Document:

Exhibit 10(b)

                                    EXHIBIT B
                 (TO AREA MARKETER FRANCHISE OFFERING CIRCULAR)

                        PAK MAIL CENTERS OF AMERICA, INC.

                            AREA MARKETING AGREEMENT

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                        PAK MAIL CENTERS OF AMERICA, INC.

                            AREA MARKETING AGREEMENT

                                            -----------------------------------
                                            Territory

                                            -----------------------------------
                                            Date

                                            -----------------------------------
                                            Area Marketer

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                        PAK MAIL CENTERS OF AMERICA, INC.
                            AREA MARKETING AGREEMENT

                                TABLE OF CONTENTS

Section Number                                                       Page Number
--------------                                                       -----------

1.       BACKGROUND AND PURPOSE...............................................1

2.       DEFINITIONS..........................................................1
         2.1.     Territory...................................................1
         2.2.     Sales Year..................................................1
         2.3.     Franchise Agreement.........................................1
         2.4.     Franchisee..................................................2
         2.5.     System Manual...............................................2

3.       SCOPE OF APPOINTMENT.................................................2
         3.1.     Appointment of Marketer/Scope of Operations.................2
         3.2.     Rights and Limitations to Territory.........................2
         3.3.     Franchisor's Reservation of Rights..........................2

4.       FRANCHISE SALES PROCEDURES...........................................3
         4.1.     Sales Goals.................................................3
         4.2.     Franchise Registration and Disclosure.......................3
         4.3.     Advertising, Recruiting and Screening.......................4
         4.4.     Franchisor's Approval of Prospective Franchisees............4

5.       PAYMENTS TO THE FRANCHISOR...........................................4
         5.1.     Initial Area Marketing Fee..................................4

6.       PAYMENTS TO THE AREA MARKETER........................................5
         6.1.     Commissions on Sales Services...............................5
         6.2.     Commissions on Transfers of Franchises......................5
         6.3.     Service Fees................................................5
         6.4.     Application of Payments.....................................6
         6.5.     Setoffs.....................................................6

7.       TRAINING ASSISTANCE..................................................6
         7.1.     Area Marketer Training......................................6
         7.2.     Length of Training..........................................7
         7.3.     Additional Training.........................................7
         7.4.     Seminars and Ongoing Training...............................7

8.       FRANCHISOR'S OPERATING ASSISTANCE....................................7
         8.1.     System Manual...............................................7
         8.2.     Operating Assistance........................................8

9.       AREA MARKETER'S OBLIGATIONS..........................................8
         9.1.     Hiring and Training of Employees of Area Marketer...........8
         9.2.     Commencement of Business....................................8
         9.3.     Sales Services..............................................8
         9.4.     Pre-Opening Support Services................................8
         9.5.     Ongoing Support Services....................................9

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         9.6.     Compliance with Franchise Agreement........................10
         9.7.     Area Marketer's Inspections................................10

10.      MARKS...............................................................10
         10.1.    Ownership and Goodwill of Marks............................10
         10.2.    Limitations on Use.........................................11
         10.3.    Discontinuance of Use of Marks.............................11
         10.4.    Notification of Infringements and Claims...................11
         10.5.    Indemnification............................................11

11.      CONFIDENTIAL INFORMATION............................................12
         11.1.    Confidential Information...................................12
         11.2.    Confidentiality and Noncompetition Agreement...............12

12.      EXCLUSIVE RELATIONSHIP..............................................12
         12.1.    Exclusive Relationship.....................................12

13.      OPERATING STANDARDS.................................................13
         13.1.    Standards of Service.......................................13
         13.2.    Compliance with Laws and Good Business Practices...........13
         13.3.    Accuracy of Information....................................13
         13.4.    Notification of Litigation.................................14
         13.5.    Ownership and Management of Business.......................14
         13.6.    Conflicting Interests......................................14
         13.7.    Insurance..................................................14
         13.8.    Proof of Insurance Coverage................................15
         13.9.    Advertising in Territory...................................15
         13.10.   Approval of Advertising....................................15
         13.11.   Accounting, Bookkeeping and Records........................15
         13.12.   Reports....................................................16
         13.13.   Late Charges...............................................16
         13.14.   Compliance with Third Party Agreements.....................16
         13.15.   Electronic Advertising.....................................16

14.      INSPECTIONS AND AUDITS..............................................16
         14.1.    Inspections and Audits.....................................16

15.      TRANSFERS...........................................................17
         15.1.    Transfers by the Franchisor................................17
         15.2.    Transfers by the Marketer..................................17
         15.3.    Conditions for Approval of Transfer........................17
         15.4.    Transfer to an Entity......................................18
         15.5.    Franchisor's Approval of Transfer..........................18
         15.6.    Death or Disability of Area Marketer.......................19

16.      TERM AND EXPIRATION.................................................19
         16.1.    Term.......................................................19
         16.2.    Continuation...............................................19
         16.3.    Rights Upon Expiration.....................................19
         16.4.    Exercise of Option for Successor Area Marketer Rights......20
         16.5.    Conditions of Refusal......................................20

17.      TERMINATION.........................................................20
         17.1.    By the Marketer............................................20
         17.2.    By the Franchisor..........................................20

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         17.3.    Rights and Obligations of the Area Marketer Upon
                    Termination or Expiration................................21
         17.4.    Confidential Information...................................22
         17.5.    Covenant Not to Compete....................................23
         17.6.    No Further Right to Payment................................23
         17.7.    Continuing Obligations.....................................23
         17.8.    State and Federal Law......................................23

18.      RELATIONSHIP OF THE PARTIES.........................................24
         18.1.    Relationship of the Parties................................24
         18.2.    Payment of Third Party Obligations.........................24
         18.3.    Independent Contractors....................................24
         18.4.    Indemnification............................................24

19.      MISCELLANEOUS PROVISIONS............................................25
         19.1.    Governing Law/Consent to Venue and Jurisdiction............25
         19.2.    Severability...............................................25
         19.3.    Modification...............................................25
         19.4.    Attorneys' Fees............................................25
         19.5.    Injunctive Relief..........................................25
         19.6.    Payment of Taxes...........................................26
         19.7.    No Waiver..................................................26
         19.8.    No Right to Set Off........................................26
         19.9.    Effective Date.............................................26
         19.10.   Review of Agreement........................................26
         19.11.   Entire Agreement...........................................26
         19.12.   Notices....................................................27
         19.13.   Cumulative Rights..........................................27
         19.14.   Acknowledgment.............................................27

EXHIBITS
--------

         Exhibit I       Rider to Area Marketing Agreement
         Exhibit II      Franchise Agreement
         Exhibit III     Guaranty and Assumption of Area Marketer's Obligations
         Exhibit IV      Statement of Ownership

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                        PAK MAIL CENTERS OF AMERICA, INC.

                            AREA MARKETING AGREEMENT

     THIS AGREEMENT is made this ___ day of ________________, 20____, between
PAK MAIL CENTERS OF AMERICA, INC., a Colorado corporation, with its principal
offices at 7173 South Havana Street, Suite 600, Englewood, Colorado 80112
("Franchisor") and __________________________________________________________
_____________________________whose principal address is ____________
________________________________________________________ ("Marketer"), who on
the basis of the following understandings and in consideration of the following
promises, agree as follows:

                           1. BACKGROUND AND PURPOSE

1.1. The Franchisor has developed methods for establishing, operating and
promoting stores offering a variety of packaging, shipping, crating, freight
forwarding, mailing, communications and information services ("PAK MAIL Centers"
or "Centers"). These methods feature the use and license of the service mark
"PAK MAIL" and related service marks and trademarks (all referred to in this
Agreement as the "Marks") and the Franchisor's distinctive plans for the
establishment, operation and promotion of PAK MAIL Centers and related licensed
methods of doing business (the "Licensed Methods").

1.2. The Franchisor grants to qualified individuals, or to entities with which
such individuals are affiliated, the right and license to develop and operate
Centers using the Marks and Licensed Methods.

1.3. The Marketer desires to sell franchises for PAK MAIL Centers within a
certain geographic area, and to develop, support and provide services to PAK
MAIL Centers within such geographic area, under the terms and conditions which
are contained in this Agreement ("Marketer Business" or "Business").

1.4. The Franchisor is willing to grant the right to Marketer to sell franchises
for PAK MAIL Centers and to provide site selection and support services to PAK
MAIL Centers within a certain geographic area, under the terms and conditions
which are contained in this Agreement.

                                 2. DEFINITIONS

2.1. Territory.
     ----------

     "Territory" shall mean the geographical area described in Exhibit I
attached hereto and incorporated herein by reference.

2.2. Sales Year.
     -----------

     "Sales Year" shall mean each 12-month period during the term of this
Agreement, as defined in Exhibit I attached.

2.3. Franchise Agreement.
     --------------------

     "Franchise Agreement" shall mean the forms of agreements (including,
without limitation, franchise agreement and any exhibits, riders, collateral
assignments of lease or sublease, and personal guarantees used in connection
therewith) used by the Franchisor from time to time in the granting of

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franchises for the ownership and operation of PAK MAIL Centers. Attached to this
Agreement as Exhibit II and incorporated herein by reference, is the
Franchisor's current form of Franchise Agreement. The Marketer acknowledges that
the Marketer will use the Franchisor's then current form of franchise agreement
and that the Franchisor, in its sole discretion, may from time to time modify or
amend in any respect the form of franchise agreement and related agreements,
including but not limited to, modifying fees customarily charged in granting PAK
MAIL Center franchises.

2.4. Franchisee.
     -----------

     "Franchisee" shall mean any person, corporation, partnership or other
entity that has entered into a Franchise Agreement with the Franchisor.

2.5. System Manual.
     --------------

     "System Manual" means the manuals, technical bulletins or other written
materials covering the proper operating and marketing techniques of a Marketer
Business and standards and specifications for implementing the Licensed Methods.

                            3. SCOPE OF APPOINTMENT

3.1. Appointment of Marketer/Scope of Operations.
     --------------------------------------------

     The Franchisor appoints the Marketer as an "Area Marketer," and the
Marketer agrees to perform its obligations in accordance with the terms and
conditions of this Agreement, only within the Territory, to solicit prospective
Franchisees for PAK MAIL Centers to be located in the Territory ("Sales
Services") as described in Section 9.3 below, to perform certain site
acquisition services and to render support and other services ("Support
Services") to Centers located within the Territory as those services are
described in Sections 9.4 and 9.5 below.

3.2. Rights and Limitations to Territory.
     ------------------------------------

     The Franchisor will not establish and license any other area marketers
to perform Sales Services or Support Services to Franchisees within the
Territory; provided, however, that the Franchisor shall retain such rights in
the Territory as described in Section 3.3 below.

3.3. Franchisor's Reservation of Rights.
     -----------------------------------

     The Marketer acknowledges that its franchise rights granted hereunder are
nonexclusive and the Franchisor (on behalf of itself, its affiliates and
designees), retains the rights, among others:

     a. to use, and to license others to use, the Marks and Licensed Methods for
the operation of other area marketer businesses at any location outside of the
Territory;

     b. to solicit prospective Franchisees and sell franchises for PAK MAIL
Centers at locations within and outside of the Territory and on such terms and
conditions as the Franchisor deems appropriate and to itself own and operate PAK
MAIL Centers within the Territory;

     c. to use and license the use of other proprietary marks or methods in
connection with the sale of products and services similar to those which
Franchisees who operate PAK MAIL Centers sell, whether in alternative channels
of distribution or in connection with the operation of packaging and mailing

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businesses which are the same as, or similar to, or different from PAK MAIL
Centers, at any location, within and outside of the Territory, on any terms and
conditions as the Franchisor deems advisable; and

     d. to use the Marks to identify services and products other than those sold
by Franchisees who operate PAK MAIL Centers, to identify promotional and
marketing efforts and related items, and to identify services and products
similar to those offered by Franchisees who operate PAK MAIL Centers, made
available through alternative channels of distribution, at any location, within
and outside of the Territory.

                         4. FRANCHISE SALES PROCEDURES

4.1. Sales Goals.
     ------------

     The Marketer agrees that during the term of this Agreement, the Marketer
will meet and maintain the franchise sales goals ("Sales Goals") set forth in
Exhibit I to this Agreement.

4.2. Franchise Registration and Disclosure.
     --------------------------------------

     Neither the Marketer nor any employee or representative of the Marketer
shall solicit prospective Franchisees of PAK MAIL Centers until the Franchisor
has registered to sell franchises in the applicable jurisdiction and has
provided the Marketer with the requisite documents, nor shall the Marketer, its
employees or representatives, solicit Franchisees at any time when the
Franchisor notifies the Marketer that its registration is not then in effect or
its documents are not then in compliance with applicable law. If the Marketer's
activities pursuant to this Agreement require the preparation, amendment,
registration or filing of information or any disclosure or other documents, all
requisite offering circulars, ancillary documents and registration applications
shall be prepared and filed by the Franchisor or its designee, and registration
secured before the Marketer may solicit prospective Franchisees of PAK MAIL
Centers. Costs of such registration applicable to the Marketer shall be borne by
the Marketer. In particular, the Marketer shall:

     a. prepare and forward to the Franchisor verified financial statements of
the Marketer in such form and for such periods as shall be designated by the
Franchisor, including audited financial statements if necessary and appropriate
to comply with applicable legal disclosure, filing or other legal requirements;

     b. promptly provide all information reasonably required by the Franchisor
to prepare all requisite offering circulars and ancillary documents for the
offering of franchises throughout the Territory;

     c. execute all documents required by the Franchisor for the purpose of
registering the Marketer and the Franchisor to offer franchises throughout the
Territory; and

     d. pay to the Franchisor, or its designee, upon demand, the costs of
registering and preparing those portions of all such offering circulars and
ancillary documents which are applicable to the Marketer.

The Marketer agrees to review all information pertaining to the Marketer
prepared to comply with legal requirements for selling franchises in the
Territory and verify its accuracy if so requested by the Franchisor. The

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Marketer acknowledges that the Franchisor, its affiliates or its designees,
shall not be liable to the Marketer for any errors, omissions or delays which
may occur in the preparation of such materials.

4.3. Advertising, Recruiting and Screening.
     --------------------------------------

     The Marketer shall be responsible for advertising for, recruiting,
screening and interviewing prospects for PAK MAIL Centers franchises within the
Territory. The Marketer shall provide prospective Franchisees with written
information regarding a PAK MAIL Center franchise approved by the Franchisor, or
via the telephone, face-to-face meetings or by visiting other PAK MAIL Centers
within the Territory. The Marketer shall submit each qualified applicant
("Applicant") for a PAK MAIL Center franchise to the Franchisor for approval.
The Marketer further agrees that all Applicants submitted to the Franchisor by
the Marketer, if an individual, or the Principal Owner of the Applicant, if the
Applicant is not an individual, shall be individuals who are of good character,
have adequate financial resources and meet the Franchisor's criteria for
Franchisees or Principal Owners of Franchisees. A "Principal Owner" is defined
in Section 7.1 below. Each application for a franchise received by the Marketer
shall be submitted to the Franchisor with all information respecting the
Applicant, the Principal Owner of the Applicant, if applicable, the Applicant's
proposed franchise location, if known, and all other information then
customarily required by the Franchisor concerning Applicants, including such
financial statements and other information as the Franchisor may reasonably
require. The Marketer shall assist the Applicant in the preparation of financial
and other required information.

4.4. Franchisor's Approval of Prospective Franchisees.
     -------------------------------------------------

     By delivery of written notice to the Marketer, the Franchisor shall approve
or disapprove Applicants to become PAK MAIL Center Franchisees. The Franchisor
agrees to exert its best efforts to deliver such notification to the Marketer
within 30 days after the later of: (a) receipt by the Franchisor of a complete
application, financial statement and other materials regarding the Applicant
requested by the Franchisor; or (b) the personal interview of Applicant by the
Franchisor, if any. If the Franchisor, in its sole discretion, determines that
the Applicant possesses sufficient financial and managerial capability and meets
the other criteria then utilized by the Franchisor in the grant of franchises,
the Franchisor shall offer to the Applicant a franchise for the operation of a
PAK MAIL Center. The grant of the franchise shall be effected only upon and
after the full execution of the then current Franchise Agreement by the
Franchisor and the Applicant.

                         5. PAYMENTS TO THE FRANCHISOR

5.1. Initial Area Marketing Fee.
     ---------------------------

     The initial area marketing fee ("Marketing Fee") payable to the Franchisor
by the Marketer in consideration for the Marketer's appointment as exclusive
Marketer within the Territory shall be calculated and set forth in the attached
Exhibit I. Unless otherwise agreed, the Marketing Fee is payable in full upon
execution of this Agreement. The Marketing Fee is fully earned by the Franchisor
upon receipt and is nonrefundable once paid. The Marketer acknowledges that the
Marketing Fee does not include payment of any initial franchise fees for
individual PAK MAIL Centers.

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                        6. PAYMENTS TO THE AREA MARKETER

6.1. Commissions on Sales Services.
     ------------------------------

     During the term of this Agreement, the Marketer shall be paid a commission
based on a percentage of initial franchise fees paid by Franchisees for the
purchase of a franchise for a PAK MAIL Center to be located within the
Territory, upon fulfillment of the following conditions ("Franchise Sales
Conditions"):

     a. The Franchisee shall have executed a Franchise Agreement with the
Franchisor and an initial franchise fee shall have been paid and actually
received by the Franchisor (the Franchisor shall not be deemed to have received
any fees paid into escrow, if applicable, until such fees have actually been
remitted to the Franchisor). If the Franchisee pays its initial franchise fee in
whole or in part with a promissory note, then the Marketer shall be paid a
commission on each payment after it has been received by the Franchisor;

     b. The sale for which the initial franchise fee has been paid shall not be
a resale of any existing PAK MAIL Center, or any interest therein;

     c. The Franchisee shall have successfully completed the Franchisor's
initial training program; and

     d. The Marketer shall have complied with all other of its obligations under
this Agreement with respect to such sale and verified the same to the
Franchisor, in writing in a form prescribed by the Franchisor.

     Commissions on Sales Services shall be paid to the Marketer in the amount
of 40% of the total initial franchise fees paid to the Franchisor, payable to
the Marketer within 45 days after the Franchise Sale Conditions have been
fulfilled. The Marketer shall not receive any commission on Sales Services for
PAK MAIL Centers owned and operated by the Franchisor, its affiliates or
designees ("Company Owned Centers") in the Territory.

6.2. Commissions on Transfers of Franchises.
     ---------------------------------------

     If, during the term of this Agreement, a PAK MAIL Center located within the
Territory or an interest therein is resold to a different Franchisee and the
sale results in the execution of a Franchise Agreement and the payment of a
transfer fee, then the Marketer will not be paid a commission on any transfer
fee paid to the Franchisor, but the Marketer will be paid Service Fees in
accordance with Section 6.3 below.

6.3. Service Fees.
     -------------

     The Franchisor shall pay to the Marketer, within 45 days after the end of
each month, a service fee ("Service Fee") consisting of 50% of the royalty fees
("Royalty Fees") that each Franchisee located in the Territory paid to the
Franchisor during the applicable month pursuant to their Franchise Agreement.
Royalty Fees do not include advertising fees. Notwithstanding the foregoing:

     a. If the Marketer has failed to conduct the quarterly inspections
described in Section 9.5 below or failed to file a written report or failed to
perform in any material respect the other services to be provided to Franchisees
located in the Territory described in Article 9 below during any applicable

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month with respect to one or more Franchisees located in the Territory, the
Marketer shall not be entitled to receive Service Fees with respect to such
Franchisees for the period during which reports or services were not provided.

     b. The Marketer shall not be entitled to share or receive any Service Fees
from any fees paid to the Franchisor by Franchisees in the Territory prior to
the time the Marketer completes the initial Marketer training program and
commences full performance of the services set forth in Article 9 of this
Agreement.

     c. If there are franchised Centers operating in the Territory at the time
the Marketer signs this Agreement, then the Marketer shall receive Service Fees
from those Centers during the term of this Agreement.

     d. The Marketer shall not receive any Service Fees with respect to any PAK
MAIL Centers in the Territory owned and operated by the Franchisor or its
affiliates, unless those Centers are operating under Franchise Agreements and
pay Royalty Fees to the Franchisor.

