Document:

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                                                                   EXHIBIT 10.77

                                   [MTI LOGO]

                    SOFTWARE LICENSE AGREEMENT ("AGREEMENT")

THIS AGREEMENT is made on the 7th day of July 2003 (the "Effective Date"),
BETWEEN (1) MTI Technology Corporation, a Delaware, USA, corporation, whose
principal place of business is situated at 14661 Franklin Avenue, Tustin,
California 92780, USA ("MTI"); and (2) Xyratex International Inc., a company
incorporated in England, whose registered office is situated at Langstone Road,
Havant, Hampshire, PO9 ISA, England ("Xyratex").

RECITALS:

         (A)      The parties have entered into a Memorandum of Understanding
                  dated 26th June 2003 relating to the provision of certain
                  premises, assets and software from MTI to Xyratex. This
                  Agreement sets out the terms and conditions under which MTI is
                  to license the Software (as defined hereunder) to Xyratex.

         (B)      MTI has agreed to supply Xyratex with the Software. The
                  Software enables Xyratex to test and evaluate products.

THE PARTIES AGREE:

1.       DEFINITIONS AND INTERPRETATION

1.1      In this Agreement:

         "DERIVATIVE WORKS" means any modification or adaption to any part of
         the Software by Xyratex under the terms of this Agreement.

         "INTELLECTUAL PROPERTY" means any patent, trade mark, design, design
         rights, copyright, database right, topography rights, moral rights,
         know how, trade secret and other confidential information, rights in
         the nature of any of the these items in any country, rights in the
         nature of unfair competition rights and rights to sue for passing off
         or other similar intellectual or commercial right (in each case whether
         or not registered or registrable) and registrations of and applications
         to register any of the these items.

         "LICENSE FEE" means a one time, upfront payment of US$200,000 (two
         hundred thousand US dollars) (exclusive of any value added tax or other
         taxes or levies).

         "OBJECT CODE" means any machine executable code derived in whole or in
         part from the Software.

         "PERMITTED USE" means, in relation to the Software, to (i) internally
         use, reproduce, load, analyze, and create Derivative Works of the
         Source Code for the purpose of testing and evaluating products and
         integrating the Software and any Derivative Works with Xyratex products
         and (ii) to reproduce, distribute and sublicense the use of the
         Software and/or any Derivative Works (with Xyratex products) to third
         parties.

         "SOFTWARE" means the software programs (in Source Code and Object Code
         form) as listed in Schedule A.

         "SOURCE CODE" means the human readable code, which documents the
         Software.

2.       LICENSE

2.1      Upon the Effective Date, MTI shall supply Xyratex with the Software.
         From the Effective Date, MTI may invoice Xyratex for the License Fee.
         Xyratex shall pay the License Fee to MTI within thirty (30) days from
         the date of MTI's invoice.

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2.2      The Intellectual Property, title and interest in the Software supplied
         to Xyratex is, and shall remain, the property of MTI and the Xyratex is
         not licensed to use the Software otherwise than expressly provided for
         in this Agreement.

2.3      With effect from the Effective Date and in consideration of payment of
         the License Fee by Xyratex to MTI, MTI grants to Xyratex a worldwide,
         royalty-free, exclusive, perpetual license for Xyratex to use the
         Software for the Permitted Use.

2.4      The Intellectual Property, title and interest in any Derivative Works
         created by Xyratex (including its employees or contractors) is and
         shall remain, the property of Xyratex (subject to MTI's ownership of
         the underlying Software), MTI has no right or license to any Derivative
         Works and Xyratex (including its employees and contractors) is not
         required to disclose any Derivative Works to MTI.

2.5      Xyratex (and its employees or contractors) shall not use the Software
         (or any revision of the Software that is done by Xyratex under the
         terms of this Agreement) for any purpose other than the Permitted Use.
         Xyratex will inform MTI in writing promptly if Xyratex becomes aware of
         any unauthorized use of the Software.

3.       WARRANTY AND SUPPORT

3.1      MTI makes no warranty, express or implied, and disclaims any warranties
         with respect to the Software, including without limitation, any
         warranty for fitness for a particular purpose, merchantability, quality
         or non-infringement. MTI does not warrant that the operation of the
         Software will be uninterrupted or error free.

3.2      MTI shall not be liable for fixing any errors or providing any type of
         support (technical or otherwise) in the Software. Any services to be
         provided by MTI to Xyratex shall be pursuant to the terms and
         conditions of a separate agreement.

4.       LIMITATION OF LIABILITY

4.1      MTI shall not be liable for costs of procurement of substitutes, loss
         or profits, use or data, interruption of business, or for any other
         special, consequential, incidental or indirect damages, however caused,
         whether for breach of warranty, contract, tort, negligence, strict
         liability, infringement or otherwise.

4.2      Except in the case of fraud or personal injury caused by MTI's
         negligence, MTI's cumulative liability under this Agreement for all
         causes of action shall be limited to and not exceed the fees paid (if
         any) by Xyratex for the license of the Software hereunder, regardless
         of whether MTI has been advised of the possibility of such damages or
         any remedy set forth herein fails of its essential purpose or
         otherwise.

4.3      This section 4 allocates the risks under this Agreement. MTI pricing
         (if any) reflects this allocation of risk and the limitation of
         liability specified herein.

5.       CONFIDENTIALITY

5.1      MTI and Xyratex have entered into a mutual non-disclosure agreement
         ("NDA") with NDA number X410. dated 22nd JULY 1997 and the terms of
         such NDA are hereby incorporated herein and shall govern the disclosure
         of confidential information under this Agreement. These terms of this
         Agreement will take precedence over any conflicting term contained in
         such NDA.

6.       TERM AND TERMINATION

6.1      The license granted under this Agreement shall commence on the
         Effective Date and, unless sooner terminated in accordance with this
         section 6, shall continue thereafter.

Software License Agreement

July 7,2003

                                 Page 2 of 5                       MTI & Xyratex

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6.2      MTI may terminate this Agreement immediately: (a) if Xyratex breaches
         any confidentiality provisions contained herein or in the NDA referred
         to in section 5.1 above; (b) if, at any time during the continuance of
         this Agreement, Xyratex opposes or assists any third party to oppose
         the validity or MTI's ownership of Intellectual Property in the
         Software. Either party may terminate this Agreement immediately: (c)
         upon the other party's insolvency, bankruptcy, reorganization (except
         for the purposes of a bona fide scheme for amalgamation or
         reconstruction), or assignment for the benefit of creditors; or (d) in
         the event of any other material breach by the other party of any
         provision of this Agreement where the defaulting party fails to correct
         such breach within thirty (30) days of written notice thereof.

6.3      If this Agreement terminates: (a) Xyratex will immediately deliver to
         MTI all fees due and owing (if any) as of the date of termination; (b)
         the license granted in section 2 will immediately terminate; (c)
         Xyratex will, at MTI's option, either return to MTI the Software, all
         related documentation and any other confidential information of MTI's,
         and all copies thereof existing at the date of such termination, or
         destroy them and certify in writing to MTI that they have been
         destroyed; (d) notwithstanding the foregoing, Xyratex's right to right
         to sell, maintain or support products into which the Software or any
         Derivative Work has been incorporated before the date of termination
         shall not be affected, except to the extent that such sale, maintenance
         or support constitutes a breach of this Agreement; and (e) any already
         existing rights or liabilities of either party will not be affected.

7.       GENERAL

7.1      Subject to clause 7.2, the parties shall not assign any portion of its
         rights or liabilities under this Agreement without the written consent
         of the other (such consent not to be unreasonably withheld or delayed).

7.2      Each party shall be entitled to assign its respective rights and
         obligations under this Agreement to an affiliate or to such third party
         as may purchase all or a substantial part of its assets (or the
         relevant business division thereof) upon providing the other with prior
         written notice of such assignment.

7.3      This Agreement shall be governed by and construed in accordance with
         the laws of the State of California, USA, and the parties submit to the
         non-exclusive jurisdiction of the Courts of California, USA.

7.4      All notices to be given under this Agreement must be in writing and
         sent to the address of the party as set forth above, Attention: Legal
         Department, or any other address which the recipient may tell the other
         in writing. Any notice may be delivered by hand personally or sent by
         registered mail or by facsimile and will be treated as served: if by
         hand, when delivered; if by registered mail, 72 hours after posting;
         and if by facsimile, when dispatched, provided the sender's fax machine
         produces automatic confirmation of error free transmission to the
         recipient's fax number.

7.5      A failure by either party hereto to exercise or enforce any rights
         conferred upon it by this Agreement shall not be deemed to be a waiver
         of any such rights or operate so as to bar the exercise or enforcement
         thereof at any subsequent time or times.

7.6      If any term of this Agreement is determined to be invalid or
         unenforceable for any reason, it shall be adjusted rather than voided,
         if possible, to achieve the intent of the parties to the extent
         possible. In any event, all other terms shall be deemed valid and
         enforceable to the maximum extent possible.

7.7      Neither party shall be liable for any loss, damage, or penalty arising
         from delay due to causes beyond its reasonable control.

7.8      Both parties acknowledge that they have read, understood and agree to
         be bound by this Agreement, and that this Agreement is the complete and
         exclusive statement of the agreement between the parties regarding the
         subject matter hereof, which supersedes all proposals, oral or written,
         all other communications between the parties relating to such subject
         matter save for fraudulent misrepresentations.

