Document:

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                                                                    Exhibit 10.8

                            EQUITY BRIDGE GUARANTY

                                      by

                              TECO ENERGY, INC.,
        a corporation organized and existing under the laws of Florida
                                 as Guarantor

                                  in favor of

                                CITIBANK, N.A.,
                         as Administrative Agent under
                 the Gila River Project Bridge Loan Agreement

                           dated as of May 31, 2001
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                            EQUITY BRIDGE GUARANTY

          THIS EQUITY BRIDGE GUARANTY, dated as of May 31, 2001 (as amended,
supplemented or otherwise modified from time to time, this "Guaranty"), made by
                                                            --------
TECO ENERGY, INC., a corporation organized and existing under the laws of
Florida (the "Guarantor"), in favor of CITIBANK, N.A., as administrative agent
              ---------
(together with any successor(s) thereto in such capacity, the "Administrative
                                                               --------------
Agent") for the Bridge Banks under the Bridge Loan Agreement described below.
-----

                                    RECITALS

          A.   Panda Gila River, L.P., a Delaware limited partnership

("Borrower") intends to construct and either own or lease the Project.
  --------

          B.   Pursuant to the Gila River Project Bridge Loan Agreement (the

"Bridge Loan Agreement"), dated as of May 31, 2001, among Borrower, the Bridge
----------------------
Banks and Administrative Agent, the Bridge Banks have agreed to provide Bridge
Loans in the amounts specified and on the terms and subject to the conditions
set forth therein.

          C.   Guarantor, as the indirect owner of 50% of the Equity Interests
of Borrower, will derive substantial economic benefit from the Bridge Loans to
be made by the Bridge Banks to Borrower pursuant to the Bridge Loan Agreement.

          D.   Administrative Agent and the Bridge Banks have agreed to enter
into the Bridge Loan Agreement with Borrower on the condition that Guarantor
guarantee certain of Borrower's obligations thereunder as provided herein.

                                   AGREEMENT

          NOW, THEREFORE, in consideration of the premises and to induce the
Bridge Banks to provide Bridge Loans pursuant to the Bridge Loan Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Guarantor hereby agrees as follows:

                                   ARTICLE I
                                 DEFINITIONS.

     Unless the context shall otherwise require, capitalized terms used but not
defined herein are used as defined in the Bridge Loan Agreement and, except as
otherwise expressly provided, the Rules of Interpretation set forth in Exhibit A
to the Bridge Loan Agreement shall apply to this Guaranty.  In addition, unless
the context shall otherwise require, as used herein the following terms shall
have the following meanings:

          "Bridge Obligations" means all obligations of Borrower to repay the
           ------------------
Bridge Loans under the Bridge Loan Agreement and the Bridge Notes (together with
all interest and fees payable in respect thereof and, solely to the extent
arising out of the Bridge Loan Agreement and the Bridge Notes, expenses and
indemnities thereon).
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          "Capitalization" means, as to Guarantor, the sum of Total Debt and
           --------------
Consolidated Shareholders Equity, in each case, as at the date of any
determination thereof.

          "Capitalized Lease Obligations" means, as to any Person, all rental
           -----------------------------
obligations as lessee which, under GAAP, are or will be required to be
capitalized on the books of such Person, in each case taken at the amount
thereof accounted for as indebtedness in accordance with GAAP.

          "Consolidated Adjusted Interest Expense" means, for any period, the
           --------------------------------------
sum of Interest Expense (a) of Guarantor and its subsidiaries and (b) accruing
on any Indebtedness of any other Person to the extent such Indebtedness is
guaranteed by Guarantor or any of its subsidiaries, but excluding any Interest
Expense (i) on Non-Recourse Indebtedness; and (ii) on Indebtedness of a Person
before the date (A) it becomes a subsidiary of Guarantor, (B) it is merged or
consolidated with Guarantor or (C) a subsidiary of Guarantor or its assets are
acquired by Guarantor to the extent that income or loss of such Person is
excluded under the definition of Consolidated Adjusted Net Income, each
determined for such period on a consolidated basis in accordance with GAAP.

          "Consolidated Adjusted Net Income" means, for any period, the net
           --------------------------------
income or loss of Guarantor and its subsidiaries for such period determined on a
consolidated basis in accordance with GAAP (and before giving effect to any
elimination of minority interests in non-wholly owned subsidiaries); provided
                                                                     --------
that there shall be excluded the income or loss of any Person accrued before (a)
the date it becomes a subsidiary of Guarantor, (b) the date it is merged into or
consolidated with Guarantor or any subsidiary of Guarantor or (c) the date its
assets are acquired by Guarantor or any subsidiary of Guarantor, other than
amounts of income accrued before such date which are actually paid as dividends
after such date.

          "Consolidated EBITDA" means, for any period, Consolidated Adjusted Net
           -------------------
Income for such period plus (a) without duplication and to the extent deducted
in determining such Consolidated Adjusted Net Income, the sum of (i)
Consolidated Adjusted Interest Expense for such period, (ii) consolidated income
tax expense for such period, (iii) all amounts attributable to depreciation and
amortization for such period and (iv) any extraordinary non-cash charges for
such period, and minus (b) without duplication and to the extent included in
determining such Consolidated Adjusted Net Income, any extraordinary gains for
such period, all determined on a consolidated basis in accordance with GAAP.

          "Consolidated Shareholders Equity" means, as of the date of any
           --------------------------------
determination, the consolidated tangible net worth of Guarantor and its
subsidiaries, and including amounts attributable to (a) junior subordinated
debentures; provided that such junior subordinated debentures have subordination
            --------
and deferral features substantially similar to those in the TECO Subordinated
Debentures; and (b) preferred stock to the extent excluded from Total Debt,
minus the value of minority interests in any of Guarantor's subsidiaries, and
disregarding unearned compensation associated with Guarantor's employee stock
ownership plan or other benefit plans, foreign currency translation adjustments
and other comprehensive income adjustments, all determined in accordance with
GAAP.

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          "Contingent Obligation" means, as to any Person, any obligation of
           ---------------------
such Person guaranteeing any Indebtedness or lease obligation (each a "primary
                                                                       -------
obligation") of any other Person (the "primary obligor") in any manner, whether
----------                             ---------------
directly or indirectly, including any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor or (c) otherwise to
assure or hold harmless the holder of such primary obligation against loss in
respect thereof; provided, however, that the term Contingent Obligation shall
                 --------  -------
not include endorsements of instruments for deposit or collection in the
ordinary course of business.  The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum probable liability in respect thereof
(assuming such Person is required to perform thereunder) as determined in good
faith by Guarantor.

          "Credit Documents" shall have the meaning given to the term "Credit
           ----------------
Documents" in the Credit Agreement.

          "Credit Obligations" means all "Obligations" of Borrower under, and as
           ------------------
defined in, the Credit Agreement.

          "El Dorado Bridge Obligations" means all obligations of El Dorado
           ----------------------------
Borrower to repay the El Dorado Bridge Loans under the El Dorado Bridge Loan
Agreement and the El Dorado Bridge Notes (together with all interest and fees
payable in respect thereof and, solely to the extent arising out of the El
Dorado Bridge Loan Agreement and the El Dorado Bridge Notes, expenses and
indemnities thereon).

          "El Dorado Bridge Loans" shall have the meaning given to the term
           ----------------------
"Bridge Loans" in the El Dorado Bridge Loan Agreement.

          "El Dorado Bridge Notes" shall have the meaning given to the term
           ----------------------
"Bridge Notes" in the El Dorado Bridge Loan Agreement.

          "El Dorado Credit Obligations" shall mean all "Obligations" of El
           ----------------------------
Dorado Borrower under, and as defined in, the El Dorado Credit Agreement.

          "El Dorado Partners" shall have the meaning given to the term
           ------------------
"Partners" in Exhibit A to the El Dorado Bridge Loan Agreement.

          "Equity Interests" means (a) shares of capital stock, partnership
           ----------------
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person or (b) any
warrants, options or other rights to acquire such shares or interests.

          "Event of Default" has the meaning given in Section 5.1.
           ----------------

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          "Guaranteed Obligations" has the meaning given in Section 2.1(a).
           ----------------------

          "Guaranty Limit" means, at any time and from to time, (a)
           --------------
$250,000,000, minus (b) subject to any reinstatement pursuant to Section 6.13,
              -----
the aggregate amount of all repayments and prepayments of Bridge Loans by
Borrower as of such date, plus (c) all interest and fees to be paid on the
                          ----
Bridge Loans under the Bridge Loan Agreement and the Bridge Notes through the
Maturity Date and, solely to the extent arising out of the Bridge Loan Agreement
and the Bridge Notes, all expenses and indemnities thereon.

          "Hedge Transactions" means transactions under any interest swap
           ------------------
agreements, caps, collars or other interest rate hedging mechanisms.

          "Indebtedness" of any Person means, without duplication, (a) all
           ------------
indebtedness of such Person for borrowed money, (b) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (c) the face amount of all
letters of credit issued for the account of such Person (other than letters of
credit issued to secure a financial obligation of such Person to the extent such
obligation is not outstanding at the time) and all unreimbursed drafts drawn
thereunder, (d) all Indebtedness of another Person secured by any Lien on any
property owned by such Person, whether or not such Indebtedness has been assumed
by such Person, (e) all Capitalized Lease Obligations of such Person, (f) all
obligations of such Person under any subscription or similar agreement, (g) the
discounted present value of all obligations of such Person (other than Tampa
Electric) payable under agreements for the payment of a specified purchase price
for the purchase and resale of power whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations, (h) any unfunded or underfunded obligation
subject to the minimum funding standards of Section 412 of the Code of such
Person to any "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) maintained at any time, or contributed to, by such Person or any other
Person which is under common control (within the meaning of Section 414(b) or
(c) of the Code) with such Person, (i) all Contingent Obligations of such Person
and (j) all obligations of such Person in respect of Hedge Transactions;
provided, however, that Indebtedness shall specifically exclude accounts payable
--------  -------
arising in the ordinary course of business.

          "Interest Expense" means, with respect to any Person, for any period,
           ----------------
total cash interest expense of such Person payable for such period with respect
to all outstanding Indebtedness of such Person, including all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under hedging agreements to the
extent such net costs are allocable to such period in accordance with GAAP.

          "Non-Recourse Indebtedness" means Indebtedness which is not an
           -------------------------
obligation of, and is otherwise without recourse to, the assets or revenues of
Guarantor or any subsidiary of Guarantor (other than the assets or revenues of
TPS or any subsidiary of TPS).

          "Significant Subsidiary" means, collectively, Tampa Electric Company,
           ----------------------
TPS and any other subsidiary of Guarantor formed or acquired after the Closing
Date the total assets (after

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intercompany eliminations) of which exceed 10% of the total assets of Guarantor
and its subsidiaries (taken as a whole).

          "Taxes" means any present or future tax, levy, impost, duty, charge,
           -----
assessment or fee of any nature (including interest, penalties and additions
thereto) that is imposed by any government or other taxing authority in respect
of any payment under this Guaranty other than any income, franchise or similar
tax imposed upon or measured by the gross or net income or capital of
Administrative Agent or any Bridge Bank by the United States, New York State,
any jurisdiction where Administrative Agent or any Bridge Bank is organized
and/or the jurisdiction in which is located any office from or at which
Administrative Agent or any Bridge Bank is making or maintaining any Bridge
Loans or receiving any payments under any of the Bridge Loan Documents.

          "TECO Subordinated Debentures" means the 8.50% Junior Subordinated
           ----------------------------
Notes Due 2041, issued by Guarantor on December 20, 2000, in the original
principal amount of $206,200,000.

          "Total Debt" means, without duplication, Indebtedness of Guarantor and
           ----------
its Significant Subsidiaries determined on a consolidated basis outstanding at
the date of any determination thereof, but expressly excluding (a) Non-Recourse
Indebtedness, (b) junior subordinated debentures issued by Guarantor; provided
                                                                      --------
that such junior subordinated debentures have subordination and deferral
features substantially similar to those in the TECO Subordinated Debentures, and
(c) preferred stock of Guarantor in an amount not to exceed 10% of Guarantor's
Capitalization on such date.

          "Trans-Union Partners" means each of Trans-Union Interstate Pipeline
           --------------------
I, LLC and Trans-Union Interstate Pipeline II, LLC, each a Delaware limited
liability company.

                                  ARTICLE II
                                 THE GUARANTY.

     2.1  Guaranty.  Guarantor hereby unconditionally and irrevocably:
          --------

          (a)  guarantees, as primary obligor and not as surety, to
Administrative Agent, and its successors and assigns, the prompt payment in full
when due of all Bridge Obligations of Borrower, whether by acceleration or
otherwise, strictly in accordance with the terms set forth in the Bridge Loan
Agreement, in an aggregate amount not to exceed the Guaranty Limit (such Bridge
Obligations being collectively referred to herein as the "Guaranteed
                                                          ----------
Obligations"); and
-----------

          (b)  agrees that if for any reason whatsoever Borrower shall fail or
be unable to pay in full as and when due any of the Guaranteed Obligations,
Guarantor will promptly pay the same on the date payment for such Guaranteed
Obligation is due without regard to any exercise or non-exercise by Guarantor,
Administrative Agent or any Bridge Bank of any right, remedy, power or privilege
under or in respect of the Bridge Loan Agreement and the other Bridge Loan
Documents, and that in the case of any extension of time of the payment or
renewal of any of the Guaranteed Obligations, the same will be promptly paid in
full when due (whether at extended

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maturity, by acceleration or otherwise) in accordance with the terms of such
extension or renewal, in an aggregate amount not to exceed the Guaranty Limit.

     2.2  Obligations Absolute and Unconditional.
          --------------------------------------

          (a)  The obligations of Guarantor hereunder are primary obligations of
Guarantor and are an absolute, unconditional, continuing and irrevocable
guaranty of payment and not of collectibility or performance and are in no way
conditioned on or contingent upon any attempt to enforce in whole or in part
Borrower's liabilities and obligations to the Bridge Banks. If Borrower shall
fail to pay any of the Guaranteed Obligations as and when they are due,
Guarantor shall forthwith pay such Guaranteed Obligations in immediately
available funds, and each such failure by Borrower to pay a Guaranteed
Obligation shall give rise to a separate cause of action herewith, and separate
suits may be brought hereunder as each cause of action arises.

          (b)  The Bridge Banks may, at any time and from time to time (whether
or not after revocation or termination of this Guaranty) without the consent of
or notice to Guarantor, except such notice as may be required by applicable law
which cannot be waived or any notice required hereunder, without incurring
responsibility to Guarantor, without impairing or releasing the obligations of
Guarantor hereunder, upon or without any terms or conditions and in whole or in
part, (i) change the manner, place and terms of payment or change or extend the
time of such payment of, renew, or alter any Guaranteed Obligation, or any
obligations and liabilities (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof or in any manner modify, amend or
supplement the terms of the Bridge Loan Agreement, any documents, instruments or
agreements executed in connection therewith, and the guaranty herein made shall
apply to the Guaranteed Obligations, as changed, extended, renewed, modified,
amended, supplemented or altered in any manner; (ii) exercise or refrain from
exercising any rights against Borrower or others (including Guarantor) or
otherwise act or refrain from acting; (iii) add or release any other guarantor
from its obligations without affecting or impairing the obligations of Guarantor
hereunder; (iv) settle or compromise any Guaranteed Obligations and/or any
obligations and liabilities (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any obligations and liabilities which
may be due to the Bridge Banks or others; (v) sell, exchange, release,
surrender, realize upon or otherwise deal with in any manner or in any order any
property by whomsoever pledged or mortgaged to secure or howsoever securing the
Guaranteed Obligations or any liabilities or obligations (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof and/or
any offset thereagainst; (vi) apply any sums by whomsoever paid or howsoever
realized to any obligations and liabilities of Borrower to the Bridge Banks
under the Bridge Loan Agreement or the other Bridge Loan Documents in the manner
provided therein regardless of what obligations and liabilities remain unpaid;
(vii) consent to or waive any breach of, or any act, omission or default under,
the Bridge Loan Agreement or any other Bridge Loan Document; and/or (viii) act
or fail to act in any manner referred to in this Guaranty which may deprive
Guarantor of its right to subrogation against Borrower to recover full indemnity
for any payments made pursuant to this Guaranty or of its right of contribution
against any other party.

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<PAGE>

          (c)  No invalidity, irregularity or unenforceability of the Guaranteed
Obligations or invalidity, irregularity, unenforceability or nonperfection of
any collateral therefor, shall affect, impair, or be a defense to this Guaranty,
which is a primary obligation of Guarantor.

          (d)  This is a continuing Guaranty and all obligations to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. In the event that, notwithstanding the
provisions of Section 2.2(a) hereof, this Guaranty shall be deemed revocable in
accordance with applicable law, then to the extent permitted by applicable law
any such revocation shall become effective only upon receipt by Administrative
Agent of written notice of revocation signed by Guarantor. To the extent
permitted by applicable law, no revocation or termination hereof shall affect in
any manner rights arising under this Guaranty with respect to Guaranteed
Obligations (i) arising prior to receipt by Administrative Agent of written
notice of such revocation or termination and the sole effect of revocation and
termination hereof shall be to exclude from this Guaranty Guaranteed Obligations
thereafter arising which are unconnected with Guaranteed Obligations theretofore
arising or transactions theretofore entered into or (ii) arising as a result of
an Event of Default under the Bridge Loan Agreement occurring by reason of the
revocation or termination of this Guaranty.

          (e)  Guarantor shall file, in any bankruptcy or other proceeding in
which the filing of claims is required or permitted by law, all claims which
Guarantor may have against Borrower relating to any indebtedness of Borrower to
Guarantor, and hereby assigns to Administrative Agent on behalf of the Bridge
Banks all rights of Guarantor thereunder.  If Guarantor does not file any such
claim, Administrative Agent, as attorney-in-fact for Guarantor, is hereby
authorized to do so in the name of Guarantor or, in Administrative Agent's
discretion, to assign the claim to a nominee and to cause proofs of claim to be
filed in the name of Administrative Agent's nominee.  The foregoing power of
attorney is coupled with an interest and cannot be revoked.  Administrative
Agent or its nominee shall have the sole right to accept or reject any plan
proposed in any such proceeding and to take any other action which a party
filing a claim is entitled to take.  In all such cases, whether in
administration, bankruptcy or otherwise, the person authorized to pay such a
claim shall pay the same to Administrative Agent to the extent of any Guaranteed
Obligations which then remain unpaid and, to the full extent necessary for that
purpose, Guarantor hereby assigns to Administrative Agent all of Guarantor's
rights to all such payments or distributions to which Guarantor would otherwise
be entitled; provided, however, that Guarantor's obligations hereunder shall not
             --------  -------
be satisfied except to the extent that Administrative Agent receives cash by
reason of any such payment or distribution.  If Administrative Agent receives
anything hereunder other than cash, the same shall be held as collateral for
amounts due under this Guaranty.

