inc. is the licensor of all right, title and interest in and to the Licensed Marks and the goodwill associated with and symbolized by them.

B. You shall not directly or indirectly contest the validity of the ownership of the Licensed Marks.

C. Your use of the Licensed Marks pursuant to this Agreement does not give You any ownership interest or other interest in or to the Licensed Marks.

D. Any and all goodwill arising from Your use of the Licensed Marks in the Franchise under AIRSOPURE's system shall inure solely and exclusively to the benefit of AIRSOPURE, and upon expiration or termination of this Agreement and the Franchise herein granted, no monetary amount shall be assigned as attributable to any goodwill associated with Your use of the Licensed Marks.

E. The right and license to use the Licensed Marks granted hereunder to You is nonexclusive, and AIRSOPURE may use and grant franchises to others to use the Licensed Marks in any manner except as expressly provided otherwise herein.

F. AIRSOPURE reserves the right to substitute different Licensed Marks for use in identifying the System and the businesses operating thereunder, and You agree to comply with AIRSOPURE's requirements relating thereto.

7.04. You shall promptly notify AIRSOPURE of any unauthorized use of the Licensed Marks or marks confusingly similar thereto, any challenge to the validity of the Licensed Marks, or any challenge to AIRSOPURE's ownership of, or Your right to use, the Licensed Marks. You acknowledge that AIRSOPURE has the sole right to direct and control any administrative proceeding or litigation involving the Licensed Marks, including any settlement thereof. AIRSOPURE has the right, but not the obligation, to take action against uses by others that may constitute infringement of the Licensed Marks.





7.05. Provided You have used the Licensed Marks in accordance with this Franchise Agreement and AIRSOPURE's Operations Manual, AIRSOPURE will defend You at AIRSOPURE's expense against any third Party claim, suit or demand involving the Licensed Marks and arising out of Your use thereof. In the event that You have not used the Licensed Marks in accordance with this Agreement, AIRSOPURE shall defend You, at Your expense, against such third Party claims, suits or demands.

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7.06. In the event of any litigation or administrative proceeding relating to the Licensed Marks, You shall execute any and all documents and do all acts as may, in the opinion of AIRSOPURE, be necessary to carry out such defense or prosecution, including, but not limited to, becoming a nominal Party to any legal action. Except to the extent that such litigation is the result of Your use of the Proprietary Marks in a manner inconsistent with the terms of this Agreement, AIRSOPURE agrees to reimburse You for its out-of-pocket costs in performing such acts, except that You shall bear the salary costs of its employees, and AIRSOPURE shall bear the cost of any judgment or settlement.

8.  OPERATIONS MANUAL

8.01. AIRSOPURE shall provide You with one copy of AIRSOPURE's Operations Manual covering the proper operating and marketing techniques and the standards and specifications for operation of the Franchise. You agree to fully comply with the Operations Manual in its entirety as an essential aspect of Your obligations under this Agreement. Failure to so comply shall be treated as a breach of this Agreement.

8.02. You shall at all times treat the Operations Manual, all supplements and revisions thereto, any other operations manual, brochure or memorandum created for or approved for use in the operation of the Franchise and the information contained therein as the confidential and proprietary information of AIRSOPURE, and shall use all reasonable efforts to maintain the confidentiality of such information. You shall not at any time, without AIRSOPURE's prior written consent, copy, duplicate, record, or otherwise reproduce the foregoing materials, in whole or in part, nor otherwise make the same available to any unauthorized person. You may disclose such information and materials only to such of Your employees or agents, or others who must have access to it in connection with their employment or the performance of this Agreement, in which event You shall obtain the agreement of such persons and entities to maintain the confidentiality thereof. The Operations Manual shall remain at all times the sole property of AIRSOPURE.

8.03. AIRSOPURE may from time to time revise the contents of the Operations Manual, and You expressly agree to comply with each new or changed standard, specification or procedure set forth therein. You shall at all times ensure that Your copy of the Operations Manual is kept current and up to date. In the event of any dispute as to the content of the Operations Manual, the terms of the master copy of the Operations Manual maintained by AIRSOPURE at AIRSOPURE's home office shall be controlling.

9.  ACCOUNTING AND RECORDS

9.01. During the term of this Agreement, You shall maintain and preserve, for at least five years from the date of their preparation, full, complete, and accurate, books, records and accounts in the form and manner prescribed by AIRSOPURE from time to time in the Operations Manual or otherwise in writing.

9.02. You shall, at Your expense, submit to AIRSOPURE, by the 7th day of each month, a monthly statement on forms prescribed by AIRSOPURE accurately reflecting gross sales of the Franchise for the preceding calendar month. Each statement shall accompany Your monthly royalty and advertising fund fee payments and shall be signed by You attesting that it is true and correct.

9.03. You shall, at Your expense, submit to AIRSOPURE an annual financial statement for the Franchise, which includes an income statement prepared in accordance with generally accepted accounting principals, within 90 days of the end of each fiscal year during the term hereof. Each statement shall be signed by You attesting that it is true and correct.

9.04. You shall submit to AIRSOPURE for review and auditing such other forms, reports,

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records, information and data, as AIRSOPURE may reasonably request in writing.

9.05. AIRSOPURE or its designated agents shall have the right at all reasonable times to examine and copy, at its expense, all books, records, receipts and tax returns of Yours related to the Franchise and, at its option, to have an independent audit made, and thereupon be allowed to search Your computer accounting files. If an inspection or audit should reveal that payments have been understated in any report to AIRSOPURE, then You shall immediately pay to AIRSOPURE the amount understated upon demand, in addition to interest from the date such amount was due until paid, at the prime rate being charged by Bank of America on the date the payment was due plus 2%, or the maximum rate permitted by law, whichever is less. If an inspection discloses an underpayment to AIRSOPURE of 2% or more of the total amount that should have been paid to AIRSOPURE, You shall, in addition to repayment of such understated amount with interest, reimburse AIRSOPURE for any and all costs and expenses incurred in connection with the inspection or audit (including, without limitation,





reasonable accounting and attorneys' fees). The foregoing remedies shall be in addition to any other remedies AIRSOPURE may have, including without limitation, the remedies for default.

10.  MARKETING AND ADVERTISING

10.01. You shall submit to AIRSOPURE for review prior to use samples of all advertising and promotional materials that have not been previously approved by AIRSOPURE. AIRSOPURE shall notify You of its approval or disapproval within 7 days or less from the date of receipt by AIRSOPURE of such materials. Failure by You to obtain the prior approval in writing of AIRSOPURE for all advertising and promotional materials shall be a violation of this Agreement.

10.02. AIRSOPURE has established an advertising fund (the Fund) to build recognition of the Products and the Licensed Marks and to promote AIRSOPURE's Products and the Franchise. You shall participate in the Fund, in addition to Your obligation to conduct local advertising of the Franchise, on the basis described in Paragraph 3.01.D above.

10.03. AIRSOPURE will administer the Fund as follows:

A. The Fund shall be maintained in a separate bank account. Upon request by You, AIRSOPURE will provide an annual accounting of amounts spent from the Fund, including a reasonable allocation to cover AIRSOPURE's overhead expenses for administration and management of the Fund.

B. AIRSOPURE may allocate amounts held in the Fund at its discretion as AIRSOPURE deems appropriate. You are not guaranteed that any particular amount or percentage of the Fund will be spent in Your local market.

C. AIRSOPURE shall have the right to terminate the Fund at any time. However, the Fund will not be terminated until all moneys in the Fund have been expended for the purposes stated in Paragraph 10.02 above.

D. AIRSOPURE may from time to time amend its policies or establish new policies and procedures for administration of the Fund.

10.04. In addition to its monthly contribution to the Fund, You shall spend an amount equal to at least 2% of Your total monthly gross sales (as defined in Paragraph 3.01.C above) on local advertising in Your Exclusive Territory. You shall submit to AIRSOPURE a monthly report to accompany Your advertising fund fee and royalty fee payments accounting for and evidencing Your local advertising expenditures. Your local advertising shall comply with the procedures specified in Paragraph 10.01 above.

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11.  INSURANCE

11.01. You shall procure and maintain in full force and effect during the term of this Agreement, at Your expense, insurance policies written by an insurance company satisfactory to AIRSOPURE in accordance with standards and specifications set forth in the Operations Manual or otherwise by AIRSOPURE in writing. Such policies shall name AIRSOPURE as an additional insured and shall include, at a minimum:

A. Comprehensive general liability insurance in the amount of $1,000,000.00.

B. Comprehensive automobile liability insurance, including collision, comprehensive, medical and liability to satisfy state law requirements.

C. Additional coverage's and higher policy limits may be required from time to time by AIRSOPURE.

11.02. At least 7 days prior to the opening of the Center and on each policy renewal date thereafter, You shall submit to AIRSOPURE copies of all policies and policy amendments. The evidence of insurance shall include a statement by the insurer that the policy or policies will not be canceled or materially altered without at least 30 days prior written notice to AIRSOPURE.

11.03. Your obligation to obtain and maintain the foregoing policy or policies in the amounts specified shall not be limited in any way by reason of any insurance which may be maintained by AIRSOPURE, nor shall Your performance of that obligation relieve You of liability under the indemnity provisions set forth in Section 17 of this Agreement.

11.04. Should You, for any reason, fail to procure or maintain the insurance required by this Agreement, AIRSOPURE shall have the right and authority (without, however, any obligation to do so) immediately to procure such insurance and to charge same to You, which charges, together with a reasonable fee for AIRSOPURE's expenses in so acting, shall be payable by You immediately upon notice. AIRSOPURE is not a licensed insurance agent or agency.

12.  TRANSFER OF INTEREST

12.01.   Transfer by AIRSOPURE

A. AIRSOPURE shall have the right to transfer or assign all or any part of its rights or obligations in this Agreement to any person or legal entity. AIRSOPURE may sell or assign any of its assets, including without limitation the Licensed Marks, the system or Products, to any person or legal entity without liability or obligation to You.

B. Nothing in this Agreement or otherwise shall obligate AIRSOPURE to remain in





the indoor air purification business in the event AIRSOPURE should exercise its right to assign this Agreement or its assets which are the subject of this Agreement to a third Party.

12.02.   Transfer by You A. You agree that the rights and duties set forth in this Agreement are personal to You, and that AIRSOPURE has entered into this Agreement and granted the Franchise rights and license hereunder in reliance on Your business skill, financial capacity, and character. Accordingly, You shall not sell, assign, transfer, convey, give away, mortgage or otherwise encumber any direct or indirect interest in the Franchise without the prior written consent of AIRSOPURE.

B. Any purported assignment or transfer, by operation of law or otherwise, not having the prior written consent of AIRSOPURE shall be null and void and shall constitute a material breach of this Agreement.