7.9      This Agreement may be modified only by a written instrument duly
         executed by an authorized representative of MTI and Xyratex.

Software License Agreement

July 7,2003

                                 Page 3 of 5                       MTI & Xyratex

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7.10     This Agreement is not intended to be for the benefit of, and shall not
         be enforceable by, any person who is not a party to it, under the
         Contracts (Rights of Third Parties) Act 1999 or otherwise and neither
         party can declare itself a trustee of the rights under it for the
         benefit of any third party.

IN WITNESS the parties have signed this Agreement on the date referred to above.

SIGNED by MARK FRANZEN               )     /s/ Mark Franzen
CHIEF FINANCIAL OFFICER              )    -------------------------------
for and on behalf of                 )       8-4-03
MTI TECHNOLOGY CORPORATION           )

SIGNED BY STEVE BARBER               )     /s/ Steve Barber
CEO                                  )    -------------------------------
for and on behalf of                 )
XYRATEX INTERNATIONAL INC.           )

Software License Agreement

July 7,2003

                                 Page 4 of 5                       MTI & Xyratex

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                                   SCHEDULE A

                                    SOFTWARE

PLEASE SEE ATTACHED SOFTWARE LIST HEADED "SOFTWARE" AS INITIALLED BY MTI AND
XYRATEX.

Software License Agreement

July 7,2003

                                 Page 4 of 5                       MTI & Xyratex

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                                                             Software

<TABLE>
<CAPTION>
                                                                                      Estimated
                                                                       Estimated    Test/Validate
                                                                      Development    /Document
Test Name            Platform              Purpose                       Time           Time       Value Multiplier  Estimated Value
<S>                  <C>        <C>                                   <C>           <C>            <C>               <C>
                                Multi-purpose drive testing
                                suite of tools. Benchmarking/
                                data integrity in both raw
                                and filesystem mode. This is the
                                most valuable utility in the suite
                                of utilities, as it represents
                                many years of development,
                                refining, and review. Many
                                data corruption problems were
                                found and fixed by using this
                                utility. During each problem,
                                the test is always highly
                                scrutinized and problems have
                                been found and fixed over the
                                years. If developing a data
                                integrity utility
                                generator/checker can be
                                avoided, it should be. Development
                                started in 1996. Brett Griffiths
                                was the author and Greg Marcinko
                                has been maintaining and enhancing
                                since then. To start over, it
                                would take about a year for a
                                dedicated expert
                                systems/development/dvt person
                                to recreate. One of the main
                                values of this software is that
                                it is cross platform and time/
                                product tested over the last 7
                                years. The suite includes
                                disk_integrity,
                                disk_failover, disk_format,
Divist Suite         Multiple   disk_capacity, disk_asynch.                    12               6                 2     $ 414,720.00

                                This is a tool for replaying
                                I/O profiles that had been
                                collected in the filed. The
                                goal is to replay the exact
                                sequences of requests to a set
                                of devices for the purpose of
                                turning or debugging.
I/O Profiler/                   Potential patent material and
Data Replay          Multiple   this would be the original work.                2               2                 3     $ 138,240.00

                                ASL's for S200 and Vivant 400.
                                This is already a requested piece
                                of software by Xyratex. It took
                                MTI about 1 year to get through
                                the development effort and
                                testing cycle. Even after a year,
                                MTI was touted as the first to
                                market with an ASL. The basis for
                                the design was flexiblity across
                                multiple products. After the
                                release of the code, there has
                                not been a requirement ot fix a
                                single bug, thus avoiding a
                                lengthly and time consuming test
                                cycles(veritas has to approve all
                                of the tests, do a source code
Veritas ASL          Solaris    review, compiling comparisons, etc).            2               8                 1     $ 115,200.00

                                Automates the setting and
                                displaying of the Mode Pages of
                                SCSI/FC devices. This is the only
                                way to set all of the mode pages
                                for disk drives within a mylex
                                based product to their correct
                                values or just read the values.
                                It also works for JBOD and RAID
                                products. Uses the MTI SCSI
Gldmps               Solaris    pass thru layer.                                4               2                 1     $  69,120.00

                                Collects the current state of a
                                host system and saves it to a
                                text file. Very valuable for
                                support ogranization, as it does
                                a snapshot fo the entire system
                                that is being examined. It runs
                                on all UNIX platforms. Refined
host_state_collect   Multiple   over the past 7 years.                          1             0.5                 3     $  51,840.00

                                This is software that abstracts
                                the unique API's for all of the
                                UNIX platforms into a single API
MTI SCSI                        for accessing the SCSI icotl
pasthru layer        Multiple   layer.                                          4               2               0.5     $  34,560.00

                                Automation tool to Create load
                                and exercise an Oracle database
                                using the FCC license data.
                                Very unique experience to develop
DVTORA 1             Solaris    this test.                                      2             0.5                 1     $  28,800.00

                                MTI Serial Port Interface. Used
                                to capture data from a comm port.
                                This is very valuable for UNIX
                                hosts because the normal method
                                of reading from the serial
                                port(tip) is very complex and
                                different on every system. This
                                was initially called nmft for
Mtispi               Multiple   (no more box tip).                              1             0.5                 1     $  17,280.00

                                Data integrity test sepecifically
                                designed to test defragmentation
                                tool. Basically, this creates a
                                situation on the disk where it is
Fragdisk             Multiple   fragmented.                                   0.5             0.5                 1     $  11,520.00

                                Java based tool to dynamically
                                display performance statistics of
                                a disk. Must be used on a system
                                that supports iostat. This tool
                                is very useful for demos because
                                it represents visual feedback to
                                the user regarding various
                                performance metrics for specified
Mtichart             Multiple   devices.                                      0.5            0.25                 1     $   8,640.00

                                Displays all the data associated
                                with a FC-MI compliant HBA. Dumps
                                the internal queue in realtime of
                                the HBA, inquires for all
                                'connected' devices, etc. Very
                                useful tool for debugging SAN
Hbadump              Solaris    issues.                                       0.5            0.25                 1     $   8,640.00

                                Automation tool to show the
Showdisks            Multiple   available devices on a system                 0.1                                 1     $   1,152.00

                                Automated the creation and
                                destruction of logical volumes on
pvlinks/unpvlinks    HPUX       HPUX                                          0.1                                 1     $   1,152.00

                                Automates the capture of system
Mti_Syslog           Multiple   logs during test execution.                   0.1                                 1     $   1,152.00

                                Automates the file system creation
Imount/dismount      Multiple   and mounting of a device.                     0.1                                 1     $   1,152.00
</TABLE>

                                    Page 1

<PAGE>

<TABLE>
<CAPTION>
                                                              Software
<S>              <C>         <C>                                                                     <C>        <C>       <C>
                  Veritas
Concat            Script      Automates the creation of a Veritas concatentation set.                 0.1       1        $1,152.00
                  Veritas
Mirror            Script      Automates the creation of a Veritas Mirror                              0.1       1        $1,152.00
                  Veritas
Raid10            Script      Automates the creation of a Veritas RAID 10 set                         0.1       1        $1,152.00
                  Veritas
Raid5             Script      Automates the creation of a Veritas RAID 5 set                          0.1       1        $1,152.00
                  Veritas
remove_vol        Script      Automates the destruction of a Veritas volume set                       0.1       1        $1,152.00
                  Veritas
Stripe            Script      Automates the creation of a Veritas Stripe set                          0.1       1        $1,152.00
                              Automates the failover testing of a mylex based controller.
failover_soft     Solaris     This is a combination of scripts and code.                              0.1       1        $1,152.00
mti_cda_sun.sh    Solaris     Automates a basic capture of a crash dump from a Solaris box.           0.1       1        $1,152.00
Unixpage          Multiple    Test tool to validate a disk device can be used as a system
                              page/swap device.                                                       0.1       1        $1,152.00
ntpage.exe        Windows     Test tool to validate a disk device can be used as a system
                              page/swap device.                                                       0.1       1        $1,152.00
file_copy.exe     Windows     Executes file copy operations.                                          0.1       1        $1,152.00
fs_check.exe      Windows     Automates a file system check on Windows.                               0.1       1        $1,152.00
showscsi.exe      Windows     Dumps devices on the SCSI/FC adapters                                   0.1       1        $1,152.00
Download          Solaris     Downloads firmware to a disk drive on Solaris.                          0.1       1        $1,152.00
Inquiry           Solaris     Runs an inquiry to a disk drive on Solaris                              0.1       1        $1,152.00
read_cap          Solaris     Reads the capacity of a disk drive on Solaris                           0.1       1        $1,152.00
Format_512        Solaris     Formats a disk to 512 sectors on a Solaris                              0.1       1        $1,152.00

                                                                                                              TOTAL    $922,752.00
</TABLE>

                                     Page 2<PAGE>

                                                                   EXHIBIT 10.78

                                                            AGREEMENT NO. 500155

                            FALCONSTOR SOFTWARE, INC.
                           SOLUTION PROVIDER AGREEMENT

THIS SOLUTION PROVIDER AGREEMENT ("Agreement") is made and entered into on May
7, 2003 (the "Effective Date") between FALCONSTOR SOFTWARE, INC. ("FalconStor"),
a Delaware Corporation with its principal offices at 125 Baylis Rd., Suite 140,
Melville, NY 11747 USA, and MTI Technology Corporation ("Solution Provider"), a
Delaware corporation with its principal offices at 14661 Franklin Avenue,
Tustin, CA 92780.