          (f)  Except as otherwise required by law, each payment required to be
made by Guarantor to Administrative Agent or the Bridge Banks hereunder shall be
made without deduction or withholding for or on account of Taxes.  If such
deduction or withholding is so required, Guarantor shall, upon notice thereof
from Administrative Agent, (i) pay the amount required to be deducted or
withheld to the appropriate authorities before penalties attach thereto or
interest accrues thereon (including deductions from amounts payable under this
Section

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2.2(f)), (ii) on or before the 30th day after payment of such amount, forward to
the Bridge Banks an official receipt evidencing such payment (or a certified
copy thereof), and (iii) in the case of any such deduction or withholding,
forthwith pay to Administrative Agent for the account of the Bridge Banks such
additional amount as may be necessary to ensure that the net amount actually
received by the Bridge Banks, free and clear of such Taxes, including any Taxes
on such additional amount, is equal to the amount that the Bridge Banks would
have received had there been no such deduction or withholding.

     2.3  Subordination.  Except as otherwise specifically provided in this
          -------------
Guaranty, all existing and future indebtedness of Borrower to Guarantor, and the
right of Guarantor to withdraw any capital invested by Guarantor directly or
indirectly in Borrower, is hereby subordinated to all obligations and
liabilities hereby guaranteed.  Without the prior written consent of
Administrative Agent, such subordinated indebtedness shall not be paid or
withdrawn in whole or in part, nor shall Guarantor accept any payment of or on
account of any such indebtedness or as a withdrawal of capital, while this
Guaranty is in effect.  At Administrative Agent's request, if an Event of
Default under the Bridge Loan Agreement has occurred and is continuing,
Guarantor shall cause Borrower to pay to Administrative Agent for the benefit of
the Bridge Banks all or any part of such subordinated indebtedness and any
capital which Guarantor is entitled to withdraw up to the Guaranty Limit.  Any
payment by Borrower in violation of this Guaranty shall be received by Guarantor
in trust for Administrative Agent and the Bridge Banks, and Guarantor shall
cause the same to be paid to Administrative Agent for the benefit of the Bridge
Banks immediately upon demand by Administrative Agent on account of Borrower's
obligations and liabilities hereby guaranteed.  Guarantor shall not assign all
or any portion of such indebtedness while this Guaranty remains in effect except
upon prior written notice to Administrative Agent by which the assignee of any
such indebtedness agrees that the assignment is made subject to the terms of
this Guaranty, and that any attempted assignment of such indebtedness in
violation of the provisions hereof shall be void.  Nothing in this Section 2.3
shall apply to any distribution or payment permitted to be made to Guarantor,
either Partner or any of their respective Affiliates pursuant to the Credit
Documents.

     2.4  Waiver.  To the extent permitted by applicable law, Guarantor hereby
          ------
unconditionally and irrevocably waives and relinquishes all rights and remedies
accorded by applicable law to sureties or guarantors and agrees not to assert or
take advantage of any such rights or remedies, including (a) any right to
require Administrative Agent or the Bridge Banks to proceed against Borrower or
any other person or to proceed against or exhaust any security held by
Administrative Agent or the Bridge Banks at any time or to pursue any other
remedy in Administrative Agent's or the Bridge Banks' power before proceeding
against Guarantor, (b) any defense that may arise by reason of the incapacity,
lack of power or authority, dissolution, merger, termination or disability of
Borrower or any other Person or the failure of Administrative Agent or the
Bridge Banks to file or enforce a claim against the estate (in administration,
bankruptcy or any other proceeding) of Borrower or any other Person, (c)
promptness, diligence, demand, presentment, protest and notice of any kind other
than notices required hereunder or under the other Bridge Loan Documents,
including notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the part
of Borrower, Administrative Agent, the Bridge Banks, any endorser or creditor of
Borrower or Guarantor or on the part of any other person under this or any other

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<PAGE>

instrument in connection with any obligation or evidence of indebtedness held by
Administrative Agent or the Bridge Banks in connection with any Guaranteed
Obligations, (d) any defense based upon an election of remedies by
Administrative Agent or the Bridge Banks, including an election to proceed by
non-judicial rather than judicial foreclosure, which destroys or otherwise
impairs the subrogation rights of Guarantor, the right of Guarantor to proceed
against Borrower for reimbursement, or both, (e) any defense based on any offset
against any amounts which may be owed by any Person to Guarantor for any reason
whatsoever, (f) any defense based on any act, failure to act, delay or omission
whatsoever on the part of Borrower or the failure by Borrower to do any act or
thing or to observe or perform any covenant, condition or agreement to be
observed or performed by it under the Bridge Loan Agreement or the other Bridge
Loan Documents, (g) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal, (h) any defense,
setoff or counterclaim which may at any time be available to or asserted by
Borrower against Administrative Agent, the Bridge Banks or any other Person
under the Bridge Loan Agreement or any other Bridge Loan Document (other than,
subject to Section 6.13, defense of payment of the applicable amounts), (i) any
duty on the part of Administrative Agent or the Bridge Banks to disclose to
Guarantor any facts Administrative Agent or the Bridge Banks may now or
hereafter know about Borrower, regardless of whether Administrative Agent or the
Bridge Banks have reason to believe that any such facts materially increase the
risk beyond that which Guarantor intends to assume, or have reason to believe
that such facts are unknown to Guarantor, or have a reasonable opportunity to
communicate such facts to Guarantor, since Guarantor acknowledges that Guarantor
is fully responsible for being and keeping informed of the financial condition
of Borrower and of all circumstances bearing on the risk of non-payment of any
obligations and liabilities hereby guaranteed, (j) the fact that Guarantor may
at any time in the future dispose of all or part of its direct or indirect
interest in Borrower, (k) any defense arising because of Administrative Agent's
or the Bridge Banks' election, in any proceeding instituted under the Federal
Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal
Bankruptcy Code, (l) any defense based upon any borrowing or grant of a security
interest under Section 364 of the Federal Bankruptcy Code and (xiii) any other
circumstance (including any statute of limitations) or any existence of or
reliance on any representation by Administrative Agent or any Bridge Bank that
might otherwise constitute a defense available to, or discharge of, any
guarantor or surety (other than, subject to Section 6.13, defense of payment of
the applicable amounts).

     2.5  Subrogation.  Until all Bridge Obligations, Credit Obligations, El
          -----------
Dorado Bridge Obligations and El Dorado Credit Obligations have been paid in
full in cash (subject to Section 6.13 and other than those contingent
obligations that are intended to survive the termination of the applicable
agreement) (a) Guarantor shall not have any right of subrogation and waives all
rights to enforce any remedy which it or the Bridge Banks now have or may
hereafter have against Borrower in respect of the Guaranteed Obligations, and
waives the benefit of, and all rights to participate in, any security now or
hereafter held by Administrative Agent or the Bridge Banks from Borrower and (b)
Guarantor waives any claim, right or remedy which Guarantor may now have or
hereafter acquire against Borrower that arises hereunder, from the existence or
enforcement of this Guaranty and/or from the performance by Guarantor hereunder,
including any claim, remedy or right of subrogation, reimbursement, exoneration,
contribution, indemnification, or participation in any claim, right or remedy of
the Bridge Banks against

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Borrower, or any security which the Bridge Banks now have or hereafter acquire,
whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise.

     2.6  Bankruptcy.  So long as any of the Bridge Obligations, Credit
          ----------
Obligations, El Dorado Bridge Obligations or El Dorado Credit Obligations remain
unsatisfied or unpaid (subject to Section 6.13 and other than those contingent
obligations that are intended to survive the termination of the applicable
agreement), Guarantor shall not, and shall not permit any of its subsidiaries
to, without the prior written consent of Administrative Agent, commence, or join
with any other Person in commencing, any bankruptcy, reorganization, or
insolvency proceeding against Borrower.  The obligations of Guarantor under this
Guaranty shall not be altered, limited or affected by any proceeding, voluntary
or involuntary, involving the bankruptcy, reorganization, insolvency,
receivership, liquidation or arrangement of Borrower, or by any defense which
Borrower may have by reason of any order, decree or decision of any court or
administrative body resulting from any such proceeding.

                                  ARTICLE III
                        REPRESENTATIONS AND WARRANTIES.

     Guarantor hereby represents and warrants that, as of the date hereof:

     3.1  Corporate Existence and Business.  Guarantor is a corporation duly
          --------------------------------
organized and validly existing in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified to do business and is in
good standing in each jurisdiction in which such qualification is necessary to
execute, deliver and perform this Guaranty and each other Bridge Loan Document
to which it is or is to become a party.

     3.2  Power and Authorization; Enforceable Obligations. Guarantor has full
          ------------------------------------------------
power and authority and the legal right to execute, deliver and perform this
Guaranty and each other Bridge Loan Document to which it is or is to become a
party and to take all action as may be necessary to complete the transactions
contemplated hereunder and thereunder. Guarantor has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Guaranty and each other Bridge Loan Document to which it is or is to become a
party to complete the transactions contemplated hereby. No consent or
authorization of, filing with, or other act by or in respect of any other Person
or Governmental Authority is required in connection with the execution, delivery
or performance by Guarantor, or the validity or enforceability as to Guarantor,
of this Guaranty and each other Bridge Loan Document to which it is or is to
become a party, except such consents or authorizations or filings or other acts
as have already been obtained or where the failure to obtain such consent or
authorization could not reasonably be expected to have a Material Adverse Effect
on Guarantor. This Guaranty and each other Bridge Loan Document to which
Guarantor is a party have been duly executed and delivered by Guarantor and
constitute, and each other Bridge Loan Document to which it is to become a party
will upon execution and delivery thereof by Guarantor and the other parties
thereto (if any) constitute, a legal, valid and binding obligation of Guarantor
enforceable against it in accordance with its terms except as enforceability may
be limited by applicable bankruptcy, insolvency,

                                       11
<PAGE>

reorganization, moratorium or similar laws affecting the right of creditors
generally and by general principles of equity.

     3.3  No Legal Bar. The execution, delivery and performance by Guarantor of
          ------------
this Guaranty and each other Bridge Loan Document to which it is or is to become
a party to complete the transactions contemplated hereby and the making by
Guarantor of any payments hereunder or under any other Bridge Loan Document to
which it is a party will not violate any applicable law or any material
contractual obligation of Guarantor and will not result in, or require, the
creation or imposition of any Lien on any of the properties or revenues of
Guarantor pursuant to any applicable law or any such contractual obligation
except, in each case, where such violation, creation or imposition could not
reasonably be expected to have a Material Adverse Effect on Guarantor.

     3.4  No Proceeding or Litigation. No litigation or proceeding of or before
          ---------------------------
any Governmental Authority is pending or, to the knowledge of Guarantor,
threatened in writing against Guarantor with respect to the transactions
contemplated by this Guaranty or any other Bridge Loan Document to which
Guarantor is or is to become a party, except where such litigation or proceeding
could not reasonably be expected to have a Material Adverse Effect on Guarantor.

     3.5  Governmental Approvals.  All governmental authorizations and actions
          ----------------------
necessary in connection with the execution and delivery by Guarantor of this
Guaranty and the performance of its obligations hereunder have been obtained or
performed and remain valid and in full force and effect.

     3.6  Financial Statements. All quarterly and annual financial statements of
          --------------------
Guarantor and its Significant Subsidiaries heretofore delivered by Guarantor to
Administrative Agent were true, correct and complete in all material respects,
did not fail to disclose any material liabilities, whether direct or contingent,
and fairly presented in all material respects the financial condition of
Guarantor or such Significant Subsidiary, as the case may be, in each case as of
the date delivered and were prepared in accordance with GAAP. Since the date of
the most recent such financial statements, there has been no material adverse
change in the business, operations, property, assets or financial condition of
Guarantor or its Significant Subsidiaries taken as a whole.

     3.7  True and Complete Disclosure. All factual information heretofore or
          ----------------------------
contemporaneously furnished by Guarantor or its representatives in writing to
Administrative Agent or any Bridge Bank for purposes of or in connection with
this Guaranty or any transaction contemplated herein was true and accurate in
all material respects on the date as of which such information was dated or
certified and at such date did not omit to state any fact necessary to make such
information not misleading at such time in light of the circumstances under
which such information was provided. The information referred to in the
immediately preceding sentence furnished to Administrative Agent or any Bridge
Bank on or prior to the Closing Date, taken as a whole, as updated or
supplemented from time to time, is true and correct in all material respects as
of the Closing Date, and as of the Closing Date all such information does not

                                       12
<PAGE>

omit to state any fact which could reasonably be expected to have a Material
Adverse Effect on Guarantor.

     3.8   Investment Company Act. Guarantor is not an "investment company"
           ----------------------
within the meaning of the Investment Company Act of 1940, as amended and is
exempt from regulation under PUHCA and the Federal Power Act.

     3.9   Compliance with Law. There is no violation by Guarantor or any
           -------------------
Significant Subsidiary of any Governmental Rule which could reasonably be
expected to have a Material Adverse Effect on Guarantor. Except as have been
delivered to Administrative Agent, no notices of violation of any Governmental
Rule relating to the Project or the Site have been issued, entered or received
by Guarantor.

     3.10  ERISA.  Guarantor and any other Person which is under common control
           -----
(within the meaning of Section 414(b) or (c) of the Code) have fulfilled their
obligations (if any) under the minimum funding standards of ERISA and the Code
for each ERISA Plan in compliance in all material respects with the currently
applicable provisions of ERISA and the Code and have not incurred any liability
to the PBGC or an ERISA Plan under Title IV of ERISA (other than liability for
premiums due in the ordinary course).  Assuming that the credit extended
hereunder does not involve the assets of any employee benefit plan subject to
ERISA, neither the execution of this Guaranty nor the consummation of the
transactions contemplated hereby will involve a Prohibited Transaction (as
defined in the Credit Agreement).

     3.11  Financial and Other Information. Guarantor has established adequate
           -------------------------------
means of obtaining financial and other information pertaining to the businesses,
operations and condition (financial and otherwise) of Borrower and its
properties on a continuing basis, and Guarantor now is and hereafter will have
sole responsibility for maintaining familiarity with the businesses, operations
and condition (financial and otherwise) of Borrower and its properties.

     3.12  Adequate Financial Means. (a) Guarantor is not, and will not as a
           ------------------------
result of the execution and delivery of this Guaranty, be rendered insolvent,
(b) Guarantor does not intend to incur, or believe it is incurring, obligations
beyond its ability to pay and (c) Guarantor's property remaining after the
delivery and performance of this Guaranty will not constitute unreasonably small
capital.

                                  ARTICLE IV
                                  COVENANTS.

     Guarantor hereby covenants and agrees that, until the earlier of the
payment in full of all Bridge Obligations (subject to Section 6.13 and other
than those contingent obligations that are intended to survive the termination
of this Guaranty or the other Bridge Loan Documents) and the payment by
Guarantor under this Guaranty of an aggregate amount equal to the Guaranty
Limit:

     4.1   Existence. Guarantor shall, and shall cause each Significant
           ---------
Subsidiary to, maintain and preserve its existence in good standing in the state
of its formation and its

                                       13
<PAGE>

qualification to do business in each other jurisdiction where such qualification
is necessary and all material rights, privileges and franchises necessary in the
normal conduct of its business.

     4.2  Consents, Legal Compliance. Guarantor shall maintain in full force and
          --------------------------
effect all consents of any Governmental Authority that are required to be
obtained by it in order for it to perform its obligations under this Guaranty
and will obtain any that may become necessary in the future.

     4.3  Prohibition of Certain Transfers.
          --------------------------------

          (a)  Guarantor shall not, and shall not permit any Significant
Subsidiary to, liquidate or dissolve, or combine, consolidate or merge with or
into another Person; except that Guarantor or any Significant Subsidiary may
combine, consolidate or merge with another Person if (i) Guarantor or a
Significant Subsidiary, as the case may be, is the surviving corporation of such
merger, consolidation or combination; (ii) prior to such merger, consolidation
or combination, and after giving effect thereto, no default under this Guaranty
shall have occurred and be continuing; (iii) such merger, consolidation or
combination shall not cause a violation of Section 4.11 hereof; (iv) Guarantor
shall have provided pro forma calculations to Administrative Agent demonstrating
that, to the reasonable satisfaction of Administrative Agent, after giving
effect to such merger, consolidation or combination (A) the projected ratio of
Total Debt to Capitalization for the next succeeding fiscal quarter will be less
than or equal to 0.65 to 1.00 and (B) the projected ratio of Consolidated EBITDA
to Consolidated Adjusted Interest Expense for the next succeeding twelve months
will equal or exceed 3.0 to 1.00; and (v) Guarantor's rights and obligations
under this Guaranty and Administrative Agent's rights and obligations under this
Guaranty shall not be diminished in any manner as a result of such merger,
consolidation or combination.