C. AIRSOPURE shall not unreasonably withhold its consent to a transfer of any interest in Your Franchise or in this Agreement if the following conditions have been met:

1. All of Your accrued monetary and other

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obligations to AIRSOPURE and its subsidiaries, affiliates and suppliers shall have been satisfied;

2. You shall not be in default of any provisions of this Agreement or any other agreement between You and AIRSOPURE or its affiliates or suppliers;

3. You shall have executed a general release, in a form satisfactory to AIRSOPURE, of any and all claims against AIRSOPURE and its officers, directors, shareholders and employees.

4. You shall remain liable for all obligations to AIRSOPURE in connection with the Franchise prior to the effective date of the transfer;

5. The transferee shall enter into a written assignment in a form satisfactory to AIRSOPURE assuming and agreeing to discharge all of Your obligations under this Agreement;

6. The transferee shall demonstrate to AIRSOPURE's satisfaction that the transferee meets AIRSOPURE's then existing requirements and qualifications for the granting of an AIRSOPURE Franchise;

7. The transferee shall execute for a term ending on the expiration date of this Agreement the standard form franchise agreement then being offered to new franchisees and such other ancillary agreements and documents as AIRSOPURE may then require for the Franchise, which may include changes in required fee payments or other terms;

8. The transferee shall agree to upgrade the Franchise to conform to the then current standards and specifications for AIRSOPURE franchises;

9. Transferee and its employees shall complete such training programs as AIRSOPURE may reasonably require, at the transferee's expense;

10. You shall pay AIRSOPURE a transfer fee of $1000.00 to cover AIRSOPURE's administrative expenses in connection with the transfer.

12.03.   Right of First Refusal

In the event You desire to sell the AIRSOPURE Center and Franchise rights and license granted herein, or any part of Your stock interest in a corporation that has been granted such rights, and receives a bona fide acceptable offer in writing, You agree to notify AIRSOPURE in writing of the terms and conditions of such offer. AIRSOPURE shall have the option, within 15 days after receipt of such written notice, to notify You that AIRSOPURE elects to purchase the rights and license granted herein or stock ownership on the same terms and conditions as the bona fide written offer. You agree to sell to AIRSOPURE on the same terms and conditions as the bona fide offer and to comply with all applicable laws relating to bulk transfers of assets. If AIRSOPURE fails to notify You of its election to exercise its right of first refusal granted herein within the thirty day period, then You may sell the franchise rights and license or the stock for the amount of the bona fide offer, subject to AIRSOPURE's rights under Section 12.02 above. Any material change in the terms or conditions of any offer prior to closing shall constitute a new offer subject to AIRSOPURE's right of first refusal described herein. If You fail to consummate the transaction within 30 days from the earlier of: (a) receipt of notice from AIRSOPURE that it elects not to exercise its right of first refusal, or (b) expiration of the 15 day period referred to herein, then You must resubmit the proposed transaction to AIRSOPURE, and AIRSOPURE shall have a new 15 day review period and right of first refusal.

12.04.   Transfer Upon Death or Mental Incapacity Upon Your death or mental incapacity, or a person owning all or controlling interest in Your Franchise, AIRSOPURE shall consent to the transfer of such interest to Your spouse or heirs provided, in AIRSOPURE's sole determination, such person(s) meet AIRSOPURE's then existing requirements and qualifications for the granting of an AIRSOPURE Franchise. If the said transfer

                                       11





shall not be approved by AIRSOPURE, Your executor, administrator or personal representative shall transfer Your interest to a third Party approved by AIRSOPURE within 6 months after Your death or the determination of Your mental incapacity. If Your interest is not disposed of within 6 months after such death or mental incapacity, AIRSOPURE may terminate this Agreement.

12.05.   Operation of Franchise by AIRSOPURE In order to prevent any interruption in the business that would cause harm to the Franchise or AIRSOPURE, You authorize AIRSOPURE, at its option but not its obligation, in the event that You are absent or incapacitated by reason of illness, death or otherwise and are not, in AIRSOPURE's sole judgment, able to operate the Franchise for any extended period of time, to operate and manage the Franchise for so long as AIRSOPURE deems necessary, without waiving any of AIRSOPURE's other rights and remedies under this Agreement. All monies from the operation of the Franchise during such period of operation by AIRSOPURE shall be kept in a separate account, and the expenses of AIRSOPURE during such period for operating the Franchise, including reasonable compensation of AIRSOPURE and its employees or representatives, shall be charged to such account. You agree to save harmless and fully indemnify AIRSOPURE and its employees and representatives for and against all claims, losses or actions in connection with the operation and management of the Franchise hereunder.

12.06.   Non-Waiver of Claims AIRSOPURE's consent to a transfer of any interest in the Franchise granted herein shall not constitute a waiver of any claims it may have against You, nor shall it be deemed a waiver of AIRSOPURE's right to demand exact compliance with any of the terms of this Agreement by the transferee.

13.  CONFIDENTIAL INFORMATION

13.01 You shall not, during the term of this Agreement or thereafter, communicate, divulge, or use for the benefit of any other person or entity any confidential information, knowledge, or know-how concerning AIRSOPURE's system, the Products or the operation of the Franchise, including without limitation the Operations Manual. You shall divulge such confidential information only to such of Your employees or agents as must have access to it in order to operate the Franchise. Any and all information, trade secrets, knowledge, know-how, or other data concerning AIRSOPURE's system, the Products or which AIRSOPURE designates as confidential shall be deemed confidential for purposes of this Agreement, except information which You can demonstrate came to Your attention prior to disclosure thereof by AIRSOPURE, or which, at or after the time of disclosure by AIRSOPURE to You, had become or later becomes a part of the public domain, through publication or communication by others. You agree to use such proprietary information of AIRSOPURE only for operation of the Franchise Business.

13.02. You acknowledge that the provisions of this Section 13 are and have been a primary inducement to AIRSOPURE to enter into this Agreement, and that any failure to comply with the requirements of Section 13.01 will cause AIRSOPURE irreparable injury without an adequate remedy at law; and You agree to pay all court costs and reasonable attorneys' fees incurred by AIRSOPURE in obtaining specific performance of, or an injunction against any violation of, the requirements of Section 13.01.

14.  DEFAULT AND TERMINATION

14.01. AIRSOPURE may, at its option, terminate this Agreement and all rights granted hereunder, without affording You any opportunity to cure the defaults, effective immediately upon receipt of notice by You, upon the occurrence of any of the following:

A. You become insolvent or makes a general assignment for the benefit of creditors; or if a

                                       12

petition in bankruptcy is filed by You or such a petition is filed against and consented to by You; or if You are adjudicated a bankrupt; or if You are unable to pay commercial debts as they become due.

B. You (or a principal shareholder if the Franchisee is a corporation) is convicted of a felony or any other crime or offense that is reasonably likely, in the sole opinion of AIRSOPURE, to adversely affect the goodwill or reputation of AIRSOPURE or the Licensed Marks.

C. A judgment or consent decree is entered against You (or a principal shareholder if the Franchisee is a corporation) in a case involving allegations of fraud, racketeering, unfair or deceptive trade practices or similar allegations which, in AIRSOPURE's judgment, are likely to adversely affect AIRSOPURE, its Products, the Licensed Marks or the goodwill associated therewith.

D. You or any partner or shareholder in You transfers any rights or obligations under this Agreement or any interest in You or in the Franchise to any third Party without AIRSOPURE's prior written consent.

E. You intentionally disclose the contents of the Operations Manual or&bbsp;other trade secrets or confidential information provided to You by AIRSOPURE to any unauthorized person or fails to exercise reasonable care to prevent such disclosure.

F. You maintain false books or records of the Franchise or knowingly make any material false statements or omission to AIRSOPURE in connection with Your





application for the franchise granted herein or in connection with any reports submitted to AIRSOPURE, including without limitation the understatement of gross sales by more than 2%.

G. You fail to commence business within 4 months following the execution of this Agreement.

H. You (and Your manager) fail to attend any scheduled training program which AIRSOPURE has indicated is mandatory.

I. You operate the Franchise in such a manner which causes a threat or danger to public health or safety.

J. You receive 3 or more notices of default of this Agreement from AIRSOPURE for violations under Section 14.02 hereof.

14.02. Except for violations of this Agreement listed in Section 13.01 above, or violations specifically provided for elsewhere in this Agreement, You shall have 30 days from receipt from AIRSOPURE of a written Notice of Termination (citing the reason(s) therefor) within which to remedy any default listed in this Section 13.02, or any other violation of this Agreement.

A. You fail to pay promptly any monies owing to AIRSOPURE or its subsidiaries or affiliates when due, or to submit the financial information or reports required by AIRSOPURE under this Agreement.

B. You fail to meet or comply with any standards, specifications or procedures prescribed by AIRSOPURE in this Agreement, the Operations Manual or otherwise specified in writing from time to time by AIRSOPURE.

C. You are convicted, plead guilty or enter into a consent agreement for violation of any federal, state or local law, ordinance, rule or regulation that is reasonably likely, in the sole opinion of AIRSOPURE, to materially and unfavorably affect the Franchise or AIRSOPURE, the Licensed Marks or the goodwill associated therewith.

D. You misuse or make any unauthorized use of the Proprietary Marks or otherwise impairs the

                                       13

goodwill associated therewith or AIRSOPURE's rights therein.

E. You abandon the Franchise or fail to operate the Center during normal business hours without the consent in writing of AIRSOPURE.

F. You fail to submit advertising or promotional materials to AIRSOPURE for approval in writing prior to use.

14.03. No right or remedy of AIRSOPURE conferred herein shall be exclusive of any other right or remedy provided herein, at law or in equity, unless specifically provided otherwise in this Agreement or any amendment hereto.

14.04. In the event this Agreement is terminated by AIRSOPURE for violation of this Agreement by You, AIRSOPURE shall have the right, at its option, to purchase Your interest in the tangible assets of the Franchise at their fair market value.

15. OBLIGATIONS UPON TERMINATION

15.01. Upon termination or expiration of this Agreement, this Agreement and all rights granted hereunder to You shall immediately terminate, and:

A. You shall immediately cease to operate the Franchise and shall not thereafter, directly or indirectly, represent to the public or hold itself out as a present or former franchisee of AIRSOPURE.

B. You shall immediately and permanently cease to use, by advertising or in any other manner whatsoever, the Licensed Marks of AIRSOPURE, any other identifying characteristics or trade dress of the system, and all confidential methods, procedures and techniques associated with the Franchise.

C. You shall take such action as may be necessary to cancel any assumed name or equivalent registrations or listings in telephone or other directories which contain the names or Licensed Marks of AIRSOPURE, and You shall furnish AIRSOPURE with evidence satisfactory to AIRSOPURE of compliance with this obligation within 30 days after termination or expiration of this Agreement.

D. You shall promptly pay all sums owing to AIRSOPURE and its subsidiaries and affiliates, including all damages, costs and expenses, including reasonable attorneys' fees, incurred by AIRSOPURE as a result of the default.

E. You shall pay to AIRSOPURE all damages, costs and expenses, including reasonable attorneys' fees, incurred by AIRSOPURE subsequent to the termination or expiration of the Franchise herein granted in obtaining injunctive or other relief for the enforcement of any provisions of this Agreement.