The parties agree as follows:

1.       SCOPE OF AGREEMENT

This Agreement provides for the marketing and distribution by Solution Provider
of the FalconStor software products ("Products" as defined below) and identified
on one or more Exhibits attached to this Agreement.

2.       DEFINITIONS

         "Demonstration Software" means the commercially available Products
         listed in Exhibit I that are used internally by Solution Provider.
         Demonstration Software includes any Maintenance Releases and New
         Versions thereof provided by FalconStor to Solution Provider under this
         Agreement.

         "Documentation" means technical documents and manuals relating to the
         end use of the Products. "End User" means a third party licensed to use
         the Products internally and not for redistribution.

         "End User Agreement" means FalconStor's then standard shrink-wrapped
         license agreement pursuant to which an End User may use a Product
         distributed by Solution Provider pursuant to this Agreement.

         "First Level Support" means a level of technical support that shall be
         substantially similar to FalconStor's first level support services as
         described in FalconStor's then current Client Support Handbook.

         "Intellectual Property" means all property, whether in the form of
         designs, formulas, procedures, methods, apparatus, ideas, inventions,
         creations, improvements, works of authorship, or other similar
         material, subject to protection under patent, copyright or trade secret
         law, or any other statutory provision or common law doctrine.

         "Maintenance Releases" means product temporary fixes, error
         corrections, work-arounds and corrections made available by FalconStor
         to supported End Users of the Products, but does not include new
         products available from FalconStor for an additional fee.

         "New Versions" means a new version of the Products containing new
         features or functions as well as error corrections, but does not
         include new products available from FalconStor for an additional fee.

         "Operating Environments" means the hardware platform and operating
         system combinations that correspond to specific versions of the
         Products generally available from FalconStor.

<PAGE>

         "Products" means all or any portion of the commercially available
         software products specified in Exhibit I together with related
         Documentation and all corrections, Maintenance Releases and New
         Versions thereof.

         "Second Level Support" means technical support for the Products
         provided by FalconStor to Solution Provider as set forth in Section
         10(b) of this Agreement.

         "Term" means the period set forth in Section 12 of this Agreement.

         "Territory" means the geographic region described in the Exhibit VI to
         this Agreement.

         "Upgrade" means a revision of the Product that includes enhancements
         that increase performance, increase functionality or add features, for
         which FalconStor charges a license fee.

3.       APPOINTMENT AND GRANT OF LICENSES

a.       APPOINTMENT. During the Term and subject to the terms and conditions of
         this Agreement, FalconStor hereby grants to Solution Provider, and
         Solution Provider hereby accepts, the non-exclusive, non-transferable
         right and license to distribute the Products to End Users in the
         Territory. The Products shall be distributed by Solution Provider under
         FalconStor's trademarks. FalconStor expressly reserves the right from
         time to time, in its sole discretion and without liability to Solution
         Provider, to: (i) appoint other Solution Providers, distributors or
         other third parties to solicit and make sales directly, both nationally
         and internationally, including, without limitation, within the
         Territory; (ii) modify the Territory upon giving Solution Provider
         thirty (30) days prior written notice of such modification, and; (iii)
         license, distribute or sell any Products directly to End Users or in
         any other channel of distribution within or without the Territory.
         FalconStor reserves the right to review and update the Products subject
         to this Agreement and the supported Operating Environments at any time
         upon 30 days notice to Solution Provider.

b.       DEMONSTRATION LICENSES. Solution Provider will be granted Demonstration
         Software to use in a lab or test environment and for demonstration
         purposes for Solution Provider's clients. Solution Provider must
         complete FalconStor's then standard registration process for each copy
         of the Demonstration Software. Demonstration Software may not be used
         by Solution Provider for production purposes or transferred or
         sublicensed to any third party.

c.       INTERNAL USE. Solution Provider will be granted a license to use
         FalconStor's products to run in a production environment at a
         discounted rate. As a condition to such use, Solution Provider must
         follow FalconStor's current registration process, which will enable
         technical support.

4.       LICENSE AND DISTRIBUTION LIMITATIONS. The licenses and the distribution
         rights granted in Section 3 are subject to the following limitations:

a.       Solution Provider shall require each End User who has licensed the
         Products to acknowledge and agree to FalconStor's standard End User
         license agreement as provided by FalconStor to Solution Provider from
         time to time. FalconStor must approve any modifications to the standard
         End User license agreement.

b.       Solution Provider shall not (nor shall it permit any third party to)
         directly or indirectly: (i) copy or manufacture the Products or any
         portion thereof, (ii) reverse engineer, decompile, disassemble or
         otherwise attempt to derive the source code of the Products; (iii)
         encumber, time-share, rent or

                                        2

<PAGE>

         lease or assign the rights granted by this Agreement; or (iv) adapt,
         translate, port or otherwise modify, except as permitted under the
         terms of this Agreement, any Products.

c.       Solution Provider shall respect and not remove, obliterate, or cancel
         from view any copyright, trademark or confidentiality notice or legend
         appearing on the Products, its media, the Documentation, or output
         generated by such Products, or any portion thereof.

d.       Except as agreed by FalconStor in writing, Solution Provider shall not
         have any right to establish or to appoint any sub-Solution Providers or
         sub-dealers of the Products, nor shall Solution Provider allow any
         third party to sublicense, copy, assign, transfer or distribute the
         Products.

e.       Solution Provider shall be solely responsible for compliance with any
         laws, rules, or regulations governing the export, re-export, import or
         use of the Products, including, without limitation, the procurement and
         renewal of all export, re-export or import licenses or approvals
         required under U.S. or any foreign law for the export, re-export,
         import or use of the Products or any portion thereof, and shall pay all
         costs and other expenses in connection with such procurement and
         renewal. Solution Provider acknowledges that restrictions imposed by
         U.S. government agencies on the export of software are subject to
         change without notice and that Solution Provider shall be solely
         responsible for compliance with all such export restrictions. Solution
         Provider agrees to indemnify FalconStor and hold FalconStor harmless
         for any violation of any statute, rule or regulation regarding the
         export of the Products.

f.       The Products are provided with RESTRICTED RIGHTS. Use, duplication, or
         disclosure by the Government is subject to restrictions set forth in
         subparagraph (c)(l)(ii) of the Rights in Technical Data and Computer
         Software clause at DFARS 252.227-7013, and in subparagraphs (a) through
         (d) of the Commercial Computer-Restricted Rights clause at FAR
         52.227-19, and in similar clauses in the NASA FAR Supplement, when
         applicable, and the successor statutes thereto. Solution Provider shall
         take all necessary steps to assure that FalconStor obtains full
         protection of its intellectual property rights under these provisions.
         Solution Provider shall affix (if not already affixed) to any media
         containing all or any portion of the Product provided to the Government
         a restricted rights legend substantially similar to the following:
         "This Program is provided with Restricted Rights. Use, duplication or
         disclosure by the Government is subject to the restrictions set forth
         in DFARs 252.227-7013 (c) (1) (ii) and 48 CFR 52.227-19 (c) (1) and (2)
         or applicable successor provisions."

5.       COMPLIANCE WITH LAWS

a.       Solution Provider will, at its expense, obtain and maintain all
         governmental authorizations, registrations and filings that may be
         required under the laws of the Territory to execute or to perform this
         Agreement. Solution Provider will consult FalconStor and obtain
         FalconStor's prior written approval before registering this Agreement
         with any government authorities. Solution Provider will otherwise
         comply with all laws, regulations and other legal requirements that
         apply to this Agreement, including tax and foreign exchange legislation
         and will promptly notify FalconStor of any change in legislation that
         may affect Solution Provider's performance of this Agreement.

b.       Solution Provider will not use any payment or other benefit derived
         from FalconStor to offer, promise or pay any money, gift or any other
         thing of value to any person for the purpose of influencing official
         actions or decisions affecting this Agreement, while knowing or having
         reason to know that any portion of this money, gift or thing will,
         directly or indirectly, be given, offered or promised to an employee,
         officer or other person acting in an official capacity for any
         government or agency or any political party, party official or
         candidate for political office.

                                        3

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6.       RESERVATION OF RIGHTS

         All rights not expressly granted to Solution Provider under this
         Agreement are reserved to FalconStor.

7.       MARKETING

         Solution Provider shall use reasonable efforts to actively promote the
         Products, and shall maintain the formal name of the Products (with
         appropriate trademark designations) in all advertising and other
         printed materials relating to the Products. All marketing efforts shall
         conform to FalconStor's Graphics/Logos Design Standards, available at
         www.falconstor.com/logousage.asp. FalconStor reserves the right to
         require Solution Provider to furnish to FalconStor in advance for
         review and approval any and all promotional, advertising and other
         materials which refer to the Products or which use or display any
         trademark, service mark, logo or trade name of FalconStor. FalconStor
         also reserves the right to require Solution Provider to discontinue use
         of any promotional, advertising or other materials referring to
         FalconStor or the Products.

8.       ORDERS

a.       Solution Provider shall fax purchase orders to (632) 501-7633 (each an
         "Order").

         (i)      FalconStor reserves the right to change the fax number for
         Orders on five (5) days written notice to Solution Provider.