6.4. Application of Payments.
     ------------------------

     The Franchisor's payments to the Marketer shall be based on amounts
actually collected from Franchisees, not on payments accrued, due or owing. In
the event of termination of a Franchise Agreement for a PAK MAIL Center within
the Territory under circumstances entitling the Franchisee to the return of all
or part of the initial franchise fee or Royalty Fees (or in the event that the
Franchisor becomes legally obligated or decides in its sole discretion, to
return part or all of the initial franchise fee or Royalty Fees), the Franchisor
may deduct the portion of the amount to be returned to Franchisee in the same
proportion as the Marketer shared in the initial franchise fee or Royalty Fees
from any future amounts owed the Marketer. The Franchisor shall apply any
payments received from a Franchisee to any past due indebtedness of that
Franchisee for Royalty Fees, advertising contributions, purchases from the
Franchisor or its affiliates, interest or any other indebtedness of that
Franchisee to the Franchisor or its affiliates. To the extent that such payments
are applied to a Franchisee's overdue Royalty Fee payments, the Marketer shall
be entitled to its pro rata share of such payments, less its pro rata share of
the costs of collection paid to third parties.

6.5. Setoffs.
     --------

     The Marketer shall not be allowed to set off amounts owed to the Franchisor
for fees or other amounts due hereunder, against any monies owed to the Marketer
by the Franchisor, which right of set off is hereby expressly waived by the
Marketer. The Franchisor shall be allowed to set off amounts owed to the
Marketer for commissions, Service Fees or other amounts due hereunder, against
any monies owed to the Franchisor by the Marketer, including, setting off
amounts owed to the Marketer for commissions or Service Fees against monies owed
to the Franchisor for commissions on Sales Services which were paid to the
Marketer before the Franchisee failed to successfully complete the Franchisor's
initial training program.

                             7. TRAINING ASSISTANCE

7.1. Area Marketer Training.
     -----------------------

     Within 90 days after the date of execution of this Agreement, the
Franchisor shall furnish, and the Marketer (or if the Marketer is a partnership,
corporation, or other entity, an individual designated by the Marketer who owns

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at least 25% of the ownership interest in the Marketer and who has been approved
by the Franchisor, who shall be designated as the "Principal Owner") shall
attend, at the Marketer's sole cost and expense, an initial training program, to
consist of the training program applicable to the Franchisor's Franchisees and
such further training which may include topics such as marketing, franchise
sales, franchise law compliance, site selection and store opening procedures, as
the Franchisor in its sole discretion deems advisable, furnished at such place
and time as the Franchisor may designate.

7.2. Length of Training.
     -------------------

     The first portion of the initial Marketer training program will last up to
nine days and will consist of the classroom portion of the initial training
program applicable to the Franchisor's Franchisees. The second portion of the
initial Marketer training consists of up to 3 days of on-the-job instruction at
or around the time the first Center opens in the Territory. Other than the
Marketing Fee, no tuition or fee shall be charged for the initial training.
However, the Marketer shall be responsible for all travel and living expenses
which are incurred in connection with attendance at the initial training
program.

7.3. Additional Training.
     --------------------

     The initial training program will be made available to replacement or
additional Principal Owners and other management personnel during the term of
this Agreement. The Franchisor reserves the right to charge a tuition or fee in
an amount payable in advance, commensurate with the then current published
prices of the Franchisor for such training. The Marketer will be responsible for
all travel and living expenses incurred by its personnel in connection with
attendance at the training program. Further, the availability of the training
programs will be subject to space considerations and prior commitments to new
PAK MAIL Franchisees and Marketers.

7.4. Seminars and Ongoing Training.
     ------------------------------

     From time to time, the Franchisor may present seminars, conventions or
continuing development programs for the benefit of the Marketer. The Marketer or
its Principal Owner shall be required to attend any ongoing mandatory seminars,
industry conventions or programs as may be offered by the Franchisor. The
Franchisor shall give the Marketer at least 30 days prior written notice of any
seminar, convention or program which is deemed mandatory. The Franchisor will
not require that the Marketer attend any ongoing training more often than a
total of five working days each calendar year. The Marketer will be responsible
for all travel and living expenses which are associated with attendance at any
ongoing training program.

                      8. FRANCHISOR'S OPERATING ASSISTANCE

8.1. System Manual.
     --------------

     The Franchisor shall, in addition to the Marketer training program, loan to
the Marketer during the term hereof one copy of its System Manual to assist the
Marketer and its employees in the conduct of the Business contemplated by this
Agreement. The Franchisor may prescribe mandatory and suggested standards and
operating procedures for the Marketer in the System Manual, which may be
modified from time to time by the Franchisor. The Marketer shall keep its copy
of the System Manual current. In the event of a dispute relating to the System
Manual, the master copy that the Franchisor maintains at its principal office
shall be controlling. The Marketer may not at any time copy any part of the
System Manual, unless approved in writing by the Franchisor. In the event the
Marketer's copy of the System Manual is lost, destroyed or damaged, the Marketer

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shall be obligated to obtain from the Franchisor, at the Franchisor's then
applicable charge, a replacement copy of the System Manual. The System Manual
and other writings communicated to the Marketer shall constitute material
provisions of this Agreement as if fully set forth herein.

8.2. Operating Assistance.
     ---------------------

      The Franchisor will make available the following services during the
term of this Agreement:

     a. Upon the reasonable request of the Marketer, consultation by telephone
regarding advice related to franchise sales, Franchisee support and assistance;
and

     b. Access to franchise sales advertising and promotional materials as may
be developed by the Franchisor, which reasonable cost may be passed on to the
Marketer at the Franchisor's option.

                         9. AREA MARKETER'S OBLIGATIONS

9.1. Hiring and Training of Employees of Area Marketer.
     --------------------------------------------------

     The Marketer shall hire all of the Marketer's employees, shall be
exclusively responsible for the terms of their employment and compensation and
shall implement a training program for employees to ensure their compliance with
the Franchisor's requirements; provided that the Marketer shall not employ any
person whom the Franchisor, in its sole discretion, has determined to be unfit
to represent the Franchisor in the marketing of PAK MAIL Center franchises or in
furnishing services to Franchisees.

9.2. Commencement of Business.
     -------------------------

     Unless otherwise agreed to in writing by the Franchisor and the Marketer,
the Marketer has 120 days from the date of this Agreement within which to
complete its initial training and commence operation of its PAK MAIL Marketer
Business. The Franchisor will extend the time within which the Marketer has to
commence operations for a reasonable period of time, in the event that factors
beyond the Marketer's reasonable control prevent the Marketer from meeting this
development schedule, so long as the Marketer has made reasonable and continuing
efforts to comply and the Marketer requests in writing, an extension of time in
which to have its Business established before the development period lapses. The
obligations of the Marketer, including Sales Services, shall commence at the
earlier of the date the Marketer or its Principal Owner has satisfactorily
completed the Franchisor's initial training program or 120 days from the date of
this Agreement.

9.3. Sales Services.
     ---------------

     The Marketer shall solicit and identify prospective franchisees for PAK
MAIL Centers to be located within the Territory.

9.4. Pre-Opening Support Services.
     -----------------------------

     The Marketer shall perform the following pre-opening Support Services on
behalf of the Franchisor with respect to Franchisees of PAK MAIL Centers located
in the Territory:

     a. Assist with Center location selection for each Franchisee, which shall
consist of providing each Franchisee with criteria for a satisfactory site and
assisting each Franchisee in completing a site report (containing such

                                       8

<PAGE>

demographic, commercial and other information and photographs as the Franchisor
may reasonably require) for each location at which the Franchisee proposes to
establish and operate a PAK MAIL Center and which Marketer reasonably believes
conform to the Franchisor's site selection criteria;

     b. At the Franchisor's request, travel to the Franchisee's proposed site(s)
for its PAK MAIL Center, evaluate each proposed site and submit a report to the
Franchisor on the condition of each proposed site;

     c. Provide information about required, recommended or acceptable terms and
conditions to be included in the Franchisee's lease for the Center premises;

     d. To the extent required by the Franchisor, assist a Franchisee in
securing financing;

     e. Provide standards and specifications for the build out, interior design,
layout, floor plan, signs, designs, color and decor of the Center as prescribed
from time to time by the Franchisor;

     f. Travel to each PAK MAIL Center located in the Territory during its first
week of operation and provide not fewer than 24 hours of on-site assistance to
the Franchisee; and

     g. Provide guidance in implementing advertising and marketing programs,
operating and sales procedures and bookkeeping and accounting programs.

9.5. Ongoing Support Services.
     -------------------------

     With respect to Franchisees of PAK MAIL Centers located in the Territory,
the Marketer shall perform the following ongoing Support Services on behalf of
the Franchisor:

     a. Initiate not fewer than two consultations by telephone with each
Franchisee each month regarding the continuing operation and management of the
Center and advise the Franchisee regarding services offered and related issues;

     b. Conduct seminars for Franchisees to provide on-going updates of
information regarding new services and products, the shipping business in
general, marketing and business techniques and updated Licensed Methods,
including without limitation, information about new services or special programs
of the Franchisor;

     c. Provide advice and assistance to the Franchisee in connection with the
development of and improvements to the Franchisee's Center;

     d. Conduct at least one on-site inspection of each PAK MAIL Center in the
Territory every calendar quarter in the manner as required by the Franchisor
from time to time, said inspections to be verified by written reports;

     e. Provide access to advertising and promotional materials as may be
developed by the Franchisor from time to time and assist Franchisees in
implementing advertising and promotional campaigns;

     f. At the Franchisor's written request, establish a toll-free telephone
number for all PAK MAIL Centers located in the Territory to consult with
Franchisees during regular business hours;

                                       9

<PAGE>

     g. Submit monthly reports to the Franchisor on activities in the Territory,
using procedures and forms prescribed and supplied by the Franchisor; and

     h. Use best efforts to cause Franchisees in the Territory to timely pay all
amounts due to the Franchisor and collect past due amounts from Franchisees.

9.6. Compliance with Franchise Agreement.
     ------------------------------------

     The Marketer acknowledges that the Franchisor is delegating certain of
its responsibilities to Franchisees in the Territory to the Marketer. The
responsibilities to Franchisees are to be performed by the Marketer as described
herein or as may in the future be set forth in the System Manual or other
reasonable standards and specifications as may be provided by the Franchisor
from time to time, and the Marketer's responsibilities to Franchisees will not
materially change during the term of this Agreement. In the performance of
services to Franchisees operating PAK MAIL Centers located in the Territory, the
Marketer shall in all respects comply with the terms and conditions of any
Franchise Agreement or other agreement in effect between the Franchisee and the
Franchisor. The Marketer understands, however, that its rights as an area
marketer are only by virtue of this Agreement and that it is not in any manner a
party, third party beneficiary or holder of any other right, title or interest
in or to any Franchise Agreement, unless it is a Franchise Agreement in which
the Marketer is the Franchisee.

9.7. Area Marketer's Inspections.
     ----------------------------

     The Marketer shall ascertain through field audits, reviews and inspections,
that each Franchisee in the Territory has complied satisfactorily with all of
the terms and conditions of the Franchise Agreement, specifications, standards,
operating procedures, and the Franchisee Operations Manual, and shall promptly
notify the Franchisee in writing, with a copy and evaluation report to the
Franchisor, of any deficiencies; provided, however, the Marketer understands and
acknowledges that its inspections and reports are advisory only and that the
Franchisor shall have: (a) all of the rights to inspect and ascertain compliance
of all Franchisees as if this Agreement were not in effect; (b) the sole right
to send notices of default to the Franchisee; (c) the sole right to terminate a
Franchise Agreement for failure to cure such defaults (if an opportunity to cure
is granted); and (d) the sole right to take any legal action with respect to any
default or any violation of a Franchise Agreement. If the Marketer believes that
any Franchisee in the Territory has breached a Franchise Agreement with the
Franchisor, the Marketer shall document in writing all facts related to the
alleged breach and shall request in writing that the Franchisor investigate such
alleged breach. If, as a result of the Franchisor's investigation, the
Franchisor determines that there is a breach by the Franchisee of its Franchise
Agreement with the Franchisor, the Franchisor shall, in its sole discretion,
take such action as it deems appropriate.

                                   10. MARKS

10.1. Ownership and Goodwill of Marks.
      --------------------------------

      The Marketer acknowledges that its rights to use the Marks are derived
solely from this Agreement, unless such rights are granted under a separate
written agreement with the Franchisor, and are limited to operating as a
Marketer pursuant to and in compliance with this Agreement. Any unauthorized use
of the Marks by the Marketer shall constitute a breach hereof and an
infringement of the Franchisor's rights in and to the Marks. The Marketer
acknowledges and agrees that its usage of the Marks and any goodwill established
thereby shall inure to the Franchisor's exclusive benefit and that this
Agreement does not confer any goodwill or other interest in the Marks upon the
Marketer.

                                       10

<PAGE>

10.2. Limitations on Use.
      -------------------

      The Marketer shall not use any Mark as part of any corporate or trade name
or with any prefix, suffix or other modifying words, terms, designs or symbols
(other than logos licensed to the Marketer hereunder), or in any modified form,
nor may the Marketer use any Mark in connection with unauthorized services or
products or in any other manner not expressly authorized in writing by the
Franchisor. The Marketer agrees to give such notices of trademark and service
mark registration as the Franchisor specifies and to use and obtain such
fictitious or assumed name registrations as may be required by the Franchisor or
under applicable law. The Marketer further agrees that no service mark other
than "PAK MAIL" or such other Marks as may be specified by the Franchisor shall
be used in the marketing, promotion or operation of the Marketer's Business.
Except as may be permitted in the System Manual, the Marketer agrees not to use
any of the Marks as part of an electronic mail address or on any sites on the
Internet or on the World Wide Web and the Marketer agrees not to use or register
any of the Marks as a domain name on the Internet.

10.3. Discontinuance of Use of Marks.
      -------------------------------

      If it becomes advisable at any time, in the Franchisor's sole discretion,
for the Franchisor and/or the Marketer to modify or discontinue use of any Mark
and/or use one or more additional or substitute trade or service marks, the
Marketer agrees, at its own expense, to comply with the Franchisor's directions
to do so within a reasonable time after notice thereof.

10.4. Notification of Infringements and Claims.
      -----------------------------------------

      The Marketer shall immediately notify the Franchisor of any possible
infringement of or challenge to the Marketer's use of any Mark or copyrighted
work, or claim by any person of any rights in any Mark or copyrighted work, and
the Marketer shall not communicate with any person other than the Franchisor or
its counsel in connection with any such matter. The Marketer may not settle any
claim without the Franchisor's written consent. The Franchisor shall have sole
discretion to take such action as it deems appropriate and the right to control
exclusively any litigation, U.S. Patent and Trademark Office proceeding or any
other administrative proceeding arising out of any such infringement, challenge
or claim or otherwise relating to any Mark or copyrighted work. The Marketer
agrees to execute any and all instruments and documents, render such assistance
and perform such acts as, in the opinion of the Franchisor's counsel, may be
necessary or advisable to protect and maintain the Franchisor's interest in the
Marks and in its copyrighted works.

10.5. Indemnification.
      ----------------

      The Franchisor agrees to indemnify the Marketer against and to reimburse
the Marketer for all damages for which the Marketer is held liable in any
proceeding arising out of its authorized use of any Mark or copyrighted work
pursuant to and in compliance with this Agreement and for all costs reasonably
incurred by the Marketer in defending any such claim or any proceeding in which
the Marketer is named as a party, provided that the Marketer has timely notified
the Franchisor of such claim or proceeding and has otherwise complied with this
Agreement. The Franchisor, at its option, shall be entitled to defend and
control the defense of any proceeding arising out of the Marketer's use of any
Mark or copyrighted work pursuant to and in compliance with this Agreement.

                                       11

<PAGE>

                          11. CONFIDENTIAL INFORMATION

11.1. Confidential Information.
      -------------------------

      The Franchisor possesses certain proprietary confidential information
consisting of the methods, techniques, formats, specifications, procedures,
information, systems, methods of business management, sales and promotion
techniques and knowledge of and experience in the operation and franchising of
PAK MAIL Centers (the "Confidential Information"). The Franchisor shall disclose
the Confidential Information to the Marketer in the training program, the System
Manual and in guidance furnished to the Marketer during the term hereof. The
Marketer will not acquire any interest in the Confidential Information, other
than the right to utilize it in the Territory in the execution of the Marketer's
duties hereunder during the term of this Agreement, and the Marketer
acknowledges that the use or duplication of the Confidential Information in any
other business venture would constitute an unfair method of competition. The
Marketer acknowledges and agrees that the Confidential Information is
proprietary, includes trade secrets of the Franchisor and is disclosed to the
Marketer solely on the condition that the Marketer agrees, and the Marketer (and
its shareholders, officers, directors, partners, members, managers and
equivalents if the Marketer is an entity) does hereby agree that the Marketer:
(a) shall not use the Confidential Information in any other business or
capacity; (b) shall maintain the absolute confidentiality of the Confidential
Information during and for two years after the term of this Agreement; (c) shall
not make unauthorized copies of any portion of the Confidential Information
disclosed in written or other tangible form; and (d) shall adopt and implement
all reasonable procedures prescribed from time to time by the Franchisor to
prevent unauthorized use or disclosure of the Confidential Information. The
Marketer agrees that the Franchisor shall have the perpetual right to use and
authorize other PAK MAIL Center Franchisees and area marketers to use, and the
Marketer shall fully and promptly disclose to the Franchisor, all ideas,
concepts, methods and techniques relating to the development and/or operation of
a PAK MAIL Center or the Marketer's activities howsoever conceived or developed
by the Marketer and/or its employees and/or the franchised PAK MAIL Centers
serviced by the Marketer during the term of this Agreement. The Marketer
acknowledges that any such ideas, concepts, methods and techniques shall be the
property of the Franchisor and the Franchisor may utilize or disclose such
information to Franchisees or other persons as it determines to be appropriate.

11.2. Confidentiality and Noncompetition Agreement.
      ---------------------------------------------

      The Franchisor reserves the right to require that the Marketer cause each
of its shareholders, officers, directors, partners, employees, members, managers
and equivalents, or if the Marketer is an individual, the Marketer's spouse, to
execute a Confidentiality and Noncompetition Agreement in a form approved by the
Franchisor.

                           12. EXCLUSIVE RELATIONSHIP

12.1. Exclusive Relationship.
      -----------------------

      The Franchisor is entering into this Agreement with the Marketer on the
condition that the Marketer will deal exclusively with the Franchisor. The
Marketer acknowledges and agrees that the Franchisor would be unable to protect
its Confidential Information and would be unable to encourage a free exchange of
ideas and information among area marketers and the Franchisor if area marketers
were permitted to hold interests in any Competitive Business, as defined below.
The Marketer therefore agrees that, during the term hereof, neither the
Marketer, the Marketer's officers, directors, shareholders, members, managers,
partners or equivalents who participate in the management of the Marketer, nor
the Marketer's spouse or Principal Owner, if applicable, shall:

                                       12

<PAGE>

      a. have any direct or indirect interest as a disclosed or beneficial owner
in a "Competitive Business," which shall be defined as a business operating or
granting franchises or licenses to others to operate, a packaging, crating,
freight forwarding and/or mailing business or any similar business deriving more
than 10% of its gross receipts (excluding PAK MAIL Centers operated under
Franchise Agreements with the Franchisor) from the sale of packaging and mailing
products or services;

      b. have any direct or indirect controlling interest as a disclosed or
beneficial owner in a Competitive Business;

      c. perform services as a director, officer, manager, employee, consultant,
representative, agent or the equivalent for a Competitive Business; or

      d. divert or attempt to divert any business related to, or any customer or
account of, the Marketer's Business, the Franchisor's business or any other PAK
MAIL area marketer's or Franchisee's business, by direct inducement or
otherwise, or divert or attempt to divert the employment of any employee of the
Franchisor or another area marketer or Franchisee licensed by the Franchisor, to
any Competitive Business by any direct inducement or otherwise.