          (b)  Except as set forth in this Section 4.3 or sales that are in the
nature of financing leases, Guarantor shall not, and shall not permit any
Significant Subsidiary to, sell, lease, assign or otherwise transfer or dispose
of, directly or indirectly, all or any substantial part of its property,
business or assets; provided that (i) Guarantor or any Significant Subsidiary
                    --------
may sell, lease or otherwise transfer or dispose of, directly or indirectly,
assets to any of Guarantor, any Significant Subsidiary, either Partner, either
El Dorado Partner, either Trans-Union Partner, Borrower, El Dorado Borrower or
Trans-Union, (ii) Tampa Electric may sell, contribute or transfer its
transmission and transmission-related assets for fair value to a regional
transmission organization and (iii) TPS may sell up to 30% of its assets in
exchange for assets similar to those sold, or for cash so long as the proceeds
of such cash sales are (x) retained by TPS or Guarantor in cash or equivalent
short term investments (provided that Guarantor shall not be obligated to so
maintain any such proceeds in cash or equivalent investments at any time that
Guarantor is rated Baa2 by Moody's and BBB+ by S&P or Baa1 by Moody's and BBB by
S&P) and reinvested within nine months of the date of such sale in assets
similar to those sold or (y) applied by Borrower, on a pro-rata basis, toward
(a) the prepayment of the outstanding principal amount of the Bridge Loans and
the El Dorado Bridge Loans, and (b) satisfaction of Guarantor's then due and
payable obligations under the "Equity Contribution Guaranty" (as defined in the
Credit Agreement) and under that certain Equity Contribution Guaranty, dated as
of May 31, 2001, by Guarantor in favor of El Dorado Administrative Agent, and
following the applications set forth

                                       14
<PAGE>

in the foregoing clauses (a) and (b), pro-rata to satisfaction of all other
obligations of Borrower and El Dorado Borrower guaranteed by Guarantor under the
"Equity Guaranties", as defined in the Credit Agreement and the El Dorado Credit
Agreement.

          (c)  Except as set forth in this Section 4.3, Guarantor shall not, and
shall not permit any Significant Subsidiary to, mortgage, pledge or encumber all
or substantially all of its assets (other than, solely in the case of TPS,
pursuant to limited recourse project financing transactions entered into by TPS
after the Closing Date in the ordinary course of its business), except for
encumbrances listed on Schedule 4.3.

          (d)  Guarantor shall not sell, assign or otherwise transfer, by way of
collateral assignment or otherwise, or dispose of, directly or indirectly (by
way of collateral assignment or otherwise) any Equity Interest in any
Significant Subsidiary; provided that for fair value (i) Guarantor may sell,
                        --------
assign or transfer up to 20% of its Equity Interests in TPS and (ii) TPS may
sell or transfer its Equity Interests in Energia Global International, Ltd.

     4.4  Payment of Material Obligations.  Guarantor shall, and shall cause
          -------------------------------
each Significant Subsidiary to, pay all its material obligations, howsoever
arising, as and when due and payable, except (a) such as may be contested in
good faith or as to which a bona fide dispute may exist; provided that adequate
                                                         --------
reserves have been established in accordance with GAAP, and (b) trade payables
which shall be paid in the ordinary course of business.

     4.5  Taxes.  Guarantor shall, and shall cause each Significant Subsidiary
          -----
to, file all tax returns and pay, or cause to be paid, as and when due and prior
to delinquency, all taxes, assessments and governmental charges of any kind that
may at any time be lawfully assessed or levied against or with respect to it;
provided that Guarantor or any Significant Subsidiary may contest in good faith
--------
any such taxes, assessments and other charges and, in such event, may permit the
taxes, assessments or other charges so contested to remain unpaid during any
period, including appeals, when such Person is in good faith contesting the
same, so long as (a) adequate reserves have been established in accordance with
GAAP, (b) enforcement of the contested tax, assessment or other charge is
effectively stayed for the entire duration of such contest if such enforcement
could reasonably be expected to have a Material Adverse Effect on Guarantor, and
(c) any tax, assessment or other charge determined to be due, together with any
interest or penalties thereon, is promptly paid as required after final
resolution of such contest.

     4.6  Maintenance of Property, Insurance. Guarantor shall, and shall cause
          ----------------------------------
each Significant Subsidiary to, (a) keep all property useful and necessary in
its business in good working order and condition except where the failure to so
maintain could not reasonably be expected to have a Material Adverse Effect on
Guarantor, (b) maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such
risks as are in accordance with normal industry practice, or make provisions
reasonably satisfactory to Administrative Agent for self-insurance, and (c)
furnish to Administrative Agent, upon written request, full information as to
the insurance carried.

     4.7  Compliance with Laws, Instruments, Etc. Guarantor shall, and shall
          --------------------------------------
cause each Significant Subsidiary to, promptly comply, or cause compliance, with
all Governmental Rules,

                                       15
<PAGE>

except where the failure to comply could not reasonably be expected to have a
Material Adverse Effect on Guarantor, including Governmental Rules relating to
pollution control, environmental protection, equal employment opportunity or
employee benefit plans, ERISA Plans and employee safety.

     4.8  No Change in Business. Guarantor shall maintain a substantial part of
          ---------------------
its business in the power industry and businesses reasonably related thereto and
Guarantor shall cause each Significant Subsidiary to maintain as a substantial
part of its business the general type of business now conducted by such
Significant Subsidiary.

     4.9  Financial Statements.  Unless Administrative Agent otherwise consents,
          --------------------
deliver or cause to be delivered to Administrative Agent, in form and detail
reasonably satisfactory to Administrative Agent:

          (a)  As soon as practicable and in any event within 60 days after the
end of the first, second and third quarterly accounting periods of its fiscal
year, an unaudited consolidated balance sheet of Guarantor and its consolidated
subsidiaries as of the last day of such quarterly period and the related
statements of income, cash flow, and partners' capital (where applicable) for
such quarterly period and (in the case of second and third quarterly periods)
for the portion of the fiscal year ending with the last day of such quarterly
period, setting forth in each case in comparative form corresponding unaudited
figures from the preceding fiscal year; and

          (b)  As soon as practicable and in any event within 120 days after the
close of each applicable fiscal year, audited consolidated financial statements
of Guarantor and its consolidated subsidiaries. Such financial statements shall
include a statement of equity, a balance sheet as of the close of such year, an
income and expense statement, reconciliation of capital accounts and a statement
of cash flow, all prepared in accordance with GAAP, certified by an independent
certified public accountant selected by Guarantor. Such certificate shall not be
qualified or limited because of restricted or limited examination by such
accountant of any material portion of the records of Guarantor.

          (c)  Each time the financial statements are delivered under Sections
4.9(a) and (b), deliver, along with such financial statements, a certificate
signed by a Responsible Officer of Guarantor (i) setting forth reasonably
detailed calculations demonstrating compliance with Sections 4.12(a) and (b) and
including a schedule describing all Contingent Obligations of Guarantor, and
(ii) certifying that (A) such Responsible Officer has made or caused to be made
a review of the transactions and financial condition of Guarantor during the
relevant fiscal period and that, to such Responsible Officer's knowledge,
Guarantor is in compliance with all applicable material provisions of each
Credit Document to which Guarantor is a party or, if such is not the case,
stating the nature of such non-compliance and the corrective actions which
Guarantor has taken or proposes to take with respect thereto, and (B) such
financial statements are true and correct in all material respects and that no
material adverse change in the consolidated assets, liabilities, operations, or
financial condition of Guarantor has occurred since the date of the immediately
preceding financial statements provided to Administrative Agent or, if a
material adverse change has occurred, the nature of such change.

                                       16
<PAGE>

           (d)  As long as Guarantor is required or permitted to file reports
under the Securities Exchange Act of 1934, as amended, a copy of its report on
Form 10-K shall satisfy the requirements of Section 4.9(a) and a copy of
Guarantor's report on Form 10-Q shall satisfy the requirements of Section
4.9(b).

     4.10  Notices.  Guarantor shall promptly, upon acquiring notice or giving
           -------
notice, as the case may be, or obtaining knowledge thereof, deliver written
notice to Administrative Agent of:

           (a)  Any litigation pending or threatened in writing against
Guarantor or any Significant Subsidiary involving claims against Guarantor or
such Significant Subsidiary that could reasonably be expected to have a Material
Adverse Effect on Guarantor, such notice to include copies of all papers filed
in such litigation and to be given monthly if any such papers have been filed
since the last notice given;

           (b)  Any dispute or disputes which may exist between Guarantor or any
Significant Subsidiary and any Governmental Authority and which involve (i)
claims against Guarantor or such Significant Subsidiary that could reasonably be
expected to have a Material Adverse Effect on Guarantor, (ii) injunctive or
declaratory relief that could reasonably be expected to have a Material Adverse
Effect on Guarantor, (iii) revocation or material modification or the like of
any applicable material permit or imposition of additional material conditions
with respect thereto, or (iv) any liens for any material amount of taxes due but
not paid;

           (c)  Any default under this Guaranty or under any other agreement
with respect to any Indebtedness of Guarantor outstanding in an amount equal to
or in excess of $50,000,000;

           (d)  Guarantor being placed on watch or review for possible rating
down-grade by S&P or Moody's;

           (e)  Any negative change, from the date hereof, from the rating given
to Guarantor's long-term senior unsecured debt by either S&P or Moody's; and

           (f)  Any event or circumstance which could reasonably be expected to
have a Material Adverse Effect on Guarantor.

     4.11  Maintenance of Ratings. If Guarantor's long term unsecured
           ----------------------
indebtedness is not rated at least (a) BBB- by S&P and Baa2 by Moody's or (b)
BBB by S&P and Baa3 by Moody's, Guarantor shall, within 15 days following such
downgrade, (x) cause the Equity Bridge LC Issuer to issue the Equity Bridge
Letter of Credit, naming Administrative Agent, on behalf of the Bridge Banks, as
beneficiary and (y) in the event the Equity Bridge Letter of Credit shall have
been issued in accordance with clause (x) of this Section 4.11, secure a
replacement Equity Bridge Letter of Credit within 15 days after Equity Bridge LC
Issuer's long term unsecured indebtedness is rated below A by S&P or below A2 by
Moody's, or the rating on such indebtedness is removed altogether.

                                       17
<PAGE>

     4.12  Financial Covenants. Guarantor shall comply with the following
           -------------------
covenants as of the last day of each fiscal quarter:

           (a)  The ratio of Total Debt to Capitalization, for the fiscal
quarter then ended, shall be less than or equal to 0.65 to 1.00; and

           (b)  The ratio of Consolidated EBITDA to Consolidated Adjusted
Interest Expense, for the twelve months then ended, shall equal or exceed 3.0 to
1.0.

                                  ARTICLE V.
                               EVENTS OF DEFAULT

     5.1  Events of Default. The occurrence of any of the following events shall
          -----------------
constitute an event of default (an "Event of Default") hereunder:
                                    ----------------
          (a)  Debt Cross Default. (i) Guarantor or any Significant Subsidiary
shall default for a period beyond any applicable grace period in the payment of
any principal, interest or other amount due under any agreement involving the
borrowing of money or the advance of credit (other than trade payables) and the
outstanding amount or amounts payable under all such agreements equals or
exceeds $50,000,000 or (ii) an event of default shall have occurred and be
continuing under an agreement, or related agreements, under which Guarantor or
any Significant Subsidiary has outstanding indebtedness for borrowed money of
$10,000,000 or more and, in the case of this clause (ii), such debt has been
accelerated by the holder of such debt, or the holder of such debt has attempted
to accelerate but such acceleration was prevented by applicable Governmental
Rule.

          (b)  Bankruptcy; Insolvency. Guarantor or any Significant Subsidiary
shall become subject to a Bankruptcy Event.

          (c)  Misstatements; Omissions. Any representation or warranty of
Guarantor set forth in this Guaranty shall be untrue or misleading in any
material respect as of the time made and such untrue or misleading
representation or warranty (i) is having or could reasonably be expected to
result in a Material Adverse Effect on Guarantor and (ii) shall remain
unremedied by Guarantor for a period of 30 days after the earlier of the date
that Guarantor becomes aware thereof or receives written notice thereof from
Administrative Agent.

          (d) Breach of Terms of Agreement. Guarantor shall fail to perform or
observe any of the covenants set forth in this Guaranty and (except with respect
to any covenants set forth in Section 4.1 (with respect to its obligation to
maintain its existence), 4.3, 4.8, 4.11 or 4.12) such failure shall continue
unremedied for 30 days after Guarantor becomes aware thereof or receives written
notice with respect thereto from Administrative Agent.

          (e)  Judgments. A final judgment or judgments shall be entered against
Guarantor or any Significant Subsidiary in the amount of $50,000,000 or more
(net of amounts covered by insurance) individually or in the aggregate (other
than (i) a judgment which is fully discharged within 30 days after its entry, or
(ii) a judgment, the execution of which is effectively stayed within 30 days
after its entry but only for 30 days after the date on which such stay is

                                       18
<PAGE>

terminated or expires) or, in the case of injunctive relief, which if left
unstayed could reasonably be expected to have a Material Adverse Effect on
Guarantor.

          (f)  Change in Control. Without the consent of the Majority Bridge
Banks, Guarantor shall cease to directly or indirectly own and control at least
80% of (i) the economic interests and (ii) the voting interests (whether by
committee, contract or otherwise) in TPS.

                                  ARTICLE VI
                                 MISCELLANEOUS.

     6.1  Successions or Assignments.
          --------------------------

     (a)  This Guaranty shall inure to the benefit of the successors or assigns
of the Bridge Banks who shall have, to the extent of their interest, the rights
of the Bridge Banks hereunder.

     (b)  This Guaranty is binding upon Guarantor and its successors or
permitted assigns; provided that Guarantor is not entitled to assign its
                   --------
obligations hereunder to any other person without the prior written consent of
the Bridge Banks and any purported assignment in violation of this provision
shall be void.

     6.2  Waivers.
          -------

          (a)  No delay on the part of Administrative Agent or the Bridge Banks
in exercising any of their rights (including those hereunder) and no partial or
single exercise thereof and no action or non-action by Administrative Agent or
the Bridge Banks, with or without notice to Guarantor or anyone else, shall
constitute a waiver of any rights or shall affect or impair this Guaranty.

          (b)  ADMINISTRATIVE AGENT AND GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS GUARANTY OR ANY OTHER BRIDGE LOAN DOCUMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE
BRIDGE BANKS, ADMINISTRATIVE AGENT, BORROWER OR GUARANTOR. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE BRIDGE BANKS AND ADMINISTRATIVE AGENT TO ACCEPT THIS
GUARANTY AND ENTER INTO THE BRIDGE LOAN AGREEMENT.

     6.3  Interpretation. The section headings in this Guaranty are for the
          --------------
convenience of reference only and shall not affect the meaning or construction
of any provision hereof.

     6.4  Remedies Cumulative. Each and every right and remedy of Administrative
          -------------------
Agent hereunder shall be cumulative and shall be in addition to any other right
or remedy given hereunder or under any other Bridge Loan Document, or now or
hereafter existing at law or in equity.

                                       19
<PAGE>

     6.5  Severability. Any provision of this Guaranty that may be determined by
          ------------
competent authority to be prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

     6.6  Amendments. This Guaranty may be amended, waived or otherwise modified
          ----------
only with the written consent of the parties hereto.

     6.7  Jurisdiction.  Administrative Agent and Guarantor agree that any legal
          ------------
action or proceeding by or against Guarantor or with respect to or arising out
of this Guaranty or any other Bridge Loan Document may be brought in or removed
to the courts of the State of New York, in and for the County of New York, or of
the United States of America for the Southern District of New York, as
Administrative Agent may elect.  By execution and delivery of this Guaranty,
Administrative Agent and Guarantor accept, for themselves and in respect of
their property, generally and unconditionally, the jurisdiction of the aforesaid
courts.  Administrative Agent and Guarantor irrevocably consent to the service
of process out of any of the aforementioned courts in any manner permitted by
law.  Any such process or summons in connection with any such action or
proceeding may also be served by mailing a copy thereof by certified or
registered mail, or any substantially similar form of mail, addressed to
Guarantor as provided for notices hereunder.  Nothing herein shall affect the
right of Administrative Agent to bring legal action or proceedings in any other
competent jurisdiction.  Notwithstanding the foregoing, service of process shall
not be deemed served or mailed to Administrative Agent or the Bridge Banks until
a copy of all matters to be served has been mailed to Latham & Watkins, 701 B
Street, Suite 2100, San Diego, California 92101, Attn: Andrew Singer or such
other Person as Administrative Agent or the Bridge Banks may hereafter designate
by notice making specific reference to this Section 6.7 given pursuant to
Section 6.11.  Administrative Agent and Guarantor further agree that the
aforesaid courts of the State of New York and of the United States of America
shall have exclusive jurisdiction with respect to any claim or counterclaim of
Guarantor based upon the assertion that the rate of interest charged by the
Bridge Banks on or under this Guaranty and/or the other Bridge Loan Documents is
usurious.  Administrative Agent and Guarantor hereby waive any right to stay or
dismiss any action or proceeding under or in connection with any or all of the
Project, this Guaranty or any other Bridge Loan Document brought before the
foregoing courts on the basis of forum non-conveniens.

     6.8  Governing Law.  This Guaranty and the rights and obligations of
          -------------
Administrative Agent and of Guarantor shall be governed by and construed in
accordance with the law of the State of New York without reference to principles
of conflicts of laws (other than Section 5-1401 and Section 5-1402 of the New
York General Obligations Law).

     6.9  Integration of Terms. This Guaranty contains the entire agreement
          --------------------
between Guarantor and Administrative Agent relating to the subject matter hereof
and supersedes all oral statements and prior writings with respect hereto.

                                       20
<PAGE>

     6.10  Consent. Guarantor hereby acknowledges receiving copies of the Bridge
           -------
Loan Agreement and the other Bridge Loan Documents, and consents to the terms
and provisions of each thereof.

     6.11  Notices.
           -------

           (a)   All notices in connection with this Guaranty shall be given by
notice in writing hand-delivered or sent by facsimile transmission or by
electronic mail or by first class or certified mail return-receipt requested
(airmail, if overseas), postage prepaid. All such notices shall be sent to the
appropriate telecopier number or address, as the case may be, set forth below or
to such other number or address as shall have been subsequently specified by
written notice to the other party, and shall be sent with copies, if any, as
indicated below. All such notices shall be effective upon receipt.

If to Guarantor:        TECO Energy, Inc.
                        702 North Franklin Street
                        Tampa, FL 33602
                        Attention: Corporate Secretary
                        Telephone No.: (813) 228-1808
                        Telecopy No.:  (813) 228-1328

If to Administrative    Citibank, N.A.
Agent:                  388 Greenwich Street
                        20th Floor
                        New York, NY 10013
                        Attention: Lorraine Frankel
                        Tel: (212) 816-0988
                        Fax: (212) 816-0584

With a copy to:         Citibank N.A.
                        2 Penns Way, Suite 2000
                        New Castle, Delaware 19720
                        Attention: Janet Wallace
                        Tel: (302) 894-6029
                        Fax: (302) 894-6120

     6.12  Collection Expenses. Without regard to any limitation set forth in
           -------------------
this Guaranty, if Administrative Agent is required to pursue any remedy against
Guarantor hereunder, Guarantor shall pay to Administrative Agent within 30 days
after demand and delivery of reasonable backup documentation, all reasonable
attorneys' fees and all other costs and expenses incurred by Administrative
Agent in enforcing this Guaranty.