F. You shall immediately turn over to AIRSOPURE the Operations Manual, records, files, instructions, software, correspondence, and all other materials provided by AIRSOPURE related to the operation of the Franchise, and all copies thereof (all of which are acknowledged to be AIRSOPURE's property), and shall retain no copy or record of any of the foregoing, except only Your copy of this Agreement and any correspondence between the Parties, and any other documents which You reasonably need for compliance with any applicable provision of law.





G. AIRSOPURE shall have the right, but not the duty, to be exercised by notice of intent to do so within 30 days after termination or expiration, to purchase any or all signs, advertising materials, supplies and inventory and any other items bearing AIRSOPURE's Licensed Marks, at Your cost or at fair market value, whichever is less. If the Parties cannot agree on the fair market value of such items, the Parties will select and share the expense of an independent appraiser to determine fair market value. With respect to any purchase by AIRSOPURE as provided herein, AIRSOPURE shall have the right to set off against the purchase price all amounts due from

                                       14

You under this Agreement.

16. COVENANTS

16.01. You covenant and agree (or if Your Franchise is a corporation Your controlling shareholder agrees) to supervise and devote Your best efforts to manage and operate the Franchise.

16.02. You acknowledge that, pursuant to this Agreement, You will receive valuable specialized training and confidential and proprietary information of AIRSOPURE, including, without limitation, information regarding the operational, sales, promotional, and marketing methods and techniques of AIRSOPURE and its system. You covenant and agree that during the term of this Agreement, and subject to the post-termination provisions contained herein, You shall not, except as otherwise approved in writing by AIRSOPURE, either directly or indirectly:

A. Divert or attempt to divert any business or customer of the Franchise to any competitor, or competing business, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to AIRSOPURE or the goodwill associated with the Licensed Marks and Products.

B. Employ or seek to employ any person who is at that time employed by AIRSOPURE or by another AIRSOPURE franchisee or induce such person to leave his or her employment.

C. Own, maintain, engage in, be employed by, advise, consult, assist, invest in or have any interest whatsoever in any business or entity which competes with or offers products or services which are the same or similar to those of AIRSOPURE or the Franchise.

16.03. You covenant and agree that You (or any shareholder if Your Franchise is a corporation) shall not, for a period of two years following termination of this Agreement for any reason, either directly or indirectly own, maintain, engage in, be employed by, advise, consult, assist, invest in or have any interest whatsoever in any business or entity which competes with or offers products or services which are the same or similar to those of AIRSOPURE or the Franchise within a radius of 25 miles of Your Exclusive Territory. In the event a court of competent jurisdiction should hold this covenant to be unreasonable or overly broad, the Parties agree to reduce the scope of such covenant to the maximum restriction permitted by law, and You agree to be bound by such less restrictive terms of this covenant. If requested by AIRSOPURE, You agree to obtain and provide to AIRSOPURE executed covenants containing terms equivalent to those contained herein from any employee of Yours who has received training from AIRSOPURE, and, if Your Franchise is a corporation, from any director or shareholder of Your corporation.

16.04. AIRSOPURE covenants and agrees that the restrictions set forth above in Paragraphs 16.02.C and 16.03 shall not apply to ownership by You of less than a 5% beneficial interest in the outstanding equity securities of any publicly traded corporation, provided that You are not an employee, consultant or director of such corporation.

16.05. You covenant and agree that its violation of any covenant contained herein would result in serious, immediate and irreparable injury to AIRSOPURE for which no adequate remedy at law will be available, and You consent, in addition to other remedies which may be available to AIRSOPURE, to the entry without opposition of an injunction prohibiting any conduct by You in violation of any covenant set forth herein.

17. INDEMNIFICATION

17.01. You agree to defend, indemnify and hold AIRSOPURE and its affiliates, directors, officers, employees and agents harmless from all claims, losses, lawsuits and expenses arising from or relating to the Franchise and Your operation thereof, except for: (i) any claims of infringement

                                       15

from third Parties due to Your use of the Licensed Marks, provided that You have used the said Licensed Marks as authorized by AIRSOPURE; and (ii) claims alleging that Products sold or leased by You are defective.

17.02. AIRSOPURE agrees to defend, indemnify and hold You harmless from all claims, losses, lawsuits and expenses arising from or relating to: (i) any claims of infringement from third Parties due to Your use of the Licensed Marks, provided that You have used the Licensed Marks as authorized by AIRSOPURE; and (ii) claims alleging that Products sold or leased by You are defective.





18. GENERAL PROVISIONS

18.01. No failure of a Party to exercise any power reserved to it by this Agreement or to insist upon strict compliance by the other Party with any obligation or condition hereunder shall constitute a waiver of such Party's rights unless such waiver is in writing. Any waiver by either Party shall not constitute a waiver thereafter to demand exact compliance with any of the terms herein. Waiver by a Party of any particular default by the other Party shall not affect or impair such Party's rights with respect to any subsequent default of the same, similar or different nature; nor shall any delay, forbearance or omission of a Party to exercise any power or right arising out of any breach or default by the other Party of any of the terms, provisions, or covenants thereof, affect or impair such Party's right to exercise the same.

18.02. Unforeseen Events

Delays in the performance of any duties hereunder which are not the fault of and are beyond the ability of the Party to control, including without limitation fires, floods, natural disasters, acts of God, labor disputes, riots or other similar events, shall not constitute a default in the Party's performance of this Agreement, and the Parties agree to extend the time of performance for a reasonable period of time to allow for such delays.

18.03. The relationship between the Parties is that of independent contractors. No partnership, joint venture, employment or relationship of principal and agent is intended, and You may not commit or bind AIRSOPURE to any obligation whatsoever.

18.04. Any and all notices required or permitted under this Agreement shall be in writing and shall be delivered by any means which will provide evidence of the date received, to the respective Parties at the following addresses unless and until a different address has been designated by written notice to the other Party:

Notices to AIRSOPURE: Airsopure International Group, Inc. 15400 Knoll Trail, Suite 200 Dallas, Texas 75248 Attn: John Potter, President

Notices to You:

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

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

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

Any notice shall be deemed to have been given at the date and time it is received.

18.05. This Agreement and the documents referred to herein constitute the entire Agreement between AIRSOPURE and You concerning the subject matter hereof, and supersede all prior agreements, oral or written. No amendment, change or variance from this Agreement shall be binding on either Party unless executed by both Parties in writing.

18.06. Except as expressly provided to the contrary herein, each provision of this Agreement shall be considered severable; and if, for any reason, any provision herein is determined to be invalid under any law or by a court having valid jurisdiction, such shall not impair the operation of, or have any other effect upon, such other

                                       16

provisions of this Agreement, and the latter shall continue to be given full force and effect and bind the Parties hereto, and the invalid provision shall be deemed not to be a part of this Agreement.

18.07. This Agreement takes effect upon its acceptance and execution by AIRSOPURE in the State of Texas, and shall be interpreted and construed under the laws of the State of Texas.

18.08. The Parties agree that any action brought by either Party against the other in any court, whether federal or state, shall be brought within the State of Texas in the judicial district in which AIRSOPURE has its principal place of business and do hereby waive all questions of personal jurisdiction or venue for the purpose of carrying out this provision.

18.09. If either Party is required to resort to legal process to enforce any provision of this Agreement, the prevailing Party will recover all costs, including reasonable attorneys fees, incurred in such legal proceeding.

18.10. You represent to AIRSOPURE that You have conducted an independent investigation of the business franchised hereunder and recognizes that the business venture contemplated by this Agreement involves business risks, and that its success will be largely dependent upon Your ability as an independent business person. AIRSOPURE expressly disclaims the making of, and You acknowledge that You have not received, any representation or guarantee, express or implied, as to the potential volume, profits or success of the business venture contemplated by this Agreement.

18.11. You acknowledge that You received a completed copy of this Agreement, the attachments hereto, if any, and agreements relating thereto, if any, at least 5





business days prior to the date on which this Agreement was executed. You further acknowledge that You have received the Offering Circular, as required by the Federal Trade Commission, at least 10 business days prior to the date on which this Agreement was executed.

18.12. This Agreement contains various headings, but it is agreed that such headings are for convenience only and shall not affect the meaning of the provisions of this Agreement.

18.13. You acknowledge that You have read and understood this Agreement, the attachments hereto, if any, and agreements relating thereto, if any, and that AIRSOPURE has accorded You ample time and opportunity to consult with advisors of Your own choosing about the potential benefits and risks of entering into this Agreement.

19. APPLICABLE LAW AND MEDIATION

A. THE PARTIES AGREE TO SUBMIT ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT (AND ATTACHMENTS) OR THE RELATIONSHIP CREATED BY THIS AGREEMENT TO NON-BINDING MEDIATION PRIOR TO BRINGING SUCH CLAIM, CONTROVERSY OR DISPUTE IN A COURT. THE MEDIATION SHALL BE CONDUCTED THROUGH EITHER AN INDIVIDUAL MEDIATOR OR A MEDIATOR APPOINTED BY A MEDIATION SERVICES ORGANIZATION OR BODY, EXPERIENCED IN THE MEDIATION OF DISPUTES IN THE AIR PURIFICATION SERVICE BUSINESS, AGREED UPON BY THE PARTIES AND, FAILING SUCH AGREEMENT WITHIN A REASONABLE PERIOD OF TIME AFTER EACH PARTY HAS NOTIFIED THE OTHER OF ITS DESIRE TO SEEK MEDIATION OF ANY CLAIM CONTROVERSY OR DISPUTE (NOT TO EXCEED 15 DAYS), THROUGH THE AMERICAN ARBITRATION ASSOCIATION IN ACCORDANCE THE RULES GOVERNING MEDIATION, AT AIRSOPURE CORPORATE HEADQUARTERS IN DALLAS, TEXAS. THE COSTS AND EXPENSES OF MEDIATION, INCLUDING COMPENSATION AND EXPENSES OF THE MEDIATOR, SHALL BE BORNE BY THE PARTIES EQUALLY. IF THE PARTIES ARE UNABLE TO RESOLVE THE CLAIM, CONTROVERSY OR DISPUTE 90 DAYS

                                       17

AFTER THE MEDIATOR HAS BEEN APPOINTED, THEN EITHER PARTY MAY SUBMIT SUCH CLAIM, CONTROVERSY OR DISPUTE TO A COURT IN ACCORDANCE WITH SECTION 19.B. BELOW NOTWITHSTANDING THE FOREGOING, EITHER PARTY MAY BRING AN ACTION (1) FOR MONEYS OWED, (2) FOR INJUNCTIVE RELIEF, OR (3) INVOLVING THE POSSESSION OR DISPOSITION OF, OR OTHER RELIEF RELATING TO, REAL PROPERTY IN A COURT HAVING JURISDICTION AND IN ACCORDANCE WITH SECTION 19.B. BELOW, WITHOUT SUBMITTING SUCH ACTION TO MEDIATION.