Notwithstanding the foregoing, the Marketer shall not be prohibited from owning
securities in a Competitive Business if such securities are listed on a stock
exchange or traded on the over-the-counter market and represent 2% or less of
that class of securities issued and outstanding.

                            13. OPERATING STANDARDS

13.1. Standards of Service.
      ---------------------

      The Marketer shall at all times give prompt, courteous and efficient
service to PAK MAIL Center Franchisees in the Territory. The Marketer shall, in
all dealings with Franchisees, prospective franchisees and the public, adhere to
the highest standards of honesty, integrity, fair dealing and ethical conduct.

13.2. Compliance with Laws and Good Business Practices.
      -------------------------------------------------

      The Marketer shall secure and maintain in force all required licenses,
permits and certificates relating to the Marketer's activities hereunder and
shall operate in full compliance with all applicable laws, ordinances and
regulations. The Marketer acknowledges being advised that many jurisdictions
have enacted laws concerning the advertising, sale, renewal, termination and
continuing relationship between parties to a franchise agreement, including
without limitation, laws concerning disclosure requirements. The Marketer agrees
promptly to become aware of, and to comply with, all such laws and legal
requirements in force in the Territory and to utilize only offering circulars
that the Franchisor has approved for use in the applicable jurisdiction.

13.3. Accuracy of Information.
      ------------------------

      Before it offers or sells any franchise, the Marketer shall each time take
reasonable steps to confirm that the information contained in any written
materials, agreements and other documents related to the offer or sale of
franchises is true, correct and not misleading at the time of such offer or
sale, and the offer or sale of such franchise will not at that time be contrary
to or in violation of any applicable state law related to the registration of
the franchise offering. The Franchisor shall provide the Marketer with any
changes to its disclosure documents and other agreements on a timely basis, and
shall, upon request, provide the Marketer with confirmation that the information

                                       13

<PAGE>

contained in any written materials, agreements or documents being used by the
Marketer is true, correct and not misleading, except for information
specifically relating to disclosures regarding the Marketer. If the Marketer
notifies the Franchisor of an error in any information in the Franchisor's
documents, the Franchisor shall have a reasonable period of time to attempt to
correct any deficiencies, misrepresentations or omissions in such information.

13.4. Notification of Litigation.
      ---------------------------

      The Marketer shall notify the Franchisor in writing within five days after
(i) the commencement of any action, suit, proceeding or investigation; and (ii)
the issuance of any order, writ, injunction, award or decree, by any court,
agency or other governmental body, which concerns the operation or financial
condition of the Marketer, the Marketer's Business or any Franchisee in the
Territory.

13.5. Ownership and Management of Business.
      -------------------------------------

      The Marketer's Business shall at all times be under the direct,
day-to-day, full-time supervision of the Marketer (or, if the Marketer is a
partnership, corporation, limited liability company or other entity, the
Principal Owner who shall have been approved by the Franchisor and who shall
have satisfactorily completed the Franchisor's training program). The Marketer
shall at all times during the term of this Agreement own and control the
Business authorized hereunder. Upon the request of the Franchisor, the Marketer
shall promptly provide satisfactory proof of such ownership. The Marketer
represents that the Statement of Ownership, attached to this Agreement as
Exhibit IV and incorporated herein by reference, is true, complete, accurate and
not misleading. The Marketer shall promptly provide the Franchisor with written
notification if the information contained in the Statement of Ownership changes
at any time during the term of this Agreement and shall comply with the
applicable transfer provision contained in Article 15 of this Agreement. If the
Marketer is not an individual, an individual or individuals designated by the
Franchisor shall execute the Guaranty and Assumption of Area Marketer's
Obligations attached hereto as Exhibit III and incorporated herein by reference.

13.6. Conflicting Interests.
      ----------------------

      The Marketer shall at all times faithfully, honestly and diligently
perform its obligations hereunder and continuously exert its best efforts to
promote, enhance and service PAK MAIL Centers in the Territory. The Marketer
shall not engage in any other business or other activity, directly or
indirectly, that requires any significant management responsibility, time
commitments, or otherwise may conflict with the Marketer's obligations
hereunder, without the prior written approval of the Franchisor.

13.7. Insurance.
      ----------

      The Marketer shall at all times during the term of this Agreement maintain
in force, at the Marketer's sole expense, comprehensive, public and motor
vehicle liability insurance against claims for bodily and personal injury, death
and property damage caused by or occurring in conjunction with the operation of
the Marketer's Business under this Agreement. Such insurance coverage shall be
maintained under one or more policies of insurance containing minimum liability
protection of $1,000,000 per occurrence for bodily and personal injury and death
and $500,000 per occurrence for property damage. All such insurance policies
shall be issued by insurance carriers acceptable to the Franchisor. All of the
required insurance policies shall name the Franchisor as an additional insured,
contain a waiver of the insurance company's right of subrogation against the
Franchisor and provide that the Franchisor will receive 30 days' prior written
notice of termination, expiration or cancellation of any such policy. The
Franchisor has the right to change the minimum amount of insurance the Marketer
is required to maintain by giving the Marketer prior reasonable notice, giving
due consideration to what is reasonable and customary in similar businesses.

                                       14

<PAGE>

13.8.  Proof of Insurance Coverage.
       ---------------------------

       The Marketer will provide proof of insurance to the Franchisor prior to
commencement of operations of its Marketer Business. This proof will show that
the insurer has been authorized to inform the Franchisor in the event any
policies lapse or are cancelled. The Marketer shall submit to the Franchisor
annually a copy of the certificates or other evidence of the renewal or
extension of each required insurance policy. Noncompliance with the insurance
provisions set forth herein shall be deemed a material breach of this Agreement;
and in the event of any lapse in insurance coverage, in addition to all other
remedies, the Franchisor shall have the right to demand that the Marketer cease
operations of the Marketer Business until coverage is reinstated, or, in the
alternative, pay any delinquencies in premium payments and charge the same back
to the Marketer. The Marketer's obligation to obtain and maintain required
insurance policies shall not be limited in any way by reason of any insurance
maintained by the Franchisor, nor shall the Marketer's compliance with the
insurance provisions in this Agreement relieve the Marketer of its obligations
under Section 18.4 of this Agreement.

13.9.  Advertising in Territory.
       -------------------------

       The Marketer is required to spend during each calendar quarter a certain
specified amount ("Advertising Expenditure") to advertise and promote the offer
and sale of franchises for PAK MAIL Centers in the Territory. The amount of the
Advertising Expenditure shall be designated in Exhibit I attached hereto. The
Marketer shall submit to the Franchisor an accounting of its Advertising
Expenditures within 20 days following the end of each calendar quarter during
the term of this Agreement. The Franchisor reserves the right to withhold the
payment of Service Fees due to the Marketer for any calendar quarter until such
time as the Franchisor receives the Marketer's Advertising Expenditure report
for all previous quarters. All advertising and promotion by the Marketer shall
be completely factual and conform to the highest standards of ethical
advertising. The Marketer agrees to refrain from any business or advertising
practice that may be injurious to the Franchisor, the goodwill associated with
the Marks or PAK MAIL Centers.

13.10. Approval of Advertising.
       ------------------------

       Prior to their use by the Marketer, samples of all advertising and
promotional materials not prepared or previously approved by the Franchisor,
including, without limitation, Internet advertising on the World Wide Web or
other similar network, shall be submitted to the Franchisor for approval, which
approval shall not be unreasonably withheld. If written disapproval is not
received by the Marketer within 15 business days from the Franchisor's receipt
of proposed advertising materials, the Franchisor shall be deemed to have given
its approval. The Marketer shall not use any advertising or promotional
materials that the Franchisor has disapproved. The Marketer acknowledges and
understands that certain states require the filing of franchise sales
advertising materials with the appropriate state agency prior to dissemination.
The Marketer agrees to fully and timely comply with such filing requirements at
the Marketer's own expense unless such advertising has been previously filed
with the state by the Franchisor.

13.11. Accounting, Bookkeeping and Records.
       ------------------------------------

       The Marketer shall maintain at its Business premises in the Territory all
original invoices, receipts, checks, contracts, licenses, acknowledgement of
receipt forms and bookkeeping and business records as the Franchisor may require
from time to time. The Marketer shall furnish to the Franchisor, within 90 days

                                       15

<PAGE>

after the end of the Marketer's fiscal year, a balance sheet and profit and loss
statement for the Marketer's Business for such year (or monthly or quarterly
statements if required by the Franchisor, in which case such statements shall
also reflect year-to-date information). In addition, upon request of the
Franchisor, within 10 days after such returns are filed, exact copies of federal
and state income, sales and any other tax returns and such other forms, records,
books and other information as the Franchisor may periodically require regarding
the Marketer's Business shall be furnished to the Franchisor. The Marketer shall
maintain all records and reports of the Business conducted pursuant to this
Agreement for at least two years after the date of termination or expiration of
this Agreement.

13.12. Reports.
       --------

       The Marketer shall, as often as required by the Franchisor, deliver to
the Franchisor a written report of its Business activities during such periods
as required in Sections 9.4, 9.5 and 9.7 above, in such form and in such detail
as the Franchisor may from time to time specify, including information about
efforts to solicit prospective Franchisees, the status of pending real estate
transactions and the status of the Centers in the Territory. The Marketer shall,
as often as required by the Franchisor, during the term of this Agreement,
deliver to the Franchisor the field inspection reports required in Section 9.5
above, for each Franchisee-owned Center in the Territory, in such form and in
such detail as the Franchisor may from time to time specify.

13.13. Late Charges.
       -------------

       The Franchisor reserves the right to automatically assess a $50 late
charge for any report or financial statement required under the terms of this
Agreement which is not timely filed by the Marketer. Such late charge shall
continue to accrue each month that the late report or financial statement
remains unfiled and shall be due and payable in full upon demand by the
Franchisor. In the event any late charge is not paid upon demand, the Franchisor
may elect to pursue all of its available remedies.

13.14. Compliance with Third Party Agreements.
       ---------------------------------------

         The Marketer shall comply with all agreements with third parties
related to the Marketer Business including, in particular, all provisions of any
premises lease.

13.15. Electronic Advertising.
       -----------------------

       The Franchisor reserves the right to advertise on the Internet, including
the creation of a website with a Uniform Resource Location ("URL") address and
to require the Marketer's assistance in the development of Internet advertising.
The Marketer shall not advertise on the Internet by use of "banner ads" or
otherwise or create an independent website without the prior written consent of
the Franchisor, as required by Section 13.10.

                           14. INSPECTIONS AND AUDITS

14.1.  Inspections and Audits.
       -----------------------

       To determine whether the Marketer is complying with this Agreement, the
Franchisor or its designee shall have the right at any time during normal
business hours, and without prior notice to the Marketer, to enter onto the
premises in which the Marketer is then keeping its business records and inspect,
and conduct an audit of, the business records, bookkeeping and accounting
records, invoices, payroll records, time cards, check stubs, bank deposits,
receipts, sales tax records and returns and other business records and documents

                                       16

<PAGE>

of the Marketer's Business. The Marketer and its employees shall fully cooperate
with representatives of the Franchisor making, conducting, supervising or
observing any such inspection or audit. Marketer must purchase certain office
equipment that meets the Franchisor's standards and specifications, including a
facsimile machine, a separate phone line dedicated to the Business, and pay an
annual fee for access to the Franchisor's electronic mail network to facilitate
the Franchisor's communication with the Marketer and among all Marketers and
Franchisees. At the Franchisor's request, the Marketer will purchase computer
equipment and software according to the Franchisor's standards and
specifications, to allow the Franchisor unlimited electronic access to the
Marketer's Business records. The Marketer must have access to the internet in
order to receive and send electronic mail messages on the Franchisor's
electronic mail network.

                                 15. TRANSFERS

15.1.  Transfers by the Franchisor.
       ----------------------------

       This Agreement is fully transferable by the Franchisor and shall inure to
the benefit of any transferee or other legal successor to the Franchisor's
interests herein.

15.2.  Transfers by the Marketer.
       --------------------------

       The Marketer agrees that the rights and duties created by this Agreement
are personal to the Marketer (or its officers, directors, shareholders,
managers, members, partners or equivalents if the Marketer is an entity) and
that the Franchisor has entered into this Agreement in reliance upon the
Franchisor's perceptions of the individual or collective character, skill,
aptitude, attitude, business ability and financial capacity of the Marketer (or
its officers, directors, shareholders, members, managers or partners).
Accordingly, without the prior written consent of the Franchisor, which consent
will not be unreasonably withheld, neither this Agreement (or any interest
therein), nor any of the assets of the Business, nor any part or all of the
ownership of the Marketer may be transferred. Any unauthorized transfer shall
constitute a breach hereof and be void and of no effect. As used in this
Agreement, the term "transfer" shall mean and include the voluntary,
involuntary, direct or indirect assignment, sale, subfranchise, gift or other
disposition by the Marketer (or any of its owners) of any interest in: (1) this
Agreement; (2) 30% or more of the ownership interests in the Marketer; or (3)
the assets of the Business.

15.3.  Conditions for Approval of Transfer.
       ------------------------------------

       If the Marketer (and its officers, directors, managers, owners and
equivalents if the Marketer is an entity) is in full compliance with this
Agreement, the Franchisor shall not unreasonably withhold its approval of a
transfer that meets all the applicable requirements of this Section. The
proposed transferee and its officers, directors, managers and owners must be
individuals of good moral character and otherwise meet the Franchisor's then
applicable standards for area marketers. If the transfer is of this Agreement, a
30% or more ("Controlling Interest") interest in the Marketer, or all or a
substantial portion of the assets of the Business, or is one of a series of
transfers which in the aggregate constitute the transfer of this Agreement, a
Controlling Interest in the Marketer or all or a substantial portion of the
assets of the Business, all of the following conditions must be met prior to or
concurrently with the effective date of the transfer:

       a. The transferee shall have sufficient business experience, aptitude and
financial resources to act as a Marketer, agree to be bound by all of the terms
and conditions of this Agreement and the transferee and/or its Principal Owner
must have completed the Franchisor's training program to the Franchisor's
satisfaction;

                                       17

<PAGE>

       b. The Marketer shall have paid all fees due hereunder, all amounts owed
for purchases from the Franchisor and all other amounts owed to the Franchisor
or its affiliates and third party creditors and submit to the Franchisor all
required reports and statements;

       c. The Marketer or the transferee shall have paid the Franchisor a
transfer fee in the amount of $4,000 to defray expenses the Franchisor incurs in
connection with the transfer;

       d. The Marketer (and/or its transferring owners) shall have executed a
general release, in form satisfactory to the Franchisor, of any and all claims
against the Franchisor and its affiliates and their respective officers,
directors, employees and agents;

       e. The transferee shall have executed an Area Marketing Agreement in the
form then currently offered by the Franchisor, the term of which will end on the
expiration date of this Agreement, and which shall supersede this Agreement in
all respects. The Marketer acknowledges that the terms of a new Area Marketing
Agreement may differ from the terms of this Agreement;

       f. The Franchisor shall have approved the material terms and conditions
of such transfer, including, without limitation, that the price and terms of
payment are not so burdensome as to affect adversely the transferee's business
as a Marketer of the Franchisor;

       g. If the Marketer (and/or the transferring owners) finances any part of
the sale price of the transferred interest, the Marketer and/or its owners shall
have agreed that all obligations of the transferee under any promissory notes,
agreements or security interests shall be subordinate to the transferee's
obligations to pay fees, and other amounts due to the Franchisor, its affiliates
and designees and otherwise to comply with this Agreement; and

       h. The Marketer (and/or its transferring owners) shall have executed a
noncompetition covenant in favor of the Franchisor and the transferee with terms
the same as those set forth in Section 17.5 below.

15.4.  Transfer to an Entity.
       ----------------------

       If the Marketer is in full compliance with this Agreement, the Marketer
may transfer this Agreement to a corporation or other entity in which the
Marketer owns all of the ownership interest, with the Franchisor's prior written
approval, which approval shall not be unreasonably withheld. The transfer fee
described in Section 15.3(c) above will be waived by the Franchisor and all
owners of such entity shall sign a Guaranty and Assumption of the Area
Marketer's Obligations, attached hereto as Exhibit III.

15.5.  Franchisor's Approval of Transfer.
       ----------------------------------

       The Franchisor has 30 days from the date of the written notice to approve
or disapprove in writing, of the Marketer's proposed transfer. Written notice
shall mean and include all documentation necessary to evaluate the transferee.
The Marketer acknowledges that the proposed transferee shall be evaluated for
approval by the Franchisor based on the same criteria as is currently being used
to assess new marketers of the Franchisor and that the proposed transferee shall
be provided, if appropriate, with such disclosures as may be required by state
or federal law.

                                       18

<PAGE>

15.6.  Death or Disability of Area Marketer.
       -------------------------------------

       Upon the death or permanent disability of the Marketer (or a Principal
Owner of or the owner of a Controlling Interest in the Marketer), the executor,
administrator, conservator, guardian or other personal representative of such
person shall transfer his or her interest in this Agreement or such interest in
the Marketer to an approved third party. Such disposition of this Agreement or
such interest (including, without limitation, transfer by bequest or
inheritance) shall be completed within a reasonable time, not to exceed six
months from the date of death or permanent disability, and shall be subject to
all the terms and conditions applicable to transfers contained in this Article.
Failure to transfer the interest in this Agreement or such interest in the
Marketer within said period of time shall constitute a breach of this Agreement.
For purposes hereof, the term "permanent disability" shall mean a mental or
physical disability, impairment or condition that prevents the Marketer, a
Principal Owner or an owner of a Controlling Interest in the Marketer from
performing the essential functions of the Marketer.

                            16. TERM AND EXPIRATION

16.1.  Term.
       -----

       The term of this Agreement is for a period of 5 years from the date of
this Agreement, unless sooner terminated as provided herein.

16.2.  Continuation.
       -------------

       If, for any reason, the Marketer continues to operate the Business beyond
the term of this Agreement or any subsequent renewal period, it shall be deemed
to be on a month-to-month basis under the terms of this Agreement and subject to
termination upon 30 days notice or as required by law. If said holdover period
exceed 90 days, this Agreement is subject to immediate termination unless
applicable law requires a longer period. Upon termination after any holdover
period, the Marketer and those in active concert with the Marketer, including
family members, officers, directors, partners and managing agents, are subject
to the terms of Articles 11 and 12 and Sections 17.3, 17.4 and 17.5 of this
Agreement and all other applicable post-termination obligations contained in
this Agreement.

16.3.  Rights Upon Expiration.
       -----------------------

       At the end of the initial term, the Marketer shall have the option to
renew its area marketer rights for an additional term as set forth in the then
current form of Area Marketing Agreement, by acquiring successor area marketer
rights, if the Franchisor authorizes a successor area marketer franchise in
accordance with Section 16.3 below, and if the Marketer:

       a. At least 60 days prior to expiration of the term, executes the form of
Area Marketing Agreement then in use by the Franchisor. The Marketer
acknowledges that such agreement may contain terms which are materially
different from those in this Agreement, including commission percentages and
territories;

       b. Has complied with all provisions of this Agreement during the current
term, including the payment on a timely basis of all fees due hereunder.
"Compliance" shall mean, at a minimum, that the Marketer has not received
written notification from the Franchisor of breach hereunder more than three
times during the term hereof;

                                       19

<PAGE>

       c. Executes a general release, in a form satisfactory to the Franchisor,
of any and all claims against the Franchisor and its affiliates, and their
respective officers, directors, employees, successors, assigns and agents
arising out of or relating to this Agreement; and

       d. Has agreed with the Franchisor on new Sales Goals for the additional
term at least 60 days prior to expiration of the term.