         (ii)     Solution Provider acknowledges that it is FalconStor's intent
         to require all Orders to be placed online in the future and agrees to
         convert to an online ordering process at FalconStor's request.

b.       Each Order shall be subject to acceptance by FalconStor. Solution
         Provider shall provide FalconStor with such information as FalconStor
         may require about how a prospective End User proposes to use the
         Products, including, but not limited to, the number of CPU(s) on an
         Application Server on which the Products will be operated by End User.
         FalconStor reserves the right to require Solution Provider to register
         and to provide additional information regarding each End User with its
         Orders. Solution Provider understands and agrees that FalconStor may
         delay or withhold issuance of authorization keys for the Products in
         the event Solution Provider or its End User fails to provide the
         necessary information to issue the authorization key. No provisions in
         Solution Provider's purchase orders, license agreements or in any other
         business forms employed by Solution Provider shall add to or supersede
         the terms and conditions of this Agreement, which shall exclusively
         govern the relationship of the parties.

c.       All Orders for the Products (or any Upgrade) shall be pursuant to a
         Solution Provider registration of Product. In addition to any other
         right or remedy, FalconStor may, at its option, refuse any Order placed
         by Solution Provider, or any accepted order or delay shipment thereof,
         if Solution Provider is delinquent in any payments to FalconStor or if
         Solution Provider is otherwise in breach of this Agreement.

d.       Upon receipt of Orders from Solution Provider that comply with all
         requirements of this Agreement, FalconStor will, unless Solution
         Provider is delinquent in its payments or in breach of its agreements
         with FalconStor, make reasonable efforts to fill all orders for the
         Products and issue associated authorization keys electronically to
         Solution Provider or its End Users. FalconStor shall

                                        4

<PAGE>

         not be liable to Solution Provider, or to any other person, for
         FalconStor's failure to fill any Orders, or for any delay in delivery
         or in filling any Orders for any reason whatsoever.

e.       Unless otherwise agreed, all Products shall be shipped by FalconStor
         FOB the point of shipment to Solution Provider at Solution Provider's
         address set forth above or such other address in the Territory as
         Solution Provider may notify FalconStor as its delivery address WHICH
         MAY INCLUDE THE END USER ADDRESS. FalconStor will select the
         appropriate method of shipment and will obtain all licenses required to
         export the Products from the country of origin. Solution Provider will
         (i) obtain all licenses required to import the Products; (ii) clear the
         Products through customs promptly upon their arrival in the Territory;
         and (iii) pay all shipping costs, customs duties and other charges
         assessed on such imports into the Territory, if applicable. Solution
         Provider shall be responsible for shipment to its customers.

f.       Solution Provider shall complete and maintain the information requested
         on Exhibit V regarding contacts for marketing and pricing. No Product
         will be shipped unless Exhibit V is filled out. Notices from FalconStor
         regarding marketing and pricing will be deemed received by Solution
         Provider if addressed to the individuals identified on Exhibit V at the
         e-mail addresses listed thereon. It is Solution Provider's
         responsibility to update Exhibit V if it wishes to change a contact or
         an address.

9.       REPRESENTATIONS BY SOLUTION PROVIDER

         Solution Provider shall not make (i) any representation or warranty
         whatsoever on behalf of FalconStor; (ii) any representation or warranty
         concerning the quality, performance or other characteristics of the
         Products other than those which are consistent in all respects with,
         and do not expand the scope of, the warranties set forth in this
         Agreement; or (iii) any commitment to modify any of the Products.

10.      CUSTOMER SUPPORT

a.       SOLUTION PROVIDER FIRST LEVEL SUPPORT. If Solution Provider is
         authorized by FalconStor in writing to provide First Level Support for
         all or any of the Products, Solution Provider shall ensure that___2_
         number of employees complete the required minimum training for each of
         the Products and Operating Environments as necessary to be certified by
         FalconStor as an authorized provider of First Level Support services.
         If Solution Provider provides First Level Support, it shall provide
         First Level Support substantially similar to that described in the
         FalconStor Client Support Handbook, attached hereto as Exhibit II.
         FalconStor may provide First Level Support and other support services
         directly to End Users, but shall not have any obligation to do so
         unless the End User has registered for the product and has entered into
         a maintenance agreement directly with Solution Provider or FalconStor.

b.       SECOND LEVEL SUPPORT. FalconStor shall provide Solution Provider with
         Second Level Support (in accordance with FalconStor's Client Support
         Handbook) from FalconStor's North American support centers, or, at
         FalconStor's sole discretion, from other FalconStor worldwide support
         centers, for Products properly licensed to Solution Provider's End
         Users who have also purchased technical support for the Products, and
         provided that Solution Provider follows the following procedures:

         (i)      Solution Provider shall dedicate _2_ technical staff members
                  to the Product. These technical staff members shall be
                  qualified and trained in the Products and shall review all
                  reported errors to determine if the error occurs in the
                  Products or in other hardware or

                                        5

<PAGE>

                  software products not supplied by FalconStor. If Solution
                  Provider determines that the error occurs in the Products,
                  Solution Provider may then submit the error to FalconStor.

         (ii)     Solution Provider shall submit detailed descriptions of any
                  reported errors. If FalconStor is not able to replicate the
                  error, Solution Provider shall provide any additional
                  information required by FalconStor (which may include a sample
                  program enabling FalconStor to replicate the error). Solution
                  Provider will also make its personnel available to assist in
                  problem identification and resolution.

c.       NON-CONTRACTED SECOND LEVEL SUPPORT. FalconStor shall make available
         Second Level support to the Solution Provider on an "Individual Premium
         Incident" basis in accordance with its then published price list for
         support calls placed outside the End User contracted support hours.
         Solution Provider shall not be entitled to a discount on such support.

d.       END USER HANDBOOK. FalconStor's Client Support Handbook for End Users
         is attached hereto as Exhibit III. This handbook describes how End
         Users may receive support for the Products from FalconStor.

11.      LICENSE AND UPGRADE FEES

         The price charged by FalconStor to Solution Provider for licenses of
         the Products acquired by Solution Provider from FalconStor during the
         term of this Agreement shall be the then prevailing suggested list
         price for the version of the Product (or Upgrade) ordered by Solution
         Provider, less the discount then available to Solution Provider under
         Exhibit I. Alternatively, Solution Provider may elect to acquire
         Product licenses from a distributor of the Products that is authorized
         by FalconStor to distribute the Products to Solution Providers
         ("Authorized Distributor"). If Solution Provider elects to purchase
         Product licenses from an Authorized Distributor, the prices, payment
         and shipment terms and other commercial terms shall be agreed between
         Solution Provider and the Authorized Distributor.

12.      TERM

         The Initial Term of this Agreement shall commence on the Effective Date
         and shall continue for a period of twelve (12) months from such date,
         unless sooner terminated as hereinafter provided. After the Initial
         Term, this Agreement may be renewed on an annual basis if mutually
         agreed by both parties in writing prior to the end of the Term. "Term"
         shall mean the Initial Term together with any agreed renewal periods.

13.      PAYMENTS

a.       Terms of payment on all invoices from FalconStor shall be net thirty
         (45) days. All payments shall be made in US Dollars.

b.       All prices listed in Exhibit I are exclusive of all taxes, including
         customs duties, import taxes and sales, use or value added taxes where
         applicable. Upon presentation of invoices by FalconStor, Solution
         Provider shall pay any and all applicable tariffs, duties or taxes
         (other than franchise and income taxes for which FalconStor is
         responsible) imposed or levied by any government or agency, including,
         without limitation, federal, state and local sales, use, value added
         and personal property taxes. Any claimed exemption from such tariffs,
         duties or taxes must be supported by a tax exemption certificate and
         other proper documentary evidence delivered to FalconStor.

                                        6

<PAGE>

c.       If Solution Provider is legally required to withhold any income or
         remittance tax from amounts payable to FalconStor, then (i) Solution
         Provider will promptly notify FalconStor, (ii) the amount payable will
         be automatically increased to the full extent required to offset such
         tax, so that the amount remitted to FalconStor net of all taxes, equals
         the amount stated in the invoice, and (iii) Solution Provider will
         provide FalconStor with the official receipt of payment of such taxes
         to the appropriate taxing authority. Solution Provider will be
         responsible for payment of any withholding taxes and shall indemnify
         and hold FalconStor harmless from and against any claim for unpaid
         withholding taxes, interest and penalties, which may be claimed by the
         applicable tax authorities relating to payment of such taxes.

d.       Solution Provider shall attach all applicable resale certificate(s) to
         this Agreement. If resale certificate(s) is not attached, FalconStor
         will be required to charge sales tax on orders.

e.       Solution Provider shall submit payment reports including Point of Sales
         ("POS") information or reports within twenty (20) days from the last
         day of each quarter. The POS report shall be transmitted electronically
         and shall identify, for the relevant quarter, all sales by country,
         state or other local subdivision, customer, dollar amount and SKU. The
         POS report shall separately identify any maintenance or support sold
         for the Products.