     6.13  Reinstatement. This Guaranty shall continue to be effective or be
           -------------
automatically reinstated, as the case may be, and the Guaranty Limit shall be
increased to the extent previously reduced pursuant to clause (b) of the
definition of "Guaranty Limit", if and to the extent that for

                                       21
<PAGE>

any reason any payment by or on behalf of Borrower in respect of the Guaranteed
Obligations is rescinded or otherwise restored to Borrower, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise, all as if such
payment had not been made, and Guarantor agrees that it will indemnify
Administrative Agent, the Bridge Banks and their respective successors and
assigns, on demand for all reasonable costs and expenses (including reasonable
fees of counsel) incurred by Administrative Agent, the Bridge Banks and their
respective successors and assigns in connection with any such rescission or
restoration.

     6.14  Counterparts. The Guaranty may be executed in one or more duplicate
           ------------
counterparts, and when executed and delivered by all of the parties listed below
shall constitute a single binding agreement.

     6.15  Non-Recourse. Recourse to Guarantor under this Guaranty shall be
           ------------
limited to the extent provided in this Agreement and in Article 7 of the Bridge
Loan Agreement.

     6.16  Limitation on Liability. Recourse against Administrative Agent, the
           -----------------------
Bridge Banks or any of their Affiliates, directors, employees, attorneys or
agents under this Guaranty shall be limited to the extent provided in Section
9.12 of the Bridge Loan Agreement, which Section 9.12 is incorporated by
reference herein, mutatis mutandis.

6.17  Further Assurances.  Guarantor shall execute and deliver any such further
      ------------------
instruments and shall take such further actions as Administrative Agent may at
any time or times reasonably request in order to carry out the provisions and
intent of this Guaranty.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       22
<PAGE>

          IN WITNESS WHEREOF, intending to be legally bound, Guarantor has
caused this Guaranty to be duly executed and delivered as of the day and year
first above written.

                                           TECO ENERGY, INC.,
                                           as Guarantor

                                           By:________________________
                                              Name:
                                              Title:

                                           Accepted:

                                           CITIBANK, N.A.,
                                           as Administrative Agent under the
                                           Gila River Bridge Loan Agreement

                                           By:________________________
                                              Name:
                                              Title:

                   [TEI EQUITY BRIDGE GUARANTY (GILA RIVER)]
<PAGE>

                                  SCHEDULE 4.3
                                  ------------

1.   First Mortgage Indenture of Tampa Electric Company (First Mortgage on Tampa
Electric assets).SAN Holdings 10-Q Exhibit 10.1 HTML

CREDIT AND
SECURITY AGREEMENT

Dated as of May 31, 2001

        STORAGE
AREA NETWORKS,  INC., a Colorado  corporation (the "Borrower"),  and WELLS FARGO
BUSINESS CREDIT, INC., a Minnesota  corporation (the "Lender"),  hereby agree as
follows:

ARTICLE I.

Definitions:

Section 1.1
   Definitions. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires, the
terms defined in this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular; and all accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with GAAP.

        “Accounts”
means all of the Borrower’s accounts, as such term is defined in the UCC,
including without limitation the aggregate unpaid obligations of customers and
other account debtors to the Borrower arising out of the sale or lease of goods
or rendition of services by the Borrower on an open account or deferred payment
basis. 

        “Advance
” means a Revolving Advance.

        “Affiliate”
or “Affiliates” means SAN Holdings, Inc. and any other Person
controlled by, controlling or under common control with the Borrower, including
(without limitation) any Subsidiary of the Borrower. For purposes of this
definition, “control,” when used with respect to any specified Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise. 

        “Agreement”
means this Credit and Security Agreement,  as amended,  supplemented or restated
from time to time.

        “Availability”
means the difference of (i) the Borrowing Base and (ii) the
outstanding principal balance of the Revolving Note. 

        “Banking
Day” means a day other than a Saturday, Sunday or other day on which
banks are generally not open for business in Minneapolis, Minnesota and Denver,
Colorado. 

        “Book
Net   Worth”   means   the   aggregate   of  the   common   and   preferred
stockholders‘  equity  in  the  Borrower,  determined  in  accordance  with
GAAP.

        “Borrowing
Base”  means,  at any time and  subject to change  from time to time in the
Lender‘s sole discretion, the lesser of:

        (a)
the Maximum Line; or

        (b)
the sum of:

                (i)
80% of Eligible Accounts, plus:

                (ii)
the  lesser of (A) 80% of  Accounts  owed by the U.S.  Government  which are not
Eligible Accounts because they are not secured by an assignment of claims to the
Lender or (B) $300,000, less:

                (iii)
the Rebate Reserve.:

        “Capital
Expenditures” for a period means any expenditure of money for the
lease, purchase or other acquisition of any capital asset, or for the lease of
any other asset whether payable currently or in the future, and whether or not
capitalized on the Borrower’s balance sheet. 

        “Collateral”
means all of the Borrower’s assets including but not limited to all of the
Borrower’s Equipment, General Intangibles, Inventory, Receivables,
Investment Property, all sums on deposit in any Collateral Account, and any
items in any Lockbox, all of Borrower’s instruments and documents (as each
such term is defined in the UCC), commercial tort claims, commercial deposit
accounts, letters of credit and health-care insurance receivables; together with
(i) all substitutions and replacements for and products of any of the
foregoing; (ii) proceeds of any and all of the foregoing; (iii) in the
case of all tangible goods, all accessions; (iv) all accessories,
attachments, parts, equipment and repairs now or hereafter attached or affixed
to or used in connection with any tangible goods; and (v) all warehouse
receipts, bills of lading and other documents of title now or hereafter covering
such goods. 

        “Collateral
Account” means the Lender Account.

        “Commitment”
means  the   Lender‘s   commitment   to  make   Advances   to  or  for  the
Borrower‘s account pursuant to Article II.

        “Credit
Facility” means the credit facility being made available to the
Borrower by the Lender pursuant to Article II. 

        “Debt”
of any Person means all items of indebtedness or liability which in accordance
with GAAP would be included in determining total liabilities as shown on the
liabilities side of a balance sheet of that Person as at the date as of which
Debt is to be determined. For purposes of determining a Person’s aggregate
Debt at any time, “Debt” shall also include the aggregate payments
required to be made by such Person at any time under any lease that is
considered a capitalized lease under GAAP. 

        “Default”
means an event  that,  with  giving of notice or passage of time or both,  would
constitute an Event of Default.

        “Default
Period” means any period of time beginning on the first day of any
month during which a Default or Event of Default has occurred and ending on the
date the Lender notifies the Borrower in writing that such Default or Event of
Default has been cured or waived. 

2

        “Default
Rate” means, with respect to the Revolving Advances, an annual rate
equal to three percent (3%) over the Revolving Floating Rate, which rate shall
change when and as the Revolving Floating Rate changes. 

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

        “Eligible
Accounts” means all unpaid Accounts, net of any credits, except the
following shall not in any event be deemed Eligible Accounts: 

                (i)
That   portion  of   Accounts   unpaid  90  days  or  more  after  the   invoice
date;

                (ii)
That  portion of Accounts  that is disputed or subject to a claim of offset or a
contra account;

                (iii)
That  portion  of  Accounts  not yet  earned by the final  delivery  of goods or
rendition   of   services,    as   applicable,    by   the   Borrower   to   the
customer;

                (iv)
Accounts owed by any unit of government,  whether foreign or domestic (provided,
however,  that there  shall be included in  Eligible  Accounts  that  portion of
Accounts  owed by such units of  government  for which the Borrower has provided
evidence  satisfactory  to the Lender  that (A) the Lender has a first  priority
perfected  security interest and (B) such Accounts may be enforced by the Lender
directly against such unit of government under all applicable laws);

                (v)
Accounts owed by an account debtor  located  outside the United States or Canada
which  are not (A)  backed  by a bank  letter of  credit  naming  the  Lender as
beneficiary  or assigned  to the Lender,  in the  Lender‘s  possession  and
acceptable to the Lender in all respects, in its sole discretion, or (B) covered
by a foreign  receivables  insurance policy acceptable to the Lender in its sole
discretion;

                (vi)
Accounts owed by an account debtor that is insolvent,  the subject of bankruptcy
proceedings or has gone out of business;

                (vii)
Accounts owed by a shareholder,  Subsidiary,  Affiliate,  officer or employee of
the Borrower;

                (viii)
Accounts not subject to a duly perfected  security interest in the Lender‘s
favor or which are subject to any lien,  security  interest or claim in favor of
any Person other than the Lender  including  without  limitation  any payment or
performance bond;

                (ix)
That  portion  of  Accounts  that has been  restructured,  extended,  amended or
modified;

                (x)
That portion of Accounts that constitutes advertising,  finance charges, service
charges or sales or excise taxes;

3

                (xi)
Accounts owed by an account debtor, regardless of whether otherwise eligible, if
10% or more  of the  total  amount  due  under  Accounts  from  such  debtor  is
ineligible under clauses (i), (ii) or (ix) above;

                (xii)
That portion of the aggregate  Accounts of a single customer that exceeds 15% of
all Accounts of the Borrower;

                (xiii)
Accounts owed by account debtors,  including without  limitation Storage Tek and
United Space  Alliance,  pursuant to a  maintenance  contract or similar type of
agreement; and

                (xiv)
Accounts, or portions thereof,  otherwise deemed ineligible by the Lender in its
sole discretion.

        “Environmental
Law” has the meaning specified in Section 5.12.

        “Equipment”
means all of the Borrower’s equipment, as such term is defined in the UCC,
whether now owned or hereafter acquired, including but not limited to all
present and future machinery, vehicles, furniture, fixtures, manufacturing
equipment, shop equipment, office and recordkeeping equipment, parts, tools,
supplies, and including specifically (without limitation) the goods described in
any equipment schedule or list herewith or hereafter furnished to the Lender by
the Borrower. 

        “Event
of Default” has the meaning specified in Section 8.1.

        “Funding
Date” has the meaning given in Section 2.1.

        “GAAP”
means generally accepted accounting principles, applied on a basis consistent
with the accounting practices applied in the financial statements described in
Section 5.5. 

        “General
Intangibles” means all of the Borrower’s general intangibles, as
such term is defined in the UCC, whether now owned or hereafter acquired,
including (without limitation) all present and future patents, patent
applications, copyrights, trademarks, trade names, trade secrets, customer or
supplier lists and contracts, manuals, operating instructions, permits,
franchises, the right to use the Borrower’s name, and the goodwill of the
Borrower’s business. 

        “Guarantor”
means SAN Holdings, Inc.

        “Hazardous
Substance” has the meaning given in Section 5.12.

        “Inventory”
means all of the Borrower’s inventory, as such term is defined in the UCC,
whether now owned or hereafter acquired, whether consisting of whole goods,
spare parts or components, supplies or materials, whether acquired, held or
furnished for sale, for lease or under service contracts or for manufacture or
processing, and wherever located. 

        “Investment
Property” means all of the Borrower’s investment property, as such
term is defined in the UCC, whether now owned or hereafter acquired, including
but not limited to all securities, security entitlements, securities accounts,
commodity contracts, commodity accounts, stocks, bonds, mutual fund shares,
money market shares and U.S. Government securities. 

4

        “Lender
Account” has the meaning given in the Lockbox Agreement.

        “Loan
Documents” means this Agreement, the Note and the Security Documents.

        “Lockbox”
has the meaning given in the Lockbox Agreement.

        “Lockbox
Agreement” means the Lockbox and Collection Agreement by and among the
Borrower, Wells Fargo, Regulus West LLC and the Lender, of even date
herewith. 

        “Maturity
Date” means May 31, 2004.

        “Maximum
Line” means $2,500,000, unless said amount is reduced pursuant to
Section 2.6, in which event it means the amount to which said amount is
reduced. 

        “Minimum
Interest Charge” has the meaning given in Section 2.2(b).

        “Net
Income” means fiscal year-to-date before-tax net income from continuing
operations, and excluding any extraordinary gains, as determined in accordance
with GAAP. 

        “Note”
means the Revolving Note.

        “Obligations”
means the Note and each and every other debt, liability and obligation of every
type and description which the Borrower may now or at any time hereafter owe to
the Lender, whether such debt, liability or obligation now exists or is
hereafter created or incurred, whether it arises in a transaction involving the
Lender alone or in a transaction involving other creditors of the Borrower, and
whether it is direct or indirect, due or to become due, absolute or contingent,
primary or secondary, liquidated or unliquidated, or sole, joint, several or
joint and several, and including specifically, but not limited to, all
indebtedness of the Borrower arising under this Agreement, the Note or any other
loan or credit agreement or guaranty between the Borrower and the Lender,
whether now in effect or hereafter entered into. 

        “Permitted
Lien” has the meaning given in Section 7.1.

        “Person”
means any individual, corporation, partnership, joint venture, limited liability
company, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

        “Plan”
means an employee benefit plan or other plan maintained for the  Borrower‘s
employees and covered by Title IV of ERISA.

        “Premises”
means all premises where the Borrower conducts its business and has any rights
of possession, including (without limitation) the premises legally described in
Exhibit C attached hereto. 

5

        “Prime
Rate” means the rate of interest publicly announced from time to time
by Wells Fargo Bank, N.A.-San Francisco as its “prime rate” or, if
such bank ceases to announce a rate so designated, any similar successor rate
designated by the Lender. 

        “Rebate
Reserve” means $25,000, which amount may be adjusted quarterly at the
sole discretion of the Lender based on the estimated amount of rebate payments
payable by Borrower to the U.S. General Services Administration and the U.S.
Defense Logistics Agency. 

        “Receivables”
means each and every right of the Borrower to the payment of money, whether such
right to payment now exists or hereafter arises, whether such right to payment
arises out of a sale, lease or other disposition of goods or other property, out
of a rendering of services, out of a loan, out of the overpayment of taxes or
other liabilities, or otherwise arises under any contract or agreement, whether
such right to payment is created, generated or earned by the Borrower or by some
other person who subsequently transfers such person’s interest to the
Borrower, whether such right to payment is or is not already earned by
performance, and howsoever such right to payment may be evidenced, together with
all other rights and interests (including all liens and security interests)
which the Borrower may at any time have by law or agreement against any account
debtor or other obligor obligated to make any such payment or against any
property of such account debtor or other obligor; all including but not limited
to all present and future accounts, contract rights, loans and obligations
receivable, chattel papers, bonds, notes and other debt instruments, tax refunds
and rights to payment in the nature of general intangibles. 

        “Reportable
Event” shall have the meaning assigned to that term in Title IV of
ERISA. 

        “Revolving
Advance” has the meaning given in Section 2.1.

        “Revolving
Floating Rate” means an annual rate equal to the sum of the Prime Rate
plus three percent (3.0%), which annual rate shall change when and as the Prime
Rate changes. 

        “Revolving
Note” means the Borrower’s revolving promissory note, payable to
the order of the Lender in substantially the form of Exhibit A hereto and any
note or notes issued in substitution therefor, as the same may hereafter be
amended, supplemented or restated from time to time. 

        “Security
Documents” means this Agreement, the Lockbox Agreement, and any other
document delivered to the Lender from time to time to secure the Obligations, as
the same may hereafter be amended, supplemented or restated from time to time. 

        “Security
Interest”" has the meaning given in Section 3.1.

        “Subsidiary”
means any corporation of which more than 50% of the outstanding shares of
capital stock having general voting power under ordinary circumstances to elect
a majority of the board of directors of such corporation, irrespective of
whether or not at the time stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency, is at the
time directly or indirectly owned by the Borrower, by the Borrower and one or
more other Subsidiaries, or by one or more other Subsidiaries. 

6

        “Termination
Date” means the earliest of (i) the Maturity Date, (ii) the date the
Borrower terminates the Credit Facility, or (iii) the date the Lender demands
payment of the Obligations after an Event of Default pursuant to
Section 8.2. 

        “UCC”
means the Uniform Commercial Code as in effect from time to time in the state
designated in Section 9.13 as the state whose laws shall govern this
Agreement, or in any other state whose laws are held to govern this Agreement or
any portion hereof. Borrower and Lender agree that, with respect to any term
used herein that is defined in either (i) Article 9 of the Uniform Commercial
Code as in effect on the date hereof in the state designated in
Section 9.13 as the state whose laws shall govern this Agreement, or in any
other state whose laws are held to govern this Agreement or any portion hereof
or (ii) Article 9 of the Uniform Commercial Code as in effect from time to time
hereafter in the state designated in Section 9.13 as the state whose laws
shall govern this Agreement, or in any other state whose laws are held to govern
this Agreement or any portion hereof, the meaning to be ascribed thereto with
respect to any particular item of property shall be that under the more
encompassing of the two definitions. 

        “Wells
Fargo” means Wells Fargo Bank, N.A.

Section 1.2    Cross
References. All references in this Agreement to Articles, Sections and
subsections, shall be to Articles, Sections and subsections of this Agreement
unless otherwise explicitly specified. 

ARTICLE II.

Amount and Terms of the Credit Facility

Section 2.1    Revolving
Advances. The Lender agrees, on the terms and subject to the conditions
herein set forth, to make advances to the Borrower from time to time from the
date all of the conditions set forth in Section 4.1 are satisfied or waived
in writing by the Lender (the “Funding Date”) to the Termination
Date (the “Revolving Advances”). The Lender shall have no obligation
to make a Revolving Advance if, after giving effect to such requested Revolving
Advance, the sum of the outstanding and unpaid Revolving Advances would exceed
the Borrowing Base. The Borrower’s obligation to pay the Revolving Advances
shall be evidenced by the Revolving Note and shall be secured by the Collateral
as provided in Article III. Within the limits set forth in this
Section 2.1, the Borrower may borrow and reborrow and prepay pursuant to
Section 2.6. The Borrower agrees to comply with the following procedures in
requesting Revolving Advances under this Section 2.1: 

        (a)
The Borrower shall make each request for a Revolving Advance to the Lender
before 11:00 a.m. (Denver time) of the day of the requested Revolving Advance.
Requests may be made in writing or by telephone, specifying the date of the
requested Revolving Advance and the amount thereof. Each request shall be by
(i) any officer of the Borrower named in the Certificate of Authority of
the Borrower, as may be amended from time to time; or (ii) any person
designated as the Borrower’s agent by any such officer of the Borrower in a
writing delivered to the Lender; or (iii) any person whom the Lender
reasonably believes to be such an officer of the Borrower or such a designated
agent. 