B. WITH RESPECT TO ANY CLAIMS, CONTROVERSIES OR DISPUTES WHICH ARE NOT FINALLY RESOLVED THROUGH MEDIATION, YOU HEREBY IRREVOCABLY SUBMIT YOURSELF TO THE NONEXCLUSIVE JURISDICTION OF THE STATE COURTS OF DALLAS COUNTY, TEXAS AND THE FEDERAL DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION. YOU HEREBY IRREVOCABLY AGREE THAT SERVICE OF PROCESS MAY BE MADE UPON YOU IN ANY EACH PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP CREATED BY THIS AGREEMENT BY ANY MEANS ALLOWED BY TEXAS OR FEDERAL LAW. VENUE FOR ANY SUCH LEGAL PROCEEDING SHALL BE DALLAS COUNTY, TEXAS; PROVIDED, HOWEVER WITH RESPECT TO ANY ACTION (1) FOR MONEYS OWED, (2) FOR INJUNCTIVE OR OTHER EXTRAORDINARY RELIEF OR (3) INVOLVING POSSESSION OR DISPOSITION OF; OR OFFER RELIEF RELATING TO, REAL PROPERTY, AIRSOPURE MAY BRING SUCH ACTION IN ANY STATE OR FEDERAL DISTRICT COURT WHICH HAS JURISDICTION. YOU HEREBY WAIVE ALL QUESTIONS OF PERSONAL JURISDICTION FOR TITLE PURPOSE OF CARRYING OUT THIS PROVISION. WITH RESPECT TO ALL CLAIMS, CONTROVERSIES, DISPUTES OR ACTIONS, THIS AGREEMENT SHALL BE INTERPRETED AND CONSTRUED UNDER TEXAS LAW (EXCEPT FOR TEXAS CHOICE OF LAW RULES).

C. YOU AND AIRSOPURE ACKNOWLEDGE THAT THE PARTIES' AGREEMENT REGARDING APPLICABLE STATE LAW AND FORUM SET FORTH IN SECTION 19.B. ABOVE PROVIDE EACH OF THE PARTIES WITH THE MUTUAL BENEFIT OF UNIFORM INTERPRETATION OF THIS AGREEMENT AND ANY DISPUTE ARISING OUT OF THIS AGREEMENT OR THE PARTIES' RELATIONSHIP CREATED BY THIS AGREEMENT, EACH OF YOU AND AIRSOPURE FURTHER ACKNOWLEDGE THE RECEIPT AND SUFFICIENCY OF MUTUAL CONSIDERATION FOR SUCH BENEFIT.

D. YOU AND AIRSOPURE ACKNOWLEDGE THAT THE EXECUTION OF THIS AGREEMENT OCCURRED IN DALLAS, TEXAS AND FURTHER ACKNOWLEDGE THAT THE PERFORMANCE OF CERTAIN OBLIGATIONS OF YOU ARISING UNDER THIS AGREEMENT SHALL OCCUR IN DALLAS, TEXAS.

IN WITNESS WHEREOF, the Parties hereto have duly executed, sealed, and delivered this Agreement on the day and year first above written.

AIRSOPURE:

By:    ---------------------------------

Title:       ------------------------------

YOU:

By:    ---------------------------------

Title:       ------------------------------

                                       18

                                    EXHIBIT F





                               PERSONAL GUARANTEE

For value received, and in consideration of the execution by Airsopure International Group, Inc. (Airsopure) of a Franchise Agreement with

- ---------------------------------------- (Franchisee), The undersigned

- ---------------------------------------- (Guarantor) hereby unconditionally guarantees to Airsopure all indebtedness, obligations and liabilities, direct or indirect, matured or immatured, primary or secondary, certain or contingent, of Franchisee to Airsopure, now or hereafter owing or incurred. This Guarantee is an absolute, unconditional, unlimited and continuing guarantee of the full and punctual payment by Franchisee of the foregoing indebtedness, obligations and liabilities and not of their collectibility only. Upon any default by Franchisee in such full and punctual payment, the liabilities and obligations of the Guarantor hereunder shall, at Airsopure's option, become forthwith due and payable without demand or notice of any nature, all of which are expressly waived by the Guarantor.

Airsopure may deal with Franchisee in such manner as Airsopure in its sole discretion deems fit, and Guarantor gives to Airsopure full authority, in its sole discretion, to do any or all of the following things: a) extend credit, make loans and afford other financial accommodations to Franchisee at such times, in such amounts and on such terms as Airsopure may approve; b) vary the terms and grant extensions or renewals of any present or future indebtedness of Franchisee to Airsopure; c) grant time, waivers and other indulgences in respect thereto; d) vary, exchange, release or discharge, wholly or partially, or delay in or abstain from perfecting and enforcing any security or guaranty or other means of obtaining payment; e) accept partial payments from Franchisee; f) release or discharge, wholly or partially, any endorser or guarantor; g) compromise or make any settlement or other arrangement with Franchisee.

Guarantor waives notice of acceptance hereof or of any action taken or omitted by Airsopure in reliance hereon and any requirement that Airsopure be diligent or prompt in making demands hereunder, giving notice of any default by Franchisee or asserting any other right hereunder.

No provision of this Guaranty can be changed, waived, discharged or terminated except by an instrument in writing signed by Airsopure and Guarantor, and no such waiver shall extend to, affect or impair any other right of Airsopure hereunder.

This Unlimited Guarantee shall inure to the benefit of Airsopure and its successors and assigns, and shall be binding on the Guarantor and the Guarantor's successors, heirs and assigns.

EXECUTED on this ____ day of ____________, 2000.

- ---------------------------------------- GUARANTOR

- ---------------------------------------- WITNESS

                                   EXHIBIT G

                            CONFIDENTIALITY AGREEMENT

This Confidentiality and Noncompetition Agreement (the Agreement) is made and entered into effective the _____day of ________________, 2000 by and between Airsopure International Group, Inc., a Nevada corporation, located at 15400 Knoll Trail, Suite 200, Dallas, Texas 75248 (the Company) and

- ----------------------------------------------- who resides at

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

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

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

- ----------------------------------------------- (the Associate).

                                    RECITALS

A. Company sells franchises for the operation of air purification system business which operate under the name and service mark Airsopure (the Franchises);

B. Company has developed a business method for operating Franchises utilizing certain Information, plans, methods, data, processes, marketing systems, techniques, operating procedures, trademarks, designs, information and know how of Company (the Confidential Information), and such Confidential Information may be further developed from time to time by Company:

C. Company has established substantial goodwill and an excellent reputation with respect to the quality of services available, which goodwill and reputation have been and will continue to be of Major benefit to Company;





D. Associate is or will become involved with Company, or a franchise of Company, in the capacity of an officer, partner, director or as beneficial owner of an Airsopure Franchise or an employee of a Franchise, and will become privileged to certain Confidential Information; and

E. Associate and Company have reached an understanding with regard to nondisclosure by Associate of Confidential Information and Noncompetition by Associate with Company

NOW THEREFORE, in consideration of the foregoing, the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, Associate and Company, intending legally to be bound, hereby agree as follows:

1. CONFIDENTIAL INFORMATION. Associate and Company acknowledge that the business plan and methods used in connection with the operation of the Franchise which utilize Company's Confidential Information, are confidential, unique, constitute the exclusive property of Company and are trade secrets of Company. Associate acknowledges that any disclosure of the Confidential Information would be wrong and would cause irreparable injury and harm to Company. Associate further acknowledges that Company has expended a great amount of effort and money in obtaining and developing the Confidential Information, the Company has taken numerous precautions to guard the secrecy of the Confidential Information and that it would be very costly for competitors to acquire or duplicate the Confidential Information.

2. OPERATIONS MANUAL AS TRADE SECRET It is understood that Confidential Information, constituting trade secret, as used in this Agreement is deemed to include, without initiation, any and all information contained in the Franchise Operations Manual, which may be provided AS one or more separate manuals, or written instructional guides, as the same are changed or supplemented from time to time, and any information of whatever nature which gives to Company an opportunity to obtain an advantage over its competitors who do not have access to, know or use such lists, written materials or information.

3. CONFIDENTIAL INFORMATION. Associate shall not at any time, publish, disclose, divulge or in any manner communicate to any person, firm' corporation, association. partnership or any other entity whatsoever or use, directly or indirectly, for its own benefit or for the benefit of any Person, firm, corporation or other entity, other than the use of Company, any of the Confidential Information of Company or its Affiliates.

4. NO INTERFERENCE WITH BUSINESS. During the term of this Agreement, neither Associate nor any member of his or her immediate finally shall divert or attempt to divert: I) any business related to, or any customer or prospective customer of; the Franchise by direct inducement or otherwise, or 2) the employment of Company or another franchisee licensed by Company,

                                       1

to any Competitive Business by any direct inducement or otherwise.

5. REMEDIES. Associate hereby acknowledges and agrees that in the event of any violations of this Agreement, Company shall be authorized and entitled, without posting a bond to obtain from any court of competent jurisdiction, preliminary and permanent injunctive relief as well as an equitable accounting of all profits or benefits arising out of any such violation, which rights and remedies shall be cumulative and in addition to any rights or remedies to which Company may be entitled.

6. EFFECT OF WAVIER. The waiver by Associate or company of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach thereof

7. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of Associate and Company and their respective heirs, executors, representatives successors and assigns.

8. ENTIRE AGREEMENT. This instrument contains the entire agreement of Associate and Company relating to the matters set forth here It may not be changed orally, but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change modification, extension or discharge is sought.

9. GOVERNING LAW. This instrument shall be governed by and construed under the laws of the State of Texas.

10. JURISDICTION AND VENUE. In the event of a breach or threatened breach by Associate of this Agreement, Associate hereby irrevocably submits to the jurisdiction of the State District Court in Dallas County, Texas and the Federal District Court for the Northern District of Texas, and irrevocably agrees that venue for any action or proceeding shall be in Dallas County, Texas. Notwithstanding the foregoing, in the event that the laws of the state where, Associate resides require that the jurisdiction or venue be elsewhere, then such other states laws shall control. but only to the extent that such other state's laws so require.

11. SEVERABILITV. Should anyone or more of the provisions hereof be determined to be illegal or unenforceable, all other provisions hereof shall be given separately therefrom and shall not be affected thereby.

12. COST OF ENFORCEMENT. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party in such





litigation as determined by the court in a final judgment or decree, shall pay the successful party or parties all costs, expenses and reasonable attorney's fees incurred therein by such arty or parties (including without Initiation such as costs, expenses and fees on any appeals), plus, if applicable, interest at the highest rate allowable by law, accruing from the date of the breach of this Agreement. If such successful party shall recover judgement in any such action or proceeding, such costs, expenses. attorney's fees and interest shall be included as part of such judgment.

IN WITNESS WHEREOF, the parties hereto have signed this Agreement on the date first above written.