14.      AUDIT RIGHTS

         FalconStor shall have the right, during the Term and for two (2) years
         thereafter, in each case with advance notice and during regular
         business hours, to request that audits of Solution Provider be
         conducted by an independent, third party auditor selected by
         FalconStor. Such audit shall be of the records of Solution Provider
         with respect to the Products, for the purpose of verifying the licenses
         used by Solution Provider or its End Users and the maintenance and
         support services provided by Solution Provider. Such audits shall be
         conducted in such a way as to minimize interference with Solution
         Provider's normal business operations, and be no more frequently than
         two (2) times per year. If any such audit should disclose any
         underpayment by Solution Provider, Solution Provider shall promptly pay
         FalconStor the amount of the underpayment, together with interest at a
         rate of one-and-one-half percent (1-1/2%) per month or the highest rate
         allowed by law, whichever is lower, from the date on which such amount
         became due to FalconStor from Solution Provider. If the underpayment
         amount is more than five percent (5%) of the amount due for the
         relevant period, Solution Provider shall pay FalconStor's costs and
         expenses for such audit.

15.      PROPRIETARY INFORMATION AND NON-DISCLOSURE

a.       FalconStor (or its licensors) retains ownership of all Intellectual
         Property rights and know-how in and relating to the Products. The
         Products, the Documentation and other proprietary information provided
         by FalconStor to Solution Provider hereunder contain and constitute
         trade secrets, information and data proprietary to and copyrighted by
         FalconStor. Neither Solution Provider nor its employees shall use or
         allow such information or data to be disclosed to third parties or
         duplicated except as expressly allowed in this Agreement. Any
         customizations, enhancements, improvements, translations, derivative
         works or other modifications of the Products (collectively,
         "Modifications") made by Solution Provider shall be deemed to be works
         made for hire and shall belong to FalconStor and FalconStor shall have
         all right, title and intellectual property interest to such work. To
         the extent that copyright title to any Modifications may not, by
         operation of law, vest in FalconStor, or such Modifications may not be
         considered works made for hire, all right, title and interest therein
         are hereby and with no further action of Solution Provider required,
         irrevocably assigned to FalconStor. The copyright to all such
         Modifications shall belong exclusively to FalconStor, with FalconStor
         having the right to obtain and to hold in its own name or the name of
         its nominee all copyrights and any extensions and renewals thereof.
         Solution Provider agrees to

                                        7

<PAGE>

         give FalconStor and any person designated by FalconStor any reasonable
         assistance, at FalconStor's expense, to perfect the copyright defined
         in this paragraph and to assign such rights to any affiliate of
         FalconStor, including without limitation by executing and delivering
         all such instruments and documents as FalconStor may deem necessary or
         desirable in connection therewith. Solution Provider shall ensure that
         it has sufficient contractual agreements with its employees and
         independent contractors to ensure that the copyright to the
         Modifications may be assigned to FalconStor. FalconStor shall have no
         obligation to support any customizations, extensions or modifications
         made to the Products by any third party unless otherwise agreed by
         FalconStor in writing.

b.       Solution Provider acknowledges that Solution Provider's failure to
         comply with the provisions of this Section shall result in irreparable
         harm to FalconStor for which a remedy at law would be inadequate, and
         therefore, in the event of the breach, or threatened breach by Solution
         Provider of its obligations under this Section, FalconStor shall be
         entitled to equitable relief in the form of specific performance and/or
         an injunction, without the posting of any bond, for any such actual or
         threatened breach, in addition to the exercise of any other remedies at
         law or in equity.

c.       During the term of this Agreement, Solution Provider is authorized by
         FalconStor to use the trademarks, trade names, logos, and designations
         used by FalconStor for Products only in connection with Solution
         Provider's advertisement and promotion of Products. All use of
         FalconStor's trademarks, trade names, logos and designations shall be
         in accordance with FalconStor's Graphics/Logos Design Standards,
         available at www.falconstor.com/logousage.asp. FalconStor reserves the
         right to require Solution Provider to submit to FalconStor for its
         prior approval any and all advertising and sales literature of Solution
         Provider which refer to FalconStor or include any of FalconStor's
         marks. If FalconStor has not notified Solution Provider of its
         disapproval of such materials within five (5) business days of receipt,
         the materials shall be deemed approved. Solution Provider shall make
         all modifications to the materials deemed necessary by FalconStor to
         protect the goodwill of FalconStor's marks. Solution Provider
         acknowledges and agrees that FalconStor is the owner of its marks and
         that all goodwill arising out of Solution Provider's use of the
         FalconStor's marks pursuant to this Agreement shall inure to
         FalconStor. Solution Provider shall not at any time or in any way
         indicate ownership of or any right in the FalconStor's marks. Solution
         Provider's right to use the FalconStor's marks shall immediately cease
         upon termination or expiration of this Agreement except as may be
         agreed upon by the parties regarding Solution Provider's disposal of
         inventory of Products at the time of termination or expiration.
         Solution Provider shall at all times conduct business only under its
         own name and may not use FalconStor's marks as part of its business
         name. Solution Provider shall not register or apply for registration of
         any of FalconStor's marks or any name or mark that incorporates any of
         FalconStor's marks anywhere in the world. FalconStor reserves the right
         to require Solution Provider to discontinue the use of any advertising
         or marketing materials relating to FalconStor, the trademarks, names or
         logos, or the Products.

16.      LIMITED WARRANTY

a.       Both parties represent and warrant that they have the right to enter
         into this Agreement. FalconStor warrants that the then current,
         unmodified version of the Products will substantially perform the
         functions or generally conform to the then current version of their
         published Documentation for a period of ninety (90) days from delivery
         to the End User. If it is determined that the Products do not perform
         as warranted, FalconStor's only responsibility will be to use
         reasonable efforts, consistent with industry standards, to cure the
         defect. FalconStor does not represent that the Products are error free
         or will satisfy all of Solution Provider's or its End User's
         requirements. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES. TO THE
         MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, ALL OTHER WARRANTIES,

                                        8

<PAGE>

         CONDITIONS AND REPRESENTATIONS, WHETHER EXPRESS OR IMPLIED, VERBAL,
         STATUTORY OR OTHERWISE, AND WHETHER ARISING UNDER THIS AGREEMENT OR
         OTHERWISE ARE HEREBY EXCLUDED, INCLUDING, BUT NOT LIMITED TO, THE
         IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
         PURPOSE. FALCONSTOR SHALL NOT BE BOUND BY OR LIABLE FOR ANY
         REPRESENTATIONS OR WARRANTIES, WHETHER WRITTEN OR ORAL, WITH RESPECT TO
         THE PRODUCTS MADE BY SOLUTION PROVIDER OR ITS AGENTS, EMPLOYEES OR
         REPRESENTATIVES.

b.       Except for the Indemnification set forth below in Section 17(a),
         FalconStor's maximum liability for damages under this Agreement
         (regardless of the form of action, whether in contract or tort) shall
         not exceed the amount paid by Solution Provider to FalconStor for the
         Products or services as to which the claim relates.

c.       IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL OR
         CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS OR REVENUE OR DATA OR
         INFORMATION LOSS, INCURRED BY EITHER PARTY OR ANY THIRD PARTY, IN THE
         PERFORMANCE OF THIS AGREEMENT, OR RELATED TO THE PRODUCTS, MAINTENANCE
         RELEASES, OR NEW VERSIONS, WHETHER IN AN ACTION IN CONTRACT OR TORT,
         EVEN IF THE OTHER PARTY OR ANY OTHER PERSON HAS BEEN ADVISED OF THE
         POSSIBILITY OF SUCH DAMAGES, EXCEPT TO THE EXTENT THAT DAMAGES FOR
         BREACH OF CONFIDENTIALITY OR PATENT, COPYRIGHT OR TRADE SECRET
         INFRINGEMENT ARE DEEMED TO BE CONSEQUENTIAL IN NATURE. IN ANY EVENT,
         THE LIABILITY OF FALCONSTOR TO SOLUTION PROVIDER FOR ANY REASON AND
         UPON ANY CAUSE OF ACTION OR CLAIM SHALL BE LIMITED TO THE LICENSE FEES
         PAID TO FALCONSTOR BY SOLUTION PROVIDER UNDER THIS AGREEMENT. THIS
         LIMITATION APPLIES TO ALL CAUSES OF ACTION OR CLAIMS IN THE AGGREGATE,
         INCLUDING WITHOUT LIMITATION TO BREACH OF CONTRACT, BREACH OF WARRANTY,
         NEGLIGENCE, STRICT LIABILITY, MISREPRESENTATIONS, CLAIMS FOR FAILURE TO
         EXERCISE DUE CARE IN THE PERFORMANCE OF SERVICES HEREUNDER AND OTHER
         TORTS. BOTH PARTIES UNDERSTAND AND AGREE THAT THE REMEDIES, EXCLUSIONS
         AND LIMITATIONS HEREIN ALLOCATE THE RISKS OF PRODUCT AND SERVICE
         NONCONFORMITY BETWEEN THE PARTIES AS AUTHORIZED BY THE UNIFORM
         COMMERCIAL CODE AND/OR OTHER APPLICABLE LAWS. THE LICENSE FEES HEREIN
         REFLECT, AND ARE SET IN RELIANCE UPON, THIS ALLOCATION OF RISK AND THE
         EXCLUSION OF CONSEQUENTIAL DAMAGES AND LIMITATIONS OF LIABILITY SET
         FORTH IN THIS AGREEMENT. THIS EXCLUSION ALSO INCLUDES ANY LIABILITY
         THAT MAY ARISE OUT OF THIRD-PARTY CLAIMS AGAINST SOLUTION PROVIDER. ANY
         ACTION BY A PARTY MUST BE BROUGHT WITHIN THE EARLIER OF TWO (2) YEARS
         AFTER SUCH PARTY OBTAINS KNOWLEDGE OF THE FACTS LEADING TO SUCH ACTION
         AND THE APPLICABLE STATUTE OF LIMITATIONS.