7

        (b)
Upon fulfillment of the applicable conditions set forth in Article IV, the
Lender shall disburse the proceeds of the requested Revolving Advance by
crediting the same to the Borrower’s demand deposit account maintained with
Wells Fargo unless the Lender and the Borrower shall agree in writing to another
manner of disbursement. Upon the Lender’s request, the Borrower shall
promptly confirm each telephonic request for an Advance by executing and
delivering an appropriate confirmation certificate to the Lender. The Borrower
shall repay all Advances even if the Lender does not receive such confirmation
and even if the person requesting an Advance was not in fact authorized to do
so. Any request for an Advance, whether written or telephonic, shall be deemed
to be a representation by the Borrower that the conditions set forth in
Section 4.2 have been satisfied as of the time of the request. 

        Section
2.2    Interest; Minimum Interest Charge; Default Interest;
Usury.

        (a)
Revolving Note. Except as set forth in Sections 2.2(b),
2.2(c) and 2.2(e), the outstanding principal balance of the Revolving Note shall
bear interest at the Revolving Floating Rate. Interest accruing on the Revolving
Note shall be due and payable in arrears on the first day of each month. 

        (b)
Minimum Interest Charge. Notwithstanding the interest payable
pursuant to Section 2.2(a), the Borrower shall pay to the Lender interest
of not less than $30,000 per calendar quarter (the “Minimum Interest
Charge”) during the term of this Agreement (provided that the Minimum
Interest Charge for the period beginning on May 31, 2001 and ending upon the
earlier of (i) a satisfactory collateral audit of the Borrower by the Lender or
(ii) July 31, 2001, shall be $2,500 per month), and the Borrower shall pay any
deficiency between the Minimum Interest Charge and the amount of interest
otherwise calculated under Sections 2.2(a) and 2.2(c) on the date and in
the manner provided in Section 2.4. 

        (c)
Default Interest Rate. At any time during any Default
Period, in the Lender’s sole discretion and without waiving any of its
other rights and remedies, the principal of the Advances outstanding from time
to time shall bear interest at the Default Rate, effective for any periods
designated by the Lender from time to time during that Default Period. 

        (d)
Participations. If any Person shall acquire a participation
in the Advances under this Agreement, the Borrower shall be obligated to the
Lender to pay the full amount of all interest calculated under this Agreement,
along with all other fees, charges, and other amounts due under this Agreement,
regardless if such Person elects to accept interest with respect to its
participation at a lower rate than the Revolving Floating Rate or otherwise
elects to accept less than its pro rata share of such fees, charges and other
amounts due under this Agreement. 

        (e)
Usury. In any event no rate change shall be put into effect
which would result in a rate greater than the highest rate permitted by law.
Notwithstanding anything to the contrary contained in any Loan Document, all
agreements which either now are or which shall become agreements between the
Borrower and the Lender are hereby limited so that in no contingency or event
whatsoever shall the total liability for payments in the nature of interest,
additional interest and other charges exceed the applicable limits imposed by
any applicable usury laws. If any payments in the nature of interest, additional
interest and other charges made under any Loan Document are held to be in excess
of the limits imposed by any applicable usury laws, it is agreed that any such
amount held to be in excess shall be considered payment of principal hereunder,
and the indebtedness evidenced hereby shall be reduced by such amount so that
the total liability for payments in the nature of interest, additional interest
and other charges shall not exceed the applicable limits imposed by any
applicable usury laws, in compliance with the desires of the Borrower and the
Lender. This provision shall never be superseded or waived and shall control
every other provision of the Loan Documents and all agreements between the
Borrower and the Lender, or their successors and assigns. 

8

Section 2.3     Fees.

        (a)
Origination Fee. The Borrower hereby agrees to pay the
Lender a fully earned and non-refundable origination fee of $25,000 of which
$12,500 shall be due and payable on June 29, 2001 and $12,500 shall be due and
payable on September 30, 2001. 

        (b)
Unused Line Fee. For the purposes of this
Section 2.3(b), “Unused Amount” means the Maximum Line reduced by
outstanding Revolving Advances. The Borrower agrees to pay to the Lender an
unused line fee at the rate of one quarter of one percent (0.25%) per annum on
the average daily Unused Amount from the date of this Agreement to and including
the Termination Date, due and payable monthly in arrears on the first day of the
month and on the Termination Date. 

        (c)
Audit Fees. The Borrower hereby agrees to pay the Lender,
on demand, audit fees in connection with quarterly audits or inspections
conducted by the Lender of any Collateral or the Borrower’s operations or
business (provided, however, that upon an Event of Default, audits or
inspections may be conducted by the Lender at any time in the Lender’s sole
discretion), at the rates established from time to time by the Lender as its
audit fees (which fees are currently $80 per hour per auditor), together with
all actual out-of-pocket costs and expenses incurred in conducting any such
audit or inspection. 

Section 2.4    Computation
of Interest and Fees; When Interest Due and Payable. Interest accruing on
the outstanding principal balance of the Advances and fees hereunder outstanding
from time to time shall be computed on the basis of actual number of days
elapsed in a year of 360 days. Interest shall be payable in arrears on the first
day of each month and on the Termination Date. 

Section 2.5    Capital
Adequacy. If any Related Lender determines at any time that its Return has
been reduced as a result of any Rule Change, such Related Lender may require the
Borrower to pay it the amount necessary to restore its Return to what it would
have been had there been no Rule Change. For purposes of this Section 2.5: 

        (a)
“Capital Adequacy Rule” means any law, rule,
regulation, guideline, directive, requirement or request regarding capital
adequacy, or the interpretation or administration thereof by any governmental or
regulatory authority, central bank or comparable agency, whether or not having
the force of law, that applies to any Related Lender. Such rules include rules
requiring financial institutions to maintain total capital in amounts based upon
percentages of outstanding loans, binding loan commitments and letters of
credit. 

9

        (b)
“Return,” for any period, means the return as
determined by such Related Lender on the Advances based upon its total capital
requirements and a reasonable attribution formula that takes account of the
Capital Adequacy Rules then in effect. Return may be calculated for each
calendar quarter and for the shorter period between the end of a calendar
quarter and the date of termination in whole of this Agreement. 

        (c)
“Rule Change” means any change in any Capital
Adequacy Rule occurring after the date of this Agreement, but the term does not
include any changes in applicable requirements that at the date of this
Agreement are scheduled to take place under the existing Capital Adequacy Rules
or any increases in the capital that any Related Lender is required to maintain
to the extent that the increases are required due to a regulatory
authority’s assessment of the financial condition of such Related Lender. 

        (d)
“Related Lender” includes (but is not limited to)
the Lender, any parent corporation of the Lender and any assignee of any
interest of the Lender hereunder and any participant in the loans made
hereunder. 

        Certificates
of any Related Lender sent to the Borrower from time to time claiming
compensation under this Section 2.5, stating the reason therefor and
setting forth in reasonable detail the calculation of the additional amount or
amounts to be paid to the Related Lender hereunder to restore its Return shall
be conclusive absent manifest error. In determining such amounts, the Related
Lender may use any reasonable averaging and attribution methods. 

Section 2.6    
Reduction of the Maximum Line; Termination of the Credit Facility by the
Borrower. Except as otherwise provided herein, the Borrower may prepay the
Revolving Advances in whole at any time or from time to time in part. The
Borrower may terminate the Credit Facility or reduce the Maximum Line at any
time if it (i) gives the Lender at least 30 days’ prior written notice
and (ii) pays the Lender the termination or line reduction fees in
accordance with Section 2.7. Any reduction in the Maximum Line must be in
an amount not less than $100,000 or an integral multiple thereof. If the
Borrower reduces the Maximum Line to zero, all Obligations shall be immediately
due and payable. Upon termination of the Credit Facility and payment and
performance of all Obligations, the Lender shall release or terminate the
Security Interest and the Security Documents to which the Borrower is entitled
by law. 

Section 2.7
   Termination and Line Reduction Fees; Waiver of Termination
and Line Reduction Fees.

        (a)
Termination and Line Reduction Fees. If the Credit Facility
is terminated for any reason as of a date other than the Maturity Date, or the
Borrower reduces the Maximum Line, the Borrower shall pay to the Lender a fee in
an amount equal to a percentage of the Maximum Line (or the reduction, as the
case may be) as follows: (i) three percent (3.0%) if the termination or
reduction occurs on or before the first anniversary of the Funding Date;
(ii) two percent (2.0%) if the termination or reduction occurs after the
first anniversary of the Funding Date but on or before the second anniversary of
the Funding Date; and (iii) one percent (1.0%) if the termination or
reduction occurs after the second anniversary of the Funding Date. 

10

        (b)
Waiver of Termination and Line Reduction Fees. The Borrower
will not be required to pay the termination and line reduction fees otherwise
due under this Section 2.7 if such termination or line reduction is made
because of refinancing of the Borrower by an affiliate of the Lender. 

Section 2.8    
Mandatory Prepayment. Without notice or demand, if the outstanding
principal balance of the Revolving Advances shall at any time exceed the
Borrowing Base, the Borrower shall immediately prepay the Revolving Advances to
the extent necessary to eliminate such excess. Any payment received by the
Lender under this Section 2.8 or under Section 2.6 may be applied to
the Obligations, in such order and in such amounts as the Lender, in its
discretion, may from time to time determine. 

Section 2.9    
Payment. All payments to the Lender shall be made in immediately
available funds and shall be applied to the Obligations two (2) Banking Days
after receipt by the Lender. The Lender may hold all payments not constituting
immediately available funds for three (3) additional days before applying them
to the Obligations. Notwithstanding anything in Section 2.1, the Borrower
hereby authorizes the Lender, in its discretion at any time or from time to time
without the Borrower’s request and even if the conditions set forth in
Section 4.2 would not be satisfied, to make a Revolving Advance in an
amount equal to the portion of the Obligations from time to time due and
payable. 

Section 2.10    
Payment on Non-Banking Days. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Banking Day, such payment may
be made on the next succeeding Banking Day, and such extension of time shall in
such case be included in the computation of interest on the Advances or the fees
hereunder, as the case may be. 

Section 2.11
   Use of Proceeds. The Borrower shall use the proceeds of
Advances for ordinary working capital purposes.

Section 2.12    
Liability Records. The Lender may maintain from time to time, at its
discretion, liability records as to the Obligations. All entries made on any
such record shall be presumed correct until the Borrower establishes the
contrary. Upon the Lender’s demand, the Borrower will admit and certify in
writing the exact principal balance of the Obligations that the Borrower then
asserts to be outstanding. Any billing statement or accounting rendered by the
Lender shall be conclusive and fully binding on the Borrower unless the Borrower
gives the Lender specific written notice of exception within 30 days after
receipt. 

ARTICLE III.

Security Interest; Occupancy; Setoff

Section 3.1    
Grant of Security Interest. The Borrower hereby pledges, assigns and
grants to the Lender a security interest (collectively referred to as the
“Security Interest”) in the Collateral, as security for the payment
and performance of the Obligations. 

11

Section 3.2    
Notification of Account Debtors and Other Obligors. The Lender may at any
time (whether or not a Default Period then exists) notify any account debtor or
other person obligated to pay the amount due that such right to payment has been
assigned or transferred to the Lender for security and shall be paid directly to
the Lender. The Borrower will join in giving such notice if the Lender so
requests. At any time after the Borrower or the Lender gives such notice to an
account debtor or other obligor, the Lender may, but need not, in the
Lender’s name or in the Borrower’s name, (a) demand, sue for,
collect or receive any money or property at any time payable or receivable on
account of, or securing, any such right to payment, or grant any extension to,
make any compromise or settlement with or otherwise agree to waive, modify,
amend or change the obligations (including collateral obligations) of any such
account debtor or other obligor; and (b) as the Borrower’s agent and
attorney-in-fact, notify the United States Postal Service to change the address
for delivery of the Borrower’s mail to any address designated by the
Lender, otherwise intercept the Borrower’s mail, and receive, open and
dispose of the Borrower’s mail, applying all Collateral as permitted under
this Agreement and holding all other mail for the Borrower’s account or
forwarding such mail to the Borrower’s last known address. 

Section 3.3    
Assignment of Insurance. As additional security for the payment and
performance of the Obligations, the Borrower hereby assigns to the Lender any
and all monies (including, without limitation, proceeds of insurance and refunds
of unearned premiums) due or to become due under, and all other rights of the
Borrower with respect to, any and all policies of insurance now or at any time
hereafter covering the Collateral or any evidence thereof or any business
records or valuable papers pertaining thereto, and the Borrower hereby directs
the issuer of any such policy to pay all such monies directly to the Lender. At
any time, whether or not a Default Period then exists, the Lender may (but need
not), in the Lender’s name or in the Borrower’s name, execute and
deliver proof of claim, receive all such monies, endorse checks and other
instruments representing payment of such monies, and adjust, litigate,
compromise or release any claim against the issuer of any such policy.

Section 3.4
   Occupancy.

        (a)
The  Borrower  hereby  irrevocably  grants  to the  Lender  the  right  to  take
possession of the Premises at any time during a Default Period.

        (b)
The Lender may use the Premises only to hold, process, manufacture, sell, use,
store, liquidate, realize upon or otherwise dispose of goods that are Collateral
and for other purposes that the Lender may in good faith deem to be related or
incidental purposes. 

        (c)
The Lender’s right to hold the Premises shall cease and terminate upon the
earlier of (i) payment in full and discharge of all Obligations and
termination of the Commitment, and (ii) final sale or disposition of all
goods constituting Collateral and delivery of all such goods to purchasers. 

        (d)
The Lender shall not be obligated to pay or account for any rent or other
compensation for the possession, occupancy or use of any of the Premises;
provided, however, that if the Lender does pay or account for any rent or other
compensation for the possession, occupancy or use of any of the Premises, the
Borrower shall reimburse the Lender promptly for the full amount thereof. In
addition, the Borrower will pay, or reimburse the Lender for, all taxes, fees,
duties, imposts, charges and expenses at any time incurred by or imposed upon
the Lender by reason of the execution, delivery, existence, recordation,
performance or enforcement of this Agreement or the provisions of this
Section 3.4. 

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Section 3.5    
License. The Borrower hereby grants to the Lender a non-exclusive,
worldwide and royalty-free license to use or otherwise exploit all trademarks,
franchises, trade names, copyrights and patents of the Borrower for the purpose
of selling, leasing or otherwise disposing of any or all Collateral during any
Default Period. 

Section 3.6    
Financing Statement. A carbon, photographic or other reproduction of this
Agreement or of any financing statements signed by the Borrower is sufficient as
a financing statement and may be filed as a financing statement in any state to
perfect the security interests granted hereby. For this purpose, the following
information is set forth: 

        Name
and address of Debtor:

        Storage Area Networks, Inc.

        900 West Castleton Road, Suite 100

        Castle Rock, Colorado 80104

        Federal Tax Identification No.

        88-0409787

        Name and address of Secured Party:

        Wells Fargo Business Credit, Inc.

        MAC C7300-300

        1740 Broadway

        Denver, Colorado 80274

        Federal Tax Identification No. 41-1237652

Section 3.7    
Setoff. The Borrower agrees that the Lender may at any time or from time
to time, at its sole discretion and without demand and without notice to anyone,
setoff any liability owed to the Borrower by the Lender, whether or not due,
against any Obligation, whether or not due. In addition, each other Person
holding a participating interest in any Obligations shall have the right to
appropriate or setoff any deposit or other liability then owed by such Person to
the Borrower, whether or not due, and apply the same to the payment of said
participating interest, as fully as if such Person had lent directly to the
Borrower the amount of such participating interest. 

ARTICLE IV.

Conditions of Lending

Section 4.1    
Conditions Precedent to the Initial Revolving Advance. The Lender’s
obligation to make the initial Revolving Advance hereunder shall be subject to
the condition precedent that the Lender shall have received all of the
following, each in form and substance satisfactory to the Lender: 

13

        (a)
This Agreement, properly executed by the Borrower.

        (b)
The Note, properly executed by the Borrower.

        (c)
A true and correct copy of any and all leases pursuant to which the Borrower is
leasing the Premises, together with a landlord’s disclaimer and consent
with respect to each such lease. 

        (d)
A true and correct copy of any and all mortgages pursuant to which the Borrower
has mortgaged the Premises, together with a mortgagee’s disclaimer and
consent with respect to each such mortgage. 

        (e)
A true and correct copy of any and all agreements pursuant to which the
Borrower’s property is in the possession of any Person other than the
Borrower, together with, in the case of any goods held by such Person for
resale, (i) a consignee’s acknowledgment and waiver of liens,
(ii) UCC financing statements sufficient to protect the Borrower’s and
the Lender’s interests in such goods, and (iii) UCC searches showing
that no other secured party has filed a financing statement against such Person
and covering property similar to the Borrower’s other than the Borrower, or
if there exists any such secured party, evidence that each such secured party
has received notice from the Borrower and the Lender sufficient to protect the
Borrower’s and the Lender’s interests in the Borrower’s goods
from any claim by such secured party. 

        (f)
An acknowledgment  and waiver of liens from each warehouse in which the Borrower
is storing Inventory.

        (g)
A true and correct copy of any and all agreements pursuant to which the
Borrower’s property is in the possession of any Person other than the
Borrower, together with, (i) an acknowledgment and waiver of liens from
each subcontractor who has possession of the Borrower’s goods from time to
time, (ii) UCC financing statements sufficient to protect the
Borrower’s and the Lender’s interests in such goods, and
(iii) UCC searches showing that no other secured party has filed a
financing statement covering such Person’s property other than the
Borrower, or if there exists any such secured party, evidence that each such
secured party has received notice from the Borrower and the Lender sufficient to
protect the Borrower’s and the Lender’s interests in the
Borrower’s goods from any claim by such secured party. 

        (h)
The Lockbox Agreement,  properly executed by the Borrower, Regulus West, LLC and
Wells Fargo.