16.4.  Exercise of Option for Successor Area Marketer Rights.
       ------------------------------------------------------

       The Marketer may exercise its option for successor area marketer rights
by giving written notice of such exercise to the Franchisor not less than 120
days nor more 180 days prior to the scheduled expiration of this Agreement. The
Marketer's successor area marketer rights shall become effective by signing the
Area Marketing Agreement then currently being offered by the Franchisor;
however, if the Marketer fails to sign the general release and the Area
Marketing Agreement within 60 days after delivery thereof to the Marketer, the
Marketer shall be deemed to have elected not to acquire a successor area
marketing franchise.

16.5.  Conditions of Refusal.
       ----------------------

       The Franchisor shall not be obligated to offer the Marketer successor
area marketer rights upon the expiration of this Agreement if the Marketer fails
to comply with any of the above conditions of renewal. In such event, except for
failure to execute the then current Area Marketing Agreement, the Franchisor
shall give the Marketer notice of expiration not more than 90 days after the
Franchisor receives the Marketer's notice, and such notice shall set forth the
reasons for such refusal to offer successor area marketer rights. Upon the
expiration of this Agreement, the Marketer shall comply with the provisions of
Section 17.3 below.

                                17. TERMINATION

17.1.  By the Marketer.
       ----------------

       The Marketer may terminate this Agreement at any time during the term
hereof with 90 days advance written notice to the Franchisor.

17.2.  By the Franchisor.
       ------------------

       The Franchisor shall have the right to terminate this Agreement effective
upon delivery of written notice of termination to the Marketer, unless otherwise
noted below (subject to any state laws to the contrary, where state law shall
prevail) if the Marketer (and/or any of its shareholders, members, managers,
Principal Owners, partners or the equivalent):

       a. Fails to satisfactorily complete the training program as provided in
Section 7.1 of this Agreement;

       b. Has made any material misrepresentation or omission in its application
to be a Marketer;

       c. Fails to meet the Sales Goals set forth in Exhibit I;

                                       20

<PAGE>

       d. Fails to comply with any other provision of this Agreement or any
mandatory specification, standard or operating procedure prescribed by the
Franchisor and does not correct such failure within 30 days after written notice
of such failure to comply is delivered to the Marketer;

       e. Surrenders, transfers control of or makes an unauthorized transfer of
this Agreement or an ownership interest in the Marketer;

       f. Is convicted by a trial court of or pleads no contest to a felony, or
to any other crime or offense that is, in the opinion of the Franchisor, likely
to adversely affect the goodwill associated with the Marks, or engages in any
conduct which may adversely affect the reputation of PAK MAIL Centers or the
goodwill associated with the Marks;

       g. Is declared bankrupt or insolvent or voluntarily institutes a
bankruptcy proceeding under the Bankruptcy Code or is adjudicated bankrupt as a
result of an involuntary petition in bankruptcy being filed against it. (This
provision may not be enforceable under federal bankruptcy law, 11 U.S.C. ss.ss.
101 et seq.);

       h. Abandons or ceases to operate the Marketer Business for a period of 15
consecutive days or any shorter period that indicates an intent by the Marketer
to discontinue operation of the Marketer Business unless precluded from doing so
by an event beyond the Marketer's reasonable control, other than for financial
reasons;

       i. Has received three notices of default from the Franchisor within a 12
month period, regardless of whether the defaults were cured by the Marketer;

       j. Makes any unauthorized use of the Marks or unauthorized use or
disclosure of the Confidential Information, or uses, duplicates or discloses any
part of the System Manual;

       k. Has terminated a Franchise Agreement between the Franchisor and the
Marketer, or if the Franchisor has terminated such a Franchise Agreement;

       l. Fails to pay any amounts due the Franchisor or affiliates, including
any amounts due under any promissory note due and owing to the Franchisor,
within 10 days after receiving notice that such amounts are overdue; or

       m. Defaults under any term of any promissory note due and owing to the
Franchisor or any other agreement material to the Marketer Business and such
default is not cured within the time specified in such promissory note or other
agreement.

17.3.  Rights and Obligations of the Area Marketer Upon Termination or
       ---------------------------------------------------------------
       Expiration.
       -----------

       Upon termination of this Agreement, whether pursuant to Section 17.1,
17.2 or upon expiration of this Agreement pursuant to Article 16 above, the
Marketer agrees:

       a. To pay the Franchisor within 15 days after the effective date of
termination or expiration of this Agreement, or such later date that the amounts
due to the Franchisor are determined, such fees, amounts owed for purchases by
the Marketer from the Franchisor, its affiliates or designees, interest due on
any of the foregoing and all other amounts owed to the Franchisor, its
affiliates or designees which are then unpaid;

                                       21

<PAGE>

       b. To refrain from, directly or indirectly at any time or in any manner
(except with respect to PAK MAIL Center franchises owned and operated by the
Marketer) identifying itself or any business as a current or former PAK MAIL
Marketer, use any Mark, any colorable imitation thereof or other indicia of a
PAK MAIL Center in any manner or for any purpose or utilize for any purpose any
trade name, trademark or service mark or other commercial symbol that suggests
or indicates a connection or association with the Franchisor or its affiliates;

       c. To immediately deliver to the Franchisor all past and present
franchise sales leads and records and all contracts, acknowledgements of
receipt, and other information and records related to Franchisees of the
Franchisor in the Territory;

       d. To immediately deliver to the Franchisor all advertising materials,
the System Manual, all other manuals, forms, offering circulars, franchise sales
brochures and other materials containing any Mark or otherwise identifying or
relating to the sale or service of PAK MAIL Centers;

       e. To refrain from communicating, in any manner, with Franchisees, except
as expressly authorized by the Franchisor;

       f. To take such action as may be required to cancel all fictitious or
assumed names or equivalent registrations relating to the Marketer's use of any
Mark;

       g. To notify the telephone company and all telephone directory publishers
of the termination or expiration of the Marketer's right to use any telephone
number and any regular, classified or other telephone directory listings
associated with any Mark and to authorize transfer thereof to the Franchisor or
its designee. The Marketer acknowledges that, as between it and the Franchisor,
the Franchisor has the sole rights to and interest in all telephone, telecopy or
facsimile machine numbers and directory listings associated with any Mark. The
Marketer authorizes the Franchisor, and hereby appoints the Franchisor and any
of its officers as the Marketer's attorney-in-fact, to direct the telephone
company and all telephone directory publishers to transfer any telephone,
telecopy or facsimile machine numbers and directory listings relating to the
Marketer's Business to the Franchisor at its direction, should the Marketer fail
or refuse to do so, and the telephone company and all telephone directory
publishers may accept such direction or this Agreement as conclusive evidence of
the Franchisor's exclusive rights in such telephone numbers and directory
listings and the Franchisor's authority to direct their transfer;

       h. If applicable, take such action as may be required to remove from the
internet all sites referring to the Marketer's former Business, PAK MAIL Centers
or any of the Marks and to cancel or assign to the Franchisor, in the
Franchisor's sole discretion, all rights to any domain names for any sites on
the internet that refer to the Marketer's former Business, PAK MAIL Centers or
any of the Marks;

       i. Abide by all restrictive covenants set forth in this Agreement; and

       j. Furnish the Franchisor, within 30 days after the effective date of
termination or expiration, with evidence satisfactory to the Franchisor of the
Marketer's compliance with the foregoing obligations.

17.4.  Confidential Information.
       -------------------------

       Marketer agrees that, upon termination or expiration of this Agreement,
the Marketer shall immediately cease to use any Confidential Information of the
Franchisor pursuant to this Agreement in any business or otherwise (except in
connection with the operation of a PAK MAIL Center pursuant to a Franchise

                                       22

<PAGE>

Agreement with the Franchisor) and return to the Franchisor all copies of the
System Manual and any other confidential materials which have been loaned to the
Marketer by the Franchisor.

17.5.  Covenant Not to Compete.
       ------------------------

       Upon termination or expiration of this Agreement for any reason, the
Marketer (and its shareholders, officers, directors, members, managers and/or
partners if the Marketer is a corporation, partnership, or limited liability
company) agrees that for a period of two years commencing on the effective date
of termination or expiration, or the date on which the Marketer ceases to
conduct business, whichever is later, the Marketer (and its shareholders,
officers, directors, members, managers, partners and/or equivalents if the
Marketer is an entity) shall not have any direct or indirect interest (through a
member of any immediate family of the Marketer or its affiliates, shareholders,
officers, directors, partners, members, managers, equivalents or otherwise) as a
disclosed or beneficial owner, investor, partner, director, officer, employee,
consultant, representative or agent or in any other capacity in any Competitive
Business located or operating within the Territory. The restrictions of this
Section shall not be applicable to the ownership of shares of a class of
securities listed on a stock exchange or traded on the over-the-counter market
that represent 2% or less of the number of shares of that class of securities
issued and outstanding. The Marketer (and its shareholders, officers, directors,
members, managers, partners and/or equivalents) expressly acknowledges that it
possesses skills and abilities of a general nature and has other opportunities
for exploiting such skills. Consequently, enforcement of the covenants made in
this Section will not deprive it of its personal goodwill or ability to earn a
living.

17.6.  No Further Right to Payment.
       ----------------------------

       Upon termination or expiration of this Agreement, the Marketer forfeits
all fees paid to the Franchisor and remains liable to the Franchisor for all
amounts due to the Franchisor on the date of termination or expiration. The
Marketer shall have no further right to receive payment of commissions or
Service Fees from the Franchisor, except for those commissions or Service Fees
which have been fully earned by the Marketer up through the date of such
termination or expiration. For purposes of this Agreement, "fully earned"
commissions shall mean commissions due on franchise sales for which all
Franchise Sales Conditions described in Section 6.1 of this Agreement have been
met or fulfilled by the Marketer. "Fully earned" Service Fees shall mean those
Service Fees which accrue up through the date of termination which are otherwise
owed to the Marketer. The Franchisor shall have the right to immediately assume
control of and manage all franchise sales in the Territory and to receive all
Service Fees from Franchisees in the Territory. Any fully earned commissions or
Service Fees which are due to the Marketer will be paid by the Franchisor in
accordance with the provisions of Article 6 of this Agreement.

17.7.  Continuing Obligations.
       -----------------------

       All obligations of the Franchisor and the Marketer which expressly or by
their nature survive the expiration or termination of this Agreement shall
continue in full force and effect subsequent to and notwithstanding its
expiration or termination and until they are satisfied or by their nature
expire.

17.8.  State and Federal Law.
       ----------------------

       THE PARTIES ACKNOWLEDGE THAT IN THE EVENT THAT THE TERMS OF THIS
AGREEMENT REGARDING TERMINATION OR EXPIRATION ARE INCONSISTENT WITH APPLICABLE
STATE OR FEDERAL LAW, SUCH LAW SHALL GOVERN THE MARKETER'S RIGHTS REGARDING
TERMINATION OR EXPIRATION OF THIS AGREEMENT.

                                       23

<PAGE>

                        18. RELATIONSHIP OF THE PARTIES

18.1.  Relationship of the Parties.
       ----------------------------

       It is understood and agreed by the parties hereto that this Agreement
does not create a fiduciary relationship between them, that the parties are
independent contractors and that nothing in this Agreement is intended to make
either party an agent, subsidiary, joint venturer, partner, employee or servant
of the other for any purpose. The Marketer shall conspicuously identify itself
in all dealings with Franchisees, prospective Franchisees, lessors, contractors,
suppliers, public officials and others as the owner of its own Business under an
Area Marketing Agreement with the Franchisor, and shall place such other notices
of independent ownership on signs, forms, stationery, advertising and other
materials as the Franchisor may require from time to time.

18.2.  Payment of Third Party Obligations.
       -----------------------------------

       Neither the Franchisor nor the Marketer shall make any express or implied
agreements, guaranties or representations, or incur any debt, in the name of or
on behalf of the other or represent that their relationship is other than
franchisor and franchisee, and neither the Franchisor nor the Marketer shall be
obligated by or have any liability under any agreements or representations made
by the other that are not expressly authorized hereunder, nor shall the
Franchisor be obligated for any damages to any person or property directly or
indirectly arising out of the operation of the Marketer's Business, whether or
not caused by the Marketer's negligent or willful action or failure to act.

18.3. Independent Contractors.
      ------------------------

       The Marketer may delegate its duties hereunder to independent contractors
provided that the Marketer receives written approval from the Franchisor prior
to any such delegation of duties and complies with all state laws which require
broker registration for such persons. The Franchisor reserves the right to
withdraw the approval of any independent contractor engaged by the Marketer to
fulfill its duties and obligations under this Agreement, at any time.

18.4.  Indemnification.
       ----------------

       The Marketer agrees to indemnify and hold the Franchisor and its
subsidiaries, affiliates, stockholders, directors, officers, employees, agents
and assignees harmless against, and to reimburse them for, any loss, liability,
taxes or damages (actual or consequential) and all reasonable costs and expenses
of defending any claim brought against any of them or any action in which any of
them is named as a party (including, without limitation, reasonable
accountants', attorneys' and expert witness fees, costs of investigation and
proof of facts, court costs, other litigation expenses and travel and living
expenses) which any of them may suffer, sustain or incur by reason of, arising
from or in connection with any acts, omissions or activities of the Marketer or
any employee of or independent contractor engaged by the Marketer whether such
acts, omissions or activities are authorized by or are not in accordance with
this Agreement. The Franchisor shall have the right to defend any such claim
against it. This indemnity shall continue in full force and effect, subsequent
to and notwithstanding the expiration or termination of this Agreement.

                                       24

<PAGE>

                          19. MISCELLANEOUS PROVISIONS

19.1.  Governing Law/Consent to Venue and Jurisdiction.
       ------------------------------------------------

       Except to the extent governed by the United States Trademark Act of 1946
(Lanham Act, 15 U.S.C. Sections 1051 et seq.) or other federal law, this
Agreement shall be interpreted under the laws of the state of Colorado and any
dispute between the parties shall be governed by and determined in accordance
with the substantive laws of the state of Colorado, which laws shall prevail in
the event of any conflict of law. The Marketer and the Franchisor have
negotiated regarding a forum in which to resolve any disputes which may arise
between them and have agreed to select a forum in order to promote stability in
their relationship. Therefore, if a claim is asserted in any legal proceeding
involving the Marketer, its officers, partners, managers or directors
(collectively, "Marketer Affiliates") and the Franchisor, its officers,
directors or sales employees (collectively, "Franchisor Affiliates") both
parties agree that the exclusive venue for disputes between them shall be in the
state and federal courts of Colorado and each waive any objection either may
have to the personal jurisdiction of or venue in the state and federal courts of
Colorado. The Franchisor, the Franchisor Affiliates, the Marketer and the
Marketer Affiliates each waive their rights to a trial by jury.

19.2.  Severability.
       -------------

       If any provision of this Agreement is held invalid by any tribunal in a
final decision from which no appeal is or can be taken, such provision shall be
deemed modified to eliminate the invalid element and, as so modified, such
provision shall be deemed a part of this Agreement as though originally
included. The remaining provisions of this Agreement shall not be affected by
such modification.

19.3.  Modification.
       -------------

       The Franchisor and/or the Marketer may modify this Agreement only upon
execution of a written agreement between the two parties. The Marketer
acknowledges that the Franchisor may modify its standards and specifications and
operating and marketing techniques set forth in the System Manual unilaterally
under any conditions and to the extent that the Franchisor, in its sole
discretion, deems necessary to protect, promote, or improve the Marks and the
quality of the Licensed Methods, but under no circumstances will such
modifications be made arbitrarily without such determination.

19.4.  Attorneys' Fees.
       ----------------

       In the event of any default on the part of either party to this
Agreement, in addition to all other remedies, the party in default will pay the
aggrieved party all amounts due and all damages, costs and expenses, including
reasonable attorneys' fees, incurred by the aggrieved party in any legal action
or other proceeding as a result of such default, plus interest at the highest
rate allowable by law, accruing from the date of such default.

19.5.  Injunctive Relief.
       ------------------

       Nothing herein shall prevent the Franchisor or the Marketer from seeking
injunctive relief to prevent irreparable harm, in addition to all other
remedies. If the Franchisor seeks an injunction, the Franchisor will not be
required to post a bond in excess of $500.

                                       25

<PAGE>

19.6.  Payment of Taxes.
       -----------------

       The Marketer shall reimburse the Franchisor, and its affiliates and
designees, promptly and when due, the amount of all sales taxes, use taxes,
personal property taxes and similar taxes imposed upon, required to be collected
or paid by the Franchisor, or its affiliates or designees, on account of
services or goods furnished by the Franchisor, its affiliates or designees, to
the Marketer through sale, lease or otherwise, or on account of any payments
made by the Marketer to the Franchisor required under the terms of this
Agreement.

19.7.  No Waiver.
       ----------

       No waiver of any condition or covenant contained in this Agreement or
failure to exercise a right or remedy by the Marketer or the Franchisor shall be
considered to imply or constitute a further waiver by the Franchisor or the
Marketer of the same or any other condition, covenant, right, or remedy.

19.8.  No Right to Set Off.
       --------------------

       The Marketer shall not be allowed to set off amounts owed to the
Franchisor for fees or other amounts due hereunder, against any monies owed to
the Marketer, nor will the Marketer in any event withhold any amounts due to any
alleged nonperformance by the Franchisor hereunder, which right of set off is
hereby expressly waived by the Marketer.

19.9.  Effective Date.
       ---------------

       Regardless of the date first written above, this Agreement shall not be
effective until accepted by the Franchisor as evidenced by the dating and
signing of this Agreement by an officer of the Franchisor.

19.10. Review of Agreement.
       --------------------

       The Marketer acknowledges that it had a copy of the Franchisor's Uniform
Franchise Offering Circular in its possession for a period of time not less than
10 full business days, and this Agreement in its possession for a period of time
not less than 5 full business days, during which time the Marketer has had the
opportunity to submit the same for review and advice by a professional of the
Marketer's choosing prior to freely executing this Agreement.

19.11. Entire Agreement.
       -----------------

       This Agreement, including all Exhibits and addenda, contains the entire
agreement between the parties and supersedes any and all prior agreements
concerning the subject matter hereof. The Marketer agrees and understands that
the Franchisor shall not be liable or obligated for any oral representations or
commitments made prior to the execution hereof or for claims of negligent or
fraudulent misrepresentation and that no modifications of this Agreement shall
be effective except those in writing and signed by both parties. The Franchisor
does not authorize and will not be bound by any representation of any nature
other than those expressed in this Agreement. The Marketer further acknowledges
and agrees that no representations have been made to it by the Franchisor
regarding projected sales volumes, market potential, revenues, profits of the
Marketer's Business, or operational assistance other than as stated in this
Agreement or in any disclosure document provided by the Franchisor or its
representatives.

                                       26

<PAGE>

19.12. Notices.
       --------

       All notices required to be given under this Agreement shall be given in
writing, by certified mail, return receipt requested, or by an overnight
delivery service providing documentation of receipt, to the addresses set forth
in the first paragraph of this Agreement, or, with respect to notices to the
Marketer, to the address of the Marketer Business, or at such other addresses as
the Franchisor or the Marketer may designate from time to time, and shall be
effectively given when deposited in the United States mails, postage prepaid, or
when received via overnight delivery, as may be applicable.

19.13. Cumulative Rights.
       ------------------

       The rights and remedies of the Franchisor and the Marketer hereunder are
cumulative and no exercise or enforcement by the Franchisor or the Marketer of
any right or remedy hereunder shall preclude the exercise or enforcement by the
Franchisor or the Marketer of any other right or remedy hereunder which the
Franchisor or the Marketer is entitled by law to enforce.