FOR AIRSOPURE (COMPANY):

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

FOR FRANCHISEE OF AIRSOPURE:

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

ASSOCIATE OF FRANCHISEE:

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

ASSOCIATE'S WORK CAPACITY:

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

                                       2 
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?
answer:
You shall not directly or indirectly contest the validity of the ownership of the Licensed Marks.


question:
Exhibit 10.13

                   SOFTWARE LICENSE AND MAINTENANCE AGREEMENT

                                     BETWEEN

                     GARMAN ROUTING SYSTEMS, INC. (GARMAN)

                                       AND

               SPARKLING SPRING WATER GROUP LIMITED (SPARKLING)

     WHEREAS Garman has developed and is entitled to license to others certain software and supporting materials which Sparkling wishes to license, the parties agree as follows:

1.   DEFINITIONS AND SCHEDULES

     In this Agreement the following definitions shall apply:

     (a)    Authorized Locations means the locations listed in Schedule C.

     (b)    Confidential Information has the meaning specified in Section 14.

     (c)    Documentation means the documentation related to use of the Software described in Schedule B.

     (d)    Maintenance Commencement Date means the date that acceptance testing is successfully completed at all of the Authorized Locations.

     (e)    Maintenance Services means the Software Update Service, Telephone Support Service and Software Repair Service described in Section 10.

     (f)    Modifications means the modifications set out in Schedule D.

     (g)    Person includes an individual, corporation, partnership, joint venture, trust, unincorporated organization, the Crown or any agency or instrumentality thereof or any other judicial entity recognized by law.

     (h)    Software means the software described in Schedule B.

     (i)    Specifications means the specifications set out in Schedule D.

     (j)    Work means the Software and the Documentation collectively.

     The following is a summary of the Schedules, which shall form an integral part of this Agreement:

                                                                          PAGE 1

     Schedule A:   Fee Schedule.

     Schedule B:   Software and Documentation.

     Schedule C:   Authorized Locations and Software copies for Authorized                      Locations.

     Schedule D:   Specifications, Modifications, Data Conversion.

     Schedule E:   Implementation and Training.

     Schedule F:   Telephone Support Schedule.

2.   GRANT OF LICENSE

     Garman hereby grants to Sparkling, for the use of Sparkling and affiliated companies of Sparkling operating at Authorized Locations, a non-transferable and non-exclusive licence to use: (i) the Software, safely in executable object code format, at each AS400 at each of the Authorized Locations; and (ii) the Documentation. Sparkling's right, if any, to use the Software and Documentation at locations other than the Authorized Locations is subject to the payment of additional fees in accordance with the Fee Schedule.

3.   RESTRICTIONS ON USE

     Sparkling shall:

     (a)    not copy the Software except to copy it onto another AS400 at the Authorized Locations and to make copies of the Software at each Authorized Location solely for backup purposes;

     (b)    not copy any of the Documentation except as required for Sparkling's internal purposes related to Sparkling's use of the Software;

     (c)    not assign this Agreement or transfer, lease, export or grant a sublicence of the Work to any Person, except as and when authorized to do so by Garman in writing;

     (d)    not reverse engineer, decompile or disassemble the Software;

     (e)    not use the Work except as authorized herein;

     (f)    take all reasonable precautions to prevent third parties from using





the Work in any way that would constitute a breach of this Agreement including, without limitation, such precautions as Sparkling would otherwise take to protect its own proprietary software or hardware or information; and

                                                                          PAGE 2

     (g)    not use the Work to act as a service bureau in whole or in part, for any other Person, except for any affiliate of Sparkling operating at the Authorized Locations.

4.   DELIVERY, INSTALLATION AND DATA CONVERSION

     (a)    In accordance with Schedule C, Garman has delivered the required number of copies of the executable object code of the Software to those Authorized Locations (together with copies of the Documentation as is reasonably required by Sparkling to operate the Software in the manner contemplated hereunder) and installed the Software on the applicable AS400's at each Authorized Location. The installation of the Software at each existing Authorized Location shall be deemed to be completed including contracted changes and has been properly installed, is in good working order. Modifications and changes shall fall within the 60 day testing period at which time they are deemed to be completed and has been properly installed, is in good working order.

     (b)    For Future Installations and Conversions at an existing or new Authorized Location, Garman shall be available for Contracting required installation and conversion tasks as reasonably required, in consultation with and with the reasonable assistance of Sparkling, including conversion of Sparkling's data, as more particularly described in Schedule D, from its current electronic form into a form suitable for processing with the Software and as required for the testing of the Software and for use of the Software as contemplated hereunder.

5.   TRAINING

     In conjunction with the installation of the Software at each existing or new Authorized Location, and prior to the commencement of acceptance testing at each Authorized Location, Garman shall provide as contracted a qualified personnel as specified in Schedule E. Garman shall also provide copies of reference documentation and manuals for training and reference by Sparkling's personnel.

6.   ACCEPTANCE TESTING AT EACH AUTHORIZED LOCATION

     (a)    For each new Authorized Location, upon written notice by Garman of the completion of the installation of the Software as contracted for in Section 4 including training provided for in Section 5, Sparkling shall operate and test the Software for an acceptance period of 30 business days in accordance with Sparkling's normal operating practices. At the end of each day during the acceptance period, Sparkling shall notify Garman of any instances in which the Software does not perform in accordance with the Specifications.

     (b)    If Garman receives such notification, then it shall take the actions that are necessary to make the Software perform in accordance with the Specifications.

                                                                          PAGE 3

Once it has completed such action, the Software shall be retested by Sparkling for a new 30 day period in accordance with Section 6(a). Such testing and notification by Sparkling and remedial action by Garman shall be repeated until the Software has been accepted by Sparkling, acting reasonably, as meeting the Specifications.

     (c)    Notwithstanding (a) and (b) of this Section 6, Sparkling acknowledges and agrees that there may be minor deficiencies in the Software and provided that on notification thereof Garman promptly rectifies such deficiencies, the acceptance of the Software will not be delayed thereby.

     (d)    If Garman does not receive notice of any deficiencies within ten (10) business days after the completion of the acceptance period, then Sparkling shall be deemed to have accepted the Software at that Authorized Location.

7.   OPTION TO REJECT SOFTWARE

     If during the acceptance period described in Section 6, the Software has failed to perform in accordance with the Specifications and Garman has been unable to correct the deficiency within 45 business days of written notice being provided to Garman of such failure then Sparkling shall have the option, exercisable on 15 business days written notice to Garman, in lieu of any other remedy, to reject the Software. Such option shall terminate if in the interim, the Software successfully completes acceptance testing and meets the Specifications.

8.   OPTION TO REJECT EXERCISED

     If Sparkling exercises its option to reject the Software in accordance with Section 7, then the parties shall forthwith carry out the following actions and this Agreement will terminate upon their completion:

     (a)    Sparkling shall return all copies of the Work and all of Garman's Confidential Information in its possession or control to Garman.

     (b)    Garman shall return to Sparkling any and all amounts paid to Garman hereunder, and all of Sparkling's Confidential Information in its possession or





control.

9.   CO-OPERATION AND IMPLEMENTATION

     (a)    Both Garman and Sparkling have designated in Schedule E a responsible individual from their respective organizations with the authority and competence to act, and responsibility to serve, as a project manager hereunder and deal with the other party with respect to the Software. Sparkling's project manager shall also be responsible for providing or coordinating the provision of such information about Sparkling and its operations, external and internal procedures and such other information as Garman may reasonably require in order to perform its obligations hereunder. Sparkling's project manager shall have the authority on behalf

                                                                          PAGE 4

of Sparkling to notify Garman that any acceptance tests provided for herein have been successfully passed or, where applicable, that Sparkling waives compliance with any such acceptance tests. Garman's project manager shall be responsible for coordinating with Sparkling's project manager the delivery and installation of the Software. The project managers shall meet for this purpose, as may be reasonably requested by either of them in writing.

     (b)    Garman and Sparkling shall use their best efforts to carry out their respective obligations under this Agreement in accordance with the Implementation and Training Schedule.

10.  MAINTENANCE AND SUPPORT

     For a renewable one-year term commencing upon the Maintenance Commencement Date, subject to payment of maintenance fees in accordance with the Fee Schedule but without additional fees or charges, Garman shall provide the following Maintenance Services:

     (a)    SOFTWARE UPDATE SERVICE

     As part of the Software Update Service, Garman shall provide to Sparkling as soon as reasonably available:

            (1)   corrections and bug fixes for the Software;

            (2)   all modifications, refinements, and enhancements                   (Improvements) of the Software;

            (3)   new releases of the Software; and

            (4)   updated user manuals to support all of the above in a                   reasonable time frame.

     (b)    TELEPHONE SUPPORT SERVICE

     Telephone Support Service includes Sparkling having direct telephone access to employees of Garman who have the necessary technical expertise and experience to understand and consider Sparkling's inquiries concerning the failure of Software to operate according to Specifications and to clarify Documentation that is either insufficient or unclear. Such direct telephone access shall be available in accordance with the Telephone Support Schedule. In the event that the Telephone Support Service does provide a resolution to Sparkling (acting reasonably) within 2 business days to permit the Software to meet the Specifications, then Garman shall provide Software Repair Services to address the Software failure. The existing Telephone support numbers are for Garman business hours 1-800-667-6901 or 1-306-242-6322

                                                                          PAGE 5

and after hours 1-306-717-1999, which is a pager number being monitored directly by qualified Garman staff.

     (c)    SOFTWARE REPAIR SERVICE

     Should the Software not operate substantially in conformance with the Sparkling's Specifications in all material respects, Garman will use its best efforts to repair the Software under the support agreement at no additional charge to Sparkling. Notwithstanding the foregoing, Garman may charge a fee at its rates set out in the Fee Schedule to provide Software Repair Services which are required due to:

            (1)   failure due to Sparkling operator errors;

            (2)   failure to maintain Software at such updated version or                   release of the Software provided by Garman to Sparkling, from                   time to time, at no additional charge as part of the                   Maintenance Services or otherwise;

            (3)   material modification of the Software by Sparkling; or

            (4)   the Software being transferred to a different networking                   environment or hardware configuration without the prior                   written consent of Garman; or

            (5)   any failure of the hardware or the operating system not caused                   by Garman or the Software.

11.  FEES





     Sparkling shall pay the fees as set out in the Fee Schedule in accordance with the terms of this Agreement and the Fee Schedule.

12.  SPECIFICATIONS AND WARRANTY

     For the acceptance period and for a period of one year from the Maintenance Commencement Date, and thereafter for as long as the Software is covered by Maintenance Services and is used by Sparkling in accordance with this Agreement, Garman warrants that the Software shall perform in conformance with the Specifications in all material respects.

13.  INTELLECTUAL PROPERTY INDEMNITY

     Garman is the owner of all intellectual property rights in the Work (including any Improvements or Modifications thereto), including all related materials, logos, and names provided pursuant to the terms of this Agreement. No title to the intellectual property in the Work is transferred to Sparkling by this Agreement.