        (i)
Current searches of appropriate filing offices showing that (i) no state or
federal tax liens have been filed and remain in effect against the Borrower,
(ii) no financing statements or assignments of patents, trademarks or
copyrights have been filed and remain in effect against the Borrower except
those financing statements and assignments of patents, trademarks or copyrights
relating to Permitted Liens or to liens held by Persons who have agreed in
writing that upon receipt of proceeds of the Advances, they will deliver UCC
releases and/or terminations and releases of such assignments of patents,
trademarks or copyrights satisfactory to the Lender, and (iii) the Lender
has duly filed all financing statements necessary to perfect the Security
Interest, to the extent the Security Interest is capable of being perfected by
filing. 

14

        (j)
A certificate of the Borrower’s Secretary or Assistant Secretary certifying
as to (i) the resolutions of the Borrower’s directors and, if
required, shareholders, authorizing the execution, delivery and performance of
the Loan Documents, (ii) the Borrower’s articles of incorporation and
bylaws, and (iii) the signatures of the Borrower’s officers or agents
authorized to execute and deliver the Loan Documents and other instruments,
agreements and certificates, including Advance requests, on the Borrower’s
behalf. 

        (k)
A current certificate issued by the Colorado Secretary of State, certifying that
the Borrower is in compliance with all applicable organizational requirements of
the State of Colorado. 

        (l)
Evidence that the Borrower is duly licensed or qualified to transact business in
all jurisdictions where the character of the property owned or leased or the
nature of the business transacted by it makes such licensing or qualification
necessary. 

        (m)
A  certificate  of an  officer  of the  Borrower  confirming,  in  his  personal
capacity, the representations and warranties set forth in Article V.

        (n)
An opinion of counsel to the Borrower, addressed to the Lender.

        (o)
Certificates  of the insurance  required  hereunder,  with all hazard  insurance
containing a lender‘s loss payable  endorsement in the Lender‘s  favor
and  with  all   liability   insurance   naming  the  Lender  as  an  additional
insured.

        (p)
A guaranty, properly executed by the Guarantor, pursuant to which the Guarantor
unconditionally guarantees the full and prompt payment of all Obligations. 

        (q)
An opinion of counsel to the Guarantor, addressed to the Lender.

        (r)
Availability plus cash and cash equivalents held in a deposit account maintained
with Wells Fargo shall be equal to or greater than $750,000 immediately after
the initial Advance which shall be used to pay in full all of the
Borrower’s accounts payable over 45 days past due and all of the fees
and commission set forth in Section 4.1(t) below. 

        (s)
Evidence  that  the  Guarantor  has  received  an  equity  infusion  of at least
$800,000.

        (t)
Payment of the fees and commissions due through the date of the initial Advance
under Section 2.3 and expenses incurred by the Lender through such date and
required to be paid by the Borrower under Section 9.6, including all legal
expenses incurred through the date of this Agreement. 

        (u)
Evidence that the promissory notes, issued pursuant to the Private Placement
Memorandum dated March 15, 2001, as amended, by SAN Holdings, Inc., have been
converted into units consisting of common stock and warrants and all such issued
and outstanding notes have been cancelled. 

15

        (v)
Evidence  that all taxes  have been paid and are  current,  and that all use and
sales tax liens have been released.

        (w)
Such other documents and conditions as the Lender in its sole discretion may
require, including a satisfactory collateral audit of the Borrower by the
Lender. 

Section 4.2    
Conditions Precedent to All Advances. The Lender’s obligation to
make each Advance shall be subject to the further conditions precedent that on
such date: 

        (a)
the representations and warranties contained in Article V are correct on
and as of the date of such Advance as though made on and as of such date, except
to the extent that such representations and warranties relate solely to an
earlier date; and 

        (b)
no event has occurred and is continuing, or would result from such Advance which
constitutes a Default or an Event of Default.

ARTICLE V.

Representations and Warranties

        The
Borrower represents and warrants to the Lender as follows:

Section 5.1    
Corporate Existence and Power; Name; Chief Executive Office; Inventory and
Equipment Locations; Tax Identification Number. The Borrower is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of Colorado and is duly licensed or qualified to transact
business in all jurisdictions where the character of the property owned or
leased or the nature of the business transacted by it makes such licensing or
qualification necessary. The Borrower has all requisite power and authority,
corporate or otherwise, to conduct its business, to own its properties and to
execute and deliver, and to perform all of its obligations under, the Loan
Documents. During its existence, the Borrower has done business solely under the
names set forth in Schedule 5.1 hereto. The Borrower’s chief executive
office and principal place of business is located at the address set forth in
Schedule 5.1 hereto, and all of the Borrower’s records relating to its
business or the Collateral are kept at that location. All Inventory and
Equipment is located at that location or at one of the other locations set forth
in Schedule 5.1 hereto. The Borrower’s tax identification number is
correctly set forth in Section 3.6 hereto. 

Section 5.2
   Authorization of Borrowing; No Conflict as to Law or
Agreements. The execution, delivery and performance by the Borrower of the
Loan Documents and the borrowings from time to time hereunder have been duly
authorized by all necessary corporate action and do not and will not
(i) require any consent or approval of the Borrower’s stockholders;
(ii) require any authorization, consent or approval by, or registration,
declaration or filing with, or notice to, any governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
any third party, except such authorization, consent, approval, registration,
declaration, filing or notice as has been obtained, accomplished or given prior
to the date hereof; (iii) violate any provision of any law, rule or
regulation (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System) or of any order, writ, injunction or
decree presently in effect having applicability to the Borrower or of the
Borrower’s articles of incorporation or bylaws; (iv) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other material agreement, lease or instrument to which the
Borrower is a party or by which it or its properties may be bound or affected;
or (v) result in, or require, the creation or imposition of any mortgage,
deed of trust, pledge, lien, security interest or other charge or encumbrance of
any nature (other than the Security Interest) upon or with respect to any of the
properties now owned or hereafter acquired by the Borrower. 

16

Section 5.3    
Legal Agreements. This Agreement constitutes and, upon due execution by
the Borrower, the other Loan Documents will constitute the legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms. 

Section 5.4
   Subsidiaries. Except as set forth in Schedule 5.4
hereto, the Borrower has no Subsidiaries.

Section 5.5    
Financial Condition; No Adverse Change. The Borrower has heretofore
furnished to the Lender the audited financial statements for the Guarantor as of
the fiscal year ended December 31, 2000 and the unaudited financial statements
for the Guarantor as of the fiscal year-to-date period ended March 31, 2001 and
those statements fairly present the Borrower’s and the Guarantor’s
financial condition on the dates thereof and the results of their operations and
cash flows for the periods then ended and were prepared in accordance with
generally accepted accounting principles. Since the date of the most recent
financial statements, there has been no material adverse change in the
Borrower’s or the Guarantor’s business, properties or condition
(financial or otherwise). 

Section 5.6
   Litigation. Except as set forth in Schedule 5.6 hereto,
there are no actions, suits or proceedings pending or, to the Borrower’s
knowledge, threatened against or affecting the Borrower or any of its Affiliates
or the properties of the Borrower or any of its Affiliates before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if determined adversely to the Borrower or any of
its Affiliates, would have a material adverse effect on the financial condition,
properties or operations of the Borrower or any of its Affiliates. 

Section 5.7
   Regulation U. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Advance will be used
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock. 

Section 5.8    
Taxes. The Borrower and its Affiliates have paid or caused to be paid to
the proper authorities when due all federal, state and local taxes required to
be withheld by each of them. The Borrower and its Affiliates have filed all
federal, state and local tax returns which to the knowledge of the officers of
the Borrower or any Affiliate, as the case may be, are required to be filed, and
the Borrower and its Affiliates have paid or caused to be paid to the respective
taxing authorities all taxes as shown on said returns or on any assessment
received by any of them to the extent such taxes have become due. 

17

Section 5.9    
Titles and Liens. The Borrower has good and absolute title to all
Collateral described in the collateral reports provided to the Lender and all
other Collateral, properties and assets reflected in the latest financial
statements referred to in Section 5.5 and all proceeds thereof, free and
clear of all mortgages, security interests, liens and encumbrances, except for
Permitted Liens. No financing statement naming the Borrower as debtor is on file
in any office except to perfect only Permitted Liens. 

Section 5.10    
Plans. Except as disclosed to the Lender in writing prior to the date
hereof, neither the Borrower nor any of its Affiliates maintains or has
maintained any Plan. Neither the Borrower nor any Affiliate has received any
notice or has any knowledge to the effect that it is not in full compliance with
any of the requirements of ERISA. No Reportable Event or other fact or
circumstance which may have an adverse effect on the Plan’s tax qualified
status exists in connection with any Plan. Neither the Borrower nor any of its
Affiliates has: 

        (a)
Any accumulated funding deficiency within the meaning of ERISA; or

        (b)
Any liability or knows of any fact or circumstances which could result in any
liability to the Pension Benefit Guaranty Corporation, the Internal Revenue
Service, the Department of Labor or any participant in connection with any Plan
(other than accrued benefits which are or which may become payable to
participants or beneficiaries of any such Plan). 

Section 5.11
   Default. The Borrower is in compliance with all
provisions of all agreements, instruments, decrees and orders to which it is a
party or by which it or its property is bound or affected, the breach or default
of which could have a material adverse effect on the Borrower’s financial
condition, properties or operations. 

Section 5.12
   Environmental Matters.

        (a)
Definitions.  As used in this  Agreement,  the  following  terms  shall have the
following meanings:

                (i)
“Environmental Law” means any federal, state, local or other
governmental statute, regulation, law or ordinance dealing with the protection
of human health and the environment.

                (ii)
“Hazardous Substances” means pollutants, contaminants,
hazardous substances, hazardous wastes, petroleum and fractions thereof, and all
other chemicals, wastes, substances and materials listed in, regulated by or
identified in any Environmental Law.

        (b)
To the Borrower’s best knowledge, there are not present in, on or under the
Premises any Hazardous Substances in such form or quantity as to create any
liability or obligation for either the Borrower or the Lender under the common
law of any jurisdiction or under any Environmental Law, and no Hazardous
Substances have ever been stored, buried, spilled, leaked, discharged, emitted
or released in, on or under the Premises in such a way as to create any such
liability. 

18

        (c)
To the Borrower’s best knowledge, the Borrower has not disposed of
Hazardous Substances in such a manner as to create any liability under any
Environmental Law. 

        (d)
There are not and there never have been any requests, claims, notices,
investigations, demands, administrative proceedings, hearings or litigation,
relating in any way to the Premises or the Borrower, alleging liability under,
violation of, or noncompliance with any Environmental Law or any license, permit
or other authorization issued pursuant thereto. To the Borrower’s best
knowledge, no such matter is threatened or impending. 

        (e)
To the Borrower’s best knowledge, the Borrower’s businesses are and
have in the past always been conducted in accordance with all Environmental Laws
and all licenses, permits and other authorizations required pursuant to any
Environmental Law and necessary for the lawful and efficient operation of such
businesses are in the Borrower’s possession and are in full force and
effect. No permit required under any Environmental Law is scheduled to expire
within 12 months and there is no threat that any such permit will be withdrawn,
terminated, limited or materially changed. 

        (f)
To the Borrower’s best knowledge, the Premises are not and never have been
listed on the National Priorities List, the Comprehensive Environmental
Response, Compensation and Liability Information System or any similar federal,
state or local list, schedule, log, inventory or database. 

        (g)
The Borrower has delivered to Lender all environmental assessments, audits,
reports, permits, licenses and other documents describing or relating in any way
to the Premises or the Borrower’s businesses. 

Section 5.13    
Submissions to Lender. All financial and other information provided to
the Lender by or on behalf of the Borrower in connection with the
Borrower’s request for the credit facilities contemplated hereby is true
and correct in all material respects and, as to projections, valuations or
proforma financial statements, present a good faith opinion as to such
projections, valuations and proforma condition and results. 

Section 5.14    
Financing Statements. The Borrower has provided to the Lender signed
financing statements sufficient when filed to perfect the Security Interest and
the other security interests created by the Security Documents. When such
financing statements are filed in the offices noted therein, the Lender will
have a valid and perfected security interest in all Collateral and all other
collateral described in the Security Documents which is capable of being
perfected by filing financing statements. None of the Collateral or other
collateral covered by the Security Documents is or will become a fixture on real
estate, unless a sufficient fixture filing is in effect with respect thereto.

Section 5.15    
Rights to Payment. Each right to payment and each instrument, document,
chattel paper and other agreement constituting or evidencing Collateral or other
collateral covered by the Security Documents is (or, in the case of all future
Collateral or such other collateral, will be when arising or issued) the valid,
genuine and legally enforceable obligation, subject to no defense, setoff or
counterclaim, of the account debtor or other obligor named therein or in the
Borrower’s records pertaining thereto as being obligated to pay such
obligation. 

19

Section 5.16
   Financial Solvency. Both before and after giving effect
to the transactions contemplated in the Loan Documents, none of the Borrower or
its Affiliates:

        (a)
was or will be insolvent, as that term is used and defined in Section 101(32) of
the  United  States  Bankruptcy  Code and  Section 2 of the  Uniform  Fraudulent
Transfer Act;

        (b)
has unreasonably small capital or is engaged or about to engage in a business or
a transaction  for which any remaining  assets of the Borrower or such Affiliate
are unreasonably small;

        (c)
by executing, delivering or performing its obligations under the Loan Documents
or other documents to which it is a party or by taking any action with respect
thereto, intends to, nor believes that it will, incur debts beyond its ability
to pay them as they mature; 

        (d)
by executing, delivering or performing its obligations under the Loan Documents
or other documents to which it is a party or by taking any action with respect
thereto, intends to hinder, delay or defraud either its present or future
creditors; and 

        (e)
at this time contemplates filing a petition in bankruptcy or for an arrangement
or reorganization or similar proceeding under any law of any jurisdiction, or,
to the best knowledge of the Borrower, is the subject of any actual, pending or
threatened bankruptcy, insolvency or similar proceedings under any law of any
jurisdiction. 

ARTICLE VI.

Borrower‘s Affirmative Covenants

        So
long as the Obligations shall remain unpaid, or the Credit Facility shall remain
outstanding, the Borrower will comply with the following requirements, unless
the Lender shall otherwise consent in writing: 

Section 6.1    
Reporting Requirements. The Borrower will deliver, or cause to be
delivered, to the Lender each of the following, which shall be in form and
detail acceptable to the Lender: 

        (a)
as soon as available, and in any event within 120 days after the end of
each fiscal year of the Borrower, the Borrower’s and the Guarantor’s
audited financial statements with the unqualified opinion of independent
certified public accountants selected by the Borrower and acceptable to the
Lender, which annual financial statements shall include the Borrower’s and
the Guarantor’s balance sheet as at the end of such fiscal year and the
related statements of the Borrower’s and the Guarantor’s income,
retained earnings and cash flows for the fiscal year then ended, prepared, if
the Lender so requests, on a consolidating and consolidated basis to include any
Affiliates, all in reasonable detail and prepared in accordance with GAAP,
together with (i) copies of all management letters prepared by such
accountants; (ii) a report signed by such accountants stating that in
making the investigations necessary for said opinion they obtained no knowledge,
except as specifically stated, of any Default or Event of Default hereunder and
all relevant facts in reasonable detail to evidence, and the computations as to,
whether or not the Borrower is in compliance with the requirements set forth in
Sections 6.12, 6.13, 6.14, and 7.10; and (iii) a certificate of the
Borrower’s chief financial officer stating that such financial statements
have been prepared in accordance with GAAP and whether or not such officer has
knowledge of the occurrence of any Default or Event of Default hereunder and, if
so, stating in reasonable detail the facts with respect thereto; 

20

        (b)
as soon as available and in any event within 20 days after the end of each
month, an unaudited/internal balance sheet and statements of income and retained
earnings of the Borrower and Guarantor as at the end of and for such month and
for the year to date period then ended, prepared, if the Lender so requests, on
a consolidating and consolidated basis to include any Affiliates, in reasonable
detail and stating in comparative form the figures for the corresponding date
and periods in the previous year, all prepared in accordance with GAAP, subject
to year-end audit adjustments; and accompanied by a certificate of the
Borrower’s chief financial officer, substantially in the form of Exhibit B
hereto stating (i) that such financial statements have been prepared in
accordance with GAAP, subject to year-end audit adjustments, (ii) whether
or not such officer has knowledge of the occurrence of any Default or Event of
Default hereunder not theretofore reported and remedied and, if so, stating in
reasonable detail the facts with respect thereto, and (iii) all relevant
facts in reasonable detail to evidence, and the computations as to, whether or
not the Borrower is in compliance with the requirements set forth in
Sections 6.12, 6.13, 6.14, and 7.10; 

        (c)
within 15 days after the end of each month or more frequently if the Lender so
requires, detailed agings and reconciliations of the Borrower’s accounts
receivable and its accounts payable, and a calculation of the Borrower’s
Accounts and Eligible Accounts as of the end of such month or shorter time
period; 

        (d)
weekly reports of sales, receivables and collections, including copies of
deposit slips, and supporting documentation for all adjustments thereto, copies
of invoices to account debtors in excess of $50,000, and copies of all shipping
documents and delivery receipts for goods sold in excess of $50,000; 

        (e)
at least 30 days before the beginning of each fiscal year of the Borrower, the
projected balance sheets and income statements for each month of such year, each
in reasonable detail, representing the Borrower’s good faith projections
and certified by the Borrower’s chief financial officer as being the most
accurate projections available and identical to the projections used by the
Borrower for internal planning purposes, together with such supporting schedules
and information as the Lender may in its discretion require; 

        (f)
immediately after the commencement thereof, notice in writing of all litigation
and of all proceedings before any governmental or regulatory agency affecting
the Borrower of the type described in Section 5.12 or which seek a monetary
recovery against the Borrower in excess of $10,000; 

        (g)
as promptly as practicable (but in any event not later than five business days)
after an officer of the Borrower obtains knowledge of the occurrence of any
breach, default or event of default under any Security Document or any event
which constitutes a Default or Event of Default hereunder, notice of such
occurrence, together with a detailed statement by a responsible officer of the
Borrower of the steps being taken by the Borrower to cure the effect of such
breach, default or event; 

21

        (h)
as soon as possible and in any event within 30 days after the Borrower
knows or has reason to know that any Reportable Event with respect to any Plan
has occurred, the statement of the Borrower’s chief financial officer
setting forth details as to such Reportable Event and the action which the
Borrower proposes to take with respect thereto, together with a copy of the
notice of such Reportable Event to the Pension Benefit Guaranty Corporation; 

        (i)
as soon as possible, and in any event within 10 days after the Borrower fails to
make any quarterly contribution required with respect to any Plan under
Section 412(m) of the Internal Revenue Code of 1986, as amended, the
statement of the Borrower’s chief financial officer setting forth details
as to such failure and the action which the Borrower proposes to take with
respect thereto, together with a copy of any notice of such failure required to
be provided to the Pension Benefit Guaranty Corporation; 

        (j)
promptly upon knowledge thereof, notice of (i) any disputes or claims by
the Borrower’s customers; (ii) credit memos; (iii) any goods
returned to or recovered by the Borrower; and (iv) any change in the
persons constituting the Borrower’s officers and directors; 

        (k)
promptly upon knowledge thereof, notice of any loss of or material damage to any
Collateral or other collateral covered by the Security Documents or of any
substantial adverse change in any Collateral or such other collateral or the
prospect of payment thereof; 

        (l)
promptly upon their distribution,  copies of all financial  statements,  reports
and   proxy   statements   which   the   Borrower   shall   have   sent  to  its
stockholders;

        (m)
promptly after the sending or filing thereof, copies of all regular and periodic
reports which the Borrower shall file with the Securities and Exchange
Commission or any national securities exchange; 

        (n)
as soon as possible, and in any event by not later than ten (10) days after the
filing thereof, copies of the Borrower’s and the Guarantor’s state and
federal tax returns and all schedules thereto; 

        (o)
promptly upon knowledge thereof,  notice of the Borrower's violation of any law,
rule or regulation, the non-compliance with which could materially and adversely
affect the Borrower's business or its financial condition; and

        (p)
from time to time, with reasonable promptness, deposit records, equipment
schedules, copies of invoices to account debtors, shipment documents and
delivery receipts for goods sold, and any such other material, reports, records
or information as the Lender may request. 