19.14. Acknowledgment.
       ---------------

       BEFORE SIGNING THIS AGREEMENT, THE MARKETER SHOULD READ IT CAREFULLY WITH
THE ASSISTANCE OF LEGAL COUNSEL. THE MARKETER ACKNOWLEDGES THAT:

       (A) THE SUCCESS OF THE BUSINESS VENTURE CONTEMPLATED HEREIN INVOLVES
SUBSTANTIAL RISKS AND DEPENDS UPON THE MARKETER'S ABILITY AS AN INDEPENDENT
BUSINESS PERSON AND ITS ACTIVE PARTICIPATION IN THE DAILY AFFAIRS OF THE
BUSINESS, AND

       (B) NO ASSURANCE OR WARRANTY, EXPRESS OR IMPLIED, HAS BEEN GIVEN AS TO
THE POTENTIAL SUCCESS OF SUCH BUSINESS VENTURE OR THE EARNINGS LIKELY TO BE
ACHIEVED, AND

       (C) NO STATEMENT, REPRESENTATION OR OTHER ACT, EVENT OR COMMUNICATION,
EXCEPT AS SET FORTH IN THIS DOCUMENT, AND IN ANY OFFERING CIRCULAR SUPPLIED TO
THE MARKETER IS BINDING ON THE FRANCHISOR IN CONNECTION WITH THE SUBJECT MATTER
OF THIS AGREEMENT.

                                       27

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have signed and delivered this
Agreement in counterparts on the last date written below.

PAK MAIL CENTERS OF AMERICA, INC.,          AREA MARKETER
a Colorado corporation

                                            -----------------------------------
                                            (Print Name)

By:
   --------------------------               -----------------------------------
Title:                                      Individually
      -----------------------
Name:                                       Title:
     ------------------------                     -----------------------------
                                            Address:
                                                    ---------------------------
                                            City:
                                                 ------------------------------
                                            State:            Zip:
                                                 -------------    -------------

                                            OR:

                                            (if a corporation or partnership)

                                            -----------------------------------
                                            Company Name

                                            By:
                                               --------------------------------
                                            Name:
                                                 ------------------------------
                                            Title:
                                                  -----------------------------
                                            Address:
                                                    ---------------------------
                                            City:
                                                 ------------------------------
                                            State:            Zip:
                                                  ------------    -------------

(2/28/03)

                                       28

<PAGE>

                                    EXHIBIT I
                                    ---------

                                      RIDER
                           TO AREA MARKETING AGREEMENT
                    BETWEEN PAK MAIL CENTERS OF AMERICA, INC.
                                       AND
                 -----------------------------------------------
                         DATED _______________, 20 ____

         1. Territory. The Territory referred to in Section 2.1 of the Agreement
shall be the following geographic area:
                                       ----------------------------------------

-------------------------------------------------------------------------------.

         2. Marketing Fee. The Marketing Fee payable to the Franchisor by the
Marketer under Section 5.1 of the Agreement shall be an amount equal to the
product of the estimated population within the Territory and the price per
person within the Territory, which shall be no less than $0.05, and adjusted as
follows: ______________________________________________________ and calculated
as follows:

A. 2000 Bureau of Census Population Estimate =
                                                   ---------
B. Adjustment to Population Estimate =
                                                   ---------
C. Current Population Within Territory (A + B) =
                                                   ---------
D. Adjusted Price Per Person =
                                                   ---------
   MARKETING FEE (C x D) =
                                                   ---------

The Franchisor and the Marketer agree that the Marketing Fee will not be subject
to change for any reason, including subsequent revisions of the Bureau of Census
population estimates.

Unless otherwise agreed, the Marketing Fee is payable in cash, certified funds
or by wire transfer.

     3. Advertising Expenditure. During the term of the Agreement, Marketer
shall be required during each calendar quarter to spend a minimum of $_________
("Advertising Expenditure") to advertise and promote the offer and sale of
franchises for PAK MAIL Centers in the Territory, in accordance with Section
13.9 of the Agreement, based on the following calculation:

A. 2000 Bureau of Census Population Estimate =..............................

B. Adjustment to Population Estimate =......................................

C. Current Population Within Territory (A+B ) =
                                                   ---------
D. Price Per Person = $.001...
                                                   ---------
   ADVERTISING EXPENDITURE (D x C ) =
                                                   ---------

     The Franchisor and the Marketer agree that the Advertising Expenditure will
not be subject to change for any reason, including subsequent revisions of the
Bureau of Census population estimates.

     4. Sales Goals. The Marketer shall meet the following cumulative Sales
Goals by the last day of each twelve-month period ("Sales Year") during the term
of the Agreement:

<PAGE>

                          Cumulative Minimum Number of New
                            Pak Mail Centers Sold in the       Last Day of Sales
      Sales Year                     Territory                        Year
      First                                                                 ,
                           -------------------------------      ------------
      Second                                                                ,
                           -------------------------------      ------------
      Third                                                                 ,
                           -------------------------------      ------------
      Fourth                                                                ,
                           -------------------------------      ------------
      Fifth                                                                 ,
                           -------------------------------      ------------
      TOTAL SALES GOALS
                           ===============================

The first Sales Year commences on the date of the Agreement and expires on the
date shown above. Each subsequent Sales Year commences on the date succeeding
the last day of the preceding Sales Year and expires on the respective date
shown above. The sales made during the term of the Agreement are cumulative.
Therefore, if the Marketer meets its total Sales Goals prior to the end of the
fifth Sales Year, the Marketer's Sales Goals will be satisfied.

PAK MAIL Centers located in the Territory and owned by the Franchisor do not
count toward fulfillment of the Marketer's cumulative Sales Goals.

PAK MAIL CENTERS OF AMERICA, INC.,          AREA MARKETER
a Colorado corporation
                                            -----------------------------------
                                            (Print Name)

By:
   --------------------------               -----------------------------------
Title:                                      Individually
      -----------------------
Name:                                       Title:
     ------------------------                     -----------------------------
                                            Address:
                                                    ---------------------------
                                            City:
                                                 ------------------------------
                                            State:          Zip:
                                                  ----------    ---------------

                                            OR:

                                            (if a corporation or partnership)

                                            Company Name

                                            By:
                                               --------------------------------
                                            Name:
                                                 ------------------------------
                                            Title:
                                                  -----------------------------
                                            Address:
                                                    ---------------------------
                                            City:
                                                 ------------------------------
                                            State:          Zip:
                                                  ----------    ---------------

                                       2

<PAGE>

                                   EXHIBIT II
                                   ----------
                       CURRENT FORM OF FRANCHISE AGREEMENT

<PAGE>

                     See Exhibit C to this Offering Circular

<PAGE>

                                   EXHIBIT III
                                   -----------

                           GUARANTY AND ASSUMPTION OF
                           AREA MARKETER'S OBLIGATIONS

     In consideration of, and as an inducement to, the execution of the above
Area Marketing Agreement (the "Agreement") by PAK MAIL CENTERS OF AMERICA, INC.
("Franchisor"), each of the undersigned ("Guarantors") personally and
unconditionally (1) guarantees to the Franchisor and its affiliates and their
successors and assigns, for the term of the Agreement and thereafter as provided
in the Agreement, that the Area Marketer defined in the Agreement (the
"Marketer") shall punctually pay and perform each and every undertaking,
agreement and covenant set forth in the Agreement and (2) agrees personally to
be bound by, and personally liable for the breach of, each and every provision
in the Agreement and all obligations related thereto.

     1.   Waiver. Each of the undersigned waives:

          a. acceptance and notice of acceptance by the Franchisor and its
     affiliates of the foregoing undertakings;

          b. notice of demand for payment of any indebtedness or nonperformance
     of any obligations hereby guaranteed;

          c. protest and notice of default to any party with respect to the
     indebtedness or nonperformance of any obligations hereby guaranteed;

          d. any right he or she may have to require that an action be brought
     against the Marketer or any other person as a condition of liability; and

          e. any and all other notices and legal or equitable defenses to which
     he or she may be entitled.

     2.   Consents. Each of the undersigned consents and agrees that:

          a. his or her direct and immediate liability under this guaranty shall
     be joint and several;

          b. he or she shall render any payment or performance required under
     the Agreement upon demand if the Marketer fails or refuses punctually to do
     so;

          c. such liability shall not be contingent or conditioned upon pursuit
     by the Franchisor or its affiliates of any remedies against the Marketer or
     any other person;

          d. such liability shall not be diminished, relieved or otherwise
     affected by any extension of time, credit or other indulgence which the
     Franchisor or its affiliates may from time to time grant to the Marketer or
     to any other person, including, without limitation, the acceptance of any
     partial payment or performance or the compromise or release of any claims,
     none of which shall in any way modify or amend this guaranty, which shall
     be continuing and irrevocable during the term of the Agreement; and

<PAGE>

          e. he or she shall be bound by the restrictive covenants and
     confidentiality provisions contained in Articles 11 and 12 and Sections
     17.4 and 17.5 of the Agreement, and the indemnification provisions
     contained in Section 18.4 of the Agreement; and

          f. the governing law, consent to jurisdiction and related provisions
     contained in Article 19 and the costs and attorneys fees provision
     contained in Section 19.4 of the Agreement shall govern this Guaranty and
     such provisions are incorporated into this Guaranty by this reference.

     IN WITNESS WHEREOF, each of the undersigned has affixed his or her
signature, effective as of the ____ day of ____________________, 20___.

PERCENTAGE OF OWNERSHIP                     GUARANTOR(S)
INTEREST IN AREA MARKETER

-----------------------------               -----------------------------------
                                            (Print Name)

                                            -----------------------------------
                                            Signature

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

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

                                            -----------------------------------
                                            Address

                                            -----------------------------------
                                            Telephone Number

-----------------------------               -----------------------------------
                                            (Print Name)

                                            -----------------------------------
                                            Signature

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

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

                                            -----------------------------------
                                            Address

                                            -----------------------------------
                                            Telephone Number

-----------------------------               -----------------------------------
                                            (Print Name)

                                            -----------------------------------
                                            Signature

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

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

                                            -----------------------------------
                                            Address

                                            -----------------------------------
                                            Telephone Number

                                       2
<PAGE>

                                   EXHIBIT IV
                                   ----------

                             STATEMENT OF OWNERSHIP
                             ----------------------

Area Marketer:
              -----------------------------------------------------------------

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

Trade name (if different from above):
                                     ------------------------------------------

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

                                Form of Ownership
                                   (Check One)

___Individual   ___Partnership     ___Corporation   ___Limited Liability Company

     If a Partnership, provide name and address of each partner showing
percentage owned, whether active in management, and indicate the state in which
the partnership was formed.

     If a Corporation, give the state and date of incorporation, the names and
addresses of each officer and director, and list the names and addresses of
every shareholder showing what percentage of stock is owned by each.

     If a Limited Liability Company, give the state and date of formation, the
names and addresses of every manager, the names and addresses of every member
and the percentage of membership interest held by each member.

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

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

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

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

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

     Marketer acknowledges that this Statement of Ownership applies to the PAK
MAIL Marketer Business authorized under the Area Marketing Agreement. Use
additional sheets if necessary. Any and all changes to the above information
must be reported to the Franchisor in writing.

-----------------------------               -----------------------------------
Date                                        NameLoan and Security Agreement

 
 
EXHIBIT 10.22 
 
LOAN AND SECURITY AGREEMENT 
 
by and between 
 
Legato Systems, Inc., as Borrower 
 
and 
 
Silicon Valley Bank, as
Lender 
 
December 31, 2002 
 

 
TABLE OF
CONTENTS 
 

	 	  	 	  	 	  	 Page

	 1.
	  	 DEFINITIONS; ACCOUNTING AND OTHER TERMS
	  	 1

	
	 2.
	  	 LOAN AND TERMS OF PAYMENT
	  	 1

	
	 	  	 2.1
	  	 Promise to Pay
	  	 1

	 	  	 2.2
	  	 Overadvances
	  	 3

	 	  	 2.3
	  	 Interest Rate, Payments
	  	 3

	 	  	 2.4
	  	 Fees
	  	 3

	
	 3.
	  	 CONDITIONS OF LOANS
	  	 3

	
	 	  	 3.1
	  	 Conditions Precedent to Initial Advance
	  	 3

	 	  	 3.2
	  	 Conditions Precedent to all Advances
	  	 4

	
	 4.
	  	 CREATION OF SECURITY INTEREST
	  	 4

	
	 	  	 4.1
	  	 Grant of Security Interest
	  	 4

	 	  	 4.2
	  	 Authorization to File; Delivery of Additional Documentation
	  	 4

	
	 5.
	  	 REPRESENTATIONS AND WARRANTIES
	  	 4

	
	 	  	 5.1
	  	 Due Organization; Organizational Structure; Authorization
	  	 4

	 	  	 5.2
	  	 Collateral
	  	 5

	 	  	 5.3
	  	 Litigation
	  	 5

	 	  	 5.4
	  	 No Material Adverse Change in Financial Statements
	  	 5

	 	  	 5.5
	  	 Solvency
	  	 5

	 	  	 5.6
	  	 Regulatory Compliance
	  	 6

	 	  	 5.7
	  	 Subsidiaries
	  	 6

	 	  	 5.8
	  	 Full Disclosure
	  	 6

	
	 6.
	  	 AFFIRMATIVE COVENANTS
	  	 6

	
	 	  	 6.1
	  	 Government Compliance
	  	 6

	 	  	 6.2
	  	 Financial Statements, Reports, Certificates
	  	 7

	 	  	 6.3
	  	 Inventory; Returns
	  	 7

	 	  	 6.4
	  	 Taxes
	  	 8

	 	  	 6.5
	  	 Insurance
	  	 8

	 	  	 6.6
	  	 Financial Covenants
	  	 8

	 	  	 6.7
	  	 Investable Funds with Bank
	  	 8

 

 
TABLE OF
CONTENTS 
(Continued) 
 

	 	 	 	 	 	  	 Page

	 	 	 6.8
	 	 Registration of Intellectual Property Rights
	  	 8

	 	 	 6.9
	 	 Use of Proceeds
	  	 9

	 	 	 6.10
	 	 Account Control Agreements
	  	 9

	 	 	 6.11
	 	 Further Assurances
	  	 9

	
	 7.
	 	 NEGATIVE COVENANTS
	  	 9

	
	 	 	 7.1
	 	 Dispositions
	  	 9

	 	 	 7.2
	 	 Changes in Business, Ownership, Management or Business Locations
	  	 9

	 	 	 7.3
	 	 Mergers or Acquisitions
	  	 9

	 	 	 7.4
	 	 Indebtedness
	  	 10

	 	 	 7.5
	 	 Encumbrance
	  	 10

	 	 	 7.6
	 	 Distributions; Investments
	  	 10

	 	 	 7.7
	 	 Transactions with Affiliates
	  	 10

	 	 	 7.8
	 	 Subordinated Debt
	  	 10

	 	 	 7.9
	 	 Compliance
	  	 10

	
	 8.
	 	 EVENTS OF DEFAULT
	  	 10

	
	 	 	 8.1
	 	 Payment Default
	  	 11

	 	 	 8.2
	 	 Covenant Default
	  	 11

	 	 	 8.3
	 	 Material Adverse Change
	  	 11

	 	 	 8.4
	 	 Attachment
	  	 11

	 	 	 8.5
	 	 Insolvency
	  	 11

	 	 	 8.6
	 	 Other Agreements
	  	 12

	 	 	 8.7
	 	 Judgments
	  	 12

	 	 	 8.8
	 	 Misrepresentations
	  	 12

	 	 	 8.9
	 	 Guaranty
	  	 12

	
	 9.
	 	 BANK’S RIGHTS AND REMEDIES
	  	 12

	
	 	 	 9.1
	 	 Rights and Remedies
	  	 12

	 	 	 9.2
	 	 Power of Attorney
	  	 13

	 	 	 9.3
	 	 Accounts Collection
	  	 13

	 	 	 9.4
	 	 Bank Expenses
	  	 13

	 	 	 9.5
	 	 Bank’s Liability for Collateral
	  	 14

 
 

ii. 

 
TABLE OF
CONTENTS 
(Continued) 
 

	 	 	 	 	 	  	 Page

	 	 	 9.6
	 	 Remedies Cumulative
	  	 14

	 	 	 9.7
	 	 Demand Waiver
	  	 14

	
	 10.
	 	 NOTICES
	  	 14

	
	 11.
	 	 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
	  	 14

	
	 12.
	 	 GENERAL PROVISIONS
	  	 15

	
	 	 	 12.1
	 	 Successors and Assigns
	  	 15

	 	 	 12.2
	 	 Indemnification
	  	 15

	 	 	 12.3
	 	 Time of Essence
	  	 15

	 	 	 12.4
	 	 Severability of Provision
	  	 15

	 	 	 12.5
	 	 Amendments in Writing; Integration
	  	 15

	 	 	 12.6
	 	 Counterparts
	  	 15

	 	 	 12.7
	 	 Survival
	  	 15

	 	 	 12.8
	 	 Confidentiality
	  	 16

	 	 	 12.9
	 	 Attorneys’ Fees, Costs and Expenses
	  	 16

	
	 13.
	 	 DEFINITIONS
	  	 16

 
 

iii. 

 
THIS LOAN AND SECURITY AGREEMENT, dated as of December 31, 2002, is by and between SILICON VALLEY
BANK (“Bank”), whose address is 3003 Tasman Drive, Santa Clara, California, 95054, and LEGATO SYSTEMS, INC.
(“Borrower”), whose address is 2350 West El Camino Real, Mountain View, California, 94040, and provides the terms on which Bank will lend to Borrower and Borrower will repay Bank. The parties hereto agree as follows:

 
1. DEFINITIONS; ACCOUNTING
AND OTHER TERMS 
 
Capitalized terms used herein shall have the meanings given to such terms in Section 13 of this Agreement. Accounting terms not defined in this Agreement will be construed following GAAP. Calculations and determinations must be made
following GAAP. The term “financial statements” includes the notes and schedules thereto. The terms “including” and “includes” always mean “including (or includes) without limitation,” in this or any Loan
Document. 
 
2. LOAN AND
TERMS OF PAYMENT 
 
2.1 Promise to Pay. 
 
Borrower promises to pay Bank the unpaid principal amount of all Advances and interest on the unpaid principal amount of the Advances. 
 
2.1.1 Advances. 
 
(a) Bank will make Advances not exceeding the lesser of (i) the Committed Revolving Line or (ii) the Borrowing Base minus (A) the
outstanding principal balance of the Advances minus (B) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) minus (C) the FX Reserve and minus (D) all amounts for services utilized for Cash Management
Services. Amounts borrowed hereunder that remain available for borrowing under this Agreement may be repaid and reborrowed prior to the Maturity Date. 
 
(b) To obtain an Advance, Borrower must notify Bank by facsimile or telephone by 12:00 noon Pacific Time on the Business Day the
Advance is to be made. Borrower must promptly confirm the notification by delivering to Bank the Loan Payment/Advance Request Form attached as Exhibit B (the “Payment/Advance Form”). Bank will credit Advances to
Borrower’s deposit account. Bank may make Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Advances are necessary to meet Obligations which have become due.
Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank suffers due to such reliance. 
 
(c) The Committed Revolving Line shall terminate on
the Maturity Date, and all Advances are immediately due and payable on the Maturity Date. 
 
(d) Bank’s obligation to lend the undisbursed portion of the Obligations will terminate if, in Bank’s sole discretion, there has been a material adverse change in the general affairs,
management, results of operation, condition (financial or otherwise) or the 
 

 
prospect of repayment of the
Obligations, or there has been any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank prior to the execution of this Agreement. 
 
2.1.2 Letters of Credit. 
 
(a) Bank will issue or have issued standby Letters of
Credit for Borrower’s account not exceeding the lesser of (a) the amount available under the Committed Revolving Line and (b) the Borrowing Base (each, a “Letter of Credit”). Each Letter of Credit will have an expiry
date of no later than 180 days after the Maturity Date, but Borrower’s reimbursement obligation will be secured by cash on terms acceptable to Bank at any time after the Maturity Date if such Maturity Date is not extended by Bank or if an Event
of Default occurs and continues. Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably request. 
 