17.      INDEMNIFICATION

a.       FalconStor at its expense, shall defend any action brought against
         Solution Provider to the extent that it is based on a claim that any
         Product infringes a third party's copyright or a patent duly issued by
         the United States of America. FalconStor shall pay all damages and
         costs finally awarded against Solution Provider in such action,
         provided that FalconStor is notified in writing of the existence of
         such claim against Solution Provider within seven (7) days of Solution
         Provider's first learning of the same; and provided that FalconStor is
         given full authority to control the defense, costs and settlement of
         the claim and that FalconStor receives reasonable cooperation and

                                        9

<PAGE>

         assistance from Solution Provider. FalconStor will not be obligated to
         defend or otherwise indemnify Solution Provider in any lawsuit or as to
         any claim which arises from or relates to any combination of the
         Product with another product not supplied by FalconStor, or if such
         claim is based upon a use of the Product for a purpose for which it was
         not designed or if the Product has been modified by any party other
         than FalconStor. In lieu of the foregoing indemnification obligations,
         FalconStor shall have the option, at its expense, either to procure for
         an End User the right to continue using the Product or to replace or
         modify the Product so that it is no longer infringing, or, if such
         options are not reasonably available, to refund to Solution Provider
         the amount actually paid by Solution Provider to FalconStor for the
         Product. The foregoing states the entire obligation of FalconStor with
         respect to the infringement of intellectual property rights of any
         third party.

b.       Solution Provider shall indemnify and hold FalconStor harmless from and
         against all claims, judgments, awards, costs, expenses, damages and
         liabilities (including reasonable attorneys' fees) of whatsoever kind
         and nature that may be asserted, granted or imposed against FalconStor
         directly or indirectly arising from or in connection with (i) any
         claims that any software supplied by Solution Provider (other than any
         unmodified Products provided by FalconStor) infringes any third party
         intellectual property rights; (ii) any misrepresentation made by
         Solution Provider regarding FalconStor or the Products; and (iii) any
         warranty, condition, representation, guarantee or indemnity granted by
         Solution Provider with respect to the Products in addition to the
         limited warranty specified in the Section 16 of this Agreement titled
         "Limited Warranty."

18.      DEFAULT AND TERMINATION

a.       Either party may terminate this Agreement, with or without cause, on
         thirty (30) days written notice to the other party.

b.       If Solution Provider fails to pay any sum of money due and owing under
         this Agreement within ten (10) days of written notice thereof from
         FalconStor, FalconStor shall have the right to terminate this Agreement
         without further notice to Solution Provider. If either party breaches
         any of the terms, conditions or provisions of this Agreement, and fails
         to cure such breach within thirty (30) days after written notice
         thereof, the other party shall have the right to terminate this
         Agreement without any further notice.

c.       FalconStor shall also have the right to terminate this Agreement
         immediately and cancel any unfilled portion of it if (i) Solution
         Provider ceases business, files for bankruptcy or becomes bankrupt or
         insolvent, or enters into any arrangement or composition with its
         creditors or if a receiver is appointed to direct the business of
         Solution Provider, (ii) Solution Provider attempts to sell or assign,
         or sells or assigns any or all of its rights, duties or obligations
         under this Agreement, or the Agreement itself, to any person or entity,
         in whole or in part, whether by assignment, merger, transfer of assets,
         sale of stock, operation of law or otherwise, without FalconStor's
         prior written consent; (iii) Solution Provider violates any of the
         conditions of Section 15; or (iv) there is a sale or transfer, whether
         by operation of law or otherwise, of the direct or indirect control of
         Solution Provider.

d.       If this Agreement expires or is terminated by either party, for any
         reason, Solution Provider will immediately pay all sums due and owing
         to FalconStor. All Product licenses properly distributed by Solution
         Provider shall survive termination of this Agreement. Upon the
         expiration or termination of this Agreement, all rights and licenses to
         use and distribute the Products granted by FalconStor to Solution
         Provider will immediately cease and Solution Provider shall cooperate
         with FalconStor. to terminate relations in an orderly manner.

                                       10

<PAGE>

e.       Upon termination of this Agreement, Solution Provider shall immediately
         cease to use any documentation or advertising identifying it as a
         Solution Provider or representative of FalconStor or the Products.

f.       In the event of a party's uncured breach of this Agreement, the
         non-breaching party may, in addition to the right to withhold its
         performance under and/or terminate this Agreement, avail itself of all
         other rights, remedies and causes of action available at law, in equity
         or otherwise, against such party for damages as a result of such
         breach. Unless otherwise provided in this Agreement, remedies shall be
         cumulative and there shall be no obligation to exercise a particular
         remedy.

g.       Solution Provider will not be entitled under local law or otherwise to
         receive any payment from FalconStor whether for actual, indirect,
         special or consequential damages, costs or expenses as a result of
         expiration or termination of this Agreement, all of which Solution
         Provider expressly waives. SOLUTION PROVIDER ACKNOWLEDGES THAT IT HAS
         READ THIS AGREEMENT, UNDERSTANDS THE TERMS UTILIZED HEREIN AND AGREES
         TO THE ENFORCEMENT OF THE TERMS AND CONDITIONS AS SET FORTH HEREIN.

h.       Except as set forth below in Section 18(i), upon expiration or
         termination of this Agreement, Solution Provider shall immediately
         return to FalconStor, at Solution Provider's expense, all copies of the
         Product not yet distributed, all demonstration copies of the Product,
         all Documentation and all Product brochures, marketing collateral and
         materials, together with a certified statement by a duly authorized
         officer of Solution Provider stating that all such Products and
         materials and any other confidential information of FalconStor have
         been returned to FalconStor.

i.       In the event of any termination of this Agreement (other than
         termination by FalconStor under Sections 18(b) or (c) above), Solution
         Provider shall be entitled to: (i) retain one Demonstration Software
         license solely for purposes of providing support to End Users for the
         remainder of any then current support contracts; and (ii) to
         distribute, for a period not to exceed ninety (90) days, any Products
         already paid for and held in its inventory as of the termination date,
         subject to its continuing compliance with all terms of this Agreement.

j.       Any expiration or termination of this Agreement shall not prejudice,
         limit or restrict any other rights or remedies either party may have
         arising prior to such expiration or termination. FalconStor shall be
         under no obligation to refund any amounts paid to FalconStor by
         Solution Provider for any undistributed copies of the Product held by
         Solution Provider upon any expiration or termination of this Agreement,
         including, without limitation any copies of the Product returned by
         Solution Provider to FalconStor pursuant to Section 18(h) above, except
         in the event that FalconStor terminates this Agreement without cause
         under Section 18(a).

k.       In addition to this Section 18, Sections 4, 10, 13, 14, 15, 16, 17, and
         19 shall survive termination of this Agreement.

19.      MISCELLANEOUS

a)       The laws of the state of New York shall govern the construction and
         enforceability of this Agreement. The parties agree that any action
         arising under or relating to this Agreement or the Products shall lie
         within the exclusive jurisdiction of any State or Federal court located
         in the State of New York; provided that nothing in this Section will
         prevent FalconStor from seeking injunctive relief against Solution
         Provider or filing actions for payment of outstanding amounts in any
         court of the Territory. Solution Provider consents to the exercise of
         jurisdiction by any State or Federal court located in the State of New
         York and agrees that process may be served on Solution Provider in any
         such action by mailing it to Solution Provider at the address set forth
         above. If either party

                                       11

<PAGE>

         is compelled to seek judicial enforcement of its rights under this
         Agreement, the prevailing party in any such action shall be entitled to
         recover its costs incurred in such action, including reasonable
         attorneys'fees.

b)       Each provision of this Agreement is severable from the entire
         Agreement, and in the event that any provision is declared invalid or
         unenforceable, that provision shall be amended if possible to be
         enforceable, but in any event, the remaining provisions hereof shall
         remain in effect.

c)       All notices and demands of any kind or nature which any party to this
         Agreement may be required or may desire to serve upon any other in
         connection with this Agreement shall be in writing and may be served
         personally or by prepaid registered mail (return receipt requested) or
         by private mail service (e.g., Federal Express) if a confirmation of
         delivery is obtained, in either case to the addresses shown on page 1
         of this Agreement. Any party hereto may from time to time, by notice in
         writing served upon the other parties as aforesaid, designate a
         different mailing address or a different person to which following such
         service all further notices or demands are thereafter to be addressed.

d)       The parties hereto are independent contractors and have no power, and
         shall have no power, nor will either party represent that it has any
         power, to bind the other party or to assume or to create any obligation
         or responsibility, expressed or implied, on behalf of the other party
         or in the other party's name. This Agreement shall not be construed as
         constituting FalconStor and Solution Provider as partners or joint
         venturers or to create any other form of legal association which would
         impose liability upon one party for the act or failure to act of the
         other.

e)       No waiver by either party of any default shall operate as a waiver of
         any other default or of a similar default on a future occasion. No
         waiver of any term or condition shall be effective unless in writing
         and signed by the party against whom enforcement of the waiver is
         sought. Neither party shall be responsible for any failure to perform
         any obligation hereunder (except a failure to pay) due to causes beyond
         its reasonable control.

f)       This Agreement (including any attached Exhibits) is the complete and
         exclusive statement of the understanding between the parties and
         supersedes all prior agreements and representations between them
         relating to the subject matter of this Agreement. Amendments to this
         Agreement shall not be effective unless they are in writing and signed
         by authorized representatives of both parties.