Section 6.2
   Books and Records; Inspection and Examination.

        The
Borrower will keep accurate books of record and account for itself pertaining to
the Collateral and pertaining to the Borrower’s business and financial
condition and such other matters as the Lender may from time to time request in
which true and complete entries will be made in accordance with GAAP and, upon
the Lender’s request, will permit any officer, employee, attorney or
accountant for the Lender to audit, review, make extracts from or copy any and
all corporate and financial books and records of the Borrower at all times
during ordinary business hours, to send and discuss with account debtors and
other obligors requests for verification of amounts owed to the Borrower, and to
discuss the Borrower’s affairs with any of its directors, officers,
employees or agents. The Borrower will permit the Lender, or its employees,
accountants, attorneys or agents, to examine and inspect any Collateral, other
collateral covered by the Security Documents or any other property of the
Borrower at any time during ordinary business hours. 

22

Section 6.3
   Account Verification.

        The
Lender may at any time and from time to time send or require the Borrower to
send requests for verification of accounts or notices of assignment to account
debtors and other obligors. The Lender may also at any time and from time to
time telephone account debtors and other obligors to verify accounts. 

Section 6.4
   Compliance with Laws.

        (a)
The Borrower will (i) comply with the requirements of applicable laws and
regulations, the non-compliance with which would materially and adversely affect
its business or its financial condition and (ii) use and keep the
Collateral, and require that others use and keep the Collateral, only for lawful
purposes, without violation of any federal, state or local law, statute or
ordinance. 

        (b)
Without limiting the foregoing undertakings, the Borrower specifically agrees
that it will comply with all applicable Environmental Laws and obtain and comply
with all permits, licenses and similar approvals required by any Environmental
Laws, and will not generate, use, transport, treat, store or dispose of any
Hazardous Substances in such a manner as to create any liability or obligation
under the common law of any jurisdiction or any Environmental Law. 

Section 6.5
   Payment of Taxes and Other Claims.

        The
Borrower will pay or discharge, when due, (a) all taxes, assessments and
governmental charges levied or imposed upon it or upon its income or profits,
upon any properties belonging to it (including, without limitation, the
Collateral) or upon or against the creation, perfection or continuance of the
Security Interest, prior to the date on which penalties attach thereto,
(b) all federal, state and local taxes required to be withheld by it, and
(c) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien or charge upon any properties of the Borrower;
provided, that the Borrower shall not be required to pay any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which proper reserves
have been made. 

Section 6.6
   Maintenance of Collateral and Properties.

        (a)
The Borrower will keep and maintain the Collateral, the other collateral covered
by the Security Documents and all of its other properties necessary or useful in
its business in good condition, repair and working order (normal wear and tear
excepted) and will from time to time replace or repair any worn, defective or
broken parts; provided, however, that nothing in this Section 6.6 shall
prevent the Borrower from discontinuing the operation and maintenance of any of
its properties if such discontinuance is, in the Lender’s judgment,
desirable in the conduct of the Borrower’s business and not disadvantageous
in any material respect to the Lender. 

23

        (b)
The Borrower will defend the Collateral against all claims or demands of all
persons (other than the Lender) claiming the Collateral or any interest therein. 

        (c)
The Borrower will keep all Collateral and other collateral covered by the
Security Documents free and clear of all security interests, liens and
encumbrances except Permitted Liens. 

Section 6.7
   Insurance. The Borrower will obtain and at all times
maintain insurance with insurers believed by the Borrower to be responsible and
reputable, in such amounts and against such risks as may from time to time be
required by the Lender, but in all events in such amounts and against such risks
as is usually carried by companies engaged in similar business and owning
similar properties in the same general areas in which the Borrower operates.
Without limiting the generality of the foregoing, the Borrower will at all times
keep all tangible Collateral insured against risks of fire (including so-called
extended coverage), theft, collision (for Collateral consisting of motor
vehicles) and such other risks and in such amounts as the Lender may reasonably
request, with any loss payable to the Lender to the extent of its interest, and
all policies of such insurance shall contain a lender’s loss payable
endorsement for the Lender’s benefit acceptable to the Lender. All policies
of liability insurance required hereunder shall name the Lender as an additional
insured. 

Section 6.8    
Preservation of Existence. The Borrower will preserve and maintain its
existence and all of its rights, privileges and franchises necessary or
desirable in the normal conduct of its business and shall conduct its business
in an orderly, efficient and regular manner. 

Section 6.9    
Delivery of Instruments, etc. Upon request by the Lender, the Borrower
will promptly deliver to the Lender in pledge all instruments, documents and
chattel papers constituting Collateral, duly endorsed or assigned by the
Borrower. 

Section 6.10
   Lockbox; Collateral Account.

        (a)
The Borrower shall irrevocably direct all present and future Account debtors and
other Persons obligated to make payments constituting Collateral to make such
payments directly to the Lockbox. All of the Borrower’s invoices, account
statements and other written or oral communications directing, instructing,
demanding or requesting payment of any Account or any other amount constituting
Collateral shall conspicuously direct that all payments be made to the Lockbox
and shall include the Lockbox address. (All payments received in the Lockbox
shall be processed to the Collateral Account.) 

        (b)
The Borrower agrees to deposit in the Collateral Account or, at the
Lender’s option, to deliver to the Lender all collections on Accounts,
contract rights, chattel paper and other rights to payment constituting
Collateral, and all other cash proceeds of Collateral, which the Borrower may
receive directly notwithstanding its direction to Account debtors and other
obligors to make payments to the Lockbox, immediately upon receipt thereof, in
the form received, except for the Borrower’s endorsement when deemed
necessary. Until delivered to the Lender or deposited in the Collateral Account,
all proceeds or collections of Collateral shall be held in trust by the Borrower
for and as the property of the Lender and shall not be commingled with any funds
or property of the Borrower. All such collections shall constitute proceeds of
Collateral and shall not constitute payment of any Obligation. 

24

        (c)
Amounts deposited in the Collateral Account shall not bear interest and shall
not be subject to withdrawal by the Borrower, except after full payment and
discharge of all Obligations. 

        (d)
All deposits in the Collateral Account shall constitute proceeds of Collateral
and shall not constitute payment of the Obligations. The Lender from time to
time at its discretion may, after allowing two (2) Banking Days, apply deposited
funds in the Collateral Account to the payment of the Obligations, in any order
or manner of application satisfactory to the Lender, by transferring such funds
to the Lender’s general account. 

        (e)
All items deposited in the Collateral Account shall be subject to final payment.
If any such item is returned uncollected, the Borrower will immediately pay the
Lender, or, for items deposited in the Collateral Account, the bank maintaining
such account, the amount of that item, or such bank at its discretion may charge
any uncollected item to the Borrower’s commercial account or other account.
The Borrower shall be liable as an endorser on all items deposited in the
Collateral Account, whether or not in fact endorsed by the Borrower. 

Section 6.11    
Performance by the Lender. If the Borrower at any time fails to perform
or observe any of the foregoing covenants contained in this Article VI or
elsewhere herein, and if such failure shall continue for a period of ten
calendar days after the Lender gives the Borrower written notice thereof (or in
the case of the agreements contained in Sections 6.5, 6.7 and 6.10,
immediately upon the occurrence of such failure, without notice or lapse of
time), the Lender may, but need not, perform or observe such covenant on behalf
and in the name, place and stead of the Borrower (or, at the Lender’s
option, in the Lender’s name) and may, but need not, take any and all other
actions which the Lender may reasonably deem necessary to cure or correct such
failure (including, without limitation, the payment of taxes, the satisfaction
of security interests, liens or encumbrances, the performance of obligations
owed to account debtors or other obligors, the procurement and maintenance of
insurance, the execution of assignments, security agreements and financing
statements, and the endorsement of instruments); and the Borrower shall
thereupon pay to the Lender on demand the amount of all monies expended and all
costs and expenses (including reasonable attorneys’ fees and legal
expenses) incurred by the Lender in connection with or as a result of the
performance or observance of such agreements or the taking of such action by the
Lender, together with interest thereon from the date expended or incurred at the
Revolving Floating Rate. To facilitate the Lender’s performance or
observance of such covenants of the Borrower, the Borrower hereby irrevocably
appoints the Lender, or the Lender’s delegate, acting alone, as the
Borrower’s attorney in fact (which appointment is coupled with an interest)
with the right (but not the duty) from time to time to create, prepare,
complete, execute, deliver, endorse or file in the name and on behalf of the
Borrower any and all instruments, documents, assignments, security agreements,
financing statements, applications for insurance and other agreements and
writings required to be obtained, executed, delivered or endorsed by the
Borrower under this Section 6.11. 

25

Section 6.12    
Minimum Net Income. The Borrower will maintain, during each period
described below, its Net Income, determined as at the end of each quarter, at an
amount not less than the amount set forth opposite such period (numbers
appearing between “( )” are negative): 

   
            
            
            
         Period   
            
            
            
         
Minimum Net Income
            
            
        
Six months ending June 30, 2001
            
       
           
($1,705,000)
            
            
      
Nine months ending Sept. 30, 2001
            
       
         
($1,991,000)
            
            
   
Twelve months ending Dec. 31, 2001
       
            
        
($2,139,000)

Section 6.13    
Minimum Book Net Worth. The Borrower will maintain, during each period
described below, its Book Net Worth, determined as at the end of each month, and
calculated (a) without regard to any additional equity infusion received by
Guarantor in excess of $1,200,000 in fiscal year 2001 and (b) net of any noncash
adjustments related to the 3Si, Inc. stock of not more than $654,419, at an
amount not less than the amount set forth opposite such period (numbers
appearing between “( )” are negative): 

   
   
            
            
         Period   
         
            
            
            
         
Minimum Book Net Worth

     
            
         
        May 31, 2001
       
            
             
           
            
            $3,279,000

         
     
            
        June 30, 2001
            
             
         
         
            
            $3,169,000

         
     
            
        July 31, 2001
            
             
         
          
            
            $2,973,000

       
     
            
        August 31, 2001
            
             
              
              
            $2,922,000

      
     
            
        September 30, 2001
            
             
            
            
            $2,889,000

       
     
            
        October 31, 2001
            
             
              
             
            $2,748,000

     
     
            
        November 30, 2001
            
       
       
           
            
            $2,799,000

     
            
        December 31, 2001 and each
            
       
           
           
          
$2,736,000

     
            
            
        month thereafter

Section 6.14    
Minimum Cash on Hand Plus Availability. The Borrower will maintain during
each month, determined as at the end of each month, cash and cash equivalents
held in a deposit account maintained with Wells Fargo plus Availability of not
less than $500,000, which amount may be adjusted at the end of May 2002, at the
sole discretion of the Lender. 

Section 6.15    
New Covenants. On or before November 30, 2001, the Borrower and the
Lender shall agree on new covenant levels for Sections 6.12, 6.13, 6.14 and 7.10
for periods after such date. The new covenant levels will be based on the
Borrower’s projections for such periods and shall be no less stringent than
the present levels, but if the Borrower and the Lender do not agree, the Lender
may designate the required amounts in its sole discretion and the failure by the
Borrower to maintain the designated amounts shall constitute an Event of
Default. 

26

ARTICLE VII.

Negative Covenants

        So
long as the Obligations shall remain unpaid, or the Credit Facility shall remain
outstanding, the Borrower agrees that, without the Lender’s prior written
consent: 

Section 7.1    
Liens. The Borrower will not create, incur or suffer to exist any
mortgage, deed of trust, pledge, lien, security interest, assignment or transfer
upon or of any of its assets, now owned or hereafter acquired, to secure any
indebtedness; excluding, however, from the operation of the foregoing, the
following (collectively, “Permitted Liens”): 

        (a)
in the case of any of the Borrower’s property which is not Collateral or
other collateral described in the Security Documents, covenants, restrictions,
rights, easements and minor irregularities in title which do not materially
interfere with the Borrower’s business or operations as presently
conducted; 

        (b)
mortgages, deeds of trust, pledges, liens, security interests and assignments in
existence on the date hereof and listed in Schedule 7.1 hereto, securing
indebtedness for borrowed money permitted under Section 7.2; 

        (c)
the Security  Interest and liens and security  interests created by the Security
Documents; and

        (d)
purchase money security interests relating to the acquisition of machinery and
equipment of the Borrower not exceeding the lesser of cost or fair market value
thereof, and so long as no Default Period is then in existence and none would
exist immediately after such acquisition. 

Section 7.2
   Indebtedness. The Borrower will not incur, create,
assume or permit to exist any indebtedness or liability on account of deposits
or advances or any indebtedness for borrowed money or letters of credit issued
on the Borrower’s behalf, or any other indebtedness or liability evidenced
by notes, bonds, debentures or similar obligations, except: 

        (a)
indebtedness arising hereunder;

        (b)
indebtedness  of the  Borrower  in  existence  on the date  hereof and listed in
Schedule 7.2 hereto; and

        (c)
indebtedness   relating  to  liens   permitted   in   accordance   with  Section
7.1.

Section 7.3
   Guaranties. The Borrower will not assume, guarantee,
endorse or otherwise become directly or contingently liable in connection with
any obligations of any other Person, except: 

        (a)
the  endorsement  of  negotiable  instruments  by the  Borrower  for  deposit or
collection  or  similar   transactions  in  the  ordinary  course  of  business;
and

27

        (b)
guaranties, endorsements and other direct or contingent liabilities in
connection with the obligations of other Persons, in existence on the date
hereof and listed in Schedule 7.2 hereto. 

Section 7.4
   Investments and Subsidiaries.

        (a)
The Borrower will not purchase or hold beneficially any stock or other
securities or evidences of indebtedness of, make or permit to exist any loans or
advances to, or make any investment or acquire any interest whatsoever in, any
other Person, including specifically but without limitation any partnership or
joint venture, except: 

                (i)
investments in direct obligations of the United States of America or any agency
or instrumentality thereof whose obligations constitute full faith and credit
obligations of the United States of America having a maturity of one year or
less, commercial paper issued by U.S. corporations rated “A-1” or
“A-2” by Standard & Poors Corporation or “P-1” or
“P-2” by Moody‘s Investors Service or certificates of deposit or
bankers’ acceptances having a maturity of one year or less issued by
members of the Federal Reserve System having deposits in excess of $100,000,000
(which certificates of deposit or bankers’ acceptances are fully insured by
the Federal Deposit Insurance Corporation);

                (ii)
travel advances or loans to the Borrower‘s officers and employees not
exceeding at any one time an aggregate of $10,000; and

                (iii)
advances in the form of progress payments, prepaid rent not exceeding one month
or security deposits.

        (b)
The Borrower will not create or permit to exist any Subsidiary, other than any
Subsidiary in existence on the date hereof and listed in Schedule 5.4. 

Section 7.5
   Dividends. The Borrower will not declare or pay any
dividends (other than dividends payable solely in stock of the Borrower) on any
class of its stock or make any payment on account of the purchase, redemption or
other retirement of any shares of such stock or make any distribution in respect
thereof, either directly or indirectly. 

Section 7.6    
Sale or Transfer of Assets; Suspension of Business Operations. The
Borrower will not sell, lease, assign, transfer or otherwise dispose of
(i) the stock of any Subsidiary, (ii) all or a substantial part of its
assets, or (iii) any Collateral or any interest therein (whether in one
transaction or in a series of transactions) to any other Person other than the
sale of Inventory in the ordinary course of business and will not liquidate,
dissolve or suspend business operations. The Borrower will not in any manner
transfer any property without prior or present receipt of full and adequate
consideration. 

28

Section 7.7
   Consolidation and Merger; Asset Acquisitions. The
Borrower will not consolidate with or merge into any Person, or permit any other
Person to merge into it, or acquire (in a transaction analogous in purpose or
effect to a consolidation or merger) all or substantially all the assets of any
other Person. 

Section 7.8    
Sale and Leaseback. The Borrower will not enter into any arrangement,
directly or indirectly, with any other Person whereby the Borrower shall sell or
transfer any real or personal property, whether now owned or hereafter acquired,
and then or thereafter rent or lease as lessee such property or any part thereof
or any other property which the Borrower intends to use for substantially the
same purpose or purposes as the property being sold or transferred. 

Section 7.9    
Restrictions on Nature of Business. The Borrower will not engage in any
line of business materially different from that presently engaged in by the
Borrower and will not purchase, lease or otherwise acquire assets not related to
its business. 