(b) Prior to or simultaneously with the opening of each Letter of Credit, Borrower shall pay to Bank Bank’s customary fees in
connection with the opening of a letter of credit (the “Letter of Credit Fees”). The Letter of Credit Fees shall be paid upon the opening of each Letter of Credit and upon each anniversary thereof, if required. In addition,
Borrower shall pay to Bank, for its own account, any and all additional issuance, negotiation, processing, transfer or other fees to the extent and as and when required by the provisions of any application for Letters of Credit. All Letter of Credit
Fees shall be part of the Obligations. 
 
(c)
If any Letter of Credit is drawn upon, such amount shall constitute an Advance but shall be immediately due and payable. If such amount is not paid immediately, then the full amount thereof shall accrue interest at the rate set forth in Section
2.3(a). 
 
2.1.3 Foreign Exchange.

 
If there is availability under the lesser of
the Committed Revolving Line and the Borrowing Base, then Borrower may enter into foreign exchange forward contracts with the Bank under which Borrower commits to purchase from or sell to Bank a set amount of foreign currency more than one Business
Day after the contract date (the “FX Forward Contract”). Bank will subtract ten percent (10%) of each outstanding FX Forward Contract from the amount available under the Committed Revolving Line (the “FX
Reserve”). Bank may terminate the FX Forward Contracts if an Event of Default occurs. 
 
2.1.4 Cash Management Services. 
 
Borrower may use the availability under the lesser of the Committed Revolving Line and the Borrowing Base for Bank’s Cash Management
Services, which may include merchant services, direct deposit of payroll, business credit cards, automated clearing house transactions, controlled disbursement accounts and check cashing services identified in various cash management services
agreements related to such services (the “Cash Management Services”). Such aggregate amounts utilized for Cash Management Services will at all times reduce the amount otherwise available to be borrowed under the Committed
Revolving Line. Any amounts Bank pays on behalf of Borrower or any amounts that are not paid by Borrower for 
 

2. 

 
any Cash Management Services
will be treated as Advances under the Committed Revolving Line and will accrue interest at the rate for Advances. 
 
2.2 Overadvances. 
 
If, at any time, Borrower’s Obligations hereunder exceed the lesser of (a) the Committed Revolving Line or (b) the Borrowing Base,
Borrower shall immediately pay Bank the excess. 
 
2.3 Interest Rate, Payments. 
 
(a) Interest Rate. Advances accrue interest on the outstanding principal balance thereof at a per annum rate equal to the greater of (i) one-half of one percentage point above the Prime Rate and (ii) 4.75%. After an Event of
Default has occurred, Obligations shall accrue interest at a rate per annum equal to 3 percent above the rate effective immediately before the Event of Default. The interest rate increases or decreases when the Prime Rate changes. Interest is
computed on a 360 day year for the actual number of days elapsed. 
 
(b) Payments. Interest due on the Advances is payable on the first (1st) of each
month. Bank may debit any of Borrower’s deposit accounts, including account number 3300385582, for principal and interest payments owing or any amounts Borrower owes Bank. Bank will promptly notify Borrower when it debits Borrower’s
accounts. These debits are not a set-off. Payments received after 1:00 PM Pacific Time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment is due the
next Business Day and additional fees or interest accrue. 
 
2.4 Fees. 
 
Borrower will
pay: 
 
(a) Loan Fee. A fully earned,
non-refundable loan fee in the amount of Fifty Thousand Dollars ($50,000) is due on or before the Closing Date. 
 
(b) Expedite Fee. A fully earned, non-refundable fee in the amount of Ten Thousand Dollars ($10,000) is due on or before the
Closing Date, but only if the Closing Date occurs on or before December 31, 2002. 
 
(c) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and expenses) incurred through and after the date of this Agreement are payable upon demand. 
 
3. CONDITIONS OF LOANS

 
3.1 Conditions Precedent to Initial
Advance. 
 
Bank’s obligation to make the
initial Advance is subject to the condition precedent that it receive the agreements, documents, including the Opinion of Borrower’s counsel, and fees it requires. 
 

3. 

 
3.2
Conditions Precedent to all Advances. 
 
Bank’s obligation to make each Advance, including the initial Advance, is subject to the following: 
 
(a) timely receipt of any Payment/Advance Form; and 
 
(b) the representations and warranties in Section 5 must be materially true on the date of the
Payment/Advance Form and on the effective date of each Advance and no Event of Default may have occurred and be continuing, or result from such Advance. Each Advance is Borrower’s representation and warranty on that date that the
representations and warranties of Section 5 remain true. 
 
4.
CREATION OF SECURITY INTEREST 
 
4.1 Grant of Security Interest. 
 
Borrower grants Bank a continuing security interest in all presently existing and later acquired Collateral to secure all Obligations and performance of each of Borrower’s duties under the Loan
Documents. Any security interest will be a first priority security interest in the Collateral. Bank may place a “hold” on any deposit account pledged as Collateral. If this Agreement is terminated, Bank’s lien and security interest in
the Collateral will continue until Borrower fully satisfies its Obligations. 
 
4.2 Authorization to File; Delivery of Additional Documentation. 
 
Borrower authorizes Bank to file financing statements without notice to Borrower, with all appropriate jurisdictions, as Bank deems
appropriate, in order to perfect or protect Bank’s security interest in the Collateral. Borrower shall execute and deliver to Bank, at the request of Bank, all documents that Bank may reasonably request, in form satisfactory to Bank, to perfect
and continue perfected Bank’s security interest in the Collateral and in order to fully consummate all of the transactions contemplated under the Loan Documents. 
 
5. REPRESENTATIONS AND WARRANTIES 
 
Borrower represents and warrants as follows: 
 
5.1 Due Organization; Organizational Structure;
Authorization. 
 
Borrower and each Subsidiary
is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified, except
where the failure to do so could not reasonably be expected to cause a Material Adverse Change. 
 
Borrower has not changed its state of formation or organizational structure or type or any organizational number assigned by its jurisdiction of formation. 
 

4. 

 
The execution,
delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower’s formation documents, nor constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in
default under any agreement to which or by which it is bound in which the default could reasonably be expected to cause a Material Adverse Change. 
 
5.2 Collateral. 
 
Borrower has rights in the Collateral and its Intellectual Property sufficient to grant a security interest therein, free of Liens except
Permitted Liens. All of Borrower’s deposit accounts are described on the Schedule. The Accounts are bona fide, existing obligations, and the service or property has been performed or delivered to the account debtor or its agent for immediate
shipment to and unconditional acceptance by the account debtor. The Collateral is not in the possession of any third party bailee (such as at a warehouse). In the event that Borrower, after the date hereof, intends to store or otherwise deliver the
Collateral to such a bailee, then Borrower will receive the prior written consent of Bank and such bailee must acknowledge in writing that the bailee is holding such collateral for the benefit of Bank. Borrower has no notice of any actual or
imminent Insolvency Proceeding of any account debtor whose accounts are an Eligible Account in any Borrowing Base Certificate. All Inventory is in all material respects of good and marketable quality, free from material defects. Borrower is the sole
owner of the Intellectual Property, except for non-exclusive and exclusive licenses granted to its customers in the ordinary course of business. Each issued Patent owned by Borrower is valid and enforceable and no part of the Intellectual Property
has been judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of the Intellectual Property violates the rights of any third party, except to the extent such claim could not reasonably be expected to cause a
Material Adverse Change. Borrower shall not change the location of any Collateral. 
 
5.3 Litigation. 
 
Except as shown in the Schedule, there are no actions or proceedings pending or, to the knowledge of Borrower’s Responsible Officers, threatened by or against Borrower or any Subsidiary in which a likely adverse
decision could reasonably be expected to cause a Material Adverse Change. 
 
5.4 No Material Adverse Change in Financial Statements. 
 
All consolidated financial statements for Borrower, and any Subsidiary, delivered to Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s
consolidated results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Bank. 
 
5.5 Solvency. 
 
The fair salable value of Borrower’s assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities; the Borrower is not left with unreasonably small capital 
 
 

5. 

 
after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they mature. 
 
5.6 Regulatory Compliance. 
 
Borrower is not an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act. Borrower is not engaged as one of its
important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any
laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse Change. None of Borrower’s or any Subsidiary’s properties or assets has been used by Borrower or any Subsidiary or, to the best of
Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate
provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP. Borrower and each Subsidiary has obtained all consents, approvals and authorizations of, made all declarations or filings with, and
given all notices to, all government authorities that are necessary to continue its business as currently conducted, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. 
 
5.7 Subsidiaries. 
 
Borrower does not own any stock, partnership interest or other
equity securities except for Permitted Investments. 
 
5.8 Full Disclosure. 
 
No
written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank (taken together with all such written certificates and written statements to Bank) contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon
reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected and forecasted results). 
 
6. AFFIRMATIVE COVENANTS 
 
Borrower will do all of the following for so long as Bank has
an obligation to lend, or there are outstanding Obligations: 
 
6.1 Government Compliance. 
 
Borrower will maintain its and all Subsidiaries’ legal existence and good standing in its jurisdiction of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected
to cause a material adverse effect on Borrower’s business or operations. Borrower will comply, and have each Subsidiary comply, with all laws, 
 
 

6. 

 
ordinances and regulations to
which it is subject, noncompliance with which could have a material adverse effect on Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change. 
 
6.2 Financial Statements, Reports, Certificates.

 
(a) Borrower will deliver to Bank:
(i) as soon as available, but no later than 30 days after the last day of each month, a company prepared consolidated balance sheet and income statement covering Borrower’s consolidated operations during the period certified by a Responsible
Officer and in a form acceptable to Bank; (ii) as soon as available, but no later than 90 days after the last day of Borrower’s fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank; (iii) annual financial projections in form and substance commensurate with those provided to Borrower’s board of
directors or utilized by Borrower’s executive management, in form and substance satisfactory to Bank; (iv) a prompt report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to
Borrower or any Subsidiary of $100,000 or more; and (v) budgets, sales projections, operating plans or other financial information Bank reasonably requests. 
 
(b) Within 20 days after the last day of each month, Borrower will deliver to Bank a Borrowing Base Certificate, with aged
listings of accounts receivable and accounts payable. 
 
(c) Within 20 days after the last day of each month, Borrower will deliver to Bank a schedule containing a description Borrower’s Deferred Revenue, on a consolidated basis (the “Deferred Revenue
Schedule”), in form and substance acceptable to Bank. 
 
(d) Within 30 days after the last day of each month, Borrower will deliver to Bank with the monthly financial statements a Compliance Certificate. 
 
(e) Borrower will allow Bank to audit Borrower’s Collateral at Borrower’s expense, and such
audit will be satisfactory to Bank. Such audits will be conducted no more often than once in every 6-month period unless an Event of Default shall have occurred. 
 
6.3 Inventory; Returns. 
 
Borrower will keep all Inventory in good and marketable condition, free from material defects. Returns and
allowances between Borrower and its account debtors will follow Borrower’s customary practices as they exist at execution of this Agreement. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims, that involve more
than $50,000. 
 
 

7. 

 
6.4 Taxes.

 
Borrower will make, and cause each
Subsidiary to make, timely payment of all material federal, state, and local taxes or assessments (other than taxes and assessments which Borrower is contesting in good faith, with adequate reserves maintained in accordance with GAAP) and will
deliver to Bank, on demand, appropriate certificates attesting to the payment. 
 
6.5 Insurance. 
 
Borrower will keep its business and the Collateral insured for risks and in amounts standard for Borrower’s industry, and as Bank may reasonably request. Insurance policies will be in a form, with companies, and in
amounts that are satisfactory to Bank in Bank’s reasonable discretion. All property policies will have a lender’s loss payable endorsement showing Bank as an additional loss payee and all liability policies will show the Bank as an
additional insured and provide that the insurer must give Bank at least 20 days notice before canceling its policy. At Bank’s request, Borrower will deliver certified copies of policies and evidence of all premium payments. Proceeds payable
under any policy will, at Bank’s option, be payable to Bank on account of the Obligations. 
 
6.6 Financial Covenants. 
 
(a) Borrower will maintain each of the following as of the last day of each month: 
 
(i) Quick Ratio (Adjusted). A ratio of Quick Assets to Current Liabilities minus Deferred Revenue of at least 1.20 to 1.00; and

 
(ii) Unrestricted Cash and Availability.
Unrestricted Cash and Availability in an amount not less than $20,000,000. 
 
(b) Borrower will maintain each of the following as of the last day of each quarter: 
 
(i) Quick Ratio (Adjusted). A ratio of Quick Assets to Current Liabilities minus Deferred Revenue of at least 1.25 to 1.00; and

 
(ii) Quarterly Revenue. Revenue
in an amount not less than $68,000,000. 
 
6.7
Investable Funds with Bank. Borrower shall deposit with Bank or any Affiliate of Bank 100% of its consolidated, Investable Funds. 
 
6.8 Registration of Intellectual Property Rights. 
 
Borrower will (i) protect, defend and maintain the validity and enforceability of the Intellectual Property
and promptly advise Bank in writing of material infringements and (ii) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent. 
 
 

8. 

 
6.9 Use of
Proceeds. 
 
Borrower shall use the Advances
(including Advances constituting Letters of Credit) only for its general working capital requirements. 
 
6.10 Account Control Agreements. 
 
Borrower shall deliver to Bank a Control Agreement executed by any institution with which Borrower maintains any type of deposit,
operating or investment account, including Wells Fargo Bank, within sixty (60) calendar days after the Closing Date, and, thereafter, Borrower shall deliver to Bank a Control Agreement immediately upon the opening any such account. 
 
6.11 Further Assurances. 
 
Borrower will execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank’s security interest in the Collateral or to effect the purposes of this Agreement. 
 
7. NEGATIVE COVENANTS 
 
Borrower will not do any of the following without Bank’s prior written consent for so long as Bank has an obligation to lend or there
are any outstanding Obligations: 
 
7.1
Dispositions. 
 
Convey, sell, lease, transfer
or otherwise dispose of (collectively “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (i) of Inventory in the ordinary course of business; (ii) of
non-exclusive licenses and similar arrangements (such as source code escrow arrangements) for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; or (iii) of worn-out or obsolete Equipment. 
 
7.2 Changes in Business, Ownership, Management or Business
Locations. 
 
Engage in or permit any of its
Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or reasonably related thereto or have a Change in Control. Borrower will not, without at least 30 days prior written notice, relocate its chief
executive office, add any new offices or business locations in which Borrower maintains or stores over $5,000 in Borrower’s assets or property or change its state of incorporation. 
 
7.3 Mergers or Acquisitions. 
 
Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or
acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person, except where (i) no Event of Default has occurred and is continuing or would result from such action during the term
of this Agreement and (ii) Borrower is the sole surviving entity. 
 

9. 

 
7.4
Indebtedness. 
 
Create, incur, assume, or be
liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness. 
 
7.5 Encumbrance. 
 
Create, incur, or allow any Lien on any of its property (including its Intellectual Property), or assign or convey any right to receive
income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted hereunder. 
 
7.6 Distributions; Investments. 
 
Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments, or permit any of its Subsidiaries to do so. Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock. 
 
7.7 Transactions with Affiliates. 
 
Directly or indirectly enter into or permit to exist any
material transaction with any Affiliate of Borrower except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s
length transaction with a non-affiliated Person. 
 
7.8 Subordinated Debt. 
 
Make or permit any payment on any Subordinated Debt, except under the terms of the Subordinated Debt, or amend any provision in any document relating to the Subordinated Debt without Bank’s prior written consent. 
 
7.9 Compliance. 
 
Become an “investment company” or a company
controlled by an “investment company,” under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Advance for that purpose; fail
to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation
could reasonably be expected to have a material adverse effect on Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so. 
 
8. EVENTS OF DEFAULT

 
Any one of the following is an Event of
Default: 
 
 

10. 

 
8.1 Payment
Default. 
 
If Borrower fails to pay any of the
Obligations within 3 days after their due date. During the additional period the failure to cure the default is not an Event of Default (but no Advance will be made during the cure period); 
 
8.2 Covenant Default. 
 
If Borrower does not perform any obligation in Section 6 or
violates any covenant in Section 7; or 
 
If
Borrower does not perform or observe any other material term, condition or covenant in this Agreement, any Loan Documents, or in any agreement between Borrower and Bank and as to any default under a term, condition or covenant that can be cured, has
not cured the default within 10 days after it occurs, or if the default cannot be cured within 10 days or cannot be cured after Borrower’s attempts within 10 day period, and the default may be cured within a reasonable time, then Borrower has
an additional period (of not more than 30 days) to attempt to cure the default. During the additional time, the failure to cure the default is not an Event of Default (but no Advances will be made during the cure period); 
 
8.3 Material Adverse Change. 
 
If there (i) occurs a material adverse change in the business,
operations, or condition (financial or otherwise) of the Borrower, or (ii) is a material impairment of the prospect of repayment of any portion of the Obligations or (iii) is a material impairment of the value or priority of Bank’s security
interests in the Collateral. 
 
8.4 Attachment.

 
If any material portion of Borrower’s
assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not removed in 10 days, or if Borrower is enjoined, restrained, or prevented by court order from conducting a material
part of its business or if a judgment or other claim becomes a Lien on a material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed against any of Borrower’s assets by any government agency and not paid
within 10 days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Advances will be made during the cure period); 
 
8.5 Insolvency. 
 
If Borrower becomes insolvent or if Borrower begins an
Insolvency Proceeding or an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within 30 days (but no Advances will be made before any Insolvency Proceeding is dismissed); 
 
 

11. 

 
8.6 Other
Agreements. 
 
If there is a default in any
agreement between Borrower and a third party that gives the third party the right to accelerate any Indebtedness exceeding $100,000 or that could cause a Material Adverse Change; 
 
8.7 Judgments. 
 
If a money judgment(s) in the aggregate of at least $50,000 is rendered against Borrower and is unsatisfied
and unstayed for 10 days (but no Advances will be made before the judgment is stayed or satisfied); 
 
8.8 Misrepresentations. 
 
If Borrower or any Person acting for Borrower makes any material misrepresentation or material misstatement now or later in any warranty
or representation in this Agreement or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document; or 
 
8.9 Guaranty. 
 
Any guaranty of any Obligations ceases for any reason to be in full force or any Guarantor does not perform any obligation under any
guaranty of the Obligations, or any material misrepresentation or material misstatement exists now or later in any warranty or representation in any guaranty of the Obligations or in any certificate delivered to Bank in connection with the guaranty,
or any circumstance described in Sections 8.4, 8.5 or 8.7 occurs to any Guarantor. 
 
9. BANK’S RIGHTS AND REMEDIES 
 
9.1 Rights and Remedies. 
 
When an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following: 
 
                (a) Declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all
Obligations are immediately due and payable without any action by Bank); 
 
                (b) Stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other
agreement between Borrower and Bank; 
 
                (c) Settle or adjust disputes and claims directly with account debtors for amounts, on terms and in any order that Bank considers
advisable; 
 
                (d) Make any payments and do any acts it considers necessary or reasonable to protect its security interest in the Collateral.
Borrower will assemble the Collateral if Bank requires and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, 
 
 

12. 

purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest
and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies; 
 
(e) Apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount
held by Bank owing to or for the credit or the account of Borrower; 
 
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is granted a non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, Patents, Copyrights, Mask Works, rights of use of any name, trade secrets, trade names, Trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit; and 
 
(g) Dispose of the Collateral according to the Code.

 
9.2 Power of Attorney. 
 
Effective only when an Event of Default occurs and continues,
Borrower irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower’s name on any checks or other forms of payment or security; (ii) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against
account debtors, (iii) make, settle, and adjust all claims under Borrower’s insurance policies; (iv) settle and adjust disputes and claims about the Accounts directly with account debtors, for amounts and on terms Bank determines reasonable;
and (v) transfer the Collateral into the name of Bank or a third party as the Code permits. Bank may exercise the power of attorney to sign Borrower’s name on any documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank’s appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank’s obligation to provide Advances terminates. 
 