                                       12

<PAGE>

g)       Solution Provider may not assign this Agreement, or any rights and
         obligations hereunder, to any third party without the express written
         permission of FalconStor.

IN WITNESS WHEREOF, the undersigned authorized representatives of the parties
have affixed their signatures as of the Effective Date.

SOLUTION PROVIDER                         FALCONSTOR SOFTWARE, INC.
NAME: Mti Technology Corporation

/s/ Mark Franzen                          /s/ Reijane Huai
---------------------------               ---------------------------
  (Authorized Signature)                    (Authorized Signature)

Chief Financial Officer                   President & CEO
---------------------------               ---------------------------
         (Title)                                  (Title)

May 7, 2003                               7/19/03
---------------------------               ---------------------------
         (Date)                                    (Date)

<PAGE>

                                    EXHIBIT I

Discount from then current MSRP on software sales: 48%

Discount from then current MSRP on maintenance/support sales: 48%

Discount from then current MSRP on maintenance/support sales renewals: 48%

NOTE: Target amounts for discount on renewal are as follows:

<TABLE>
<CAPTION>
Net Sales to FalconStor                             Discount
-----------------------                             --------
<S>                                                 <C>
$605,001 or greater                                  48%
$500,001 to $605,000                                 45%
$225,001 to 500,000                                  37.5%
$0 to $225,000                                       30%
</TABLE>

"Net Sales" means amounts actually received by FalconStor for software and
maintenance and support, less allowances for bad debt and other claims.

Discount targets to be reviewed for adjustment based on actual sales for any
renewal term of this Agreement.

                                        1

<PAGE>

                                   Exhibit II

                           [FALCONSTOR SOFTWARE LOGO]

                             CLIENT SUPPORT HANDBOOK

                                       FOR

                        SOLUTION PROVIDERS AND RESELLERS

1.0      SERVICE AND SUPPORT REQUIREMENT

The SP/Reseller will be responsible for working directly with the end users, and
FalconStor Support will work directly with the SP/Reseller, as necessary. The
SP/Reseller represents and warrants that it is experienced in, capable of, and
staffed to provide Level 1 support (as defined below). FalconStor offers
training programs to assist in attaining this level of expertise on FalconStor
products.

FalconStor will provide Level 2 support (as defined below).

2.0      SUPPORT LEVEL DEFINITIONS

2.1      LEVEL 1 SUPPORT

Level 1 support is the first line, direct end user contact, most likely via a
telephone call-handling group provided by the SP/Reseller.

Level 1 support includes:

     -    First contact, direct end user interaction

     -    Information collection and analysis

     -    Identification of whether the problem is known and has a known
          solution

     -    Troubleshooting and problem reproduction

     -    Problem report administration and tracking

The parties agree that end users shall not have the right to contact FalconStor
directly for questions related to the IPStor products.

2.2      LEVEL 2 SUPPORT

Level 2 support is provided by FalconStor's Premium Support Engineers (PSE).
Level 2 is the first point of contact for technical issues between FalconStor
and the SP/Reseller. Once a problem is escalated by the SP/Reseller to Level 2,
FalconStor is responsible for resolution and will utilize commercially
reasonable resources to resolve the problem. SP/Reseller shall limit the number
of support personnel authorized to contact FalconStor to five (5) and ensure
that these personnel have attended the IPStor Training Courses, 1.2 and 1.3,
taught at the FalconStor training facility. SP/Reseller shall identify the five
support personnel on Attachment 1 to this handbook and FalconStor shall not
accept support calls from any other individuals. It shall be SP/Reseller's
responsibility to update the attachment as necessary.

                                        1

<PAGE>

3.0      FALCONSTOR'S SOFTWARE SUPPORT LEVEL

FalconStor will provide engineering level support to the SP/Reseller engineering
staff as needed to isolate problem cause, make bug fixes to FalconStor supplied
code, and produce the object code required by the SP/Reseller to support and
update IPStor's products.

3.1      METHODS OF REQUESTING SUPPORT

There are four levels of severity when contacting FalconStor for support.
Depending upon the perceived level of severity, you may choose to contact us
either by phone or through our website.

         3.1.1    PHONE

         FalconStor technical support will be available via telephone during
         normal working days between the hours of 9:00 AM and 6:00 PM, Eastern
         Time. For end users who have purchased "Gold," or "Individual Premium
         Incident" support, support between 6:00 PM and 9:00 AM, Eastern Time is
         available via answering service, 24 hours a day, 365 days per year.
         Calls placed via the answering service will receive a response from a
         FalconStor technical support representative within two hours. Typically
         you would contact FalconStor by phone for calls that are classified as
         priority 1 and 2 (see below).

         3.1.2    ONLINE

         Technical Support is also available through FalconStor's website at
         www.falconstor.com/supportrequest.htm. Requests opened online during
         business hours will be answered no later than the next business day.
         Requests opened online after business hours will be answered no later
         than the second business day. Requests opened online by end users who
         have purchased "Gold," or "Individual Premium Incident" support will be
         answered within 24 hours. Typically you would contact FalconStor via
         the online request form for calls that are classified as priority 3 and
         for Requests for Enhancement-RFE (see below).

3.2      FALCONSTOR/SP/RESELLER JOINT RESPONSIBILITY

FalconStor and the SP/Reseller will establish contacts to report problems, track
status, exchange technical information, track build requirements, make bug fixes
and coordinate the transfer of software files.

FalconStor Development Engineering. FalconStor will assign Development Engineers
as required to resolve all SP/Reseller's SPRs and provide engineering level
support to the SP/Reseller's engineering staff.

FalconStor Engineering. The SP/Reseller will designate specific members of their
engineering staff who are authorized to have engineering level contact with the
designated FalconStor Engineer. However, the SP/Reseller specified contacts are
required to send problem reports and receive problem status via FalconStor
Technical Support and will not contact the FalconStor Engineering staff
directly.

3.3      PROBLEM ESCALATION

If the FalconStor technical support group determines that it is unable to
resolve the problem with its own resources, it will escalate the problem to the
appropriate personnel.

In those cases where FalconStor personnel are required to make direct telephone
or field contact with a customer of the SP/Reseller to obtain problem
information, the SP/Reseller will designate a customer representative to be
present for the duration of the customer contact.

In those cases where the SP/Reseller requires on-site assistance to install, set
up, resolve operational issues, or obtain necessary diagnostic information in
order to solve a problem, FalconStor will provide the services of a field
applications engineer or a product development engineer, as determined by
FalconStor, for that purpose. If it is determined that the cause of the problem
is not due to a defect in the FalconStor-supplied product, the SP/Reseller will
reimburse FalconStor for time and materials at FalconStor's then-standard rate
plus reasonable expenses for transportation, meals and lodging.

                                        2

<PAGE>

3.4      DEFINITIONS

BUG RESOLUTION: An analysis of the problem has been performed and determined to
be a FalconStor problem, the area of the system causing the problem is
identified, and it is possible to estimate the effort to fix the problem.

BUG FIX: The problem has been fixed, incorporated into an engineering build, and
is ready for FalconStor's Quality Assurance Department to verify the fix.

3.5      BUG PRIORITY LEVELS AND RESPONSE TIME

If the FalconStor technical support group determines that the problem may be due
to a defect in the FalconStor-supplied product, the problem will be escalated to
FalconStor engineering via the normal FalconStor System Problem Report ("SPR")
process.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
 PRIORITY LEVEL          1                2                3                4                5
--------------------------------------------------------------------------------------------------
<S>               <C>              <C>              <C>              <C>              <C>
 Priority Level   A production     Customer has     Customer has     Customer has     Customer has
 Definition       system is        a serious issue  a serious issue  a minor issue    a Minor
                  down or          with a feature   with a feature   with a feature   question,
                  severely         necessary to     for which a      for which a      issue or
                  impacted         its work for     work-around      work-around      enhancement
                  as a result of   which it has     exists, a        exists, a usage  request.
                  a FalconStor     discovered no    minor issue      question or a
                  software         work-around      with a feature   high-priority
                  Product          and which        for which no     enhancement
                                   completely       work-around      request.
                                   prevents the     exists or a
                                   feature from     critical usage
                                   being used.      question.
--------------------------------------------------------------------------------------------------
Initial           2 business       2 business       4 business       4 business       6 business
Response          hours            hours            hours            hours            hours
from a TSR*
--------------------------------------------------------------------------------------------------
Case Status       As status        As status        As status        As status        As status
Updates           changes or       changes or       changes or       changes          changes
                  daily            daily            every 3 days
--------------------------------------------------------------------------------------------------
Defect/           Daily            As status        Within 24        Within 24        Within 24
Enhancement                        changes          hours of         hours            hours
Request                                             status change    of status        of status
Status                                                               change           change
Updates**
--------------------------------------------------------------------------------------------------
</TABLE>

* Technical Support Representatives (TSRs) are our first line of technical
support representatives who input the Customer's case into our systems and
provide the Customer with a case number.