Section 7.10    
Capital Expenditures. The Borrower will not incur or contract to incur
Capital Expenditures of more than $500,000 in the aggregate during its fiscal
year ending December 31, 2001. 

Section 7.11
   Accounting. The Borrower will not adopt any material
change in accounting principles other than as required by GAAP. The Borrower
will not adopt, permit or consent to any change in its fiscal year. 

Section 7.12    
Discounts, etc. The Borrower will not, after notice from the Lender,
grant any discount, credit or allowance to any customer of the Borrower or
accept any return of goods sold, or at any time (whether before or after notice
from the Lender) modify, amend, subordinate, cancel or terminate the obligation
of any account debtor or other obligor of the Borrower. 

Section 7.13    
Defined Benefit Pension Plans. The Borrower will not adopt, create,
assume or become a party to any defined benefit pension plan, unless disclosed
to the Lender pursuant to Section 5.10. 

Section 7.14    
Other Defaults. The Borrower will not permit any breach, default or event
of default to occur under any note, loan agreement, indenture, lease, mortgage,
contract for deed, security agreement or other contractual obligation binding
upon the Borrower. 

Section 7.15    
Place of Business; Name. The Borrower will not transfer its chief
executive office or principal place of business, or move, relocate, close or
sell any business location. The Borrower will not permit any tangible Collateral
or any records pertaining to the Collateral to be located in any state or area
in which, in the event of such location, a financing statement covering such
Collateral would be required to be, but has not in fact been, filed in order to
perfect the Security Interest. The Borrower will not change its name.

29

Section 7.16
   Organizational Documents; S Corporation Status. The
Borrower will not amend its certificate of incorporation, articles of
incorporation or bylaws. The Borrower will not become an S Corporation within
the meaning of the Internal Revenue Code of 1986, as amended. 

Section 7.17
   Salaries. The Borrower will not pay excessive or
unreasonable salaries, bonuses, commissions, consultant fees or other
compensation; or increase the salary, bonus, commissions, consultant fees or
other compensation of any director, officer or consultant, or any member of
their families, by more than ten percent (10.0%) in any one year, either
individually or for all such persons in the aggregate, or pay any such increase
from any source other than the ongoing operations of the Borrower in the year of
payment. 

Section 7.18    
Change in Ownership. The Borrower will not issue or sell any stock of the
Borrower so as to change the percentage of voting and non-voting stock owned by
each of the Borrower’s shareholders, and the Borrower will not permit or
suffer to occur the sale, transfer, assignment, pledge or other disposition of
any or all of the issued and outstanding shares of stock of the Borrower.

ARTICLE VIII.

Events of Default, Rights and Remedies

Section 8.1
   Events of Default. “Event of Default”,
wherever used herein, means any one of the following events:

        (a)
Default  in  the   payment  of  the   Obligations   when  they  become  due  and
payable;

        (b)
Default in the payment of any fees,  commissions,  costs or expenses required to
be paid by the Borrower under this Agreement;

        (c)
Default in the  performance,  or breach,  of any  covenant or  agreement  of the
Borrower contained in this Agreement;

        (d)
The Borrower or any Guarantor shall be or become insolvent, or admit in writing
its inability to pay its debts as they mature, or make an assignment for the
benefit of creditors; or the Borrower or any Guarantor shall apply for or
consent to the appointment of any receiver, trustee, or similar officer for it
or for all or any substantial part of its property; or such receiver, trustee or
similar officer shall be appointed without the application or consent of the
Borrower or such Guarantor, as the case may be; or the Borrower or any Guarantor
shall institute (by petition, application, answer, consent or otherwise) any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
dissolution, liquidation or similar proceeding relating to it under the laws of
any jurisdiction; or any such proceeding shall be instituted (by petition,
application or otherwise) against the Borrower or any such Guarantor; or any
judgment, writ, warrant of attachment or execution or similar process shall be
issued or levied against a substantial part of the property of the Borrower or
any Guarantor; 

        (e)
A petition shall be filed by or against the Borrower or any Guarantor under the
United States Bankruptcy Code naming the Borrower or such Guarantor as debtor; 

30

        (f)
Any representation or warranty made by the Borrower in this Agreement, by any
Guarantor in any guaranty delivered to the Lender, or by the Borrower (or any of
its officers) or any Guarantor in any agreement, certificate, instrument or
financial statement or other statement contemplated by or made or delivered
pursuant to or in connection with this Agreement or any such guaranty shall
prove to have been incorrect in any material respect when deemed to be
effective; 

        (g)
The rendering against the Borrower of a final judgment, decree or order for the
payment of money in excess of $10,000 and the continuance of such judgment,
decree or order unsatisfied and in effect for any period of 30 consecutive days
without a stay of execution; 

        (h)
A default under any bond, debenture, note or other evidence of indebtedness of
the Borrower owed to any Person other than the Lender, or under any indenture or
other instrument under which any such evidence of indebtedness has been issued
or by which it is governed, or under any lease of any of the Premises, and the
expiration of the applicable period of grace, if any, specified in such evidence
of indebtedness, indenture, other instrument or lease; 

        (i)
Any Reportable Event, which the Lender determines in good faith might constitute
grounds for the termination of any Plan or for the appointment by the
appropriate United States District Court of a trustee to administer any Plan,
shall have occurred and be continuing 30 days after written notice to such
effect shall have been given to the Borrower by the Lender; or a trustee shall
have been appointed by an appropriate United States District Court to administer
any Plan; or the Pension Benefit Guaranty Corporation shall have instituted
proceedings to terminate any Plan or to appoint a trustee to administer any
Plan; or the Borrower shall have filed for a distress termination of any Plan
under Title IV of ERISA; or the Borrower shall have failed to make any quarterly
contribution required with respect to any Plan under Section 412(m) of the
Internal Revenue Code of 1986, as amended, which the Lender determines in good
faith may by itself, or in combination with any such failures that the Lender
may determine are likely to occur in the future, result in the imposition of a
lien on the Borrower’s assets in favor of the Plan; (j) An event of default
shall occur under any Security Document or under any other security agreement,
mortgage, deed of trust, assignment or other instrument or agreement securing
any obligations of the Borrower hereunder or under any note; 

        (k)
The Borrower shall liquidate, dissolve, terminate or suspend its business
operations or otherwise fail to operate its business in the ordinary course, or
sell all or substantially all of its assets, without the Lender’s prior
written consent; 

        (l)
The Borrower shall fail to pay, withhold, collect or remit any tax or tax
deficiency when assessed or due (other than any tax deficiency which is being
contested in good faith and by proper proceedings and for which it shall have
set aside on its books adequate reserves therefor) or notice of any state or
federal tax liens shall be filed or issued; 

        (m)
Default in the  payment of any amount owed by the  Borrower to the Lender  other
than any indebtedness arising hereunder;

31

        (n)
Any Guarantor shall repudiate, purport to revoke or fail to perform any such
Guarantor’s obligations under such Guarantor’s guaranty in favor of
the Lender, or shall cease to exist; 

        (o)
Any event or circumstance with respect to the Borrower shall occur such that the
Lender shall believe in good faith that the prospect of payment of all or any
part of the Obligations or the performance by the Borrower under the Loan
Documents is impaired or any material adverse change in the business or
financial condition of the Borrower shall occur. 

        (p)
Any  breach,  default or event of default by or  attributable  to any  Affiliate
under any agreement between such Affiliate and the Lender.

        (q)
John Paul Jenkins or Holly Jean Burlage shall cease to be the President and
Chief Executive Officer and Vice President of Finance respectively of the
Borrower, and the Borrower shall fail to employ a replacement acceptable to the
Lender, which acceptance shall not be unreasonably withheld. 

Section 8.2
   Rights and Remedies. During any Default Period, the
Lender may exercise any or all of the following rights and remedies:

        (a)
the  Lender  may,  by notice  to the  Borrower,  declare  the  Commitment  to be
terminated, whereupon the same shall forthwith terminate;

        (b)
the Lender may, by notice to the Borrower, declare the Obligations to be
forthwith due and payable, whereupon all Obligations shall become and be
forthwith due and payable, without presentment, notice of dishonor, protest or
further notice of any kind, all of which the Borrower hereby expressly waives; 

        (c)
the Lender may, without notice to the Borrower and without further action, apply
any and all money  owing by the  Lender to the  Borrower  to the  payment of the
Obligations;

        (d)
the Lender may exercise and enforce any and all rights and remedies available
upon default to a secured party under the UCC, including, without limitation,
the right to take possession of Collateral, or any evidence thereof, proceeding
without judicial process or by judicial process (without a prior hearing or
notice thereof, which the Borrower hereby expressly waives) and the right to
sell, lease or otherwise dispose of any or all of the Collateral, and, in
connection therewith, the Borrower will on demand assemble the Collateral and
make it available to the Lender at a place to be designated by the Lender which
is reasonably convenient to both parties; 

        (e)
the Lender may  exercise  and  enforce  its rights and  remedies  under the Loan
Documents; and

        (f)
the Lender may exercise any other rights and remedies  available to it by law or
agreement.

32

Notwithstanding the
foregoing, upon the occurrence of an Event of Default described in subsections
(d) or (e) of Section 8.1, the Obligations shall be immediately due
and payable automatically without presentment, demand, protest or notice of any
kind. 

Section 8.3    
Certain Notices. If notice to the Borrower of any intended disposition of
Collateral or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given (in the
manner specified in Section 9.3) at least ten calendar days before the date
of intended disposition or other action. 

ARTICLE IX.

Miscellaneous

Section 9.1    
No Waiver; Cumulative Remedies. No failure or delay by the Lender in
exercising any right, power or remedy under the Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy under the Loan Documents. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law. 

Section 9.2    
Amendments, Etc. No amendment, modification, termination or waiver of any
provision of any Loan Document or consent to any departure by the Borrower
therefrom or any release of a Security Interest shall be effective unless the
same shall be in writing and signed by the Lender, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances. 

Section 9.3    
Addresses for Notices, Etc. Except as otherwise expressly provided
herein, all notices, requests, demands and other communications provided for
under the Loan Documents shall be in writing and shall be (a) personally
delivered, (b) sent by first class United States mail, (c) sent by
overnight courier of national reputation, or (d) transmitted by telecopy,
in each case addressed or telecopied to the party to whom notice is being given
at its address or telecopier number as set forth below: 

        If
to the Borrower:

        Storage Area Networks, Inc.

        900 West Castleton Road, Suite 100

        Castle Rock, Colorado 80104

        Telecopier:  (303) 814-0693

        Attention: CEO, President and CFO

        If to the Lender:

        Wells Fargo Business Credit, Inc.

        MAC C7300-300

        1740 Broadway

        Denver, Colorado  80274

        Telecopier:  (303) 863-4904

        Attention: Aida Sunglao-Canlas

33

or, as to each party, at
such other address or telecopier number as may hereafter be designated by such
party in a written notice to the other party complying as to delivery with the
terms of this Section. All such notices, requests, demands and other
communications shall be deemed to have been given on (a) the date received
if personally delivered, (b) when deposited in the mail if delivered by
mail, (c) the date sent if sent by overnight courier, or (d) the date
of transmission if delivered by telecopy, except that notices or requests to the
Lender pursuant to any of the provisions of Article II shall not be
effective until received by the Lender. 

Section 9.4    
Further Documents. The Borrower will from time to time execute and
deliver or endorse any and all instruments, documents, conveyances, assignments,
security agreements, financing statements and other agreements and writings that
the Lender may reasonably request in order to secure, protect, perfect or
enforce the Security Interest or the Lender’s rights under the Loan
Documents (but any failure to request or assure that the Borrower executes,
delivers or endorses any such item shall not affect or impair the validity,
sufficiency or enforceability of the Loan Documents and the Security Interest,
regardless of whether any such item was or was not executed, delivered or
endorsed in a similar context or on a prior occasion). 

Section 9.5
   Collateral. This Agreement does not contemplate a sale
of accounts, contract rights or chattel paper, and, as provided by law, the
Borrower is entitled to any surplus and shall remain liable for any deficiency.
The Lender’s duty of care with respect to Collateral in its possession (as
imposed by law) shall be deemed fulfilled if it exercises reasonable care in
physically keeping such Collateral, or in the case of Collateral in the custody
or possession of a bailee or other third person, exercises reasonable care in
the selection of the bailee or other third person, and the Lender need not
otherwise preserve, protect, insure or care for any Collateral. The Lender shall
not be obligated to preserve any rights the Borrower may have against prior
parties, to realize on the Collateral at all or in any particular manner or
order or to apply any cash proceeds of the Collateral in any particular order of
application. 

Section 9.6    
Costs and Expenses. The Borrower agrees to pay on demand all costs and
expenses, including (without limitation) attorneys’ fees, incurred by the
Lender in connection with the Obligations, this Agreement, the Loan Documents,
and any other document or agreement related hereto or thereto, and the
transactions contemplated hereby, including without limitation all such costs,
expenses and fees incurred in connection with the negotiation, preparation,
execution, amendment, administration, performance, collection and enforcement of
the Obligations and all such documents and agreements and the creation,
perfection, protection, satisfaction, foreclosure or enforcement of the Security
Interest. 

Section 9.7
   Indemnity. In addition to the payment of expenses
pursuant to Section 9.6, the Borrower agrees to indemnify, defend and hold
harmless the Lender, and any of its participants, parent corporations,
subsidiary corporations, affiliated corporations, successor corporations, and
all present and future officers, directors, employees, attorneys and agents of
the foregoing (the “Indemnitees”) from and against any of the
following (collectively, “Indemnified Liabilities”): 

34

        (a)
any and all transfer taxes,  documentary  taxes,  assessments or charges made by
any  governmental  authority by reason of the execution and delivery of the Loan
Documents or the making of the Advances;

        (b)
any claims, loss or damage to which any Indemnitee may be subjected if any
representation or warranty contained in Section 5.12 proves to be incorrect
in any respect or as a result of any violation of the covenant contained in
Section 6.4(b); and 

        (c)
any and all other liabilities, losses, damages, penalties, judgments, suits,
claims, costs and expenses of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel) in connection with
the foregoing and any other investigative, administrative or judicial
proceedings, whether or not such Indemnitee shall be designated a party thereto,
which may be imposed on, incurred by or asserted against any such Indemnitee, in
any manner related to or arising out of or in connection with the making of the
Advances and the Loan Documents or the use or intended use of the proceeds of
the Advances. 

If any investigative,
judicial or administrative proceeding arising from any of the foregoing is
brought against any Indemnitee, upon such Indemnitee’s request, the
Borrower, or counsel designated by the Borrower and satisfactory to the
Indemnitee, will resist and defend such action, suit or proceeding to the extent
and in the manner directed by the Indemnitee, at the Borrower’s sole costs
and expense. Each Indemnitee will use its best efforts to cooperate in the
defense of any such action, suit or proceeding. If the foregoing undertaking to
indemnify, defend and hold harmless may be held to be unenforceable because it
violates any law or public policy, the Borrower shall nevertheless make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The Borrower’s
obligation under this Section 9.7 shall survive the termination of this
Agreement and the discharge of the Borrower’s other obligations hereunder. 

Section 9.8
   Participants. The Lender and its participants, if any,
are not partners or joint venturers, and the Lender shall not have any liability
or responsibility for any obligation, act or omission of any of its
participants. All rights and powers specifically conferred upon the Lender may
be transferred or delegated to any of the Lender’s participants, successors
or assigns. 

Section 9.9    
Execution in Counterparts. This Agreement and other Loan Documents may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same instrument. 

Section 9.10    
Binding Effect; Assignment; Complete Agreement; Exchanging Information.
The Loan Documents shall be binding upon and inure to the benefit of the
Borrower and the Lender and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights thereunder or any
interest therein without the Lender’s prior written consent. This
Agreement, together with the Loan Documents, comprises the complete and
integrated agreement of the parties on the subject matter hereof and supersedes
all prior agreements, written or oral, on the subject matter hereof. Without
limiting the Lender’s right to share information regarding the Borrower and
its Affiliates with the Lender’s participants, accountants, lawyers and
other advisors, the Lender, WFC Holdings Corporation, and all direct and
indirect subsidiaries of WFC Holdings Corporation, may exchange any and all
information they may have in their possession regarding the Borrower and its
Affiliates, and the Borrower waives any right of confidentiality it may have
with respect to such exchange of such information. 

35

Section 9.11
   Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. 

Section 9.12
   Headings. Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose. 

Section 9.13    
Governing Law; Jurisdiction, Venue; Waiver of Jury Trial. The Loan
Documents shall be governed by and construed in accordance with the substantive
laws (other than conflict laws) of the State of Colorado. This Agreement shall
be governed by and construed in accordance with the substantive laws (other than
conflict laws) of the State of Colorado. Each of the parties hereto hereby
(i) consents to the personal jurisdiction of the state and federal courts
located in the State of Colorado in connection with any controversy related to
this Agreement; (ii) waives any argument that venue in any such forum is
not convenient, (iii) agrees that any litigation initiated by the Lender or
the Borrower in connection with this Agreement or the other Loan Documents shall
be venued in either the District Court of the City and County of Denver,
Colorado, or the United States District Court, District of Colorado; and
(iv) agrees that a final judgment in any such suit, action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. THE PARTIES WAIVE ANY RIGHT
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON OR PERTAINING TO THIS
AGREEMENT. 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
their respective officers thereunto duly authorized as of the date first above
written. 

WELLS FARGO BUSINESS CREDIT, INC.        
                
                
STORAGE AREA NETWORKS, INC.

By:   /s/ Aida Sunglao-Canlas      
                
                   
                
  
By:   /s/ John Jenkins         
     
                
                
                 

Name:      Aida Sunglao-Canlas        
                
                
                  
Name:       John Jenkins

Its:           Commercial Banking Officer  
      
                
                 
      Its:        President

36

Table of Exhibits and Schedules

                Exhibit A
        Form of Revolving Note

                Exhibit B
        Compliance Certificate

                Exhibit C
        Premises

                
                
                ___________________

                Schedule 5.1
        Trade Names, Chief Executive Office, Principal Place of

                
             
                Business, and Locations of Collateral

                Schedule 5.4
        Subsidiaries

                Schedule 5.6
        Litigation

                Schedule 7.1
        Permitted Liens

                Schedule 7.2
        Permitted Indebtedness and Guaranties

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