9.3 Accounts Collection. 
 
When an Event of Default occurs and continues, Bank may notify any Person owing Borrower money of Bank’s security interest in the funds and verify the amount of the Account. Borrower must collect
all payments in trust for Bank and, if requested by Bank, immediately deliver the payments to Bank in the form received from the account debtor, with proper endorsements for deposit. 
 
9.4 Bank Expenses. 
 
If Borrower fails to pay any amount or furnish any required proof of payment to third persons, Bank may make
all or part of the payment or obtain insurance policies required in Section 6.5, and take any action under the policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then

 
 

13. 

 
applicable rate and secured by
the Collateral. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default. 
 
9.5 Bank’s Liability for Collateral. 
 
If Bank complies with reasonable banking practices and the Code, it is not liable for: (a) the safekeeping of the Collateral; (b) any loss
or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other person. Borrower bears all risk of loss, damage or destruction of the Collateral. 
 
9.6 Remedies Cumulative. 
 
Bank’s rights and remedies under this Agreement, the Loan
Documents, and all other agreements are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election, and Bank’s waiver of any Event of Default is not
a continuing waiver. Bank’s delay is not a waiver, election, or acquiescence. No waiver is effective unless signed by Bank and then is only effective for the specific instance and purpose for which it was given. 
 
9.7 Demand Waiver. 
 
Borrower waives demand, notice of default or dishonor, notice
of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable.

 
10. NOTICES 
 
All notices or demands by any party about this Agreement or
any other related agreement must be in writing and be personally delivered or sent by an overnight delivery service, by certified mail, postage prepaid, return receipt requested, or by facsimile to the addresses set forth at the beginning of this
Agreement. A party may change its notice address by giving the other party written notice. 
 
11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER 
 
California law governs the Loan Documents without regard to
principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California. 
 
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH COUNSEL. PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. 
 

14. 

 
12. GENERAL
PROVISIONS 
 
12.1 Successors
and Assigns. 
 
This Agreement binds and is for
the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights under it without Bank’s prior written consent which may be granted or withheld in Bank’s discretion. Bank has the
right, without the consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits under this Agreement. 
 
12.2 Indemnification. 
 
Borrower will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid
by Bank from, following, or consequential to transactions between Bank and Borrower (including reasonable attorneys fees and expenses), except with respect to (a) and (b) above, for losses caused by Bank’s gross negligence or willful
misconduct. 
 
12.3 Time of Essence.

 
Time is of the essence for the performance
of all obligations in this Agreement. 
 
12.4
Severability of Provision. 
 
Each provision of
this Agreement is severable from every other provision in determining the enforceability of any provision. 
 
12.5 Amendments in Writing; Integration. 
 
All amendments to this Agreement must be in writing and signed by Borrower and Bank. This Agreement represents the entire agreement about
this subject matter, and supersedes prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement merge into this Agreement and
the Loan Documents. 
 
12.6 Counterparts.

 
This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement. 
 
12.7 Survival. 
 
All covenants, representations and warranties made in this Agreement continue in full force while any
Obligations remain outstanding. The obligations of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of limitations for actions that may be brought against Bank have run. 
 

15. 

 
12.8
Confidentiality. 
 
In handling any
confidential information, Bank will exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made (i) to Bank’s subsidiaries or affiliates in connection with their business
with Borrower, (ii) to prospective transferees or purchasers of any interest in the loans (provided, however, Bank shall use commercially reasonable efforts in obtaining such prospective transferee or purchasers agreement of the terms of this
provision), (iii) as required by law, regulation, subpoena, or other order, (iv) as required in connection with Bank’s examination or audit and (v) as Bank considers appropriate exercising remedies under this Agreement. Confidential information
does not include information that either: (a) is in the public domain or already in Bank’s possession before disclosed to Bank by Borrower, or becomes part of the public domain after disclosure to Bank; or (b) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing the information. 
 
12.9 Attorneys’ Fees, Costs and Expenses. 
 
In any action or proceeding between Borrower and Bank arising out of the Loan Documents, the prevailing party will be entitled to recover
its reasonable attorneys’ fees and other reasonable costs and expenses incurred, in addition to any other relief to which it may be entitled. 
 
13. DEFINITIONS 
 
In this Agreement: 
 
“Accounts” are all existing and later arising accounts, contract rights, and other obligations owed Borrower in
connection with its sale or lease of goods (including licensing software and other technology) or provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by Borrower and Borrower’s Books
relating to any of the foregoing. 
 
“Advance” or “Advances” is a loan advance (or advances) under the Committed Revolving Line, including Advances used to issue or fund Letters of Credit, the FX Reserve or Cash Management
Services. 
 
“Affiliate” of
a Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors, partners and,
for any Person that is a limited liability company, that Person’s managers and members. 
 
“Bank Expenses” are all audit fees and expenses and reasonable costs and expenses (including reasonable attorneys’ fees and expenses) for preparing, negotiating,
administering, defending and enforcing the Loan Documents (including appeals or Insolvency Proceedings). 
 
“Borrower’s Books” are all Borrower’s books and records including ledgers, records regarding
Borrower’s assets or liabilities, the Collateral, business operations or financial condition and all computer programs or discs or any equipment containing the information. 
 

16. 

 
“Borrowing Base” is 80% of the sum Eligible Accounts plus Eligible Foreign Accounts, in each case as determined by Bank from Borrower’s most recent Borrowing Base Certificate; provided, that Bank
may lower the percentage of the Borrowing Base after performing an audit of Borrower’s Collateral. 
 
“Borrowing Base Certificate” is a Borrowing Base Certificate signed by a Responsible Officer in substantially the
same form of Exhibit C attached hereto. 
 
“Business Day” is any day that is not a Saturday, Sunday or a day on which the Bank is closed. 
 
“Cash Management Services” are defined in Section 2.1.4. 
 
“Change in Control” is a transaction
in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule
13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such
“person” or “group” to elect a majority of the board of directors of Borrower, who did not have such power before such transaction. 
 
“Closing Date” is the date of this Agreement. 
 
“Code” is the Uniform Commercial Code
in effect in any applicable jurisdiction. 
 
“Collateral” is the property described on Exhibit A. 
 
“Committed Revolving Line” is an Advance up to the aggregate principal amount of $20,000,000. 
 
“Compliance Certificate” is a Compliance Certificate signed by a Responsible Officer
in substantially the same form of Exhibit D attached hereto. 
 
“Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (i) any indebtedness, lease, dividend, letter of credit or other obligation of another such
as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates,
currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under
the guarantee or other support arrangement. 
 

17. 

 
“Control Agreement” is an account control agreement, in form and substance satisfactory to Bank, executed and delivered by Borrower, Bank and all applicable depositary institutions, with respect to
Borrower’s deposit or operating accounts, or all applicable securities intermediaries, with respect to Borrower’s securities accounts. 
 
“Copyrights” are all copyright rights, applications or registrations and like protections in each work or
authorship or derivative work, whether published or not (whether or not it is a trade secret) now or later existing, created, acquired or held. 
 
“Current Liabilities” are the aggregate amount of Borrower’s Total Liabilities which mature within one (1)
year. 
 
“Deferred Revenue”
is all amounts received in advance of performance and not yet recognized as revenue. 
 
“Deferred Revenue Schedule” is defined in Section 6.2(c). 
 
“Deferred Revenue Allowance Ratio” is the ratio of (a) Quick Assets minus the total amount outstanding
hereunder to (b) Current Liabilities minus Deferred Revenue minus the total amount outstanding hereunder. 
 
“Eligible Accounts” are Accounts in the ordinary course of Borrower’s business that meet all Borrower’s
representations and warranties in Section 5, and which contain selling terms and conditions acceptable to Bank; provided, that Bank may change eligibility standards by giving Borrower notice thereof. Unless Bank agrees otherwise in writing, Eligible
Accounts will not include: 
 
(a) Accounts
against which Bank does not have a perfected, first priority security interest; 
 
(b) Accounts that the account debtor has not paid within 90 days of invoice date; 
 
(c) Accounts for an account debtor, 50% or more of whose Accounts have not been paid within 90 days of invoice date; 
 
(d) Accounts with credit balances over 90 days from
invoice date; 
 
(e) Accounts for an account
debtor, including Affiliates, whose total obligations to Borrower exceed 25% of all Accounts, for the amounts that exceed that percentage, unless the Bank approves otherwise in writing; 
 
(f) Accounts for which the account debtor does not have its principal place of business in the United
States except for Eligible Foreign Accounts; 
 
(g) Accounts for which the account debtor is a federal, state or local government entity or any department, agency, or instrumentality and against which Bank’s security interest has not been perfected under the Assignment
of Claims Act; 
 

18. 

 
(h)
Accounts for which Borrower owes the account debtor, but only up to the amount owed (sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts); 
 
(i) Accounts for demonstration or promotional
equipment, or in which goods are consigned, sales guaranteed, sale or return, sale on approval, bill and hold, or other terms if account debtor’s payment may be conditional; 
 
(j) Accounts for which the account debtor is Borrower’s Affiliate, officer, employee, or agent;

 
(k) Accounts in which the account debtor
disputes liability or makes any claim and Bank believes there may be a basis for dispute (but only up to the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business;

 
(l) Accounts for which Bank determines
collection to be doubtful, or the Account holder to be an unacceptable business risk; or 
 
(m) The amount received on behalf of any Account constituting Deferred Revenue. Notwithstanding the foregoing: 
 
(i) if Borrower’s Deferred Revenue Allowance Ratio, measured as of the last day of a calendar quarter,
is at least 1.35 to 1.00, then, for the next succeeding calendar quarter, 50% of its Deferred Revenue (as set forth on its Deferred Revenue Schedule) shall be deemed to constitute “Eligible Accounts,” or 
 
(ii) if Borrower’s Deferred Revenue Allowance Ratio,
measured as of the last day of a calendar quarter, is at least 1.50 to 1.00, then, for the next succeeding calendar quarter, 100% of its Deferred Revenue (as set forth on its Deferred Revenue Schedule) shall be deemed to constitute “Eligible
Accounts.” 
 
“Eligible Foreign
Accounts” are Accounts in the ordinary course of Borrower’s business, the account debtors of which do not have their principal place of business in the United States, but only to the extent that such foreign Accounts meet all of
Borrower’s representations and warranties in Section 5, contain selling terms and conditions acceptable to Bank, and satisfy the following conditions: 
 
(a) the Account debtor is Hewlett Packard or Nokia; or 
 
(b) such Accounts are backed by letters of credit advised through and acceptable to Bank in its sole
discretion; or 
 
(c) such Accounts are covered by
a foreign credit insurance policy acceptable to Bank in its sole discretion, and Bank is named as the beneficiary thereunder; provided, that, for purposes of calculating the Borrowing Base, the amount of such Account shall be reduced by the amount
of the applicable insurance deductible. 
 

19. 

 
Notwithstanding the foregoing, Bank may change eligibility standards by giving Borrower notice thereof. 
 
“Equipment” is all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles,
tools, parts and attachments in which Borrower has any interest. 
 
“ERISA” is the Employment Retirement Income Security Act of 1974, and its regulations. 
 
“FX Forward Contract” is defined in Section 2.1.3. 
 
“FX Reserve” is defined in Section 2.1.3. 
 
“GAAP” is generally accepted
accounting principles. 
 
“Guarantor” is any present or future guarantor of the Obligations. 
 
“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such as
reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and (d) Contingent Obligations. 
 
“Insolvency Proceeding” are
proceedings by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief. 
 
“Intellectual Property” is: 
 
(a) Copyrights, Trademarks, Patents, and Mask Works including amendments, renewals, extensions, and all licenses or other rights to use and all license fees and royalties from the use; 
 
(b) Any trade secrets and any intellectual property
rights in computer software and computer software products now or later existing, created, acquired or held; and 
 
(c) All design rights which may be available to Borrower now or later created, acquired or held. 
 
“Inventory” is present and future
inventory in which Borrower has any interest, including merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or later owned by or in the custody or possession, actual or constructive, of Borrower, including inventory temporarily out of its custody or possession or in transit and including returns on any accounts or other
proceeds (including insurance proceeds) from the sale or disposition of any of the foregoing and any documents of title. 
 

20. 

 
“Investable Funds” means all domestic cash and cash equivalents minus non-interest bearing funds held at financial institutions other than Bank. 
 
“Investment” is any beneficial
ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person. 
 
“Letter of Credit” is defined in Section 2.1.2. 
 
“Letter of Credit Fees” is defined in Section 2.1.2. 
 
“Lien” is a mortgage, lien, deed of
trust, charge, pledge, security interest or other encumbrance. 
 
“Loan Documents” are, collectively, this Agreement, any note, or notes or guaranties executed by Borrower or Guarantor, any account control agreements, and any other present or future agreement between
Borrower or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated. 
 
“Mask Works” are all mask works or similar rights available for the protection of semiconductor chips, now owned
or later acquired. 
 
“Material Adverse
Change” is described in Section 8.3. 
 
“Maturity Date” is December 30, 2003. 
 
“Obligations” are debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, including cash management services, letters of credit and foreign
exchange contracts, if any and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank. 
 
“Opinion” is that certain opinion executed and delivered by Borrower to Bank in
accordance with Section 3.1, substantially in the form of Exhibit E. 
 
“Patents” are patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same. 
 
“Permitted Indebtedness”
is: 
 
(a) Borrower’s Indebtedness to
Bank under this Agreement or any other Loan Document; 
 
(b) Indebtedness existing on the Closing Date and shown on the Schedule; 
 
(c) Subordinated Debt; 
 
(d) Indebtedness to trade creditors incurred in the ordinary course of business; and 
 

21. 

 
(e)
Indebtedness secured by Permitted Liens. 
 
“Permitted Investments” are: 
 
(a) Investments shown on the Schedule and existing on the Closing Date; and 
 
(b) future Investments in similar types of Investments pursuant to Borrower’s investment policy (attached hereto as Schedule
A) that has been formally adopted or otherwise approved by Borrower’s Board of Directors. 
 
“Permitted Liens” are: 
 
(a) Liens existing on the Closing Date and shown on the Schedule or arising under this Agreement or other Loan Documents; 
 
(b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or
being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over any of Bank’s security interests; 
 
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower or its Subsidiaries incurred
for financing the acquisition of the Equipment, or (ii) existing on equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the equipment and the cost of such Equipment does not exceed $250,00 in the
aggregate per year; 
 
(d) Licenses or
sublicenses granted in the ordinary course of Borrower’s business and any interest or title of a licensor or under any license or sublicense, if the licenses and sublicenses permit granting Bank a security interest; 
 
(e) Software escrow arrangements entered into by
Borrower in the ordinary course of business; 
 
(f) Leases or subleases granted in the ordinary course of Borrower’s business, including in connection with Borrower’s leased premises or leased property; and 
 
(g) Liens incurred in the extension, renewal or
refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not
increase. 
 
“Person” is
any individual, sole proprietorship, partnership, limited liability company, joint venture, company association, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company,
estate, entity or government agency. 
 
“Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest rate. 
 

22. 

 
“Quick Assets” is, on any date, the Borrower’s consolidated, unrestricted cash, cash equivalents, net billed accounts receivable and investments with maturities of fewer than 12 months determined
according to GAAP. 
 
“Responsible
Officer” is each of the Chief Executive Officer, the President, the Chief Financial Officer and the Controller of Borrower. 
 
“Schedule” is any attached schedule of exceptions. 
 
“Subordinated Debt” is debt incurred by Borrower subordinated to Borrower’s
indebtedness owed to Bank and which is reflected in a written agreement in a manner and form acceptable to Bank and approved by Bank in writing. 
 
“Subsidiary” is for any Person, or any other business entity of which more than 50% of the voting stock or other
equity interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person. 
 
“Total Liabilities” is on any day, obligations that should, under GAAP, be classified as liabilities on
Borrower’s consolidated balance sheet, including all Indebtedness, and current portion Subordinated Debt allowed to be paid, but excluding all other Subordinated Debt. 
 
“Trademarks” are trademark and servicemark rights, registered or not, applications to
register and registrations and like protections, and the entire goodwill of the business of Assignor connected with the trademarks. 
 
“Unrestricted Cash and Availability” is the sum of (a) Borrower’s consolidated, unrestricted cash and
short-term cash equivalents on deposit in the United States in the name of Borrower or any of its domestic Subsidiaries, as represented on Borrower’s monthly balance sheet, plus (b) the lesser of (i) the Borrowing Base less any
outstanding Advances or (ii) the amount available under the Committed Revolving Line. 
 
[The signature page follows.] 
 

23. 

 

	
	 BORROWER:
  
 LEGATO
SYSTEMS, INC.
  

	 	 	 
	 By:
	 	  

	
	 Printed Name:
	 	  

	
	 Title:
	 	  

	  
  
 BANK:
  
 SILICON VALLEY BANK
  

	 	 	 
	 By:
	 	  

	
	 Printed Name:
	 	  

	
	 Title:
	 	  

 

24. 

 
SCHEDULE OF
EXCEPTIONS 
 
Deposit Accounts (Section 5.2)

 
None 
 
Litigation (Section 5.3) 
 
None 
 
Permitted Indebtedness (Section 13) 
 
None 
 
Permitted Investments (Section 13) 
 
40,113 Shares of Sun Microsystems 
 
1,000,0000 Household Nether SR UNS Bonds 
 
2,950,000 Westinghouse EL SR UNS Bonds 
 
1,000,000 Philip Morris SR UNS Global Bonds 
 
2,500,000 Merrill Lynch Ser B MTN SR UNS Bonds 
 
3,400,000 Intl Lease Fin SR UNS Bonds 
 
1,050,000 C/P Centerpoint ENER 
 
1,950,000 C/P Glencore Funding 
 
364,000 C/P Ford Motor Company 
 
Permitted Liens (Section 13) 
 
Three Leases with Town & Country Leasing 
 
Town & Country Leasing LLC 
1097
Commercial Avenue, PO Box 329 
East Petersburg, PA 17520 
(717) 735-5120 
 
Lease Number 109127:
$33,350.20 
Lease Number 109030: $340,947.75 
Lease Number 109113: $34,557.60 

 
SCHEDULE A

 
Cash Investment Policy 
 
Legato Systems, Inc. 
 
1.0 Purpose 
 
1.1 The purpose of this policy is to establish the
parameters for Legato Systems, Inc. (the “Company”) to be followed when investing its excess cash. Excess cash is defined as cash and cash equivalents, which the Company has or expects to have on hand, that are in excess of its working
capital requirements for the next two months. 
 
1.2 The investment objectives of the Company’s excess cash, in order of priority, are as follows: 
 

	 	•	 	Preserve principal; 

	 	•	 	Meet internal liquidity requirements; 

	 	•	 	Avoid inappropriate concentrations of investments; 

	 	•	 	Deliver optimum yields (after-tax) in relationship to the guidelines and market conditions, and; 

	 	•	 	Provide fiduciary control of all investments. 

 
1.3 Risk and yield – The Company is adverse to incurring market risk or credit risk, and will generally sacrifice yield in the
interest of safety. Care must always be taken to insure that the Company’s reported financial statements are never materially affected by decreases in the market value of securities held. 
 
2.0 Scope 
 
The Company’s Cash Investment Policy represents the minimum standard for all domestic and international
subsidiaries and has been approved by the Company’s Board of Directors. 
 
3.0 Responsibilities 
 
The Chief Financial
Officer and/or Corporate Controller are authorized to make cash investments on behalf of the Company and are charged with the responsibility of creating and maintaining an investment portfolio that adheres to the guidelines set forth in this policy.
Any revisions or amendments to parameters set forth herein will be the responsibility of the Chief Financial Officer. 
 
4.0 Permissible Investments and Credit Quality 
 
4.1 Obligations issued or guaranteed by the U.S. Government, its agencies or government sponsored entities such as FNMA and FHLMC.