                                                                          PAGE 6

Garman represents and warrants that it owns or controls all rights necessary to grant the rights to Sparkling in accordance with this Agreement and that there are not, nor will there be, any lien, encumbrance, security interest or other rights against the Work which will interfere in any way with the rights granted to Sparkling. Garman agrees to indemnify Sparkling and hold it harmless from any and all losses, damages and expenses including without limitation, court costs, arbitration fees, penalties, fines, amounts paid in settlement of claims and reasonable legal fees and expenses of investigation (collectively the Losses) which Sparkling or any of its respective officers or directors may incur due to a breach of this warranty. Sparkling shall notify Garman in writing of any such claim within ten calendar days of a responsible officer of Sparkling becoming aware of such claim. If the Work or any portion thereof is held to constitute an infringement of another Person's rights, and use thereof is enjoined, Garman shall, at its election and expense, make every reasonable effort to correct the situation with minimal effect upon the operations of Sparkling and shall either:

     (a)    procure the right to use the infringing element of the Work;

     (b)    procure the right to an element which performs the same function without any material loss of functionality; or

     (c)    replace or modify the element of the Work so that the infringing portion is no longer infringing and still performs the same function without any material loss of functionality.

14.  CONFIDENTIALITY

     By virtue of this Agreement, the parties may have access to information that is confidential to one another (Confidential Information). Confidential Information means all data and information related to the business and management of either party, including proprietary and trade secrets, technology and accounting records for which access is obtained by the other party pursuant to this Agreement, provided that such Confidential Information shall not include data or information which:

     (a)    is or becomes publicly available through no fault of the other party;

     (b)    is already in the rightful possession of the other party prior to its receipt from the other party;

     (c)    is independently developed by the other party;

     (d)    is lawfully obtained by the other party from a third party;

     (e)    is disclosed as required by law; or

     (f)    is disclosed to professional advisors in confidence.

                                                                          PAGE 7

     The parties agree to hold each other's Confidential Information in confidence. The parties agree not to make each other's Confidential Information available in any form to any third party or to use each other's Confidential Information for any purpose outside the scope of this Agreement. Each party agrees to take all reasonable steps to ensure the Confidential Information is not disclosed or distributed by its employees or agents in violation of this Section.

15.  LIMITATION OF GARMAN'S LIABILITY

     The exclusive remedy of either party in a claim against the other under this Agreement shall be the recovery of its direct damages. In no event shall either party be liable to the other for the recovery of any special, indirect or consequential damages even if the defendant party had been advised of the possibility of such damages including but not limited to lost profits, lost revenues, failure to realize expected savings, loss of data and loss of use. The parties agree that the limitation of liability in this paragraph reflects the allocation of risk between the parties and the price of the licenced Software. The limitation of liability in this Section 15 shall not apply to breaches of Sections 13 and 14.

16.  SOURCE CODE ESCROW





     (a)    Immediately upon execution of this Agreement, Garman shall maintain on each AS400 at an Authorized Location the most current version of:

            (1)   all source code for the Software in machine readable form,                   with user option to print;

            (2)   all program and user documentation in machine readable and                   printed form;

            (3)   all tools such as compilers, assemblers, linkers and editors                   required to make the source code into the functional Software                   operating in accordance with the Specifications as amended                   from time to time;

            (4)   a complete explanation of any procedures that are not standard                   practice, required to create from the source code the                   functional Software; (5) all documentation listing program and                   module inputs and their sources, outputs and their                   destinations, and any other relevant program and module                   documentation,

(collectively, the Codes).

                                                                          PAGE 8

     This Source Code shall remain the property of Garman unless Sparkling exercises its option to purchase as specified in the Source Code Agreement. The Source Code on each AS400 shall be the most current version of all Codes for all corrections, bug fixes, Improvements and new releases of the Software which are licensed by Sparkling hereunder. Sparkling shall not be entitled to make use of the Codes except as provided in Section (b), provided that Sparkling may itself or by retaining independent experts, examine and test the materials for compliance with the obligations of Garman hereunder.

     (b)    Garman hereby grants to Sparkling, a perpetual, fully paid, non-exclusive license entitling Sparkling to use and reproduce the Codes deposited with it pursuant to Section (a) to change, update, add to, or substitute the Codes, the Software or any part thereof, limited to Sparkling's needs for the use and improvement of the Software or Sparkling's operations, provided that Sparkling shall only be entitled to utilize such license if Sparkling terminates this Agreement pursuant to Section 17(c) due to Garman's default, or if Garman ceases to support the Software as required pursuant to this Agreement. The parties acknowledge that the bankruptcy of Garman shall not prevent Sparkling's continued use of the Work or the Codes in accordance with United States Bankruptcy Code section 365(n) or any similar provisions in any jurisdiction.

17.  TERM AND TERMINATION

     (a)    This Agreement and the license granted under this Agreement shall remain in effect perpetually as long as fees are paid by Sparkling in accordance with the Fee Schedule and the Agreement is not otherwise terminated in accordance with this Section.

     (b)    Sparkling may terminate this Agreement at any time upon ninety (90) calendar days written notice to Garman. If Sparkling terminates this Agreement pursuant to this Section 17(b), Sparkling shall cease using the Software at the end of the ninety (90) day notice period, and shall certify to Garman within thirty (30) calendar days of termination that Sparkling has destroyed or has returned to Garman all Software, Documentation and Codes.

     (c)    If either party:

            (1)   makes an assignment in bankruptcy or is adjudicated a                   bankrupt;

            (2)   makes a general assignment for the benefit of its creditors;

            (3)   has a receiver, administrator or manager of its property,                   assets or undertaking appointed in such circumstances as would                   in the reasonable discretion of the other party, detrimentally                   affect such other party's rights under this Agreement;

                                                                          PAGE 9

            (4)   is ordered by any court to be wound up;

            (5)   becomes insolvent or makes a sale in bulk of its assets;

            (6)   ceases doing business as a going concern;

            (7)   defaults on any of its material obligations provided for                   hereunder and such default is not cured within thirty calendar                   days of written notice thereof by the other party, or the                   defaulting party fails to take sufficient actions to the                   reasonable satisfaction of the other party to cure the default                   within thirty calendar days of written notice;

this Agreement may be terminated by the other party. If this Agreement is terminated by Sparkling, due to Garman's default, the license herein granted shall continue, but shall be converted to a perpetual license pursuant to which Sparkling shall not be required to pay any further fees to Garman hereunder, and Garman shall immediately return all fees paid under this Agreement for services





not yet rendered.

18.  SURVIVAL OF CERTAIN SECTIONS

     Any provisions of this Agreement that require or contemplate performance after termination are enforceable against each party notwithstanding termination. These provisions include but are not limited to Sections 13, 14, 15, 16(b), 18, 19 and 20.

19.  NON-SOLICITATION OF EMPLOYEES

     During the term of this Agreement and for a period of one year thereafter, both parties agree not to hire or allow its respective affiliates to hire any employee of the other party, or any person who was an employee of the other party during the previous six months and who was directly involved in the provision of services under this Agreement.

20.  GENERAL MATTERS

     (a)    Time shall be of the essence with respect to all matters under this Agreement.

     (b)    All notices required or permitted to be given under this Agreement shall be given in writing and may be sent by personal delivery or facsimile transmission addressed to the recipient at the addresses shown below (or such other address as may be designated by notice in accordance with this Agreement):

                                                                         PAGE 10

           Garman:           GARMAN ROUTING SYSTEMS, INC                              #1 - 502 45th Street West                              Saskatoon, SK   S7L 6H2

           Sparkling:        SPARKLING SPRING WATER GROUP LIMITED                              19 Fielding Avenue                              Dartmouth, NS   B3B 1C9

Any notice sent by personal delivery shall be deemed to be given on the day of its delivery provided it is received during regular business hours on a business day, and if it is not received as such then it shall be deemed to be given on the next business day. Any notices sent by facsimile transmission shall be deemed to be given on the day of transmission if received during regular business hours on a business day, and if it is not received as such then it shall be deemed to be given on the next business day.

     (c)    Unless otherwise permitted by this Agreement, no waiver of any part of this Agreement shall be binding unless executed in writing by both parties. No waiver of any part of this Agreement shall constitute a waiver of any other part or a continuing waiver unless otherwise agreed to in writing by both parties.

     (d)    Neither party may assign this Agreement or any rights and obligations under this Agreement to any third party without the written consent of the other party.

     (e)    The parties are acting as independent contractors under this Agreement and not as agents or representatives of the other and not as partners or joint ventures. Neither party shall enter into any agreement or commitment on behalf of the other without the written consent of the other.

     (f)    If either party is delayed or prevented from exercising its obligations or making deliveries in accordance with this Agreement due to circumstances beyond the reasonable control of that party including without limitation, strikes, lockouts, labor disputes, fire, explosion, act of god or other similar causes, then such failure to meet obligations or make deliveries shall not be a breach of this Agreement.

     (g)    Each of the provisions contained in this Agreement is distinct and severable. If one or more of the provisions of this Agreement is found to be illegal or unenforceable, this Agreement shall not be rendered inoperative or invalid but the remaining provisions shall continue in full force and effect.

     (h)    This Agreement shall be governed by the laws of Nova Scotia and the laws of Canada applicable in Nova Scotia. All disputes under this Agreement shall be subject to the non-exclusive jurisdiction of the courts of Nova Scotia.

     (i)    All paragraph headings contained in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

                                                                         PAGE 11

     (j)    This Agreement constitutes the entire Agreement between the parties with respect to its subject matter, and this Agreement supersedes all prior understandings, representations, negotiations and communications between the parties, oral and written.

         Dated the ____ day of May, 2000.

                                        GARMAN ROUTING SYSTEMS, INC.

                                        Per: ___________________________________

                                        SPARKLING SPRING WATER GROUP LIMITED





                                        Per: ___________________________________

                                                                         PAGE 12 
Question: Highlight the parts (if any) of this contract related to Warranty Duration that should be reviewed by a lawyer. Details: What is the duration of any  warranty against defects or errors in technology, products, or services  provided under the contract?
answer:
If Garman does not receive notice of any deficiencies within ten (10) business days after the completion of the acceptance period, then Sparkling shall be deemed to have accepted the Software at that Authorized Location.


question:
BROKER DEALER   MARKETING AND SERVICING AGREEMENT   FOR VARIABLE ANNUITY CONTRACTS      This Broker Dealer Marketing and Servicing Agreement for Variable Annuity Contracts (the Agreement) is   effective this ______ day of ________________, 2013, by and among Principal Life Insurance Company   (Issuer) and Princor Financial Services Corporation (Distributor), on the one hand, and   _______________________ and its duly licensed insurance affiliates indicated on the signature page of this   Agreement, if any, (collectively Broker Dealer), on the other hand. Distributor, Issuer and Broker Dealer are   individually referred to as a Party and collectively as the Parties      RECITALS      A. Issuer offers certain individual variable annuity contracts listed in the exhibit(s) attached to this Agreement

   B. Distributor is a broker dealer registered with the Securities and Exchange Commission (the SEC) under

   C. Broker Dealer is engaged in the sale of securities and other investment products, including variable annuity

   D. The Parties enter into this Agreement for the purpose of authorizing Broker Dealer to solicit sales of and

   NOW THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, the   receipt and sufficiency of which the Parties acknowledge, the Parties agree as follows:      REPRESENTATIONS      1. Issuer represents that the Annuity Contracts shall comply with the registration and other applicable   requirements of the Securities Act of 1933 (the 1933 Act) and the Investment Company Act of 1940   (the 40 Act) and the rules and regulations thereunder, including the terms of any order of the SEC   with respect thereto. Issuer further represents that the Annuity Contract prospectuses included in   Issuer's registration statement, post-effective amendments, and any supplements thereto, as filed or to be   filed with the SEC, as of their respective effective dates, contain or will contain all statements and   information required to be stated therein by the 1933 Act and in all respects conform or will conform to   the requirements thereof, and no prospectus, nor any supplement thereof, includes or will include any   untrue statement of a material fact, or omits or will omit to state any material fact required to be stated   therein or necessary to make the statements therein not misleading; provided, however, that the   foregoing representations shall not apply to information contained in or omitted from any prospectus or   supplement in reliance upon and in conformity with written information furnished to Issuer by Broker   Dealer specifically for use in preparation thereof. The foregoing representations also shall not apply to   information contained in or omitted from any prospectus or supplement of any underlying mutual fund.