** The Customer may call Technical Support at any time to receive an update on
Defect/Enhancement Requests.

                                        3

<PAGE>

                                  Attachment 1
                     SP/Reseller Technical Support Contacts

SP/Reseller 1st Technical Support Contact
         Company: MTI
         Name:           Chris Bourne
         Phone:          +44 (l) 483 520 200
         Email:          chris.bourne@uk.mti.com

SP/Reseller 2nd Technical Support Contact
         Company: MTI
         Name:           Alasdair Young
         Phone:          +44 (1) 483 520 200
         Email:          alasdair.young@uk.mti.com

SP/Reseller 3rd Technical Support Contact
         Company: MTI
         Name:           Carlos Sanddoval
         Phone:          (800) 999-9684
         Email:          csondoval@mti.com

SP/Reseller 4th Technical Support Contact
         Company: MTI
         Name:           Mathew Keane
         Phone:          (800) 999-9684
         Email:          mkeane@mti.com

SP/Reseller 5th Technical Support Contact
         Company: MTI
         Name:           Larry Herring
         Phone:          (800) 999-9684
         Email:          lherring@mti.com

FalconStor Software

FalconStor - Primary Support Contact
         Name:
         Phone:
         Email:

FalconStor Secondary Support Contact
         Name:
         Phone:
         Email:

                                        4

<PAGE>

                                   EXHIBIT III

                           [FALCONSTOR SOFTWARE LOGO]

                            CLIENT SUPPORT HANDBOOK

                                       FOR

                                   END USERS

For customers, partners, and distributors (the "Customer") who purchase
Technical Support services for software products licensed from FalconStor (the
"Products"), FalconStor provides support services, (as such term is defined in
the Software License Agreement between the customer and FalconStor). Support
services include answering questions with regard to the operation of the
software and troubleshooting.

TECHNICAL SUPPORT

Customers may contact Technical Support in the following ways:
Americas:
- E-mail: support@falconstor.com

- Web: http://www.falconstor.com

       - Tech Support request form:

       http://www.falconstor.com/supportrequest.htm

- Fax: (631) 506-7633

- Phone: (631) 777-3332

9 a.m. - 6 p.m. EST, Monday through Friday on non-holidays. (Standard Support)
24 X 7, 365 days per year including Holidays. (Gold Support Contracts or Per
Incident)

Europe, the Middle East, and Africa (EMEA)

- E-mail: infoEurope@falconstor.com

- Web: http://www.falconstor.com

       - Tech Support request form:

       http://www.falconstor.com/supportrequest.htm

- Fax: 33-1-3923-9557

- Phone: +33-1-3923- 9550

9 a.m. - 6 p.m. GMT, Monday through Friday on non-holidays

Asia Pacific:

- E-mail: infoAsia@falconstor.com

- Web: http://www.falconstor.com

       - Tech Support request form:

       http://www.falconstor.com/supportrequest.htm

- Fax: 886 (4) 2319-7269

- Phone: +886 (4) 2320 0828

9 a.m. - 6 p.m. GMT-12, Monday through Friday on non-holidays

Note: International remote office handles Standard Support for their territory.
7x24 support will be handled by US office. All Technical Support databases

                                        1

<PAGE>

(contact, knowledge) are centrally located at US headquarters and are accessible
via the Internet. All offices follow the same policies and procedures.

LOGGING A CASE

To log a case, the Customer can contact FalconStor Technical Support via any of
the methods mentioned above. Upon logging a Case, the Customer will receive a
case identification number for future reference.

When logging a case, be prepared to provide the following information.

- Name

- Company

- Customer Site (if different from own company)

- Phone and fax numbers

- E-mail address

- FalconStor software product(s) being used, including version and build
number(s)

- OS platform IPStor server is running on

       - Linux kernel or Solaris kernel patch

- Network environment

       - IP or FibreChannel

- Brief description of the case

- Priority of the case

- Error message(s)

- Copy of the X-ray(s)

- Steps taken to troubleshoot the case thus far

If the Customer is unable to reach FalconStor Technical Support by phone, the
Customer can leave a voice mail message or contact Technical Support via e-mail.
The Customer should include the following information in his/her message:

- Name

- Company

- Brief description of case

- Preferred contact method and contact information

FALCONSTOR ONLINE SUPPORT SITE

The Online Support Site is a centralized location to log cases, access product
documentation, and search the Knowledge Base. The Online Support Site is located
at http://www.falconstor.com/support.html

FALCONSTOR KNOWLEDGE BASE

The Knowledge Base is a repository of technical documentation aimed at providing
24-hours, seven-days-a-week online technical support. The Knowledge Base is
located under the 'Knowledge Base' link at
http://www.falconstor.com/knowledgebase.htm

The Knowledge Base is available to all FalconStor employees, distributors,
partners and customers with licensed, active maintenance agreements. It is also
available to all evaluating customers for the duration of the evaluation period.
The Customer can log on to the Knowledge Base via http : //www.falcons tor.
com/knowledgebase.htm after obtaining a FalconStor Internet account.

The Knowledge Base consists of:

- Troubleshooting documents

- White Papers

- Frequently Asked Questions (FAQs)

- Release Notes

                                        2

<PAGE>

- Readmes

FAQS

FAQs may also be accessed at http://falconstor.com/fag.htm.

WHITE PAPERS

White Papers may also be accessed at http://falconstor.com/whitepapers.htm.

CERTIFICATION MATRIX

FalconStor's IPStor Certification Matrix can be accessed at
http://falconstor.com/certification_matrix_active.htm

THIRD PARTY SOFTWARE/HARDWARE

FalconStor Technical Support does not provide technical support for third-party
software/hardware, but we will do our utmost to use our established skills to
assist in the cases that the Customer may have. The Customer may, however, be
requested to log the outstanding case with the relevant third party vendor. This
will ultimately speed the resolution of the Customer's case.

PRODUCT UPDATES

Upon the release of a major Product version, FalconStor Technical Support will
continue to support the most recent major release of the Product version
(numbered to the left of the decimal point) for one year.

TECHNICAL SUPPORT LEVELS

FalconStor offers three levels of technical support.

STANDARD SUPPORT

Every Customer with a current maintenance agreement receives our standard
support level, Silver Support. Silver Support provides:

- Live Support during standard business hours: The designated Support Liaisons
have access to Technical Support engineers from 9 a.m. to 6 p.m. (EST) Monday
through Friday (except holidays). All calls will receive a response from
FalconStor within two business days.

- Online Support Site: The Support Liaison has access to the Online Support Site
(Online Support System,

Knowledge Base and Download Site 24 hours per day, seven days per week
(including holidays). Requests opened online will be answered no later than the
second business day.

- Multiple Contact Methods: The designated Support Liaison can contact Technical
Support via multiple methods including e-mail, fax, web and phone.

GOLD SUPPORT

Gold Support offers all the benefits of Silver Support plus:

- 24x7x365 Support: The designated Support Liaisons have emergency access to
Technical Support Engineers 24 hours per day, seven days a week, including
holidays.

- Support outside of 9:00 a.m. to 6:00 p.m., business days, is provided via
answering service. Calls placed via the answering service will receive a
response from FalconStor within 2 hours.

- Support requests opened on-line will be answered within 24 hours.

                                        3

<PAGE>

The following summarizes all services available with each technical support
offering.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------
 SERVICES                                 STANDARD              GOLD
-----------------------------------------------------------------------
<S>                                       <C>                 <C>
 24 x 7 Support                                                   -
-----------------------------------------------------------------------
 24 x 7 Knowledge Base Support                -                   -
-----------------------------------------------------------------------
 Number of Support Contacts               Unlimited           Unlimited
 (Knowledge Base)
-----------------------------------------------------------------------
 Multiple Contact Methods                     -                   -
-----------------------------------------------------------------------
 Access to GA Products                        -                   -
-----------------------------------------------------------------------
 Priority Involvement in                                          -
 Beta Programs
-----------------------------------------------------------------------
Number Technical Support Calls               50                   50
per. year
-----------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------
OPTIONS                                   STANDARD              GOLD
-----------------------------------------------------------------------
<S>                                       <C>                 <C>
 Individual Incident                          x                   x
 Standard
-----------------------------------------------------------------------
 Individual 7x24 Incident Premium             x                   x
-----------------------------------------------------------------------
</TABLE>

                                        4

<PAGE>

                                   EXHIBIT IV

[FALCONSTOR LOGO]

Bank Wiring Instructions

Chase Manhattan Bank
New York, New York
SWIFT # CHASUS33
ABA # 021000021
For credit to account# 445500343465
For the name of FalconStor, Inc.
Tel: 516-365-4701 (Chase Bank)

                                        1

<PAGE>

                                    EXHIBIT V

Marketing Contact                       Price List Contact

Lance Broell                            STEPHEN SCHWARZ
[Print Name]                            [Print Name]
Phone: _714-481-7846                    Phone: 714-481-7847
Email Address: broell@mti.com           Email Address: sschwarz@mti.com

                                        1

<PAGE>

                                   EXHIBIT VI

                                    TERRITORY

The Territory for this Agreement is worldwide

                                       1

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