 
4.2 U.S. Government and Agency pass-through
securities and collateralized mortgage obligations (CMOs). 
 
4.3 Obligations of corporations, including commercial paper, master notes, medium term notes or bonds and public debt securities, with short term ratings of A-2 or P-2 or better or long term rating of A- or A3 or better by either
Standard & Poor’s or Moody’s. In the case of issues with a split rating (e.g., A by one agency and Bbb by another), the lower rating shall apply. 

 
4.4
Obligations of U.S. banks, including bank notes, medium-term notes, certificates of deposits, bankers’ acceptances, time deposits, eurodollar time deposits and market auction preferred, with short term ratings of A-2 or P-2 or better or long
term rating of A- or A3 or better by either Standard & Poor’s or Moody’s. In the case of issues with a split rating (e.g., A by one agency and Bbb by another), the lower rating shall apply. 
 
4.5 Asset-backed securities and commercial mortgage-backed
securities supported by assets owned by the issuer and placed with a trustee, which has a short-term rating A-1/P-1 or a long-term rating of rated AAA or Aaa by Standard & Poor’s or Moody’s. 
 
4.6 Tax-exempt or tax-advantage securities, which have at
least a short-term A-1 or a long-term AA Standard & Poor’s or Aa2 Moody’s credit rating. Eligible investments include auction rate municipal bonds, tax-exempt commercial paper, municipal notes and bonds, municipal floating rate
securities and variable rate demand notes. 
 
4.7
Taxable or tax-exempt money market funds with assets greater than $500 million and whose assets have average maturities less than or equal to 90 days. 
 
5.0 Portfolio Diversification Requirements 
 
5.1 At the time of purchase, no more than the greater of 5% of the portfolio or $1 million may be invested with any one issuer valued on a
daily market to market basis, with the exception of obligations of the U.S. Government and its agencies and daily money market funds for which no limit will be imposed. 
 
5.2 A minimum of 10% of the portfolio must be invested in U.S. Treasury securities, U.S. Governmental agency
securities and/or cash. 
 
5.3 All of the above
credit risk limits are to be measured at the time of purchase and on a market value basis. As cash withdrawals are made and as the market value of the portfolio changes, the limits may be exceeded on a market value basis. Should this occur, the
portfolio will be adjusted in a timely, prudent and economically efficient manner. 
 
6.0 Liquidity Requirements 
 
6.1 The maximum duration of any single issue of the portfolio will be three (3) years. For securities that have put dates, reset dates, on auction dates, or that trade based on their average maturity, the put date, auction
date, reset date, or average maturity will be used instead of the final maturity date for average duration guidelines purposes. 
 
6.2 The duration of the portfolio shall not exceed 1.6 years. 
 
7.0 Performance Requirements 
 
7.1 The performance of the portfolio shall be measured by comparison to the total return of an appropriate objective index or
investment performance benchmark. Performance will be measured on a total return basis without restriction on the amount of realized gains or losses. 
 
7.2 The target for performance is the total return of a benchmark that approximates the target duration of the portfolio using the
appropriate blend of indexes. Indexes should be reputable and readily determinable such as Salomon Smith Barney, Lehman Brothers or Merrill Lynch. 
 

2. 

 
8.0 Exceptions to this
Policy 
 
If a proposed action deviates
significantly from the policy, the Chief Financial Officer will secure approval from the Chief Executive Officer or the Chairperson of the Board, with subsequent concurrence by the full Board of Directors. Minor exceptions are expected to occur from
time to time. The spirit of the Policy is not to prevent exceptions, but to promote planning for investments and to integrate investment strategy with other business activity. 
 

3. 

 
EXHIBIT A 
 
The Collateral consists of all of Borrower’s right, title and interest in and to the following, whether now owned or hereafter existing: 
 
All goods and equipment now owned or hereafter acquired, including, without limitation, all machinery, fixtures, vehicles (including motor
vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located; 
 
All inventory, now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is temporarily out of Borrower’s custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above; 
 
All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, payment intangibles, goodwill, trademarks, service marks, trade styles, trade names, patents, patent applications, leases, contracts, licenses, license agreements, franchise agreements, blueprints,
drawings, purchase orders, customer lists, route lists, infringements, claims, computer programs, software, computer discs, computer tapes, literature, reports, catalogs, design rights, tax and other types of refunds, payments of insurance and
rights to payment of any kind; 
 
All now existing
and hereafter arising rights to payment of any kind, including accounts, contract rights, royalties, license rights and all other forms of obligations owing to Borrower arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any and all credit insurance, insurance (including refund) claims and proceeds, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed
by Borrower; 
 
All documents (including warehouse
receipts), cash, cash equivalents, deposit accounts, securities, securities entitlements, securities accounts (including health care insurance receivables and credit card receivables), investment property, financial assets, letters of credit, letter
of credit rights (whether or not evidenced by a writing), certificates of deposit, instruments, chattel paper and electronic chattel paper rights now owned or hereafter acquired and Borrower’s Books relating to the foregoing; 
 
All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished, now owned or hereafter acquired; all trade secret rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned or hereafter acquired; all mask work or similar rights available for the protection of semiconductor chips, now owned or hereafter acquired; all claims for damages by way
of any past, present and future infringement of any of the foregoing; 

 
All investment
property, whether held directly or as a security entitlement, securities account, commodity contract or a commodity account, maintained with any securities intermediary or commodity intermediary; and 
 
All Borrower’s Books relating to the foregoing and any
and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof. 
 
Notwithstanding the foregoing, the Collateral shall not be deemed to include any copyrights, copyright applications, copyright
registration and like protection in each work of authorship and derivative work thereof, whether published or unpublished, now owned or hereafter acquired; any patents, patent applications and like protections including without limitation
improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same, trademarks, servicemarks and applications therefor, whether registered or not, and the goodwill of the business of Borrower connected with
and symbolized by such trademarks, any trade secret rights, including any rights to unpatented inventions, knowhow, operating manuals, license rights and agreements and confidential information, now owned or hereafter acquired; or any claims for
damage by way of any past, present and future infringement of any of the foregoing (collectively, the “Intellectual Property”), except that the Collateral shall include the proceeds of all the Intellectual Property that are
accounts, (i.e. accounts receivable) of Borrower, or general intangibles consisting of rights to payment, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary
to have a security interest in such accounts and general intangibles of Borrower that are proceeds of the Intellectual Property, then the Collateral shall automatically, and effective as of the date hereof, include the Intellectual Property to the
extent necessary to permit perfection of Bank’s security interest in such accounts and general intangibles of Borrower that are proceeds of the Intellectual Property. 
 
Borrower and Bank are parties to a Negative Pledge Agreement, whereby Borrower, in connection with
Bank’s loan or loans to Borrower, has agreed, among other things, not to sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its Intellectual Property. 
 

2. 

 
EXHIBIT B

 
LOAN PAYMENT/ ADVANCE REQUEST FORM

DEADLINE FOR SAME DAY PROCESSING IS 12:00 NOON PACIFIC TIME 
 

	 Fax To:
                                       
 
	 	 Date:                                   
 

 
Borrower: Legato
Systems, Inc. 
 
 ̈    Loan Payment: 
 

	 From Account #
                                        
                
	 	 To Account
#                                        
                

	                             (Name and Deposit Account #)
	 	 (Loan Account
#)                

	  
 Principal $
                                        
                                        
              
	 	  
 and/or Interest $
                                        
                                        
    

 
Borrower’s
representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects on and as of the date hereof, but those representations and warranties expressly referring to another date shall be true,
correct and complete in all material respects as of such date. 
 

	 Authorized Signature:
                                        
                                       
 
	 	 Phone Number:
                                        
                

 
 ̈    LOAN ADVANCE: 
 
Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire.

 

	 From Account #
                                        
                    
	 	 To Account #
                                        
                    

	                                       
      (Loan Account #)
	 	                                 (Name and Deposit Account
#)

	  
 Amount of Advance $
                                        
            
	 	 

 
Borrower’s
representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects on and as of the date of the requested Advance, but those representations and warranties expressly referring to another date
shall be true, correct and complete in all material respects as of such date. 
 

	 Authorized Signature:
                                        
                                       
 
	 	 Phone Number:
                                        
                

 
OUTGOING WIRE REQUEST

 
Complete only if all or a portion of funds from the
loan advance above are to be wired. 
Deadline for same day processing is 12:00 noon, Pacific Time 
 
 

	 Beneficiary Name:
                                        
                                       
 
	 	 Amount of Wire: $
                                        
                                    

	 Beneficiary Bank:
                                        
                                        
 
	 	 Account Number:
                                        
                                     
 

	 City and State:
                                        
                                        
      
	 	 
	 Beneficiary Bank Transit (ABA) #:
                                        
            
	 	 Beneficiary Bank Code (Swift, Sort, Chip, etc.):
                            

	 	 	 
	 	 	 (For International Wire Only)

	 Intermediary Bank:
                                        
                                      
	 	 Transit (ABA) #:
                                        
                                       
 

	 For Further Credit to:
                                        
                                        
                                        
                                        
                            

	 Special Instruction:
                                        
                                        
                                        
                                        
                                

 
By signing
below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were
previously received and executed by me (us). 
 

	 Authorized Signature:                                 
                 
	 	 2nd Signature (if
required):                                   
 

	
	 Print
Name/Title:                                      
                    
	 	 Print
Name/Title:                                      
              

	
	 Telephone #                                  
                                
	 	 Telephone
#                                        
                    

 

2. 

EXHIBIT C 
 
BORROWING BASE CERTIFICATE 
 

	 Borrower:      
	  	 Legato Systems, Inc.
	  	  
	 Bank:
	  	  
	 Silicon Valley Bank

	 	  	 2350 West El Camino Real
	  	 	 	  	  
	 3003 Tasman Drive

	 	  	 Mountain View, CA 94040
	  	 	 	  	  
	 Santa Clara, CA 95054

	
	 Commitment Amount: $ 20,000,000
	  	 	 	  	 	 
	
	 ACCOUNTS RECEIVABLE
	  	 	 	  	 	 
	
	 1.
	  	 Accounts Receivable Book Value as of
	  	 	 	  	 $
	                                    
 

	 	  	 	  	 	 	  	
	

	 2.
	  	 Eligible Foreign Accounts Book Value as of
	  	 	 	  	 $
	  

	 	  	 	  	 	 	  	
	

	 3.
	  	 Other additions, including additions based on Deferred Revenue Allowance Ratio (please explain
on reverse)
	  	 	 	  	 $
	  

	 	  	 	  	 	 	  	
	

	 4.
	  	 TOTAL ACCOUNTS RECEIVABLE
	  	 	 	  	 $
	  

	 	  	 	  	 	 	  	
	

	 ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
	  	 	 	  	 	 
	
	 5.
	  	 Amounts against which Bank not perfected
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 6.
	  	 Amounts over 90 days due
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 7.
	  	 Balance of 50% over 90 day accounts
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 8.
	  	 Credit balances over 90 days
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 9.
	  	 Concentration Limits
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 10.
	  	 Non-Eligible Foreign Accounts
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 11.
	  	 Governmental Accounts
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 12.
	  	 Contra Accounts
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 13.
	  	 Promotion or Demo Accounts
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 14.
	  	 Intercompany/Employee Accounts
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 15.
	  	 Accounts challenged by Debtor
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 16.
	  	 Accounts constituting excludable Deferred Revenue
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 17.
	  	 Other (please explain on reverse)
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 18.
	  	 TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS
	  	 $
	  

	 	  	 	  	 	 	  	
	

	 19.
	  	 Eligible Accounts (#4 minus #18)
	  	 	 	  	 $
	  

	 	  	 	  	 	 	  	
	

	 20.
	  	 LOAN VALUE OF ACCOUNTS (80% of #19)
	  	 	 	  	 $
	  

	 	  	 	  	 	 	  	
	

	 BALANCES
	  	 	 	  	 	 
	
	 21.
	  	 Maximum Loan Amount
	  	 $
	 20,000,000
	  	 	 
	
	 22.
	  	 Total Funds Available [Lesser of #21 or #20]
	  	 	 	  	 $
	  

	 	  	 	  	 	 	  	
	

	 23.
	  	 Present balance owing on Line of Credit
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 24.
	  	 Outstanding under Sublimits (LC, FX or CM)
	  	 $
	  
	  	 	 
	 	  	 	  	
	
	  	 	 
	 25.
	  	 RESERVE POSITION (#22 minus #23 and #24)
	  	 	 	  	 $
	  

	 	  	 	  	 	 	  	
	

 
The
undersigned represents and warrants that this is true, complete and correct, and that the information in this Borrowing Base Certificate complies with the representations and warranties in the Loan and Security Agreement between the undersigned and
Silicon Valley Bank. 
 

	 	 	 	

	
	 	 	 	 	 BANK USE ONLY

	 COMMENTS:
	 	 Rec’d
By:                            

	 	 	 Auth. Signer

	 	 	 Date:                                    
  

	 	 	 Verified:                                

	 LEGATO SYSTEMS,
INC.
	 	 Auth. Signer

	 By:                                     
                                        
               
	 	 Date:                                   
 

	 Authorized Signer
	 	 
	 	

 

 
EXHIBIT D

 
COMPLIANCE CERTIFICATE 
 

	TO:	 	SILICON VALLEY BANK 

3003
Tasman Drive 
Santa Clara, CA 95054 
 

	FROM:	 	LEGATO SYSTEMS, INC. 

2350
West El Camino Real 
Mountain View, CA 94040 
 
The undersigned authorized officer of LEGATO SYSTEMS, INC.
(“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending
                     with all required covenants, except as noted below, and (ii) all representations and warranties in the Agreement are true
and correct in all material respects on this date. Attached are the required documents supporting the certification. The undersigned officer certifies that such documents were prepared in accordance with Generally Accepted Accounting Principles
(GAAP) consistently applied from one period to the next, except as explained in an accompanying letter or footnotes. The undersigned officer acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not
in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. 
 
Please indicate compliance status by circling Yes/No under “Complies” column. 
 

	 Reporting Covenant

	 	 Required

	  	 	 	 Complies

	
	 Monthly financial statements + CC
	 	 Monthly within 30 days
	  	 	 	 Yes
	  	 No

	
	 Annual (Audited)
	 	 FYE within 90 days
	  	 	 	 Yes
	  	 No

	
	 Borrowing Base Certificate with
 A/R & A/P Agings
	 	 Monthly within 20 days
	  	 	 	 Yes
	  	 No

	
	 A/R Audit
	 	 Initial and Semi-Annual
	  	 	 	 Yes
	  	 No

	
	 Annual Financial Projections
	 	 Annually
	  	 	 	 Yes
	  	 No

	
	 Financial Covenant

	 	 Required

	  	 Actual

	 	 Complies

	
	 Maintain on a Monthly Basis:
	 	 	  	 	 	 	  	 
	
	 Minimum Quick Ratio (Adjusted)
	 	 1.20:1.00
	  	         :1.00
	 	 Yes
	  	 No

	
	 Unrestricted Cash and Availability
	 	 $20,000,000
	  	 $________
	 	 Yes
	  	 No

	
	 Maintain on a Quarterly Basis:
	 	 	  	 	 	 	  	 
	
	 Minimum Quarterly Revenue
	 	 $68,000,000
	  	 $________
	 	 Yes
	  	 No

	
	 Minimum Quick Ratio (Adjusted)
	 	 1.25:1.00
	  	         :1.00
	 	 Yes
	  	 No

 
 

34 

	 Comments Regarding Exceptions: See Attached.
  
 Sincerely,
  
 LEGATO
SYSTEMS, INC.
  

 SIGNATURE
  

 TITLE
  

 DATE
	 	 	  	
                         BANK USE ONLY
  
 Received by:
                                        
                
                       AUTHORIZED SIGNER
  
 Date:
                                        
                            
  
 Verified:
                                        
                      
                 AUTHORIZED SIGNER
  
 Date:
                                        
                            
  
 Compliance
Status:                             Yes     No
  

 
 

2. 

EXHIBIT E 
 
FORM OF OPINION OF COUNSEL TO BORROWER 
 
[Date] 
 
Silicon Valley Bank 
2400 Geng Road, Suite 200 
Palo Alto, California 94303 
 
Re:
                                        
         
 
Ladies and Gentlemen: 
 
We have acted as [special] counsel for
[                                       
 ], a Delaware corporation (the “Company”), in connection with [brief description of transaction] and the Loan and Security Agreement dated as of
[                                ] (the “Agreement”), by and between the
Company and Silicon Valley Bank (the “Lender”). 
 
This
opinion is furnished to you pursuant to Section          of the Agreement. Capitalized terms used but not defined herein have the meanings given them in the Agreement. 
 
In connection with this opinion, we have examined the
following documents, each of which is dated as of even date herewith: 
 
1. the Agreement; and 
 
2. the Negative Pledge Agreement by and between the Company and the Lender. 
 
In addition, for purposes of rendering our opinions below, we have examined the following: 
 
3. the Certificate of Incorporation of the Company as
certified by the Secretary of State of the State of Delaware on
                                ; 
 
4. the Bylaws of the Company certified to us by an
officer of the Company to be in full force and effect as of the date of this opinion letter; 
 
5. the resolutions adopted by the board of directors of the Company at a meeting held on
                                ; 
 
6. the Certificate of Status issued by the Secretary of
State of the State of Delaware stating that the Company is a domestic corporation in good standing in such state, dated
                                ; and 
 
7. the certificate of tax good standing for the Company
issued by the Franchise Tax Board of the State of California on
                                . 

 
Items (1) and
(2) above are hereinafter collectively referred to as the “Transaction Documents”; items (3) and (4) above are hereinafter collectively referred to as the “Organizational Documents”; and items (6) and (7) above are hereafter
referred to as the “Good Standing Certificates.” 
 
We have examined executed counterparts of the Transaction Documents and originals, or copies, the authenticity of which has been established to our satisfaction, of such other documents, corporate records, agreements and instruments
and certificates of public officials and officers of the Company as we have deemed necessary as the basis for the opinions herein expressed. As to the questions of fact material to such opinions we have, when relevant facts were not independently
established, relied upon certifications by officers of the Company. 
 
Based on the foregoing and having regard for legal considerations as we have deemed relevant, it is our opinion that: 
 
1. The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of
Delaware and is qualified as a foreign corporation in all jurisdictions where the failure to do so would result in a material adverse effect upon the Company. 
 
2. The execution and delivery of each Transaction Document and performance by the Company of its obligations thereunder and of the
transactions contemplated thereby, are within the corporate power and authority of the Company and have been authorized by proper corporate proceedings. The Transaction Documents have been duly executed and delivered by the Company. 
 
3. Each of the Transaction Documents and all of the
terms and provisions thereof are the legal, valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or affecting creditors’ rights generally and by general principles of equity including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and possible unavailability of specific performance or
injunctive relief, regardless of whether considered in a proceeding in equity or at law. 
 
4. The execution and delivery of, and performance of its obligations under, each of the Transaction Documents by the Company do not (a) violate any provision of the Organizational Documents, (b)
conflict with or constitute a default under any credit agreement, loan agreement, or any other agreement evidencing an obligation by the Company to repay any indebtedness, or (c) breach or otherwise violate any existing obligation of the Company
under any order, writ, injunction judgment or decree of any state or federal court or governmental authority binding on the Company. 
 
This Opinion is furnished by [us] [the undersigned] as counsel for the Company and may be relied upon by you only in connection with the
transactions contemplated by the Agreement. It may not be used or relied upon by you or for any other purpose or by any other person, nor may copies be delivered to any other person, without in each instance [our] [the undersigned’s] prior
written consent. You may, however deliver a copy of this opinion to each permitted 
 
 

2. 

 
transferee and assignee of the
Agreement, together with your and their participants, and each such transferee, assignee and participant may rely on this opinion as if it were addressed and had been delivered to it on the date of this opinion. 
 
Respectfully submitted, 
 
                                     
                                        
                           
 

3.

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