(Annuity Contracts). The exhibit(s) attached to this Agreement are incorporated herein by reference and  made a part hereof (Exhibits).

the Securities and Exchange Act of 1934, as amended, (the 1934 Act) and a member in good standing of  the Financial Industry Regulatory Authority, Inc. (FINRA). Distributor is the principal underwriter of the  Annuity Contracts.

contracts. Broker Dealer either is licensed in certain states as an insurance agent or agency or has entered  into an insurance networking agreement with the undersigned duly licensed insurance affiliates to act on its  behalf in the capacity of a licensed insurance agent or agency.

service Annuity Contracts, subjects to the terms and conditions set forth in this Agreement and the Exhibits.





    2 . Broker Dealer represents and warrants that it is a broker dealer registered with the SEC under the 1934   Act, a member in good standing of FINRA, and is registered as a broker dealer under state law to the   extent required in order for it or those persons who are registered with it and licensed as insurance   producers (Registered Representatives) to provide the services described in this Agreement. Broker   Dealer agrees to abide by all rules and regulations of FINRA, including its Conduct Rules, and to   comply with all applicable state and federal laws and the rules and regulations of authorized regulatory   agencies affecting the sale and servicing of Annuity Contracts.         MARKETING/SERVICING      3 . Issuer and Distributor appoint Registered Representatives to solicit and procure applications for the sale   of and service of Annuity Contracts. This appointment is not exclusive and only extends to those   jurisdictions in which the Annuity Contracts have been approved for sale and in which Broker Dealer   and Registered Representatives are properly registered, licensed and appointed.      4 . Broker Dealer will itself be, or will select persons associated with it who are, trained and qualified to   solicit applications for purchase and service of Annuity Contracts in conformance with applicable state   and federal laws. Any such persons shall be registered representatives of Broker Dealer in accordance   with the rules of FINRA and any applicable state laws, be licensed to offer the Annuity Contracts in   accordance with the insurance laws of any jurisdiction in which such person solicits applications and be   licensed with and appointed by Issuer to solicit applications for and service Annuity Contracts.      5 . Broker Dealer will use commercially reasonable efforts to train and instruct its Registered   Representatives not to make recommendations to an applicant to purchase an Annuity Contract in the   absence of reasonable grounds to believe that the purchase is suitable for such applicant, in accordance   with the suitability and disclosure requirements of the 1934 Act, FINRA Conduct Rule 2310, and any   state insurance law or regulation governing the offer and sale of Annuity Contracts, including any state   law or regulation governing sales to the public in general (e.g. consumer protection laws or regulations,   unfair trade practices, annuity disclosure regulations, etc.) or to senior citizens, as the same may be   amended or interpreted from time to time. Broker Dealer will use commercially reasonable efforts to   determine that each transaction is completed with a Registered Representative's report indicating   suitability, including any required and necessary customer information, and is subjected to a review   process in compliance with FINRA Conduct Rule 3010, as the same may be amended or interpreted   from time to time. Each application shall be approved by one of Broker Dealer's registered principals, in   accordance with all applicable FINRA rules.      6 . The activities of all Registered Representatives, employees and agents (producers) will be under the   direct supervision and control of Broker Dealer. The right of Registered Representatives to solicit   applications for the purchase and service of Annuity Contracts is subject to their continued compliance   with the rules and procedures that may be established by Broker Dealer, or Issuer, including, but not   limited to, those set forth in this Agreement.      7 . Broker Dealer shall ensure that applications for the purchase of Annuity Contracts are solicited only in   the states where Annuity Contracts are qualified for sale, and only in accordance with the terms and   conditions of the then current prospectus applicable to Annuity Contracts and will make no   representations not included in the prospectus, Statement of Additional Information, or in any   authorized supplemental material supplied by Distributor. With regard to Annuity Contracts, Broker   Dealer shall not use or permit its producers to use any sales promotion materials or any form of   advertising other than that supplied or approved by Distributor. Issuer and Distributor shall provide only   approved supplemental material, advertising and sales materials, including illustrations, for Broker   Dealer's use.





    8 . Broker Dealer will promptly forward to the appropriate office of Distributor, or its authorized designee,   all Annuity Contract applications along with other documents, if any, and any payments received with   such applications and will have no rights of set off for any reason. Any Annuity Contract application   that is rejected, together with any payment made and other documents submitted, shall be returned to   Broker Dealer or the source of the payments.      9 . Broker Dealer shall ensure that the prospectus delivery requirements under the 1933 Act and all other   applicable securities and insurance laws, rules and regulations are met and that delivery of any   prospectus for Annuity Contracts will be accompanied by delivery of the prospectus for the underlying   mutual funds, and, where required by state law, the Statement of Additional Information for the   underlying mutual funds. Issuer or Distributor shall inform Broker Dealer of those states that require   delivery of a Statement of Additional Information with the prospectus on initial sale. Broker Dealer is   responsible for prospectus delivery requirements only on initial sale. Issuer and Distributor will be   responsible for prospectus delivery annually after the original sale.      10 . Broker Dealer agrees to maintain all books and records relating to the servicing and sale of Annuity   Contracts or interests therein required under the 1934 Act, and any applicable rules promulgated   thereunder, and applicable securities or insurance laws of any states.      11 . Broker Dealer understands and agrees that in performing the services covered by this Agreement, it is   acting in the capacity of an independent contractor and not as an agent or employee of Distributor or   Issuer and is not authorized to act for, or make any representation on behalf of, Distributor or Issuer   except as specified herein. Broker Dealer understands and agrees that Issuer shall execute telephone   transactions only in accordance with the terms and conditions of the then current prospectus applicable   to Annuity Contracts and agrees that in consideration for Broker Dealer's right to exercise the telephone   transaction services neither Distributor nor Issuer will be liable for any loss, injury or damage incurred   as a result of acting upon, nor will they be held responsible for the authenticity of any telephone   instructions containing unauthorized, incorrect or incomplete information. Broker Dealer agrees to   indemnify and hold harmless Distributor and Issuer against any loss, injury or damage resulting from   any telephone transactions instruction containing unauthorized, incorrect or incomplete information   received from Broker Dealer or any of its Registered Representatives. (Telephone instructions are   recorded on tape.)      12 . Broker Dealer has no authority to: incur any liability or debt on behalf of Issuer or Distributor; accept   risks or contracts of any kind; make, alter, authorize or discharge any contract; fail to transmit promptly   any contributions collected to Issuer or Distributor; or bind Issuer or Distributor in any way.      13 . Broker Dealer agrees to notify Distributor promptly of any change, termination, or suspension of its   status as a broker dealer or FINRA member. Broker Dealer shall immediately notify Distributor with   respect to i) the initiation and disposition of any form of disciplinary action by the FINRA or any other   agency or instrumentality having jurisdiction with respect to the subject matter hereof against Broker   Dealer or any Registered Representative; ii) the issuance of any form of deficiency notice made part of   the public record by FINRA or any such agency regarding Broker Dealer's training, supervision or sales   practices; and/or iii) the effectuation of any consensual order with respect thereto.      14. Broker Dealer agrees to notify Distributor and Issuer immediately of any customer complaints or legal   or regulatory inquiries (including, but not limited to, subpoenas) regarding any Annuity Contracts   offered or sold pursuant to the Agreement. Broker Dealer shall provide full, prompt cooperation and   assistance to Distributor and Issuer in responding to and resolving any such complaints or inquiries.      15. Anti-Money Laundering and Know Your Customer Compliance: The Parties acknowledge that they are   financial institutions subject to the USA Patriot Act of 2001 and the Bank Secrecy Act (collectively, the   AML Acts), which require, among other things, that financial institutions adopt compliance programs





    to guard against money laundering. Each Party represents and warrants that it is in compliance and will   continue to comply with the AML Acts and the applicable rules and regulations of the SEC, FINRA, and   any other self-regulatory organizations, as they now exist and as they may be amended in the future.   Broker Dealer represents and warrants that it has adopted a customer identification program and will   verify the identity of customers who purchase Annuity Contracts. Periodically, Issuer or Distributor may   ask Broker Dealer to, and Broker Dealer agrees to, certify that it is compliance with the requirements,   representations and warranties in this paragraph. The Parties further acknowledge that they have a   current 314(b) notice on file with FinCEN in accordance with section 314(b) of the USA Patriot Act and   agree to refile such notice annually (or as otherwise required to remain current in accordance with   applicable rules and regulations) during the term of this Agreement.      COMPENSATION      16. Unless otherwise provided, Issuer, on behalf of Distributor, shall pay compensation to Broker Dealer as   set out in this Agreement and the Exhibits. Compensation shall only be paid to Broker Dealer of record   on premiums paid to and retained by Issuer while this Agreement is in force. Broker Dealer agrees to   pay a commission to Registered Representatives in connection with the sales or servicing of Annuity   Contracts under this Agreement.      17. In those states where Broker Dealer has not obtained an insurance license, Broker Dealer represents and   warrants that: it has entered into an insurance networking agreement with the undersigned duly licensed   insurance affiliate(s) to act on its behalf in the capacity of a licensed insurance agent or agency   (Affiliated Agency). Broker Dealer authorizes Issuer to pay any compensation owed to Broker Dealer   from the sales or servicing of Annuity Contracts to such Affiliated Agency. Broker Dealer remains fully   responsible for recordkeeping and supervision of the solicitation, sale and/or servicing of Annuity   Contracts. All compensation received by Affiliated Agency in accordance with this section will be   distributed by Affiliated Agency only to duly licensed and registered representatives who have been   appointed by Issuer to solicit applications for Annuity Contracts.      18. Issuer and Distributor may change the compensation schedules set forth in the attached Exhibits at any   time and will notify Broker Dealer of the revised compensation schedules electronically or by other   writing in advance of the effective date of the change. Any change to the compensation schedules will   affect only commissions payable on Annuity Contracts with an effective date on or after the effective   date of the change, unless otherwise provided or required by law. Issuer or Distributor may discontinue   the issuance of any form of Annuity Contract and fix the amount of compensation on Annuity Contracts   issued in exchange for previously issued Annuity Contracts.      19. Broker Dealer agrees to return promptly to Issuer all compensation received for any Annuity Contract   returned within the free look period as specified in the Annuity Contract. Issuer expressly reserves the   right to change the broker dealer of record or Registered Representative in the event an Annuity   Contract owner so requests.      20. Any indebtedness or obligation of Broker Dealer to Distributor or Issuer, whether arising hereunder or   otherwise, shall be set off against any compensation payable under this Agreement or any other   agreement between or among the Parties or their affiliates. Indebtedness or obligations include but are   not limited to any debt, liability, or debit balance resulting from Issuer's reversal of compensation under   this Agreement or any other agreement between or among the Parties or their affiliates. It also includes   any amount paid by Issuer or Distributor, including reasonable attorney fees and costs, to settle a   complaint or satisfy any judgment entered by any court, administrative agency or arbitrator related to   any Annuity Contract sold by Broker Dealer, or its producers or breach of Broker Dealer's duties and   responsibilities contained in this or any prior Agreement, whether or not the liability for settlement or   satisfaction of judgment arose after the termination of this Agreement. Issuer or Distributor reserves the   right to use any remedies under the law to collect any indebtedness Broker Dealer owes Issuer or





    Distributor and Broker Dealer agrees to pay any reasonable attorney's fees and actual costs of collection   incurred as a result of such action.      CONFIDENTIALITY      21. a. Confidentiality. Each Party acknowledges that, in the course of performing its duties under this   Agreement or otherwise, it may receive or learn information about individuals who have applied for   or purchased financial products or financial services from the other Party, including, but not limited   to, personal, financial and/or health information (Confidential Information). Each Party agrees   that it will not use or disclose to any affiliate or third party, orally or in writing, any Confidential   Information of the other Party for any purpose other than the purpose for which the Confidential   Information was provided to that Party. Without limiting any of the foregoing, each Party agrees to   take all precautions that are reasonably necessary to protect the security of the other Party's   Confidential Information. Each Party agrees to restrict access to the other Party's Confidential   Information to those employees who need to know that information to perform their duties under this   Agreement. Each Party further agrees that, upon request of the other Party, it will return to the Party   making such request all tangible items containing any Confidential Information of the other Party,   including all copies, abstractions and compilations thereof, without retaining any copies of the items   required to be returned. The obligations of this paragraph extend to the employees, agents, affiliates   and contractors of each Party and each Party shall inform such persons of their obligations   hereunder.      21. b. Notification obligation. Each Party shall, upon learning of any unauthorized disclosure or use of any   of the other Party's Confidential Information, notify the other Party promptly and cooperate fully   with such Party to protect such Confidential Information.      21. c. Disclosure required by law. If Broker Dealer believes it is required by law or by a subpoena or court   order to disclose any Confidential Information, Broker Dealer, prior to any disclosure, shall   promptly notify Issuer in writing attaching a copy of the subpoena, court order or other demand and   shall make all reasonable efforts to allow Issuer an opportunity to seek a protective order or other   judicial relief.      21. d. Non-restricted information. Except as stated in the final sentence of this paragraph, nothing in this   Agreement shall be construed to restrict disclosure or use of information that: (a) was in the   possession of or rightfully known by the recipient, without an obligation to maintain its   confidentiality, prior to receipt from the other Party; (b) is or becomes generally known to the public   without violation of this Agreement; (c) is obtained by the recipient in good faith from a third party   having the right to disclose it without an obligation of confidentiality; (d) is independently   developed by the receiving Party without the participation of individuals who have had access to the   other Party's confidential or proprietary information. The Parties acknowledge that certain laws   governing Confidential Information about individuals are more restrictive than the foregoing   statements and they agree to comply in all respects with such laws.      21. e. Compliance with law. Each Party agrees, in connection with its performance under this Agreement,   to comply with all applicable laws, including but not limited to laws protecting the privacy of non-   public personal information about individuals.      21. f. Survival. The provisions of this Agreement relating to confidentiality shall survive termination or   expiration of this Agreement.      INDEMNIFICATION      22. In connection with the offer, sale or servicing of Annuity Contracts, Broker Dealer agrees to indemnify





    and hold harmless Distributor and Issuer from any damage or expense, including reasonable attorneys'   fees, as a result of (a) the negligence, misconduct or wrongful act of Broker Dealer or producers; (b) any   violation of any securities or insurance laws, regulations or orders or (c) any actual obligation of the   Affiliated Agency under terms of the agreement between Broker Dealer and the Affiliated Agency,   including claims by one or more of Registered Representatives for compensation due or to become due   on account of such Registered Representatives' sale or servicing of Annuity Contracts and any claims or   controversy between Broker Dealer and Affiliated Agency as to rights to compensation.   Notwithstanding the foregoing, Broker Dealer shall not indemnify and hold harmless Distributor and   Issuer from any damage or expense on account of the negligence, misconduct or wrongful act of Broker   Dealer or producer if such negligence, misconduct or wrongful act arises out of or is based upon any   untrue statement or alleged untrue statement of material fact, or the omission or alleged omission of a   material fact in: (i) any registration statement, including any prospectus or any post-effective   amendment thereto; or (ii) any material prepared and/or supplied by Distributor or Issuer for use in   conjunction with the offer or sale of Annuity Contracts, or (iii) any state registration or other document   filed in any state or jurisdiction in order to qualify any Annuity Contracts under the securities laws of   such state or jurisdiction. The terms of this provision shall not be impaired by termination of this   Agreement      23. In connection with the solicitation of applications for the purchase of Annuity Contracts, Distributor and   Issuer agree to indemnify and hold harmless Broker Dealer from any damage or expense, including   reasonable attorneys' fees, as a result of the negligence, misconduct or wrongful act of Distributor or   Issuer or any employee, representative or agent of Distributor or Issuer, including but not limited to, any   damage or expense which arises out of or is based upon any untrue statement or alleged untrue   statement of material fact, or the omission or alleged omission of a material fact in: (i) any registration   statement, including any prospectus or any post-effective amendment thereto; or (ii) any material   prepared and/or supplied by Distributor or Issuer for use in conjunction with the offer or sale of Annuity   Contracts; or (iii) any state registration or other document filed in any state or other jurisdiction in order   to qualify any Annuity Contract under the securities laws of such state or jurisdiction and/or any actual   or alleged violation of any securities or insurance laws, regulations or orders. The terms of this   provision shall not be impaired by termination of this Agreement.      GENERAL PROVISIONS      24. Issuer or Distributor may modify this Agreement at any time by written notice to Broke Dealer. Any   notice shall be deemed to have been given on the date upon which it was either delivered personally or   by fax or e-mail transmission to the other Party, or mailed post prepaid to his or its address as shown   herein.      25. Any Party hereto may terminate this Agreement at any time upon prior written notice. This Agreement   shall automatically terminate if Broker Dealer voluntarily or involuntarily ceases to be or is suspended   from being, a member in good standing of FINRA. In addition, Distributor and Issuer reserve the right   to terminate this Agreement in the event that any producer of Broker Dealer is suspended, disciplined or   found to be in violation of governing insurance or securities laws, rules or regulations. Failure of any   Party to terminate this Agreement for any of the causes set forth in this Agreement shall not constitute a   waiver of the right to terminate this Agreement at a later time for any such causes.      26. This Agreement may not be assigned by Broker Dealer without the prior written consent of Issuer and   Distributor, which shall not be unreasonably withheld.      27. This Agreement shall be governed by and construed in accordance with the laws of the State of Iowa.      28. No failure or delay to exercise, nor any single or partial exercise of, any right, power, or privilege given   or arising under this Agreement will operate as a waiver of future rights to exercise any such right,





    power, or privilege.      29. This Agreement may be signed in any number of counterparts, each of which will be considered an   original, but all of those counterparts will together constitute only one Agreement.      30. The determination that any provision of this Agreement is not enforceable in a particular jurisdiction   will not affect the validity or enforceability of the remaining provisions generally, or in any other   jurisdiction or as to any other entities not involved in that judgment. Such unenforceable provisions will   be stricken or deemed modified in accordance with such determination and this Agreement, as so   modified, will continue to be in force and effect.      IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed on the date first above   written.      ABC Company, Broker Dealer         By: ____________________________      _______________________________   Please type or print name      _______________________________   Please type or print Title      Date: __________________________           Princor Financial Services Corporation      By: _______________________________________   Marty Richardson   Operations Officer      Date: ____________________________________      Principal Life Insurance Company      By: _______________________________________   Angela Ellis   Assistant Vice President - Marketer Services      Date: ____________________________________      Affiliated Agencies of Broker Dealer      By: _______________________________________      __________________________________________   Please type or print name





    __________________________________________   Please type or print Title      Date: ____________________________________





      EXHIBIT A   COMPENSATION SCHEDULE FOR   PRINCIPAL VARIABLE ANNUITY CONTRACTS         Products may not be available in all states and state variations may apply.     Trail commissions are calculated as a percentage of account value.     Commissions for variable annuities are based on the age of the oldest owner or annuitant.     The trail commission is paid to the current servicing agent of record provided the Annuity Contract is still in effect.   Servicing agent means the broker dealer or Registered Representative appointed by us and accepted by the contract owner as the  servicing agent. If the contract owner requests a change in the servicing agent or if we decide that a change would be in the best  interests of the contract owner, trail commissions will be paid to the new servicing agent or his/her broker dealer where appropriate.  No trail commissions are paid after termination of this Agreement.

  A. Option Elections      The Broker Dealer will be paid compensation on sales of Principal Variable Annuity/Principal Investment Plus Variable   Annuitysm Contracts in accordance with the Compensation Options elected herein and which its Registered Representative   shall elect, using the election procedures established by the Issuer, upon submission of the product application to the   Issuer and for which good payment has been received.      Compensation paid will be based on Option A unless, upon submission of the contract application, the Registered   Representative elects another Option made available to it by Broker Dealer's election below.      Check the options available to your Registered Representatives.      _X_ Option A - Full front end compensation with no trail      ___Option B - Slightly lower front-end commission with a .10% annual trail commission paid quarterly starting at the end of the fifth  quarter      ___Option C - Lower front-end commission with a .30% annual trail commission paid quarterly starting at the end of the fifth quarter     ___Option D - Low or no up front-end commission based upon issue age with a 1.0% annual trail commission paid   quarterly starting at the end of the fifth quarter

Principal Variable Annuity (FVA)*/Principal  Investment Plus Variable Annuity (IPVA)** 
Question: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?
answer:

In those states where Broker Dealer has not obtained an insurance license, Broker Dealer represents and   warrants that: it has entered into an insurance networking agreement with the undersigned duly licensed   insurance affiliate(s) to act on its behalf in the capacity of a licensed insurance agent or agency   ("Affiliated Agency").